American Simmental Association v. Leachman Cattle of Colorado, LLC

Representing the first decision of its kind, the Patent Trial and Appeal Board (PTAB or Board) instituted the first post-grant review (PGR) under the American Invents Act (AIA). American Simmental Association v. Leachman Cattle of Colorado, LLC, Case PGR2015-00003 (PTAB, June 19, 2015) (Kim, APJ.).

Petitioner American Simmental filed a petition seeking post-grant review of the patent owner’s patent directed to evaluation of the relative market value of livestock. The petition challenged the patent on grounds of ineligible subject matter, anticipation and obviousness. After confirming that the challenged patent was eligible for post-grant review, the Board construed a couple of key terms in the independent claims before proceeding to evaluate the substantive challenges to the claims.

In addressing patent subject-matter eligibility, the Board observed that exceptions to patent-eligible subject matter under § 101 include “[l]aws of nature, natural phenomena, and abstract ideas.” Guided by the Supreme Court’s two-step framework described in Mayo and Alice, the Board analyzed the challenged claims to determine whether they were directed to a patent-ineligible abstract idea. According to the petitioner, the claims of the patent were directed to the fundamental concept of “determining an animal’s relative economic value based on its genetic and physical traits.” The patent owner argued that the “online genetic merit scorecard” limitation, and other computerized hardware, took the claimed subject matter outside the abstract idea category and made it concrete.

In its institution decision, the Board agreed with the petitioner that the claims appeared to be directed largely to applications of mathematical formulas and algorithms in the field of animal valuation. The Board also noted that the specification described the “computerized hardware” cited by the patent owner as including “one or more processors,” which could be “any commercially available terminal processor, or plurality of terminal processors.” Because this hardware was used in a customary and conventional manner, it could not impart subject-matter eligibility. The Board therefore concluded that the claims were directed to abstract ideas and did not include “significantly more” that would transform the otherwise patent-ineligible subject idea into patentable subject matter.

Turning to the prior-art based grounds of invalidity, the Board concluded that the petitioner had met its burden in showing that it was more likely than not that all of the claims were unpatentable over the petitioner’s cited prior art references. The Board also exercised its discretion under 37 C.F.R. § 42.208(a) in declining to institute the petitioner’s additional grounds of invalidity.

Practice Note: For eligible patents, i.e., those filed under the AIA’s first-to-file regime with an effective filing date on or after March 16, 2013, PGR proceedings permit petitioners to challenge claims under §§ 101 and 112, grounds that are not available for inter partes review. Thus, at least for the nine-month period after issuance, a petitioner can challenge a patent on grounds similar to those available for covered business method (CBM) reviews, without the requirement that the claims be directed to financial transactions.