Case 1:13-cv-00328-GBL-IDD Document 18 Filed 05/16/13 Page 1 of 28 PageID# 375
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`UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`Alexandria Division
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`)
`
`))
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`))
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`VERSATA DEVELOPMENT GROUP,
`INC.,
`
`Plaintiff,
`
`vs.
`
`)
`)
`)
`TERESA STANEK REA,
`)
`Acting Under Secretary of
`Commerce for Intellectual Property )
`& Acting Director of the United
`)
`States Patent & Trademark Office,
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`Civil Action No. 1:13cv328
`
`))
`
`)
`Defendant.
`_________________________________ )
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`MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT’S MOTION TO DISMISS
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`Pursuant to Local Rule 7(F)(1), defendant, through her undersigned counsel, hereby
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`respectfully submits the instant memorandum of law in support of her motion to dismiss in the
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`above-captioned action.
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`INTRODUCTION
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`In 2011, through the America Invents Act (“AIA”), Congress created two new intricate
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`schemes for administrative and judicial review of the validity of issued patents. It did so with a
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`substantive goal in mind – to lessen the burdens (on both litigants and jurists alike) inherent in
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`federal district court litigation over such issues. And as such, each of these systems provides for
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`extremely streamlined review, including one level of administrative review (before the Patent
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`Trial and Appeal Board (“PTAB”) at the United States Patent and Trademark Office (“USPTO”))
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`that must generally be completed within one year, and one level of appellate judicial review
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`(before the Federal Circuit) at the termination of administrative proceedings.
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`Maxim Exhibit 2002 - PNC/JPMC, CBM2014-00039 - Page 2002-001
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`But here, plaintiff Versata Development Group, Inc. asks this Court to create an
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`enormous hole in this streamlined system, and allow each and every individual or entity
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`dissatisfied with the PTAB’s mere institution of administrative review proceedings to cross the
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`street and immediately file a lawsuit in this Court challenging that decision through the
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`Administrative Procedure Act (“APA”). Congress, recognizing the damage that such collateral
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`federal litigation could cause its streamlined system, fortunately prevented this result in two
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`ways. First, in the AIA itself, Congress explicitly provided that the decision “whether to
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`institute” this type of administrative review proceeding – the very decision that Versata’s own
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`complaint concedes is the gravamen of this action – is “final and nonappealable.” 35 U.S.C. §
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`324(e). And were this section, despite its clarity, somehow inapplicable here, the APA’s general
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`requirement that there be “final agency action,” 5 U.S.C. § 704, would preclude the exercise of
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`this Court’s jurisdiction, because the PTAB’s order to institute proceedings is interlocutory in
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`nature. Finally, Versata has an “adequate remedy” in an appeal to the Federal Circuit at the end
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`of the PTAB’s proceedings, which it only need exercise should the PTAB ultimately reject the
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`claims of its issued patent.
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`STATUTORY AND REGULATORY BACKGROUND
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`Versata’s instant request for this Court to exercise interlocutory APA jurisdiction
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`generally concerns new processes created by Congress through the AIA by which the USPTO
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`reviews the validity of an issued patent. The courts have repeatedly recognized that the
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`availability of these administrative options serve significant public interests, including, inter alia,
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`“to correct errors . . . and if need be to remove patents that never should have been granted.”
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`Patlex Corp. v. Mossinghoff, 758 F.2d 594, 604 (Fed. Cir. 1985); see also Callaway Golf Co. v.
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`Page 2002-002
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`Kappos, 802 F. Supp. 2d 678, 686 (E.D. Va. 2011).
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`It is thus important to provide a threshold general discussion of the new processes created
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`through the AIA. But to understand these processes (including that which is implicated here,
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`“post-grant review”), it is similarly necessary to explore the evolution of those administrative
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`processes that were previously available (before the AIA) for the review of issued patents. As
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`will be seen, although the various systems that Congress has developed (and ultimately modified
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`or eliminated) differ in many ways, this evolution reveals a single constant – Congress’s desire to
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`develop a viable administrative system for patent review to lessen the amount of litigation in the
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`federal courts.
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`I.
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`PRE-AIA ADMINISTRATIVE REVIEW – PATENT REEXAMINATION
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`A.
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`PATENT EXAMINATION
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`At the outset, an individual who seeks a patent on a particular invention must file an
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`application with the USPTO that contains a specification and an oath by the applicant to the
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`effect that he or she believe that they are the original inventor of the invention at issue. See 35
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`U.S.C. §§ 111(a); 115. A USPTO patent examiner thereafter reviews the application and makes
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`a determination as to whether the application claims presents claims that are patentable. See id. §
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`131. If “it appears that the applicant is entitled to a patent under the law,” the USPTO “shall
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`issue a patent.” Id.
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`B.
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`PATENT REEXAMINATION
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`1.
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`“Ex Parte” Reexamination
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`Until approximately 1980, individuals or entities seeking to challenge the validity of an
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`issued patent were without any real administrative recourse. Congress concluded that this gap
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`forced many to file costly and time-consuming challenges to patent validity in the federal court
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`system, when the same challenge “could be conducted with a fraction of the time and cost of
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`formal legal proceedings.” See H.R. RPT. 96-1307, at 3 (Sept. 9, 1980), reprinted in 1980
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`U.S.C.C.A.N. 6460, 6462. Congress therefore created an administrative alternative to federal
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`court litigation known as “ex parte reexamination,” which authorized third parties to make a
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`request that the USPTO reexamine “the substantive patentability” of an issued patent. 35 U.S.C.
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`§ 302 (2010). 1
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`The use of the modifier “ex parte” to describe this form of reexamination was significant,
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`and reflected the nature of that type of administrative reexamination. In short, if the USPTO
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`accepted a third-party’s request (i.e., concluded that there is a “substantial new question of
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`patentability,” 35 U.S.C. § 303(a)), and instituted reexamination proceedings, the resulting
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`proceedings would generally continue only between the USPTO and the patent owner. See
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`Syntex (USA), Inc. v. USPTO, 882 F.2d 1570, 1573 (Fed. Cir. 1989). Other than “the right to
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`reply to any statement submitted by the patent owner . . . [t]he statute [gave] third party
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`requesters no further, specific right to participate in the reexamination proceeding.” Id.; see
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`also 35 U.S.C. §§ 304-05. If the examiner responsible for conducting the reexamination
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`discovered that the claims were not actually patentable, he or she would issue a final office action
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`rejecting those claims. See 35 U.S.C. § 305.
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`2.
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`“Inter Partes” Reexamination
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`Given the extensive amendments made to the Patent Act through the AIA – especially in
`1
`the context of administrative and judicial review of issued patents – all statutory citations within
`this section (i.e., concerning patent reexamination) are to the 2010 codification of the United
`States Code.
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`Page 2002-004
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`Almost twenty years later, in 1999, Congress – after reviewing whether progress had been
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`made in reducing federal court litigation concerning the validity of issued patents in favor of
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`USPTO reexamination – elected to modify the system once again. In this respect, Congress
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`found that individuals and entities were not utilizing the existing reexamination procedure
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`because “a third party who requests reexamination cannot participate at all after initiating the
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`proceedings.” H.R. CONF. RPT. 106-464, at 133 (Nov. 9, 1999); see also id. (“Numerous
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`witnesses have suggested that the volume of lawsuits in district courts will be reduced if third
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`parties can be encouraged to use reexamination by giving them an opportunity to argue their case
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`for patent invalidity in the USPTO.”). In 1999, Congress therefore created a new “inter partes”
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`reexamination procedure that authorized the third-party requester to participate in the
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`administrative reexamination proceedings. See 35 U.S.C. § 314. More specifically, in “inter
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`partes” reexamination, “[e]ach time that the patent owner file[d] a response to an action on the
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`merits . . . the third-party requester [had] one opportunity to file written comments addressing
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`issues raised by the action . . . or the patent owner’s response.” Id. § 314(b)(2). And just like ex
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`parte reexamination, if the examiner responsible for reexamining the patent concluded that the
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`relevant claims were not patentable, he or she issued an office action rejecting the same. See id.
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`§ 314(a).
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`II.
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`AIA ADMINISTRATIVE REVIEW – INTER PARTES REVIEW & POST-GRANT REVIEW
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`By 2011, however, Congress remained dissatisfied with the progress it had made in
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`limiting federal court litigation over the validity of issued patents by enhancing the viability of
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`USPTO administrative remedies:
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`Nearly 30 years ago, Congress created the administrative “reexamination” process,
`through which the USPTO could review the validity of already-issued patents on the
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`request of either the patent holder or a third party, in the expectation that it would serve as
`an effective and efficient alternative to often costly and protracted district court litigation.
`. . . The initial reexamination statute had several limitations that later proved to make it a
`less viable alternative to litigation for evaluating patent validity than Congress intended.
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`H.R. RPT. 112-98, at 45 (2011). In particular, Congress noted that despite the improvements that
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`it had made to the procedure for the review of issued patents, the “[r]eexamination proceedings
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`are [] often costly, taking several years to complete,” and as a result, less used the procedure (and
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`reverted to federal district court litigation) than Congress desired. Id. As a result, through the
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`AIA, see PUB. L. 112-29, 125 Stat. 284 (September 16, 2011), Congress, in yet another attempt to
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`decrease federal court litigation, significantly streamlined the administrative process.
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`More specifically, Congress in the AIA created two new types of administrative
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`proceedings through which an individual or entity could secure the USPTO’s review of an issued
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`patent – (1) post-grant review; and (2) inter partes review. Both mechanisms create a streamlined
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`and thus more efficient process for both administrative and judicial review of patent validity
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`questions by eliminating one level of review at the USPTO, while ensuring that patent owners
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`and challengers alike have the ability to seek appellate review at the Federal Circuit at the
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`conclusion of the proceedings (and thus avoiding costly federal district court litigation).
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`A.
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`POST-GRANT REVIEW
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`1.
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`Generally
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`First, Congress created a new administrative mechanism for the review of issued patents
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`called “post-grant review.” See generally 35 U.S.C. §§ 321-25 (2013). Anyone “who is not the
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`owner of the patent” may petition the USPTO “to institute a post-grant review of the patent,” id.
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`§ 321(a), so long as the petition is filed within the first nine months after the patent in question
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`Page 2002-006
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`issued, id. § 321(c). Congress thus intended the post-grant review system “to enable early
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`challenges to patents, while still protecting the rights of inventors and patent owners against new
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`patent challenges unbounded in time and scope.” H.R. RPT. 112-98, at 47-48.
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`In the previously discussed reexamination procedure, an initial review was conducted by
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`a patent examiner, before administrative appeal within the USPTO, and then Article III appellate
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`review at the Federal Circuit. But in post-grant review, all administrative review at the USPTO
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`is conducted by a single entity – the Patent Trial and Appeal Board (“PTAB”). See 35 U.S.C. §
`3
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`326(c).
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`Congress provided a streamlined process for the administrative and judicial consideration
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`of post-grant review. First, the PTAB must adjudicate a petition seeking to “institute a post-grant
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`review” – a decision that is “final and nonappealable,” id. § 324(e) – within three months of the
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`filing of a response to the petition. Id. § 324(c). Next, all post-grant review proceedings,
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`including the PTAB’s final written determination on the validity of the challenged patent claims,
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`must generally be completed within one year of the institution of the proceeding. See id. §
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`326(a)(11). Finally, Congress provided for appellate review at the Federal Circuit at the
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`conclusion of post-grant review proceedings before the USPTO. See id. § 329 (“A party
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`dissatisfied with the final written decision of the [PTAB] . . . may appeal the decision . . . .”).
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`The petitioner in these circumstances is entitled to raise “any ground” concerning patent
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`validity “that could be raised” in a federal court action under 35 U.S.C. §§ 282(b)(2)-(3)
`concerning patent validity. See 35 U.S.C. § 321(b)
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`The PTAB is a newly-constituted administrative tribunal within the agency that has
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`taken the place of the former Board of the Patent Appeals and Interferences. See 35 U.S.C. §§
`6(a)-(b).
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`Page 2002-007
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`2.
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`“Covered Business Method” Patents (AIA § 18)
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`As stated above, post-grant review is generally available only within the first nine months
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`after a patent issues. But Congress remained significantly concerned with the validity of a large
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`swath of so-called “business method” patents, see generally Bilski v. Kappos, 130 S. Ct. 3218
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`(2010), that the USPTO issued “during the late 1990’s through the early 2000’s.” H.R. RPT. 112-
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`98, at 54. Despite the age of these patents, Congress thus created a limited ability to obtain post-
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`grant review for certain defined “covered business method” patents, so long as the individual or
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`entity seeking the institution of the review “has been sued for infringement of the patent or has
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`been charged with infringement under th[e] patent.” PUB. L. 112-29, § 18(a)(1)(B), 125 Stat. at
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`329-30. With the exception of specific circumstances not pertinent to the instant civil action, id.
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`§ 18(a)(1)(A), 125 Stat. at 329, post-grant review of a “covered business method” patent
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`proceeds as above.
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`B.
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`INTER PARTES REVIEW
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`Congress also transformed the former inter partes reexamination into a new type of
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`proceeding known as inter partes review. In direct contrast to post-grant review, an individual or
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`entity may only seek inter partes review – by petition – after the initial nine month period from
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`patent issuance, or the termination of a post-grant review proceedings (whichever is later). See
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`35 U.S.C. § 311(b). The grounds on which one may seek inter partes review are, however, more
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`limited than with its post-grant review sibling. See id. § 311(b) (providing that inter partes
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`review is only available to challenge patentability under 35 U.S.C. §§ 102-03).
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`At least for instant purposes, beyond these distinctions, inter partes review proceedings
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`are conducted – again, entirely by the PTAB, see id. § 316(c) – pursuant to the identical
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`streamlined process created for post-grant review. First, the PTAB must adjudicate a petition
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`seeking to “institute an inter partes review” – a decision that is “final and nonappealable,” id. §
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`314(d) – within three months of the filing of a response to the petition. Id. § 314(b). Next, all
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`inter partes review proceedings, including the PTAB’s final written determination on the validity
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`of the challenged patent claims, must generally be completed within one year of the institution of
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`the proceeding. See id. § 316(a)(11). Finally, Congress provided for appellate review at the
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`Federal Circuit at the conclusion of inter partes review proceedings before the USPTO. See id. §
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`319 (“A party dissatisfied with the final written decision of the [PTAB] . . . may appeal the
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`decision . . . .”).
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`* * *
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`In sum, motivated by an unequivocal desire to limit federal district court litigation,
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`Congress created two virtually identical systems that would streamline administrative and
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`judicial reconsideration of the validity of issued patents. The PTAB is vested with the authority
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`to adjudicate all issues encompassed within a post-grant or inter partes review, and within one
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`year, concludes that review with a written determination. Any dissatisfied party in such a review
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`can then seek Article III appellate review of the PTAB’s action in the Federal Circuit.
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`PROCEDURAL HISTORY
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`a.
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`The instant civil action generally concerns United States Patent No. 6,553,350 (“the ’350
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`patent”), entitled “Method and Apparatus for Pricing Products in Multi-Level Product and
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`Organizational Groups,” which the USPTO issued on April 22, 2003, and to which Versata”
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`claims to be the assignee. Complaint (Dkt. No. 1), ¶¶1, 8-9. In 2007, Versata sued another
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`entity, SAP America, Inc. (“SAP”), in the United States District Court for the Eastern District of
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`Texas, alleging that SAP had, inter alia, infringed the ’350 patent. Id. ¶13. Although the
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`specifics of that litigation are generally irrelevant to the issues presented in this memorandum,
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`those district court proceedings resulted in a jury verdict in Versata’s favor, which the Federal
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`Circuit recently affirmed. See Versata Software, Inc. v. SAP America, Inc., 2013 WL 1810957
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`(Fed. Cir. May 1, 2013).
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`b.
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`But during the pendency of the aforementioned Federal Circuit appeal, on September 16,
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`2012, SAP filed a petition with the PTAB seeking the institution of post-grant review
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`proceedings with respect to claims 17 and 26-29 of the ’350 patent, because – it argued – those
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`claims constituted a “covered business method” pursuant to § 18 of the AIA. Complaint, ¶20;
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`DEX A. Through the petition, SAP sought post-grant review on whether those claims
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`constituted patentable subject-matter pursuant to 35 U.S.C. § 101, were sufficiently definite
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`pursuant to § 112, and were anticipated pursuant to § 102. DEX A.
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`On November 30, 2012, Versata filed a response to the petition. DEX B. In that
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`response, Versata included a lengthy statement (over seventy pages in length) explaining “why
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`no post-grant review should be instituted under 35 U.S.C. § 324.” Id. at ii. More specifically,
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`Versata presented the very same arguments that are the gravamen of its instant civil action;
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`namely, inter alia, (1) the ’350 patent was not a “covered business method” patent subject to
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`post-grant review pursuant to AIA § 18, and (2) review of whether the ’350 patent recited
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`patentable subject-matter pursuant to 35 U.S.C. § 101 was unavailable in § 18 post-grant
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`proceedings. Id. at 10-45; 68-80.
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`Although the title page to this paper indicates that it was filed under seal, the PTAB
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`ultimately denied Versata’s motion to seal its response to the petition. DEX C.
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`After considering both of the parties’ submissions, on January 9, 2013, the PTAB issued
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`a forty-four page opinion granting SAP’s petition in part. DEX D. In particular, the PTAB
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`rejected Versata’s argument that it could not institute post-grant review proceedings – and thus
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`review the validity of the asserted claims – because the ’350 patent was not a “covered business
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`method” patent, and that § 101 is not a ground for review in an AIA § 18 proceeding. Id. at 20-
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`28; 32-36. And as a result, the PTAB entered the following order:
`5
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`In consideration of the foregoing, it is hereby :
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`ORDERED that the Petition is granted as to claims 17 and 26-29 of the ’350 patent.
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`FURTHER ORDERED that pursuant to 35 U.S.C. § 324(a), a covered business method
`review of the ’350 patent is hereby instituted commencing on the entry date of this Order,
`and pursuant to 35 U.S.C. § 324(d) and 37 C.F.R. § 42.4, notice is hereby given of the
`institution of a trial.
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`Id. at 43.
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`After the PTAB entered its order instituting post-grant review, proceedings have
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`continued in earnest. In particular, both Versata and SAP have engaged in discovery; indeed, the
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`PTAB was required to intervene and adjudicate a dispute about the conduct of the deposition of
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`Versata’s expert witness. DEX E. And on February 21, 2013, the PTAB ordered that – in the
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`interest of economy – part of the post-grant proceedings (including the submission of briefs on
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`the § 101 issue) be expedited. DEX F. Finally, on April 17, 2013, the PTAB conducted a two-
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`hour-long oral hearing on the question of whether the cited claims of the ’350 patent recited
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`patentable subject matter pursuant to § 101. DEX G. The PTAB reserved decision at the
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`conclusion of the hearing, and its decision could be issued at any time.
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`The PTAB rejected SAP’s petition to the extent that it sought review of the ’350 patent
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`pursuant to 35 U.S.C. § 112. DEX D, at 41-42.
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`c.
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`As those proceedings continued, however, on March 13, 2013, Versata filed the instant
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`action, which – more than two months after entry of the PTAB’s order – asks this Court to
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`conduct interlocutory review of the PTAB’s decision to institute post-grant review proceedings.
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`Complaint (Dkt. No. 1). As Versata itself explains the gravamen of its civil action:
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`The ’350 patent is not a covered business method patent. The claims are not related to a
`financial product or service, nor the practice, administration or management thereof. The
`institution of that proceeding is thus contrary to law and exceeds Defendant’s statutory
`authority. Additionally, Defendant has no authority to entertain challenges to the claims
`of the ’350 patent under 35 U.S.C. § 101 and its institution of a proceeding on that basis
`is also contrary to law and exceeds Defendant’s statutory authority.
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`Id. ¶1 (emphasis added). Versata maintains that this Court can exercise this interlocutory
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`jurisdiction, and engage in judicial review of the PTAB’s order instituting proceedings, pursuant
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`to the Administrative Procedure Act (“APA”). Id. ¶¶40-57.
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`ARGUMENT
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`I.
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`GENERAL STANDARDS
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`A.
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`FEDERAL RULE 12(b)(1)
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`Federal Rule 12(b)(1) serves as the appropriate vehicle to challenge the court’s subject
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`matter jurisdiction in a particular matter. See, e.g., Coulter v. United States, 256 F. Supp. 2d
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`484, 486 n.3 (E.D. Va. 2003), aff’d, 90 Fed. Appx. 60 (4 Cir. 2004). The plaintiff bears the
`th
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`burden of establishing the court’s subject matter jurisdiction, and although this Court may utilize
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`the allegations contained within the four corners of the plaintiff’s complaint as evidence in
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`determining whether it possesses jurisdiction over a dispute, it may also consider other evidence
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`outside the pleadings if necessary. See Richmond, Fredericksburg, & Potomac R.R. Corp. v.
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`United States, 945 F.2d 765, 768 (4 Cir. 1991); Coulter, 256 F. Supp. 2d at 486 n.3.
`th
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`B.
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`FEDERAL RULE 12(b)(6)
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`To the contrary, a motion pursuant to Rule 12(b)(6) serves to test the legal sufficiency of
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`the plaintiff’s complaint in relation to the factual averments he or she puts forward. Although a
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`court must accept as true all well-pled allegations in adjudicating such a motion, it need not
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`credit allegations that are merely conclusory. See Ashcroft v. Iqbal, 556 U.S. 662, 675 (2009).
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`In Iqbal, the Supreme Court continued its redevelopment of the proper Rule 12(b)(6)
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`standard that it began two years earlier. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544
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`(2007) (holding that court adjudicating Rule 12(b)(6) motion must determine whether complaint
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`alleges facts that state a “plausible” claim for relief). In this respect, the Iqbal court rejected the
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`notion that Twombly was limited to the antitrust context, see Iqbal, 556 U.S. at 684, and held as
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`follows with respect to the proper standard of review:
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`To survive a motion to dismiss, a complaint must contain sufficient factual matter,
`accepted as true, to “state a claim to relief that is plausible on its face.” A claim has
`factual plausibility when the plaintiff pleads factual content that allow the court to draw
`the reasonable inference that the defendant is liable for the misconduct alleged.
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`Id. at 678 (quoting Twombly, 550 U.S. at 570). Accordingly, although (as before) a court is
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`required to adjudge the factual averments contained within a complaint against the substantive
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`law governing the claim, now “where the well-pleaded facts do not permit the court to infer more
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`than the mere possibility of misconduct,” the complaint fails. Id. at 679 (emphasis added).
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`II.
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`ANALYSIS & APPLICATION
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`A.
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`CONGRESS PRECLUDED JUDICIAL REVIEW OVER ORDERS “INSTITUTING”
`POST-GRANT REVIEW PROCEEDINGS
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`To be sure, as the Supreme Court has noted, the “APA confers a general cause of action”
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`on aggrieved persons to obtain judicial review of agency action. See Block v. Community Nut.
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`13
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`Page 2002-013
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`Case 1:13-cv-00328-GBL-IDD Document 18 Filed 05/16/13 Page 14 of 28 PageID# 388
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`Inst., 467 U.S. 340, 345 (1984). But given that “Congress is absolutely free to limit the extent to
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`which it consents to suit against the United States,” McDougal-Saddler v. Herman, 184 F.3d 207,
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`211-12 (3rd Cir. 1999), the APA also contains a series of express “limitations on the grant of
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`judicial review.” Pregis Corp. v. Kappos, 700 F.3d 1348, 1356 (Fed. Cir. 2012). One such
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`limitation is an explicit statutory provision in the APA that prevents its use when other “statutes
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`preclude judicial review.” 5 U.S.C. § 701(a)(1); see Block. 467 U.S. at 345 (holding that §
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`701(a)(1) “withdraws [the APA] cause of action to the extent the relevant statute precludes
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`judicial review”).
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`The Supreme Court framed this Court’s § 701(a)(1) inquiry as follows:
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`Whether and to what extent a particular statute precludes judicial review is determined
`not only from its express language, but also from the structure of the statutory scheme, its
`objectives, its legislative history, and the nature of the administrative action involved.
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`Block, 467 U.S. at 345-46 (citations omitted). And as the Block Court made clear, one analyzes
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`the question of whether Congress intended to foreclose judicial review of a given agency action
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`through “inferences of intent drawn from the statutory scheme as a whole.” Id. at 349 (emphasis
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`added). Where such “congressional intent is ‘fairly discernible’ in the detail of the legislative
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`scheme, APA review is not available.” Id. at 351.
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`1.
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`And here, one need go no further than the actual text of the pertinent statutory language,
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`because Congress has unequivocally precluded judicial review of the PTAB’s decision to
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`“institute” post-grant review proceedings:
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`The determination by the Director whether to institute a post-grant review under this
`section shall be final and nonappealable.
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`Case 1:13-cv-00328-GBL-IDD Document 18 Filed 05/16/13 Page 15 of 28 PageID# 389
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`35 U.S.C. § 324(e). Initially, Versata rather clearly concedes that it is attempting to secure
`6
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`judicial review of the PTAB’s decision “to institute a post-grant review” for purposes of §
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`324(e). In the first paragraph of its complaint, it states – on two separate occasions – that the
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`PTAB’s “institution of that proceeding” is both the gravamen of its instant claim, and the action
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`taken by the agency that was “contrary to law and exceeds the [agency’s] authority.” Complaint,
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`¶1 (emphasis added). Moreover, and perhaps more importantly, Versata unequivocally provides
`7
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`the decision at issue here falls within the ambit of § 324(e). Id. ¶¶5; 33 (“The PTAB’s decision
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`to initiate the review of the ’350 patent is final and nonappealable.”).
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`Versata’s position here must therefore be that seeking APA review in this Court does not
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`constitute an “appeal” for purposes of § 324(e). But decades of jurisprudential authority give the
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`lie to that position, as it is by now well-established that APA review – albeit in a federal district
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`court – serves as an “appeal” of the agency action in question. As one court has cogently noted:
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` Appellants misunderstand the role the district court plays when it reviews agency action.
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`The district court sits as an appellate tribunal, not as a court authorized to determine in a
`trial-type proceeding whether the Secretary’s study was factually flawed. . . .
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`Marshall County Health Care Auth. v. Shalala, 988 F.2d 1221, 1226 (D.C. Cir. 1993); see also
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`Rempfer v. Sharfstein, 583 F.3d 860, 865 (D.C. Cir. 2009) (same). Many federal statutes
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`As stated above, Congress provided that with certain exceptions not relevant here, see
`6
`PUB. L. 112-29, § 18(a)(1)(A), 125 Stat. at 329, “covered business method” patent proceedings
`“shall employ the standards and procedures of[] a post-grant review under chapter 32 of title 35
`[35 U.S.C. §§ 321-29].” Id. § 18(a)(1), 125 Stat. at 329.
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`Indeed, before the PTAB, Versata argued that both of the substantive challenges at issue
`7
`here – i.e., whether the ’350 patent is directed to a “covered business method,” and whether AIA
`§ 18 post-grant review can encompass challenges under 35 U.S.C. § 101 – were reasons why the
`PTAB should not “institute . . . a post-grant review proceeding.” DEX B.
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`Case 1:13-cv-00328-GBL-IDD Document 18 Filed 05/16/13 Page 16 of 28 PageID# 390
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`themselves characterize APA actions in a federal district court as “appeals” of agency decisions.
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`See, e.g., 25 U.S.C. § 2713(c) (providing that Commission’s approval of fines “shall be
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`appealable to the appropriate Federal district court pursuant to chapter 7 of title 5”); 20 U.S.C. §
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`107d-2(a) (providing that decision of arbitration panel is “subject to appeal and review as final
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`agency action for purposes of chapter 7 of such Title 5”). And significantly, the Patent Act’s
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`authorization of review (exclusively in this Court) of USPTO patent term adjustment
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`determinations, which are governed by “[c]hapter 7 of title 5,” is codified in a section entitled
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`“[a]ppeal of patent term adjustment determination.” 35 U.S.C. § 154(b)(4)(A) (emphasis
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`added).
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`Nor, to presume Versata’s retort, would this preclude any and all judicial review of the
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`asserted substantive questions here – i.e., whether the ’350 patent is a “covered business method”
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`for purposes of, and whether § 101 review is available in, AIA § 18 proceedings. Far to the
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`contrary, as the plain language of the statutory text provides, judicial review is only unavailable
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`from the decision to “institute” post-grant review proceedings. See 35 U.S.C. § 324(e). The
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`post-grant review scheme (as with its inter partes sibling) retains the right of judicial review – in
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`the Federal Circuit – for any party “dissatisfied” by the PTAB’s ultimate “written determination”
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`on the post-grant review. See id. § 329. Nothing in the statutory scheme limits the reasons that a
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`party might be so “dissatisfied,” and this could include the fact that the PTAB lacked the
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`authority to issue a written determination rejecting Versata’s patent claims because, in Versata’s
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`view, the ’350 patent is not a “covered business method” patent for purposes of AIA § 18. And
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`thus, nothing in the statutory scheme precludes Versata from presenting these issues to the
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`Federal Circuit from a potential adverse written determination on the ’350 patent by the PTAB.
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`Case 1:13-cv-00328-GBL-IDD Document 18 Filed 05/16/13 Page 17 of 28 PageID# 391
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`2.
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`Moreover, the other factors relevant to an analysis under § 701(a)(1) – “the structure of
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`the statutory scheme, its objectives, its legislative his