SAP wins key ruling in long-running patent battle with Versata

But Versata can appeal and SAP has yet to get a $345 million judgment overturned

SAP has received a ruling that sets a legal landmark in patent law and could also prove favorable to its defense in a long-running intellectual-property dispute with Versata.

In September, SAP filed a petition with the U.S. Patent and Trademark Office's Patent Trial and Appeal board, arguing that five patent claims by Versata were unpatentable. The board agreed with SAP in a decision released Tuesday, saying the claims in question "recite unpatentable abstract ideas" and "do not provide enough significant meaningful limitations to transform these abstract ideas into patent-eligible applications of these abstractions."

SAP's petition was made possible as part of the America Invents Act, legislation that went into effect on Sept. 16. The act allows the USPTO to review the validity of "business method" patents like the one at issue in the SAP-Versata matter.

But Versata still has an option, according to one legal expert.

"Certainly it is a landmark decision but only because it is the first [under the new law]" said Scott Daniels, an attorney with the Washington, D.C., intellectual property law firm Westerman, Hattori, Daniels and Adrian, via email. However the board's decision is subject to appeal at the U.S. Court of Appeals for the Federal Circuit, where it could be reversed, Daniels said.

In addition, the USPTO is "considering whether to reexamine the patentability of Versata's '350 patent in a separate ex parte reexamination proceeding based on prior art," said Erika Arner, an attorney for SAP, in a statement.

Meanwhile, the board's decision also has no immediate effect on the legal dispute between SAP and Versata, which is still pending at the federal circuit appeals court. Last month, the court upheld a judgment ordering SAP to pay Versata US$345 million in damages, but SAP is appealing.

SAP is clearly hoping the USPTO review board's ruling will convince the court to change course and take its side.

"We are very pleased with the USPTO's action," said SAP spokesman Andy Kendzie. "We think this is a very positive milestone in this case. We recognize that this is one step in the process and it still has to be played out."

Versata and an attorney for the company didn't immediately respond to requests for comment Wednesday.

SAP and Versata have a long history dating to the 1990s when Versata created and sold pricing software that SAP customers used in conjunction with their ERP (enterprise resource planning systems.

Later, SAP created its own version of pricing software and bundled it with its products, hurting Versata's sales. Versata then sued SAP in 2007, alleging that SAP's pricing software infringed on its patents.

It won a $139 million verdict in August 2009 but a judge subsequently set aside the award and ordered a new trial to be held on damages. A second jury awarded Versata the $345 million in 2011.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com

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