Emerson Electric Co. v. SIPCO, LLC

In the America Invents Act, Congress authorized the Patent Trial and Appeal Board to review whether certain patents, called Covered Business Method (CBM) patents, were improperly issued. To institute CBM review, the Director of the Patent and Trademark Office must first determine that the challenged patent qualifies as a CBM, using a threshold statutory test that approximates the ultimate merits. Congress specified that “[t]he determination by the Director whether to institute * * * review under this section shall be final and nonappealable.” 35 U.S.C. 324(e). Below, the Board (on behalf of the Director) instituted review, and the Board determined, after a full trial, that the challenged claims were unpatentable under both 35 U.S.C. 101, for claiming an abstract idea, and under 35 U.S.C. 103, as obvious over the prior art. Notwithstanding the statutory bar on reviewing the institution decision, on appeal, the Federal Circuit ignored the Board’s final merits rulings and instead reviewed the threshold determination that the challenged patent qualified as a CBM. The court of appeals remanded to the Board to articulate more clearly how the threshold standard for institution differs from the ultimate merits standard. The question presented is: Whether 35 U.S.C. 324(e) permits review on appeal of the Director’s threshold determination, as part of the decision to institute CBM review, that the challenged patent qualifies as a CBM patent. This question is closely related to that presented in Thryv, Inc. v. Click-to-Call Technologies, LP, No. 18- 916 (argued Dec. 9, 2019), which may warrant holding the Petition pending the Court’s ruling in Thryv. (I)