First-Ever Post-Grant Review Decisions Invalidate Patents

Written by: Ron Vogel

On June 13, 2016, the Patent Trial and Appeal Board (PTAB) invalidated two livestock valuation patents for being directed to patent ineligible subject matter in the first decisions to issue under the America Invents Act (AIA) post-grant procedure. The petitions were also the first AIA post-grant reviews to be instituted two earlier filed petitions were terminated due to settlement before the PTAB decided whether to institute post-grant review.

Petitioner American Simmental Association (ASA), a cattle breeding industry group, filed two petitions challenging U.S. Patent Numbers 8,660,888 and 8,725,557 after they were asserted by patent owner Leachman Cattle of Colorado LLC against ASA. The PTAB found that all claims of the '888 and '557 patents were invalid under 35 U.S.C. 101 because (i) they were directed to the patent-ineligible abstract idea of "determining an animal's relative economic value based on its genetic and physical traits," and (ii) all computer recitations in the claims were directed "to generic computer hardware used in a conventional manner, which are insufficient to impart patentability under Alice."^FN1

The Board agreed with ASA that livestock valuation was nothing more than a fundamental economic practice, and likened the concept to the patent-ineligible abstract ideas of "hedging" found in Bilski v. Kappos and "intermediated settlement" found in Alice. It differentiated the patent-eligible computer-implemented claims discussed in the Federal Circuit's 2014 decision in DDR Holdings, LLC v. Hotels.com, which solved a business problem involving computer networks, noting that the problem of determining an animal's relative economic value based on its genetic and physical traits did not require a computer-related solution. After invalidating the two patents, the Board denied a motion to amend the claims because Leachman failed to show that the substitute claims were patentable.

The cases are American Simmental Association v. Leachman Cattle of Colorado LLC, Cases PGR2015-0003 and PGR2015-0005, before the Patent Trial and Appeal Board.
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^FN1Under the two-part test for patent eligibility announced by the Supreme Court in Alice Corp. v. CLS Bank International, a patent claim is ineligible under Section 101 if (i) it is directed to an abstract idea, and (ii) the elements of the claim do not amount to significantly more than the abstract idea itself. The PTAB additionally found that certain claims of the '557 patent were obvious in view of a prior art patent application disclosing methods implemented on a computer for determining a relative economic value of animals.