Westlake Services v. Credit Acceptance (CBM2014-00176): Estoppel Applies Claim by Claim

The AIA’s estoppel provisions stop a petitioner from returning to the Office with grounds it raised or reasonably could have raised in a review that ended in a final written decision. Westlake Services, LLC v. Credit Acceptance Corp., CBM2014-00176 (Paper 28, May 14, 2015), decided how far that estoppel reaches when the earlier review covered only some of the challenged claims. It is listed here with the Board’s precedential decisions and representative decisions on institution. Designations can change, so check the USPTO’s current list of precedential and informative decisions.

For the broader picture, see estoppel arising from PTAB trials.

Background

In an earlier covered business method (CBM) review, CBM2014-00008, Westlake challenged claims 1–42 of Credit Acceptance’s U.S. Patent No. 6,950,807. The Board instituted trial only on claims 1–9, 13 and 34–42. While that trial was pending, the Supreme Court decided Alice Corp. v. CLS Bank International (2014) and vacated a Federal Circuit decision the institution decision had relied on. The Board refused Westlake a second rehearing request at that late stage but noted that it could file a new petition.

Westlake did, filing this CBM review against the remaining claims. The Board instituted on claims 10–12 and 14–33, over the patent owner’s request for denial under § 325(d). The Board then issued its final written decision in the first case, holding the instituted claims unpatentable under 35 U.S.C. § 101. The patent owner moved to terminate the second review, arguing that § 325(e)(1) now barred Westlake from maintaining it.

What the Board decided

The Board denied the motion.

Section 325(e)(1) bars a petitioner whose post-grant review “of a claim” results in a final written decision under § 328(a) from requesting or maintaining a proceeding “with respect to that claim” on grounds raised or reasonably could have been raised. CBM reviews follow those post-grant review provisions, and the rule, 37 C.F.R. § 42.73(d)(1), is to the same effect.

The patent owner argued that because § 328(a) requires a final written decision on “any patent claim challenged by the petitioner,” the decision implicitly covered non-instituted claims too. The Board disagreed. Estoppel attaches to a claim that results in a final written decision, and the first decision ruled only on claims 1–9, 13 and 34–42. Nothing showed that it incorporated the institution decision’s treatment of other claims. The Board also pointed to the Office’s rulemaking comments stating that estoppel applies claim by claim and that a decision not to institute is not a final written decision.

The patent owner’s concerns about serial petitions and harassment, the Board explained, belong under § 325(d), not § 325(e). It had already considered those concerns at institution, weighing the change in law from Alice, the vacatur of key precedent and the timing of the two cases, and concluded that denial was inappropriate in those unusual circumstances.

Why it matters

Westlake establishes two points that remain useful: estoppel under § 315(e) and § 325(e) is analyzed claim by claim, and arguments about repetitive petitions are addressed through the Board’s institution discretion rather than estoppel. The decision also shows the Board treating a major change in law as a reason to allow a second challenge.

Later developments

Much of the factual setting has disappeared. SAS Institute Inc. v. Iancu (2018) held that the Board must decide all challenged claims if it institutes, so partial institution, and with it the gap between challenged and decided claims, no longer arises in the same way. The transitional CBM program also stopped accepting new petitions in September 2020. Federal Circuit law on the scope of IPR estoppel for non-instituted grounds has also changed since Shaw Industries Group, Inc. v. Automated Creel Systems, Inc. (Fed. Cir. 2016); see the note on Shaw. For CBM background, see the CBM review guide. Discretionary denial of repeat petitions has changed repeatedly, so check current USPTO guidance.

Key takeaways

• Estoppel under § 325(e)(1) applies claim by claim, only to claims that resulted in a final written decision.
• Claims never instituted in the earlier review were not estopped.
• Concerns about serial petitions are addressed under § 325(d) discretion, not estoppel.
• SAS (2018) and the 2020 end of new CBM petitions changed the setting; check current law.