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Westlake Services v. Credit Acceptance: PTAB’s Precedential Decision to Apply Estoppel on a Claim-by-Claim Basis

The Patent Trial and Appeal Board recently designated as precedential its decision in Westlake Services, LLC v. Credit Acceptance Corp., CBM2014-00176, Paper 28 (PTAB May 14, 2015)  addressing the scope of estoppel under 35 U.S.C. § 325(e). As a result, the Westlake holding that § 325(e) estoppel does not apply to patent claims that were not the subject of a final written decision on patentability under 35 U.S.C. § 328(a) is now binding on the PTAB in other post-grant proceedings.

In Westlake, the Petitioner initially petitioned for Covered Business Method (“CBM”) review of claims 1-42 of U.S. Patent No. 6,950,807. Westlake Services, LLC v. Credit Acceptance Corp., CBM2014-00008, Paper 1 (PTAB Oct. 11, 2013). The PTAB instituted CBM trial as to claims 1-9, 13, and 34-42, but denied the petition as to claims 10-12 and 14-33.

After the PTAB’s institution decision, the Supreme Court issued Alice Corp. Pty. LTD v. CLS Bank Int’l, 134 S. Ct 2347 (2014), addressing the standard and test for determining patent eligibility under 35 USC § 101. In light of Alice, Petitioner filed a second petition for CBM review of claims 1-42 of the ‘807 Patent. CBM2014-00176, Paper 1 (Aug. 15, 2014). Using its discretion under § 325(d) and carefully weighing the nature and timing of the recent change in law with the impact that serial petitions can have on Patent Owners, the PTAB decided to institute a second CBM trial as to claims 10-12 and 14-33, the claims not at issue in the first instituted CBM.

When the PTAB subsequently issued a § 328(a) final written decision in the first CBM finding claims 1-9, 13, and 34-42 unpatentable under § 101, the Patent Owner argued that Westlake was estopped from continuing its second CBM under § 325(e)(1), which provides that:

The petitioner in a post-grant review of a claim . . . that results in a final written decision under section 328(a) . . .  may not request or maintain a proceeding before the Office with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that post-grant review.

The Patent Owner argued that the language “any patent claim challenged by petitioner” should mean that a final written decision, and hence estoppel, applies to all claims challenged by a petitioner in a petition—even claims for which the PTAB did not ultimately institute a trial.

The PTAB disagreed, holding that estoppel under § 325(e) is applied on a claim-by-claim basis and does not apply to claims that were not instituted or addressed in a final written decision under § 328(a).  The PTAB thus found that estoppel did not apply here because its final written decision in the first CBM did not concern the claims at issue in the second CBM.

Per precedential designation of the Westlake decision, the PTAB must follow this determination of the proper scope of estoppel under § 325(e) moving forward.  Accordingly, Petitioners and Patent Owners are now on notice that the PTAB will not extend the reaches of § 325(e) to claims that were not the subject of a final written decision, regardless of whether those claims were the subject of a petition.

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William A. Meunier is a Mintz attorney who has mastered inter partes review (IPR) proceedings and high-stakes patent litigation. He has helped patent owners achieve success in over 90% of IPRs, compared to the industry average of only 35%. Bill has decades of experience litigating patent cases.
Matthew S. Galica focuses his practice on patent litigation, strategic IP counseling, and patent valuation. He represents high-tech companies, including those with standard-essential technology, before the International Trade Commission, Federal district courts, and Patent Trial and Appeal Board.