PTAB Finds Patent Eligibility in a CBM Proceeding, With a Dissent Challenging the Federal Circuit

In a final written decision, the PTAB found all challenged claims patent-eligible in Tradestation Group, Inc. v. Trading Tech. Int’l, Inc., CBM2015-00161, Paper 129 (P.TA.B. Feb. 17, 2017), an uncommon result in a CBM proceeding. But this case is more uncommon still—a dissent filed by one PTAB judge contended for patent ineligibility despite the Federal Circuit previously finding eligibility on the same claims.

The petitioner requested CBM review of U.S. Patent No. 6,766,304, and the PTAB instituted trial on a single ground of unpatentability under Section 101. A few weeks before the PTAB issued its final written decision, the Federal Circuit issued a decision in Trading Tech. Int’l, Inc. v. CQG, Inc., No. 2016-1616, 2017 WL 192716 (Fed. Cir. Jan. 18, 2017) (“CQG”), determining that the claims of the ’304 patent are patent eligible. Prior to issuing its final written decision, the Board permitted both the patent owner and the petitioner to file supplemental briefs addressing the impact of the Federal Circuit’s decision.

In its decision, the PTAB noted that the Federal Circuit had already decided that the claims are not directed to an abstract idea. The Federal Circuit had found that the patent’s electronic trading claims were not abstract because the patent professed to solve problems of prior graphical user interfaces in the context of computerized trading, relating to speed, accuracy, and usability. The PTAB determined that the petitioner provided no persuasive reason for the PTAB to ignore the Federal Circuit’s guidance.

Judge Petravick authored a dissent, arguing that the petitioner was not a party in the suit before the Federal Circuit and therefore the Federal Circuit had not considered the merits of the petitioner’s specific challenge. Judge Petravick contended that the petitioner’s challenge here was based on a different record than before the Federal Circuit. For example, Judge Petravick would have found the claims directed to a fundamental economic practice based in part on expert testimony in the CBM record. Judge Petravick further explained that should this case be appealed, the Federal Circuit might reach a different outcome given that it did not designate CQG as precedential.

Judge Petravick also authored the Board’s institution decision. As we have often seen, judges’ final written decisions frequently maintain their institution positions. If the Federal Circuit had not issued a contrary decision prior, it is quite likely that Judge Petravick’s decision would have been the majority opinion. This case highlights the strategic importance for patent owners to win at the institution stage. Rarely will the Federal Circuit save the day for one party or the other before a final written decision, as it did here.