Trading Technologies International, Inc. v. IBG LLC, Interactive Brokers, LLC (Fed. Cir. April 19, 2019). Panel: Moore (author), Mayer, and Linn Download TTI v IBG (April 18, 2019)
Trading Technologies International, Inc. v. IBG LLC, Interactive Brokers, LLC (Fed. Cir. April 30, 2019), Panel: Moore (author), Clevenger and Wallach. Download TTI v. IBG (April 30, 2019)
This is a long post since it covers two opinions addressing Covered Business Method (CBM) review for business method claims, plus discussion of two related opinions for good measure. tl;dr: The Federal Circuit affirmed the PTAB that the claims are subject to CBM review and are directed to ineligible subject matter. Along the way it clarified some its jurisprudence interpreting the threshold CBM review regulation.
A potential conflict disclosure at the outset: MBHB, which represented Trading Technologies on these appeals, is the primary financial sponsor of PatentlyO.
On to the writeup…
Both April opinions in TTI v. IBG involve the same procedural posture, the same general subject matter (displaying market information to traders), and the same issues on appeal: whether the claimed inventions are subject to the “technological inventions” exception to CBM review and whether they claim patent eligible subject matter. In both cases, the PTAB concluded that the patents were subject to CBM review and held the patents directed to patent ineligible subject matter. Of the two opinions, the court’s April 18, 2019 opinion is meatier on both issues, so I’ll mainly focus that one.
The two April opinions also provide a counterpoint to the court’s February nonprecedential opinion involving the same parties, the same area of technology, the same procedural posture (appeal from Covered Business Method review decisions by the PTAB), and for some of the patents, the same outcome at the PTAB: lack of subject matter eligibility. See TTI v. IBG (Fed. Cir. Feb 13, 2019) (nonprecedential). Writing per curiam, the panel in the February opinion (Judges Lourie, Moore and Reyna) held the patents were for “technological inventions,” and thus were not properly subject to CBM review. In the two April opinions, overlapping panels (Judges Moore, Mayer and Linn in one and Judges Moore, Clevenger and Wallach in the other) reached the opposite conclusion on different sets of GUI patents.
“Patents for Technological Inventions”
A threshold question for CBM review is whether the patents-in-suit are “patents for technological inventions. Generally, CBM review is available “a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service…” America Invents Act, § 18(a)(1)(E). However, this mechanism comes with an important caveat: “…except that this term does not include patents for technological inventions.” Id.
The USPTO regulation implementing the “technological invention” exception states that:
In determining whether a patent is for a technological invention solely for purposes of the Transitional Program for Covered Business Methods (section 42.301(a)), the following will be considered on a case-by-case basis: whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution.
37 C.F.R. § 42.301(b). In Versata v. SAP, 793 F.3d 1306 (Fed. Cir. 2015), the Federal Circuit criticized the regulation while offering a sliver of guidance. “In short, neither the statute’s punt to the USPTO nor the agency’s lateral of the ball offer anything very useful in understanding the meaning of the term ‘technological invention,'” the court wrote, concluding that “we agree with the PTAB that this is not a technical solution but more akin to creating organizational management charts.” Id. at 1326, 1327.
In a subsequent opinion, the court clarified the regulation as involving a “prong”-type analysis: that is, if a patent fails to meet either the “technological feature” or the “solves a technical problem using a technical solution,” it is not a “technological invention.” See Apple v. Ameranth, 842 F.3d 1229, 1240 (Fed. Cir. 2016) (“We need not address this argument regarding whether the first prong of 37 C.F.R. § 42.301(b) was met, as we affirm the Board’s determination on the second prong of the regulation—that the claimed subject matter as a whole does not solve a technical problem using a technical solution.”) The court did not elaborate on the meaning of the “solves a technical problem using a technical solution” language.
Meaning of “solves a technical problem using a technical solution”
The two April TTI v. IBG decisions shed additional light on the meaning of the “technical problem” and “technical solution” prong, drawing a distinction between the practice of a financial product as opposed to a technological invention:
“TT argues the inventions addressed technical problems in the way prior art GUI tools were constructed and operated. It claims the ’999 patent addressed problems related to speed, efficiency, and usability, and the ’056 patent. It claims the ’999 patent addressed problems related to speed, efficiency, and usability, and the ’056 patent addressed problems related to intuitiveness, visualization, and efficiency.”
April 18, 2019 Slip Op. at 8-9. The Federal Circuit held that this is not a technical solution to a technical problem:
“We agree with the Board that the patents relate to the practice of a financial product, not a technological invention. The specification states that a successful trader anticipates the market to gain an advantage, ’999 patent at 1:20–26, but doing so is difficult because it requires assembling data from various sources and processing that data effectively, id. at 1:51–54. The invention solves this problem by displaying trading information “in an easy to see and interpret graphical format.” Id. at 2:3–6. The specification makes clear that the invention simply displays information that allows a trader to process information more quickly.”
Ultimately, “This invention makes the trader faster and more efficient, not the computer. This is not a technical solution to a technical problem.” April 18, 2019 Slip Op. at 9 (emphasis in original).
Additional language in the opinion reinforces this line between business problems and solutions and technological problems and solutions. In rejecting a challenge to the PTAB’s decision not to consider the testimony of TTI’s expert, the court wrote “Nothing in his declaration asserts that the claimed interface did anything other than present information in a new and more efficient way to traders. Even if the Board had considered this testimony, it could not have reached a different conclusion.” April 18, 2019 Slip Op. at 10. Analyzing another GUI patent, the court stated that providing the trader with information in the claimed manner “is focused on improving the trader, not the functioning of the computer.”
“Indeed, the specification acknowledges that the invention ‘can be implemented on any existing or future terminal with the processing capability to perform the functions described,’ id. at 4:4–6, and ‘is not limited by the method used to map the data to the screen display,’ which ‘can be done by any technique known to those skilled in the art,’ id. at 4:64–67.”
The court’s April 30 opinion, reached the same conclusion on a different patent using similar reasoning. “Merely providing a trader with new or different information in an existing trading screen is not a technical solution to a technical problem,” the court wrote, before repeating the language about the method focusing on “improving the trader, not the functioning of the computer.” Apr. 30, 2019 Slip Op. at 7.
One final notable aspect of this set of the opinions: By affirming the PTAB on the second prong of the “technological inventions” regulation, the Federal Circuit avoided needing to address TTI’s argument that “Versata set aside the novelty and nonobviousness language of the first prong of the regulation….” Apr. 18, 2019 Slip Op. at 8. That issue remains unsettled.
Patent Eligible Subject Matter
The Federal Circuit affirmed the PTAB on the issue of lack of patent eligible subject matter for all the patents-in-suit in a fairly routine review. The court conducted the Alice two-stage analysis, concluding that the claims were directed to abstract ideas and did not include an inventive concept. The most interesting aspect of this component of the court’s analysis is the relationship with the 2017 TTI v. CQG nonprecedential opinion discussed below.
Constitutional Challenges: Not preserved by four sentences
The court declined to address TTI’s constitutional challenges, which consisted of “a total of four sentences in each of its opening briefs” based on “a right to a jury under the Seventh Amendment, separation of powers under Article III, the Due Process Clause, and the Taking Clause.” “Such a conclusory assertion with no analysis to the underlying challenge is insufficient to preserve the issue for appeal.” Id.
Relationship with Prior Decisions
As I noted at the outset, these opinions represent a counterpoint to the court’s February nonprecedential opinion, although since the April decisions are precedential and the February one was not, there isn’t direct legal tension.
The February opinion involved a review of a set of CBM review PTAB decisions finding that the both the two patents involved an even earlier opinion, Trading Technologies International, Inc. v. CQG, Inc., 675 F. Appx 1001 (Fed. Cir. 2017) (nonprecedential), and two other patents were not “technological inventions” and therefore were subject to CBM; in the subsequent CBM review, the PTAB held that the two patents from TTI v. CQG were directed to patent eligible subject matter but the other two patents were not. As with the April decisions, all the patents involved GUI claims.
The Federal Circuit reversed as to the institution decision on all four patents. For the two patents involved in TTI v. CQG, the Federal Circuit reasoned that because the two patents were directed to patent eligible subject matter, they must be “technological inventions.” For the other two patents, the Federal Circuit reasoned that “because we see no meaningful difference between the claimed subject matter [of the two sets of patents] for purposes of the technological invention question, the same conclusion applies in those cases as well. (This is puzzling to me, since the PTAB held that the first set of patents were directed to patent eligible subject matter but the second set were not.)
There’s also the tension between the subject matter eligibility determination in TTI v. CQG and the lack of subject matter eligibility determinations in the two April 2019 TTI v. IBG decisions, but I’ll leave that for others to opine on. The Federal Circuit itself declined TTI’s invitation to get into the specifics of how its April 2019 decisions relate to the earlier decisions:
“TT argues that because nonprecedential decisions of this court held that other TT patents were for technological inventions or claimed eligible subject matter, we should too. We are not bound by non-precedential decisions at all, much less ones to different patents, different specifications, or different claims. Each panel must evaluate the claims presented to it. Eligibility depends on what is claimed, not all that is disclosed in the specification.”
April 18, 2019 Slip Op. at 19.