Trials@uspto.gov
`Tel: 571-272-7822
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`Paper 25
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` Entered: April 9, 2014
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`
`CALLIDUS SOFTWARE INC.
`Petitioner
`
`v.
`
`VERSATA SOFTWARE, INC. and
`VERSATA DEVELOPMENT GROUP, INC.
`Patent Owner
`____________
`
`
`Case CBM2013-00054
`Patent 7,908,304 B2
`____________
`
`
`
`Before HOWARD B. BLANKENSHIP, SALLY C. MEDLEY, and
`KEVIN F. TURNER, Administrative Patent Judges.
`
`TURNER, Administrative Patent Judge.
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`
`
`
`
`
`
`DECISION
`Request for Rehearing
`37 C.F.R. §§ 42.71
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`
`Tel: 571-272-7822
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`Paper 25
`
` Entered: April 9, 2014
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`
`CALLIDUS SOFTWARE INC.
`Petitioner
`
`v.
`
`VERSATA SOFTWARE, INC. and
`VERSATA DEVELOPMENT GROUP, INC.
`Patent Owner
`____________
`
`
`Case CBM2013-00054
`Patent 7,908,304 B2
`____________
`
`
`
`Before HOWARD B. BLANKENSHIP, SALLY C. MEDLEY, and
`KEVIN F. TURNER, Administrative Patent Judges.
`
`TURNER, Administrative Patent Judge.
`
`
`
`
`
`
`
`DECISION
`Request for Rehearing
`37 C.F.R. §§ 42.71
`
`
`
`Case CBM2013-00054
`Patent 7,908,304 B2
`
`
`
`INTRODUCTION
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`Versata Development Group, Inc. and Versata Software, Inc. (“Patent
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`Owner”) filed a Request for Rehearing (Paper 22, “Req.”) of the Decision on
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`Institution (Paper 19, “Dec.”), which instituted a covered business method patent
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`review of claims 1, 12-25, 30-32, 42, and 43of Patent 7,908,304 B2 (“the ’304
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`patent”). In its request, Patent Owner argues essentially that the Board overlooked
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`and misapprehended the Patent Owner’s arguments regarding the plain language of
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`the 35 U.S.C. § 325(a)(1) statutory bar and the applicable legislative history.
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`The request for rehearing is denied.
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`ANALYSIS
`
`When rehearing a decision on institution, the Board will review the decision
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`for an abuse of discretion. 37 C.F.R. § 42.71(c). An abuse of discretion may be
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`determined if a decision is based on an erroneous interpretation of law, if a factual
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`finding is not supported by substantial evidence, or if the decision represents an
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`unreasonable judgment in weighing relevant factors. Star Fruits S.N.C. v. U.S.,
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`393 F.3d 1277, 1281 (Fed. Cir. 2005); Arnold P’ship v. Dudas, 362 F.3d 1338,
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`1340 (Fed. Cir. 2004); and In re Gartside, 203 F.3d 1305, 1315-16 (Fed. Cir.
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`2000).
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`As discussed in the Decision, there is no dispute about the facts of the instant
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`case. Dec. 10. Patent Owner has acknowledged that the Petitioner filed a civil
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`action challenging validity of the ’024 Patent before the filing of the Petition and
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`2
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`
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`Case CBM2013-00054
`Patent 7,908,304 B2
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`acknowledges that Petitioner voluntarily dismissed that action. Patent Owner’s
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`Preliminary Response (Paper 18) at 6, 8. The Board considered all of Patent
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`Owner’s arguments made in the preliminary response, but did not find them to be
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`persuasive. Dec. 10. As such, we did not overlook or misapprehend any of the
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`Patent Owner’s arguments; we simply came to a different legal conclusion. So as
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`to not put form above substance, we take Patent Owner’s request for rehearing as
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`arguing that the Board based the Decision on an erroneous interpretation of law.
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`Patent Owner argues that the language of the statute cannot be clearer,
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`detailing that “post-grant review may not be instituted if, before the date on which
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`the petition for such a review is filed, the petitioner . . . filed a civil action
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`challenging the validity of a claim of the patent.” Req. 3 (citing 35 U.S.C.
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`§ 325(a)(1), with emphasis). Patent Owner emphasizes that the filing of a civil
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`action controls the determination, and that the inquiry should have ended there. Id.
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`We do not agree.
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`Federal courts treat a civil action that is dismissed without prejudice as
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`“something that de jure never existed.” Holloway v. U.S., 60 Fed. Cl. 254, 261
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`(2004), aff’d 143 F. App’x 313 (Fed. Cir. 2005); see also Beck v. Caterpillar, Inc.,
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`50 F.3d 405, 407 (7th Cir.1995) (“[Plaintiff’s] suit was dismissed voluntarily
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`pursuant to [Rule] 41(a), and is treated as if it had never been filed.”). The Federal
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`Circuit consistently has interpreted the effect of dismissals without prejudice as
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`leaving the parties as though the action had never been brought. Graves v.
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`Principi, 294 F.3d 1350, 1356 (Fed. Cir. 2002) (“The dismissal of an action
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`without prejudice leaves the parties as though the action had never been brought.”);
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`Jet, Inc. v. Sewage Aeration Systems, 223 F.3d 1360, 1364 (Fed. Cir. 2000)
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`3
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`
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`Case CBM2013-00054
`Patent 7,908,304 B2
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`(“Dismissal without prejudice indicates that judgment is not on the merits and will
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`have no preclusive effect.”); see also, U.S. ex rel. Koch v. Koch Indus., Inc., 188
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`F.R.D. 617( D.C. Okla. 1999) (finding that dismissal without prejudice due to lack
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`of subject matter jurisdiction means the “law deems the first suit to have never in
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`fact existed.”); Macuto U.S.A. v. BOS GmbH & KG, IPR2012-00004, Paper 18 at
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`14-16 (PTAB, Jan. 14, 2013) (holding that a dismissal without prejudice nullified
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`the effect of service for purposes of 35 U.S.C. § 315(b)).
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`Thus, when an action is dismissed without prejudice, the parties are free to
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`litigate the matter in a subsequent action, as though the dismissed action had never
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`existed. Univ. of Pittsburgh v. Varian Med. Sys., Inc., 569 F.3d 1328, 1333
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`(Fed.Cir.2009). See also 9 WRIGHT & MILLER, FED. PRAC. & PROC. CIV.
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`§ 2367 (3d ed.); see id. at nn. 6 & 9 (citing numerous cases throughout the courts
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`of appeals).
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`In the instant case, the court dismissed Petitioner’s declaratory judgment
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`action without prejudice; the action, therefore, is a nullity. In the context of
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`§ 325(a)(1), the action never existed. When a court permits the challenger to
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`dismiss the declaratory judgment action voluntarily and without prejudice, the
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`petitioner effectively unmakes that choice, because the action is considered never
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`to have existed. As such, we consider the filing to not have occurred, such that the
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`absence of a filing ends the inquiry1.
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`
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`1 Patent Owner observes that “the instant proceeding is curiously devoid of any
`case law citation in the section dealing with the issue of standing under
`§ 325(a)(1),” Req. 4 n.1, but given the newness of the statute, we do not find this to
`be unremarkable.
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`4
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`
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`Case CBM2013-00054
`Patent 7,908,304 B2
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`Patent Owner also argues that the Federal Rules of Civil Procedure are
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`contrary to the “Board’s ‘de jure never existed’ premise.” Req. 5. Patent Owner
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`cites several sections and argues that the existence in fact of an action remains,
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`such that the bar under § 325(a)(1) should still apply. However, Patent Owner’s
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`argument is confusing since Patent Owner also acknowledges that “an action is
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`dismissed without prejudice . . . thus by law erased from existence,” Req. 5, such
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`that giving effect to the filing of a dismissed complaint would mean that the
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`complaint had not been erased from existence. We find no benefit of a district
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`court dismissing a complaint without prejudice if it can still be applied to bar the
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`filer. As such, we do not find Patent Owner’s argument to be persuasive.
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`Likewise, Patent Owner argues that the Board overlooked its extensive
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`citations of the applicable legislative history, seeking to bar a party who has filed a
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`declaratory-judgment action. Req. 5-6. The Board did not overlook the citations,
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`but instead found the Decision to be commensurate with the legislative history,
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`providing a single window for petitioners to pursue a declaratory-judgment action
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`or a covered business method patent review. As an example, the Board determined
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`in Branch Banking and Trust Co., v. Maxim Integrated Products, Inc., CBM2013-
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`00059, Paper 12 at 2-4 (PTAB, Mar. 20, 2014), that institution of a covered
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`business method patent review should be denied because of an ongoing declaratory
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`judgment action, finding institution barred under 35 U.S.C. § 325(a)(1).
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`Patent Owner also calls into question how long such a declaratory-judgment
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`action must remain active, Req. 6, but we can offer no input on a process that
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`occurs completely outside of the Board’s jurisdiction. We can find no actionable
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`evidence presented by Patent Owner that the district court acted improperly in
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`5
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`
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`Case CBM2013-00054
`Patent 7,908,304 B2
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`allowing for the voluntarily dismissal of that action. Additionally, while Patent
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`Owner envisions petitioners filing declaratory judgments, settling, and then filing
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`institutable petitions, Req. 7, it would appear that a proper settlement could
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`mitigate the problems outlined.
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`Lastly, Patent Owner alleges that the Board overlooked Patent Owner’s
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`arguments comparing the parallels between § 325(a)(1)’s statutory bar and § 102’s
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`statutory bar. Req. 8-9. In response, we did not overlook the argument, but rather
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`found the arguments to be unpersuasive.
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`For the forgoing reasons, Patent Owner has not shown that the Board abused
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`its discretion in instituting the instant proceeding.
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`
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`Accordingly, it is
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`
`
`ORDER
`
`ORDERED that Patent Owner’s request for rehearing is denied.
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`
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`6
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`
`
`Case CBM2013-00054
`Patent 7,908,304 B2
`
`For Petitioner:
`
`Deborah E. Fishman
`fishmand@dicksteinshapiro.com
`
`Jeffrey A. Miller
`millerj@dicksteinshapiro.com
`
`For Patent Owner:
`
`Kent B. Chambers
`kchambers@tcchlaw.com
`
`Alisa Lipski
`alipski@azalaw.com
`
`David W. O’Brien
`david.obrien.ipr@haynesboone.com
`
`
`
`7
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