Federal Circuit Orders PTO to limit business method review trials (CBM) to “financial products or services” since that is the law

by Dennis Crouch

In Unwired Planet v. Google, the Federal Circuit has vacated a PTAB covered business method decision – holding that the PTO’s definition of a “covered business method” was unduly broad.

The America Invents Act created a powerful set of post-issuance administrative review procedures known generally as AIA trials, including the covered business method (CBM) review. CBM is designed as a transitional proceeding that will sunset in the year 2020 barring congressional action. The most popular form of AIA trial is inter partes review (IPR) that allows for review of any issued patent but is limited to only novelty and obviousness challenges based upon prior art.  CBM review applies to a much narrower set of patents – only “covered business methods” – but those patents can be challenged on almost any patentability ground, including eligibility.  Here, the Board found the challenged claims unpatentable subject matter under section 101.

The term covered business method is particularly defined to include any 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, except that the term does not include patents for technological inventions.” AIA § 18(d)(1).  In its implementing rules, the PTO did not further define or explain the CBM definition within its official rules – although the PTO did propose the “incidental” or “complementary” language in its official responses to comments on its proposed rules.  On appeal, the Federal Circuit has rejected the more expansive definition as contrary to the statute.

Here Unwired’s Patent No. 7,203,752 claims a method of using privacy preferences to configure when various applications are permitted to access a wireless device’s location information.  PTAB found CBM claims by noting that businesses may want “to know a wireless device is in its area so relevant advertising may be transmitted.” The PTAB’s finding here was not conjecture but instead came from the patent’s written description.  On appeal, however, the Federal Circuit found the required “financial product or service” link too tenuous.  The court explains:

The Board’s application of the “incidental to” and “complementary to” language from the PTO policy statement instead of the statutory definition renders superfluous the limits Congress placed on the definition of a CBM patent.

The court then provides a few analogies:

The patent for a novel lightbulb that is found to work particularly well in bank vaults does not become a CBM patent because of its incidental or complementary use in banks. Likewise, it cannot be the case that a patent covering a method and corresponding apparatuses becomes a CBM patent because its practice could involve a potential sale of a good or service. All patents, at some level, relate to potential sale of a good or service. Take, for example, a patent for an apparatus for digging ditches. Does the sale of the dirt that results from use of the ditch digger render the patent a CBM patent? No, because the claims of the ditch-digging method or apparatus are not directed to “performing data processing or other operations” or “used in the practice, administration, or management of a financial product or service,” as required by the statute. It is not enough that a sale has occurred or may occur, or even that the specification speculates such a potential sale might occur.

The decision here thus appears to eliminate any chance that the patent will be considered a CBM and thus the Section 101 decision by the PTAB goes away.

No Appeal? Like IPR proceedings, CBM proceedings begin with an initiation decision followed by a trial decision.  And, like IPR proceedings, the decision to initiate a CBM is not appealable.  In Versata, however, the Federal Circuit held that the initiation question of whether a patent is a CBM patent may be reviewed on appeal.  Despite the statutory language and the intervening Supreme Court decision in Cuozzo, the court here held that it still has jurisdiction to review the CBM initiation question on appeal.

Deference: In reviewing the PTAB determination, the court gave no deference to the Board’s interpretation of the law. “We review the Board’s statutory interpretation de novo.”  The Court also gave no deference to the PTO’s “policy statement” made in its notice of final rules.  The court does implicitly suggest – as it did in Versata – that implementation of a more thorough definition in the CFR rules would be given deference. However, the PTO has not taken that approach.

I do not know yet whether Google will push this case to the Supreme Court.  The strongest argument is that Cuozzo implicitly overruled Versata. That is the holding suggested by Alito’s dissenting interpretation of the Cuozzo majority.

 

27 thoughts on “Federal Circuit Orders PTO to limit business method review trials (CBM) to “financial products or services” since that is the law

  1. 6

    Since “covered business methods” are evidently only a portion of “business methods,” is this de facto writing by Congress indicating that business methods are not – de facto and as a category – patent ineligible?

    Ned?

    1. 6.2

      I think business methods that have novel means have always been eligible. It may be necessary to claim the business method in order to accurately claim the means.

      But again Congress does indicate that business methods may be eligible subject matter. Point to anon.

  2. 5

    Ameranth v. Apple
    Reyna, Chen, Stoll
    PRECEDENTIAL DECISION TANKING A BUNCH OF JUNK CLAIMS UNDER 101

    Both Ameranth and Apple appealed from CBM ruling. Panel affirmed the Board’s finding of ineligibility of most claims, and reversed the Board’s finding that some claims were eligible. Result: all challenged claims are ineligible.

    The patents claim systems including menus with particular
    features. They do not claim a particular way of programming or designing the software to create menus that have these features, but instead merely claim the resulting systems. Essentially, the claims are directed to certain functionality—here, the ability to generate menus with certain features. Alternatively, the claims are not directed to a specific improvement in the way computers operate.

    A giant chunk of “do it on a computer” junk was just flushed down the t0 ilet … again. McWrong was cited, but only for the fundamental propositions that existed prior to McWrong.

    1. 5.1

      They do not claim a particular way of programming or designing the software to create menus

      “A method of programming a programmable computer, comprising typing instructions, wherein said instructions are executable by said computer …”

      “A method of designing software, comprising drawing a flow chart, wherein said flow chart comprises ….”

      Heckuva job, CAFC! Be careful or you might wake the elephant…

  3. 4

    That legislative expansion of IPR grounds is not going to happen, nor is a need for it consistent with your, and others, views that most 101-Alice claim unpatentability decisions could have been made on a 103 prior art basis with better prior art?

    1. 4.2

      A belief that there is no need for a legislative expansion of IPR grounds “because 103 is enough” is consistent with the views of “anon” and his c0h0rts. Of course, “anon” and his c0h0rts have abundantly demonstrated here, over and over again, that they lack a basic understanding of what subject matter eligibility is, why it exists, and why the PTO’s failure to use 101 has led to a disastrous increase in both ineligible and obvious junk patents.

      1. 4.2.1

        Your feelings, Malcolm are noted.

        (noted as well, is that you have supplied nothing else but your feelings)

        1. 4.2.1.1

          Oh, I’m happy to provide everyone with examples showing that you and your bffs have a limited understanding of subject matter eligibility.

          Just ask and we’ll get started with some basic hypotheticals for you to answer.

          1. 4.2.1.1.1

            Obviously, you asking questions is not what is needed.

            Instead, it is the affirmative presentation of YOUR “theory” and the legal rationale that YOU use to support your feelings.

            You tend to stay away (far away) from such.

            “Go figure Folks”

            1. 4.2.1.1.1.2

              Like I said: just ask for the evidence that you and your bffs don’t understand subject matter eligibility and I’ll provide that evidence.

              I’ve done it before (hundreds of times). Happy to do it again.

              All it takes is a few simple questions. Just ask Robert K S. He’s still got the egg on his face. And he can’t wipe it off.

              1. 4.2.1.1.1.2.1

                Like I said

                And like I said:

                Obviously, you asking questions is not what is needed.

                Instead, it is the affirmative presentation of YOUR “theory” and the legal rationale that YOU use to support your feelings.

                You tend to stay away (far away) from such.

                “Go figure Folks”

                1. the affirmative presentation of YOUR “theory”

                  It’s not a “theory” (unless you think that 2+2 = 4 is a “theory”<— please go ahead and say so! You're a very serious person).

                  Information is ineligible for patenting (it's not one of the statutory categories; it's an example of an abstraction).

                  A claim that recites only existing technology (e.g., data collection or data presentation technology) and "new" "non-obvious" information is ineligible because (at the very least) such a claim turns people who are using the prior art into infringers when they practice only the ineligible additional step.

                  It doesn't matter for the analysis if the information is a correlation, or if it's information about your grandma's favorite violet species.

                  Now, let me know if you need me to hold your hand and walk you through this basic stuff for the zillionth time. Call up Robert K S while you're at it.

                  Or you can just say "I understand and agree."

                  Go ahead, "anon." Impress everybody with your integrity. Or continue to wall0w in the muck.

                2. Also, just so there’s no confusion: this is just one of the analytical approaches relevant to determining the eligibility of a patent claim. The best approach will depend on the details of the claim and the particular eligibility problems presented by that claim.

                3. “anon” You tend to stay away (far away) from [he affirmative presentation of YOUR “theory” and the legal rationale ]..

                  Nice job of projecting your own transparent shortc0mings, “anon”! You’re a very serious person.

                  Anybody who wasn’t born yesterday knows that I’ve presented this “theory” (LOL) to you (and countless other people like you) many, many hundreds of times. But you still choose to l i e about that, year after year after year. Go figure.

                4. As your “theory” has so often been sunk in the past, software is not information.

                  But then again you already knew that, given your admissions against interests regarding the exceptions to the judicial doctrine of printed matter.

                  And even if I cannot “say” your meme, it is obviously in play yet again.

  4. 3

    As noted on another blog, this Fed. Cir. decision in Unwired Planet, LLC v. Google Inc. was long overdue for a more specific statutory interpretation of the technology claim scope of CBM proceedings. [They were said to have been enacted to challenge “business method” claims.]
    However, this decision is not applicable to reexams, IPRs or PGRs, which do not have that very limited scope of technology scope [which excludes the vast majority of patents from CBM proceedings]. CBMs also have other limitations, such as requiring the CBM petitioner to have been actually sued or threatened with suit for patent infringement. As of 11/22/16, over the years since the AIA enacted CBMs and IPRs, only 489 CBM petitions have even been filed, and many have not been instituted, versus 5397 petitions filed for IPRs. Also, lately, a number of “business method” claim suits have been shot down on Alice-101 grounds at the D.C. instead of in a CBM. [But, CBMs are not limited to only patent or publication prior art.] Finally, the entire CBM system automatically ends (sunsets) on Sept. 16, 2020, less than 4 years from now.

    1. 1.1

      To wit, there are references to the elements of the institution decision in several places, but this decision does NOT do as you write. This decision does NOT “appeal the institution decision.”

      Here is the conclusion as written by the court (with emphasis by me):

      CONCLUSION

      We vacate the Board’s final written decision and remand
      the case for a decision in the first instance, and in
      accordance with this opinion, whether the ’752 patent is a
      CBM patent.

      1. 1.1.1

        …note as well that the court did not undo the institution decision – the CBM review remains instituted, and the court here merely asks the PTAB itself to come to a conclusion about its own institution decision.

        1. 1.1.1.1

          This may be a subtle point – but it is an important one – a distinction very much with a difference as to what Congress wrote and the non-appeal-ability of the institution decision (and thus remains important under takings law).

        2. 1.1.1.2

          Yes, and this form of decision has advantages for the Fed. Cir. . Obviously the PTAB is bound by this Fed. Cir. legal decision anyway, but since the case is now back in an unfinished agency proceeding it cannot be further appealed at this point by the petitioner, nor does this technically constitute a reversal of the institution decision which could encourage attempted challenges by others of an institution decision prior to a final decision.
          The Court might also be taking into silent consideration the fact that even if the CBM decision has been rendered a mere gratuitous PTO advisory opinion, it might induce settlement of D.C. litigation on the same patents?

          1. 1.1.1.2.1

            Not sure that I would agree with the characterization of “the CBM decision has been rendered a mere gratuitous PTO advisory opinion.”

            There is no hint of such at all, nor would there be any legal foundation whatsoever for such a thing.

            Methinks that you merely want to plant a seed in order to avert some future Constitutional-type revocation of the post-grant procedures. But such a seed will not – and cannot – germinate unless Congress itself writes a new and different law.

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