June 9, 2017

Estoppel in CBMR is Both Reviewable and Determined on a Claim by Claim Basis

By Bryan K. Wheelock, Principal

In Credit Acceptance Corp. v. Westlake Services, [2016-2001](June 9, 2017), the Federal Circuit affirmed the PTAB decision that Westlake was not estopped to bring a Covered Business Method Review challenge to U.S. Patent No. 6,950,807, and that the challenged claims of this patent were invalid under 35 U.S.C. § 101.

On the estoppel issue, Westlake petitioned for CBMR review of all of the claims of the ‘807 patent, but the Board instituted only as to some of the claims.  Westlake filed a second CBMR, and Credit Acceptance argued that Westlake was estopped to petition for a second review.  However, since the first CBMR had not yet resulted in a Final Written Decision, the Board found the estoppel argument premature.  After the Final Written Decision in the first CBMR, Credit Acceptance renewed its effort to terminate the second proceeding on estoppel grounds, but the Board decided that estoppel is applied on a claim by claim business, and thus the first proceeding did not impact the second proceeding.

At the outset, the Federal Circuit rejected Westlake’s and the USPTO’s position that the decision on estoppel was akin to a institution decision that is not reviewable.  After finding the estoppel provision was reviewable, the Federal Circuit went on to agree with the Board, that estoppel is determined in on a claim by claim basis.

As to the merits of the CBMR, the Federal Circuit noted that the Board determined that the claims are directed to the abstract idea of “processing an application for financing a purchase,” and agreed.  The Federal Circuit said that each of the claims is directed to the abstract idea of processing an application for financing a purchase.  The Court saw no meaningful distinction between this type of financial industry practice and “the concept of intermediated settlement” held to be abstract in Alice, or the “basic concept of hedging” held to be abstract in Bilski.