Covered Business Method: Licensing of Content is not (necessarily) a Financial Service

by Dennis Crouch [Updated on July 12 to correct an error]

Apple and Google v. ContentGuard v. Iancu (Fed. Cir. 2018)

Apple and Google both challenged ContentGuard’s U.S. Patent 7,774,280 under the Covered Business Method Post Grant Review proceedings.  The challenges raised eligibility, novelty, and obviousness challenges to several of the claims, but the Director (acting via the PTAB) only partially instituted: instituting only on novelty and obviousness, and only to three of the claims.  In the end, the PTAB found those claims obvious, but also allowed the patentee to add Claim 37 as a substitute for Claim 1 and found the new claim valid (not proven invalid).

On appeal, the Federal Circuit ruled the entire event a nullity — finding that the PTAB used the wrong standard for determining whether the patent qualifies as a covered business method. See Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306, 1323 (Fed. Cir. 2015) and Unwired Planet, LLC v. Google Inc., 841 F.3d 1376, 1379 (Fed. Cir. 2016).  A key case on point is also Secure Axcess, LLC v. PNC Bank National Ass’n, 848 F.3d 1370, 1381 (Fed. Cir. 2017). However, that case was vacated as moot by the Supreme Court in PNC Bank Nat. Ass’n v. Secure Axcess, LLC, 138 S. Ct. 1982 (2018).

The “Transitional Program for Covered Business Method Patents” is not codified within the United States Code (35 U.S.C. ___) because it is only a temporary program that sunsets in September 2020.  Thus, the CBM program is generally cited as Section 18 of the Leahy-Smith America Invents Act.

Although the program allows for broad challenges of “covered business method” beyond the 102/103 published art restrictions of inter partes review, it also provides a particular narrow definition of what counts as a a covered business method patent:

[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, except that the term does not include patents for technological inventions.

In Unwired Planet, the Federal Circuit held that the “financial product or service” cannot be merely “incidental to or “complementary to” a financial activity. Rather, the claims must have a “particular use” focused on financial activity.

Here, exemplary claim 1 is a method of “transferring rights” using “meta-rights”:

1. A computer-implemented method for transferring rights adapted to be associated with items from a rights supplier to a rights consumer, the method comprising:

obtaining a set of rights associated with an item, the set of rights including a meta-right specifying a right that can be created when the meta-right is exercised, wherein the meta-right
is provided in digital form and is enforceable by a repository;

determining, by a repository, whether the rights consumer is entitled to the right specified by the meta-right; and

exercising the meta-right to create the right specified by the meta-right if the rights consumer is entitled to the right specified by the meta-right, wherein the created right includes at least one state variable based on the set of rights and used for determining a state of the created right.

Google and Apple allegedly use this process to transfer access to third-party apps via their Play Stores.

In the appeal, the Federal Circuit explained that the system could be used in either financial services or non-financial services – and it “is not enough for the specification to describe how the invention could, in some instances, be used to facilitate financial transactions.”

CBM Decision Vacated: On remand, the PTAB will revisit the CBM question and will also need to follow the new rules against partial-grants.

= = = =

I’ll note here that the added claim 37 — that the PTAB found good-to-go adds a few limitations:

  1. The “item” – the subject of the rights being transferred is an “item of content;”
  2. The rights being transferred are “usage rights” or perhaps “another meta-right” (metameta); and
  3. The “meta-right is not itself a usage right because exercising the meta-right
    does not result in action to the content.”

It will be interesting to see whether the patentee goes about amending its claims through rexamination or reissue to add the new language.

= = = =

At the petition stage, Google argued that the claims were directed to the abstract idea of “providing consumers with rights to an item, such as a movie or book.” The Director (via the PTAB panel) disagreed – although providing what appears to be extremely weak analysis:

Google’s arguments that the challenged claims … are directed to a patent-ineligible abstract idea are predicated on the notion that they recite a fundamental economic or longstanding commercial practice.

Contrary to Google’s arguments, the challenged claims are not directed merely to “providing consumers with rights to an item, such as a movie or book,” nor can the features recited in the challenged claims be stripped away so that these claims simply are directed to a traditional approach or method of licensing or sub-licensing content. Indeed, the challenged claims require much more.

For instance, independent claims 1 and 12 require obtaining “rights associated with an item”—namely, a digital work—wherein the set of rights includes a “meta-right” specifying a “right” that may be created.  These claims further require providing the “meta-right in digital form” and indicate that the “meta-right” is enforceable by a “repository,” which, based on our claim construction above, constitutes “a trusted system” that enforces the “meta-rights” using very specific computer security and rights enforcement “integrities.”  In addition, these claims further require “at least one state variable” used to determine the state of the “right” created by the “meta-right.”


18 thoughts on “Covered Business Method: Licensing of Content is not (necessarily) a Financial Service

  1. 7

    Here is how this decision defines the key terms:
    “Examples of usage rights include the right to view, use, or distribute a digital work. Id. col. 2, ll. 16–18. By contrast, ‘[m]etarights are the rights that one has to generate, manipulate, modify, dispose of or otherwise derive other rights. Meta rights can be thought of as usage rights to usage rights (or other meta-rights).’ Id. col. 5, ll. 47–49.”
    [I was non-plussed at “usage rights to usage rights” but admired the cleverly generic drafting.]

  2. 6

    rights adapted to be associated with items

    These rights are totally different from rights associated with non-items. The meta-rights access field has struggled with those rights for years because they tend to melt at temperatures above 90 Fahrenheit.

  3. 5

    What a great example of judicial activism by the Federal Circuit to read out any meaning in that particular section of AIA. Everyone on this panel should be impeached. Talk about royalty in robes.

    1. 5.1

      Yes, but we have to respect the process because Rich McRichyrich needs to finish putting that final bit of gold leaf around the t0 ilet seats in his yacht.

      And golly what a bummer it would be if these judges slowed that process down and then happened to be a cockt@ il party with Rich McRichyrich! Can you imagine? What a nightmare.

    2. 5.2

      Not sure what you mean by “read out.”

      It’s not like they are re-writing the actual words of Congress, are they?

    1. 4.1

      Google and Apple allegedly use this process to transfer access to third-party apps via their Play Stores.

      I use it, too. Every day. Come get me, @ h0les.

      1. 4.1.1

        Be careful of what you ask for – your identity (known by Prof. Crouch) may not be protected if people DO decide to come after you.

        Crouch’s editing choices have pretty much nullified any protection from divulging that type of information that he may seek as an “objective” mere provider of a forum (non-objective application of any “posted” rules will do that).

  4. 3

    The PTAB: exercising the meta-right does not result in action to the content


    News flash for PTAB: a change in “status”, where status is defined by the “rights” one possesses, is an abstraction.

    What the f ck is the matter with these people?

    1. 3.1

      Of course it’s an abstraction- it’s an item of information.

      The whole post reads like a parody…because it is one.

      PS “rights” are markers of economic value, i.e. financial assets. They are money or securities, since that’s all they can be. Duh.

      1. 3.1.1


        You are in the weeds again.

        Everything – every item – has aspects of information about that item. You confuse items of information with information of an item.

        ALL utility resolves around the information OF items and how man may make use of that information in order to put items “to work.” Utility as a concept revolves around the very thing that you want to segregate out of the patent system. This is why I have informed you (repeatedly) that your understanding of patent law needs to start with the basics of understanding utility (and how that concept is wrapped up with innovation).

        For some odd reason, you want to draw a line that is just not there; and you want to draw that line with your eyes closed.


          Information about a machine is not a machine.

          Information about how to use a machine is not a process

          Processed information used by persons (e.g. “rights”) are 100% abstractions.

          The machines used to process the information are MPF elements irrelevant to the claims or inventive act beyond the function that they provide.

          IOW, the invention is information, and information is different than things. A toddler knows these things.


            Apparently, a toddler is beyond you as you continue to conflate and confuse yourself as to patent law, utility, and innovation.

  5. 2

    These kinds of cases only prove to everyone who isn’t drunk on the patent kool-aid that the US patent system has jumped the shark. It’s a j 0ke and a playground for grifters and the worst attorneys who ever walked the planet.

    To everyone involved with the drafting: how do you wash the stench off yourself after you write a claim like this? Presumably you wipe it off with money? Desperate times, indeed.

    determining, by a repository, whether the rights consumer is entitled to the right specified by the meta-right

    S00per techno! Whoo hooo! Now let’s hear the maximalists scold everyone about “we don’t understand the technology.” That’s always good for a laugh.

    1. 2.1

      Your feelings are noted.

      (and clearly, what is not being understood – by you – is what innovation is meant to be protected by the patent system)

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