CBM Review: Must the Claims Be Expressly Limited to Financial Services?

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Secure Axcess v. PNC (Fed. Cir. 2017) (en banc petition)

In an important February 2017 decision, the Federal Circuit limited the scope of Covered Business Method Review (CBM) — requiring that the claimed invention be focused on financial transactions.  In my original review, I wrote:

This case represents an important decision limiting the scope of Covered Business Method reviews.  However, its short consideration of agency-deference leaves it open to further challenge. 

Crouch, For CBM Review: _Claims_ Must be Directed to Financial Service, Patently-O (Feb. 2017).  The case focuses on U.S. Patent No. 7,631,191.

U.S. Bank has now challenged the decision with an en banc request – raising the following question:

Whether a method patent whose claims are worded to avoid reference to financial activity, but whose specification makes plain that it is a patent “used in the practice, administration, or management of a financial product or service,” qualifies for post-grant review as a covered business method (CBM) patent under Section 18 of the Leahy-Smith America Invents Act (AIA), Pub. L. No. 112-29, § 18, 125 Stat. 284, 329-31 (2011).

The petition directly challenges the Federal Circuit’s anti-CBM Jurisprudence, writing:

This is not the first questionable decision by a panel of this Court concerning to scope of the CBM program. In Versata Dev. Grp. v. SAP Amer., Inc., 793 F.3d 1306 (Fed. Cir. 2015), another divided panel disagreed over whether this Court even has jurisdiction to review the Board’s CBM determinations. And a petition for rehearing en banc, with robust amici support, is currently pending in Unwired Planet, LLC v. Google Inc., 841 F.3d 1376 (Fed. Cir. 2016), which asks this Court to address the level of deference owed to Board determinations that a patent qualifies for CBM status and to reconsider the holding in Versata.

Two additional amicus briefs have also been filed supporting the petition.  EFF argues (1) that the panel decision contorts the statutory text; and (2) ignored the consideration of deference to an agency’s interpretation of its governing statute.  Clearing House Payments Company and Financial Services Roundtable joined together and argue (1) CBM institution rates are alredy down; and (2) the case allows artful claim drafting to effectively avoid CBM.  (The artful drafting issue is largely moot since CBM will sunset in September 2020).

The key here is interpretation of Section 18(d)(1) of the America Invents Act that limits the scope of Covered Business Method Reviews to patents “that claim[] 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.” Does the statute require that the claim include the financial product or service use?  Note here that the argument is not based upon a statute codified in the United States Code since it is only a temporary provision that will sunset after three more years.

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35 thoughts on “CBM Review: Must the Claims Be Expressly Limited to Financial Services?”

  1. 6

    a temporary provision that will sunset after three more years.

    Which is why Congress needs to expand the IPR regime to include eligibility challenges.

    It’s non-sensical and bizarre that they didn’t do it expressly in the first place, especially when the PTAB and IPR petitioners remain perfectly free to rely on the so-called “printed matter doctrine” which is nothing more than a flavor subject matter restriction.

      1. 6.2.1

        If you recall, MM, I thought the Government approach was probably the way to go. But, so long as the printed matter doctrine exists, the principle of exclusion of “non functional” mental steps from patentability analysis exists unless it is shown that they modify something physical so that it is transformed into a new state or thing.

        1. 6.2.1.1

          …please stop trying to make the Machine or Transformation into something other than a clue, Ned.

        2. 6.2.1.2

          Ned,

          Your Windmill Chase is showing again… (twice)

          first, the canard of the Point of Novelty for eligibility purposes….

          second, please stop trying to make the Machine or Transformation into something other than a clue.

    3. 6.3

      A patent applicant cannot, however, avoid a rejection
      under Section 102 or 103 merely by appending a purely
      mental step or inference to a process that is otherwise
      known in (or obvious in light of ) the prior art. A “process”
      is a series of steps for achieving a useful result in
      the physical world. See, e.g., Cochrane, 94 U.S. at 788.
      Here, the only affirmative steps described in the patent
      are (1) administering thiopurine drugs, and (2) deter
      mining metabolite levels. The district court construed
      the “wherein” clauses to require a kind of passive inference:
      the doctor must “be warned” of the medical significance
      of the metabolite levels. Pet. App. 62a. That is
      not a continuation of the process to be performed, but a
      description of how a doctor should interpret the result.

      Such medical knowledge may be new, and it may be
      valuable. But identifying a new way in which the results
      of a prior-art process may be understood, or a new benefit
      that the pre-existing process may help its users to
      realize, does not create a new “process” that is entitled
      to separate patent protection. See General Elec. Co. v.
      Jewel Incandescent Lamp Co., 326 U.S. 242, 249 (1945)
      (“It is not invention to perceive that the product which
      others had discovered had qualities they failed to detect.”).
      8 Rather, to be patentable over the prior art, a
      process claim must recite a series of steps in the physical
      world that differs from any series of steps that was
      previously known. Although a patent-eligible process
      may involve a “new use of a known process,” 35 U.S.C.
      100(b), as when a pre-existing process is incorporated
      into a new, larger series of steps, it does not satisfy Section
      102 or 103 merely to identify new and useful inferences
      from the prior art. Because the “wherein” clauses
      of respondent’s claims do not recite any physical step to
      be performed by a doctor (or anyone else), they add no
      mining metabolite levels. The district court construed
      the “wherein” clauses to require a kind of passive inference:
      the doctor must “be warned” of the medical significance
      of the metabolite levels. Pet. App. 62a. That is
      not a continuation of the process to be performed, but a
      description of how a doctor should interpret the result.
      Such medical knowledge may be new, and it may be
      valuable. But identifying a new way in which the results
      of a prior-art process may be understood, or a new benefit
      that the pre-existing process may help its users to
      realize, does not create a new “process” that is entitled
      to separate patent protection. See General Elec. Co. v.
      Jewel Incandescent Lamp Co., 326 U.S. 242, 249 (1945)
      (“It is not invention to perceive that the product which
      others had discovered had qualities they failed to detect.”).
      8 Rather, to be patentable over the prior art, a
      process claim must recite a series of steps in the physical
      world that differs from any series of steps that was
      previously known. Although a patent-eligible process
      may involve a “new use of a known process,” 35 U.S.C.
      100(b), as when a pre-existing process is incorporated
      into a new, larger series of steps, it does not satisfy Section
      102 or 103 merely to identify new and useful inferences
      from the prior art. Because the “wherein” clauses
      of respondent’s claims do not recite any physical step to
      be performed by a doctor (or anyone else), they add no
      patentable weight to the “administering” and “determining”
      steps.

      That conclusion follows a fortiori from patent law’s
      “printed matter” doctrine, under which the mere addition
      of novel printed matter to a product, such as instructions
      for using a device, does not add patentable
      weight. See, e.g., In re Ngai, 367 F.3d 1336 (Fed. Cir.
      2004).9 If the district court had accepted respondent’s
      argument that the “wherein” clauses require the laboratory
      performing the metabolite test to provide an explicit
      written or oral warning to the doctor, see pp. 6-7,
      supra, the PTO would have treated the content of any
      printed warning as irrelevant to patentability under the
      printed-matter doctrine. Likewise, if the claims had
      instead required the use of a medicine bottle for thiopurine
      drugs with the recommended metabolite range
      printed on the label, the PTO would have afforded the
      content of the label no patentable weight.

      Brief for the United States, Mayo, at 27-29.

    4. 6.4

      8 This does not mean that every process claim that recites a mental step is unpatentable. Claims that recite concrete processes with a
      “decision tree” structure (e.g., “Perform steps A and B, and then do
      either C or D, depending on the results of A and B.”) are both common
      and acceptable. In that sort of process, the mental step affects the
      physical steps to be performed. But the mere recitation of a mental
      inference at the end of a claimed process—in effect, a guide to interpreting
      the results—does not distinguish the process from the prior art.

  2. 5

    Dennis: The key here is interpretation of Section 18(d)(1) of the America Invents Act that limits the scope of Covered Business Method Reviews to patents “that claim[] 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.”

    Does the statute require that the claim include the financial product or service use?

    Of course it doesn’t which is why the Supremes should take this case and beat the CAFC over the head with it.

    1. 5.1

      “Of course it doesn’t which is why the Supremes should take this case and beat the CAFC over the head with it.”

      All the more reason a claim to a photocopier is a CBM under the statute.

    2. 5.2

      You start “Gisting” and the claim becomes meaningless as to “what is claimed.”

      If Congress did not want to include the words “that claim” they could have used other words.

      1. 5.2.1

        There’s no “gisting”, Billy.

        We’re talking about a situation where the specification repeatedly refers to the invention’s utility in finance/business contexts and where the patent was asserted against dozens of banking entities. The CAFC’s ridiculous patentee-coddling take on that situation is that the claim doesn’t recite a limitation regarding “finance” so therefore no CBM.

        1. 5.2.1.1

          And if the photocopier Patent mentions several times how the copier can be used to photocopy spreadsheets and pie charts for presentations and for general distribution, thereby enhancing communication in banks and other financial institutions…. that makes it even clearer that the photocopier is a CBM, right?

        2. 5.2.1.2

          “We’re talking about a situation where the specification”

          Please move the goal post back to what I actually stated – and the law as written by Congress which plainly uses the word “claim.”

          If other people are attempting to make a mistake and “Gist” from what is actually in the claim to some notion of what is in the specification then the meaning of the word “claim” itself is made into a nullity.

          Do I really need to hold your hand for you to understand this point?

  3. 4

    ““that claim[] 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.””

    So, is a patent claiming a photocopier a CBM? What about a Brinks type delivery truck? A business Jet?

    These are all used for performing “other operations in the practice, administration or management of financial products or services,” ain’t they?

    1. 4.1

      What matters is the claims … what are the directed towards? I person can talk about tactical nuclear warfare in their specification if they want, but if the claims are directed to a method of using a laser as a cat toy I wouldn’t consider it to be a patent about nuclear warfare even though distracting a cat could be incidental to getting him away from a big red button that launches a nuke.

      Michael Feigin, Patent Attorney
      http://PatentLawNY.com

      1. 4.1.1

        The claims are directed toward a photocopier.

        Everyone knows photocopiers are “used in the practice, administration, or management of a financial product or service.”

      2. 4.1.2

        Great example! Very relevant and totally analogous to the situations that we’re actually being presented with.

        Right.

          1. 4.1.2.1.1

            News flash: hypotheticals that insult everybody’s intelligence don’t demonstrate anything except that you’re a w@ nker.

            1. 4.1.2.1.1.1

              Well, they set you off on an ad hominem rant. So, we know they hit pretty close to the mark. But your efforts to spread false news will not be ignored Donny. We all know what you are up to.

      3. 4.1.3

        Nearly** ALL patents are directed to making money.

        I know, I know – shocking as that may be, patents remain a good thing.

        **leaving room for those who want something for vanity quite apart from business reasons.

      1. 4.2.1

        Kindly explain why a photocopier is not a “corresponding apparatus” for performing data processing or other operations used in the practice, administration, or management of a financial product or service.”

        I asked a question. I did not say anything that could remotely be characterized as “Wah”

        1. 4.2.1.1

          Your question impugns the Windmill that Malcolm liked to chase (hence the ad hominem directed to you).

  4. 3

    Just another case of a Google selected CAFC doing whatever they want to patent holders. Dissolve the CAFC. The judges can be put to a non-abstract task like cleaning litter on the side of I-66.

      1. 3.1.1

        The whole history of this at the PTO and CAFC is so outrageous that this one opinion is nothing.

        The history of the interpretation of this statute is enough to dissolve the CAFC and the remove the PTO director.

        Basically what is going on is after years of outrageous behavior they are being force to rein this in.

    2. 3.2

      Serious question: Is that even possible?

      Are they not Article III judges, so, therefore vested lifetime appointments…

      I guess Congress can shift them all to another Article III position? Yeah, that sounds right.

  6. 1

    Deference to an agency’s interpretation of the governing statute? What did I miss? The petitioner cites no authority in support of that proposition. Chevron, which also is uncited, is about deference to an agency’s interpretation of rules that the agency itself issued, not the statute governing the agency. Why would any deference be given to an agency about the scope of its powers? That would flat-out contradict the rationale for separation of powers and review agency action by Congress and by the courts.

    1. 1.1

      PTAB/ USPTO issued regulations/rules that parrot the statute (almost verbatim I believe), to which they make a claim for Seminole Rock Auer deference (? i don’t know the correct cite anymore) (agency’s interpretations of its own regs gets deference, just like it gets deference when interpreting its statute).

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