Dennis Crouch's Patently-O: Versata II: District Court has No Jurisdiction to Hear Challenge to CBM Review Institution Decision

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Versata II: District Court has No Jurisdiction to Hear Challenge to CBM Review Institution Decision Posted: 13 Jul 2015 10:21 AM PDT Versata v. Lee (Versata II) (Fed. Cir. 2015) In this follow-up to Versata v. SAP (Versata I), the Federal Circuit holds that a district court has no jurisdiction over a direct challenge the PTO’s decision to institute a covered business method (CBM) review.  This particular appeal stems from a laterally-filed E.D. Virginia lawsuit filed by Versata against the USPTO immediately after the USPTO’s decision to institute the CBM review.  In the case, the patentee asked the court to set aside the PTAB’s decision to institute.  The district court dismissed that case for lack of subject matter jurisdiction and failure to state a claim based upon the AIA’s express statement that the decision on whether to institute is not appealable and because of the detailed scheme for review provided by the statute. In affirming the district court’s judgment against the case, the Federal Circuit failed to address a core statutory question – in particular, the statute indicates that the decision is “nonappealable,” but says nothing expressly about the collateral civil action filed by the patentee here. Offering a tone of assurance, the Federal Circuit suggests that the lack of appellate review of the interlocutory institution decision is largely remedied by the broad review of a PTAB decision on the merits of a review proceeding. [I]n Versata I we highlighted the fundamental importance of judicial review of agency action, both as a matter of historic case law as well as of statutory law. The importance of judicial review was recognized by the district court when it noted that an adequate remedy lay in appeal to the Federal Circuit, an appeal expressly provided in the AIA at the final written decision stage. We have thus acknowledged the balance Congress struck between its desire for a prompt and efficient review process at the USPTO, on the one hand, and, on the other, the necessary recognition of the traditional role of judicial review of agency action. In Versata I we found that balance carefully crafted, and consistent with the roles the Constitution assigns to the Judicial and Executive Branches. This appeal was handled by the same panel that heard Versata I, and again Judge Plager wrote the majority opinion that was joined by Judge Newman. Judge Huges concurred in the results without opinion — apparently disagreeing with the majority’s statements regarding the importance of judicial review.

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