SAP, the enterprise software behemoth dealt a $345 million penalty in a patent case brought by Versata, has been given a window of opportunity in getting that case overturned, thanks to new rules in the America Invents Act concerning business method patents — used to describe certain processes, which may be years old but then get enforced with what some believe are too-wide interpretations. SAP is the very first company to test out the new rules, which are some of the most significant reforms to the patent industry in years and could potentially help turn around a system that has been much abused in the tech industry by both patent trolls but also legit companies.
Yesterday, however, SAP claimed a victory at the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board over a business method patent around dynamic pricing technology, which Versata claims SAP infringed: the PTAB has now decided that that patent, number 6,553,350 (’350), is unpatentable. This is the very first case to be tried under the new rules — SAP literally filed its appeal the day the Act was approved in September 2012 — and the success of striking down this particular business method patent could set a precedent for other companies opposing other patents based on the business methods.
This, we understand, is just the first step for SAP in turning things around. The USPTO is still considering whether to reexamine the patentability of Versata’s ’350 patent in a separate ex parte reexamination proceeding based on prior art, Arner notes. And then comes the much bigger issue: whether SAP will be able to use these rulings to overturn the damages awarded to Versata. That case, before the Court of Appeals for the Federal Circuit Court, is still pending.
The full decision is embedded below, but the background to this particular case centers around the ’350 patent. The case was first filed in 2007 by Versata, which claimed that software that it had created, and patented, to price items based on purchaser and other parameters, was effectively ripped off by SAP. Versata’s claim was that it had a thriving market for this software; then when much-bigger SAP started to offer the same, business collapsed. From its litigation site:
After several stages of the case, with increasing fees levelled against SAP, the final ruling in May was for SAP to pay $345 million in damages.
That was, however, before this secondary appeal got lodged and seen by the PTAB. Erika Arner, a partner at IP law firm Finnegan, representing SAP, notes that the PTAB had decided that the ideas described in the patent were too abstract and general, and without “enough significant meaningful limitations to transform these abstract ideas into patent-eligible applications.” The PTAB, in fact, ruled all of Versata’s challenged claims unpatentable and therefore cancelled.
Business method patents are obviously not just the terrain of older companies, nor of trolls hoping to cash in on an existing, active company’s fortunes. Amazon, for example, owns a business method patent on the One-Click shopping cart.
The rules, however, will make it easier for companies who are on the receiving end of those suits to formally question whether they are too abstract and therefore unpatentable. There are other efforts being made to also help form more useful patent methodology, such as the combined effort of StackExchange and the USTPO to crowdsource prior art that can be used to determine the validity of patents.
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