Credit Acceptance Corp. v. Westlake Servs.

859 F.3d 1044

CREDIT ACCEPTANCE CORP., Appellant

v.WESTLAKE SERVICES, Appellee

2016-2001

United States Court of Appeals, Federal Circuit.

Decided: June 9, 2017

Douglas R. Nemec , Skadden, Arps, Slate, Meagher & Flom LLP, New York, NY, argued for appellant. Also represented by Paramjeet Sammi, Andrew Gish ; James Y. Pak , Palo Alto, CA.

John David Van Loben Sels , Fish & Tsang LLP, Redwood City, CA, argued for appellee. Also represented by Jennifer Shih .

Sarah E. Craven , Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA, argued for intervenor Joseph Matal. Also represented by Nathan K. Kelley, Frances Lynch, Scott Weidenfeller .

Before Dyk, Mayer, and Reyna, Circuit Judges.

Opinion dissenting-in-part filed by Circuit Judge Mayer.

Dyk, Circuit Judge.

Credit Acceptance Corp. ("CAC") appeals the final written decision of the Patent Trial and Appeal Board ("Board") in a Covered Business Method ("CBM") review proceeding. The Board determined that claims 10–12 and 14–33 of CAC's U.S. Patent No. 6,950,807 B2 ("the '807 patent") are directed to patent-ineligible subject matter under 35 U.S.C. § 101. CAC appeals the Board's determination that the petitioner, Westlake Services, LLC ("Westlake"), was not estopped from maintaining CBM review of those claims under 35 U.S.C. § 325(e)(1). CAC also appeals the Board's § 101 determination. Because we agree with the Board that Westlake was not estopped from maintaining CBM review of those claims and that the challenged claims are unpatentable under § 101, we affirm.

BACKGROUND

CAC is the assignee of the '807 patent, which includes both system and method claims directed to "provid[ing] financing for allowing a customer to purchase a product selected from an inventory of products maintained by a dealer." '807 patent, abstract. In one embodiment, the products are vehicles for sale at a car dealership. The invention involves, inter alia , "maintaining a database of the dealer's inventory," gathering financing information from the customer, and "presenting a financing package to the dealer for each individual product in the dealer's inventory." Id.

Certain claims, such as the claims at issue here, involve the application of these steps using elements such as a "database," a "user terminal," and a "server." For example, representative claim 25 provides,

25. A system for generating financing packages provided by a financing party, for a customer purchase of a product from a dealer's inventory of a plurality of products, the system comprising:

a database for storing information related to products in the dealer's inventory including a dealer cost associated with each product;

a user terminal, communicatively coupled to said database, for receiving financial information about the customer in relation to said products; and

a server having access to the data in the database adapted to communicate with the user terminal over a network, whereby the financial information about the customer may be transmitted to the server,

the server generating a financing package for each product in the dealer's inventory and transmit financing terms for each financing package to the user terminal via the network for presentation to the user for immediate purchase, wherein the server is further configured such that the financing terms of each financing package include an advance amount to be paid to the dealer by said financing party if the customer purchases the product associated with the financing package.

'807 patent, col. 15 ll. 17–38.

Relevant to this appeal are two CBM review proceedings involving the '807 patent and the same petitioner (Westlake). In the first proceeding, Westlake petitioned for CBM review of all claims (1–42) of the '807 patent, asserting that the claims are ineligible for patenting under 35 U.S.C. § 101. On March 31, 2014, in a decision that pre-dated the Supreme Court's decision in Alice Corp. v. CLS Bank International , ––– U.S. ––––, 134 S.Ct. 2347, 189 L.Ed.2d 296 (2014), the Board instituted review based on the § 101 grounds but with respect to fewer than all of the challenged claims. The Board instituted review of claims 1–9, 13, and 34–42, but it did not institute review of claims 10–12 and 14–33 (the claims now at issue). The Board was unpersuaded that claims 10–12 and 14–33 were more likely than not ineligible under this court's then-prevailing decision in Ultramercial, Inc. v. Hulu, LLC , 722 F.3d 1335 (Fed. Cir. 2013) (" Ultramercial II ").

Nearly three months later, the Supreme Court issued Alice and vacated the Ultramercial II decision relied upon by the Board. WildTangent, Inc. v. Ultramercial, LLC , ––– U.S. ––––, 134 S.Ct. 2870, 189 L.Ed.2d 828 (2014). On August 20, 2014, in view of the developments in § 101 jurisprudence, Westlake filed a second petition for CBM review, again challenging claims 10–12 and 14–33 as patent-ineligible under § 101.¹ On November 14, 2014, we issued a revised Ultramercial decision, Ultramercial, Inc. v. Hulu, LLC , 772 F.3d 709 (Fed. Cir. 2014) (" Ultramercial III "), holding the claims in that case patent-ineligible under § 101. Noting recent authority on § 101 from the Supreme Court and Federal Circuit (including the new Ultramercial III decision), the Board instituted review of claims 10–12 and 14–33, concluding that it was "more likely than not that [the challenged claims] are directed to abstract ideas with no inventive concept." J.A. 938.

In its institution decision, the Board rejected CAC's argument that the existence of the first CBM proceeding estopped Westlake from challenging claims 10–12 and 14–33 under 35 U.S.C. § 325(e)(1). The Board's determination was based on the fact that the first proceeding had not yet resulted in a final written decision, and therefore, CAC's estoppel argument was not ripe.

The first and second instituted CBM proceedings continued in parallel until March 24, 2015, when the Board issued a final written decision in the first proceeding concluding that claims 1–9, 13, and 34–42 of the '807 patent are unpatentable under 35 U.S.C. § 101.² On April 9, 2015, CAC moved to terminate the second proceeding, again urging that Westlake was estopped from challenging claims 10–12 and 14–33 under § 325(e)(1) now that the Board had issued a final written decision in the first proceeding. The Board denied CAC's motion, explaining that estoppel under § 325(e)(1) applies on a claim-by-claim basis and that the final written decision in the first proceeding had only ruled upon claims 1–9, 13, and 34–42. Because that final written decision did not rule upon non-instituted claims 10–12 and 14–33, Westlake was free (for purposes of estoppel) to maintain its challenge to those claims in the second proceeding.

On January 25, 2016, the Board issued a final written decision in the second CBM proceeding concluding that claims 10–12 and 14–33 of the '807 patent are unpatentable under 35 U.S.C. § 101.

CAC appeals that decision. It asserts that Westlake should have been estopped from maintaining its challenge to claims 10–12 and 14–33 and argues that the Board's § 101 decision was in error. Westlake opposes, and the United States Patent and Trademark Office ("PTO") has intervened to support the Board's decision on all issues. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(4)(A). "We review the Board's factual findings for substantial evidence and its legal conclusions de novo." Synopsys, Inc. v. Mentor Graphics Corp. , 814 F.3d 1309, 1314 (Fed. Cir. 2016).

DISCUSSION

I

CAC first argues that estoppel applies here to bar Westlake from challenging claims 10–12 and 14–33 of the '807 patent in light of the prior CBM proceeding which was instituted on different claims. CBM review proceedings are governed by section 18 of the Leahy-Smith America Invents Act ("AIA"), Pub. L. No. 112-29, § 18, 125 Stat. 284, 329–31 (2011), which adopts the "chapter 32 provisions of title 35 of the U.S. Code, governing post-grant review (‘PGR’)." SightSound Techs., LLC v. Apple Inc. , 809 F.3d 1307, 1312 (Fed. Cir. 2015).³ Under those PGR procedures, a CBM review proceeds in stages: first, the Board decides whether to institute a review, and second, if review is instituted, the proceeding enters a trial stage and the Board later issues a "final written decision" under 35 U.S.C. § 328(a). Once the Board issues a final written decision, the estoppel statute applies. The PGR estoppel statute relevant here, which also governs CBM review proceedings under AIA § 18, provides,

PROCEEDINGS BEFORE THE OFFICE .—The petitioner in a post-grant review of a claim in a patent under this chapter that results in a final written decision under section 328(a), or the real party in interest or privy of the petitioner, 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.

35 U.S.C. § 325(e)(1) (emphasis added).

A

As a threshold matter, both Westlake and the PTO argue that a determination by the Board on 35 U.S.C. § 325(e)(1) is nonappealable, and therefore, this court has no jurisdiction to review the Board's estoppel determination. We disagree.

The PTO relies on 35 U.S.C. § 324(e), which provides, "[t]he determination by the Director whether to institute a post-grant review under this section shall be final and nonappealable." The PTO asserts that the Board's estoppel decision is akin to a decision to institute review, which is nonappealable. In Cuozzo Speed Technologies, LLC v. Lee , ––– U.S. ––––, 136 S.Ct. 2131, 195 L.Ed.2d 423 (2016), the Supreme Court considered the parallel "no appeal" statute for inter partes review ("IPR") proceedings, 35 U.S.C. § 314(d), and held that Board decisions are nonappealable "where the grounds for attacking the decision to institute inter partes review consist of questions that are closely tied to the application and interpretation of statutes related to the Patent Office's decision to...