In a reminder of how inscrutable the Patent Trial and Appeals Board can be, the board changed its mind about whether to institute a covered business method review of patents owned by Intellectual Ventures after a second request by Motorola Mobility LLC and dismissed the patent owner’s request for an expanded review of the decision by the board.

According to a July 24 decision by Administrative Law Judges Jameson Lee, Phillip Kaufman and Jo-Anne Kokoski, the PTAB panel said it denied Intellectual Ventures’ request for a rehearing and dismissed the request to expand the panel.

The panel did not, however, explain why it changed its mind about instituting the CBM after previously declining institution.

Indeed, the panel in August 2014 denied Motorola’s petition for CBM review of claims 1, 8, 16, and 17 of U.S. Patent No. 6,658,464 B2’464 patent, finding that the petitioner did not demonstrate that the patent was a CBM patent.

“Patent Owner argues that the Board abused its discretion by not denying institution based upon 35 U.S.C. § 325(d), in that the Board’s exercise of discretion was not based on sound legal principles because it did not prevent a serial attack against the ’464 patent. Req. Reh’g 1˗4,” the panel said.

Intellectual Ventures’ “argument suggests that the Board should deny any second petition against a patent and that prevention of serial attacks against a patent owner is the sole or primary factor in an analysis under 35 U.S.C. § 325(d). Section 325(d) does not provide for such a prohibition,” the panel said.

The panel noted that such decisions are “discretionary” and that under § 325(d), “the Director ‘may’ take into account whether the same or substantially the same argument was previously presented to the Office.

Intellectual Ventures’ contention that “the board ‘should have exercised its discretion to deny the Petition’ is better described as disagreement with our decision than as demonstrating an abuse of discretion. Disagreement with a decision is not a proper basis for rehearing.”

The panel said it “did not overlook Patent Owner’s contention that Petitioner previously argued in the 84 Petition whether the ’464 patent is a covered business method patent.”

Indeed, the panel said decision “acknowledges that Petitioner previously filed a petition for review of the ’464 patent, and that we denied institution because Petitioner did not demonstrate the ’464 patent is a covered business method patent. Dec. 2, 20.

Furthermore, the panel said “the decision acknowledges that Patent Owner argued that the Petition raises substantially the same argument presented in the 84 Decision to Institute, but concludes that trial should be instituted nonetheless based on the totality of the circumstances. Patent Owner has failed to demonstrate this is an abuse of discretion.”

The panel was silent on how the totality of those circumstances had changed its thinking.

Brenton Babcock, a partner with Knobbe Martens Olson & Bear, who represented Intellectual Ventures, couldn’t be reached immediately for comment.

"Over the past 18 months, it’s become clear that some modifications to these proceedings are required to make them not just more consistent and predictable, but also more fair to all stakeholders," said Melissa Finocchio, vice president and chief litigation counsel at Intellectual Ventures. "The system was created to be, and we believe should serve as, a cheaper, more efficient alternative to litigation for determining the validity of a patent.

"Unfortunately, it is becoming a venue where patent holders face incredible expense and uncertainty to defend their granted patents. If IV, a sophisticated company deeply involved in all parts of the patent marketplace, has a difficult time understanding how and when a patent may properly be reviewed by the PTAB, small businesses and independent inventors must find the process utterly inscrutable."

John Alemanni, a partner with Kilpatrick Townsend & Stockton LLC, who represented Motorola, also couldn’t be reached for comment.

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