In its original panel decision, the Federal Circuit narrowly construed the Covered Business Method statute – holding that CBM review is only available when the claims themselves are directed toward a financial service. I previously wrote:
In its decision, the court walked through the statute – noting that the focus is on the claimed invention rather than the asserted marketplace or potential uses of the invention. Thus, the relevant question is not how the invention is used, but rather whether the claims are directed to a financial service. According to the court, any other reading, would “give the CBM program a virtually unconstrained reach.”
The challengers then petitioned for en banc review. That petition has now been denied – although over vigorous dissent. (6-5 denial, with Judge Stoll not participating). As the Federal Circuit continues to be divided, it is most interesting to consider the sides that have formed:
Supporting Rehearing (and broader scope of CBM review, and broader 101 application): Chief Judge Prost and Judges Lourie, Dyk, Wallach, and Hughes
Against Rehearing (for narrower CBM review and reduced 101 application): Judges Moore, Taranto, O’Malley, Reyna, Newman, and Chen.
Judge Plager also sat on the original panel, but his senior status precluded his voting on the en banc rehearing question.
Once initiated, CBMs are identical to post-grant reviews (PGR) – allowing for patents to be challenged on any patentability grounds. As implemented, this includes 101 and 112 challenges in addition to the more traditional obviousness and novelty grounds. PGRs, however, are limited to only AIA-patents and must be filed within a 9-month window from issuance. Those caveats have severely limited the number of PGR petitions filed thus far. For CBMs, the AIA-patent restriction and 9-month window are both eliminated. However, the statute creates a subject-matter limitation that restricts CBMs to only non-technological financial-services business method patents.
Another feature of the CBM program is that it is “transitional” – i.e., it sunsets in 2020 and no petitions will be accepted after that date.
Last week, I hosted a quick anonymous survey on the transitional Covered Business Method Review program — asking whether the CBM program should be allowed to sunset or somehow extended. 240 Patently-O readers responded with results shown in the chart below. About 44% of responses favored ending of the program outright — allowing it to sunset. About 29% favored extending the program as-is, with the narrow financial-services scope. The remaining favored extension and expansion: 17% would expand the scope to include all information processing patents, and the remaining 10% would extend the program to include all patents. This final option would essentially mean ending the 9-month window for PGR filing.
The survey also offered (but did not require) an explanation of the answer. A variety of themes emerge from that explanation. The following are a few examples.
For patent challengers, the key response is that “it works” as a mechanism for cancelling patents, and could be extended to other technology areas.
CBM is a big success addressing one of the most abused categories of patents. Extend it to the very worst and most abused patents by including all of information processing and it can help clean up the system and make it stronger.
Business methods are not the only abstract processes being patented by the Office Patent. A majority of all information processing methods (even those outside of the Business arts) suffer from encompassing non-statutory abstract processes without reciting subject matter that amounts to anything significantly more than said abstract processes.
The historic problem associated with poor business method examination quality has now been fixed.
It was intended to handle a temporary problem in a specific area. State Street caused a flood of applications in an area that was new to the USPTO. Now skills and databases have developed and the stats show that there is no particular need for either expanding or extending CBM. Permanently singling out a particular subject matter for extra scrutiny could cause other countries to do the same in other areas.
If the goal was to clean up shoddy and overly broad patents and applications, then most all of the necessary work should be done by then. There are existing mechanisms in place that should be forcing quality such that this becomes redundant and therefore unnecessary.
It was a political sop to begin with and should be allowed to expire per the legislation and the underlying political agreement. It’s argument was to take care of “low-hanging fruit”, patents of old vintage, issued when the Office’s resources in this area were low. 8 years is more than enough time to pick that fruit.
CBM petitions are declining because most of the patents intended for consideration have already been undone.
Patents need to be strengthened, not weakened.
The patent systems is already nearly dead. Make patent owners in all areas feel the pain of having their patent rights trampled over by a kangaroo administrative court.
Broad restrictions on patentability are harming U.S. competitiveness in the areas of its greatest strength. China and the EU are poised to eat our lunch, and we are serving it up to them.
A terrible idea from the outset.
It (CBM) deprives some of the best technological innovators the chance to protect their valuable property. Abandon CBM, and instead seek recourse to the traditional approaches (102, 103 and 112) to rid the patent landscape of those patents that don’t rise to the level of technological innovation.
The PTAB process is either corrupt or incompetent.
It has been abused by petitioners and PTAB has taken it too far.
Go back to district court litigation. The present scheme is a disaster.
The USPTO is turning into a mini-court system. That is not its competency. It needs to focus on technology, granting patents to those inventions that meet the basic statutory criteria, and leave the legal hair-splitting to courts.
This is a corrupt Review that benefits a specific class of infringers and is detrimental to the development of new technology.
The approach should be ended because it violates the constitutional rights of patent owners.
AIA has overstepped its boundaries on constitutional grounds as patents are private rights.
All patent owners are entitled to due process, and that includes the right of access to a court of law before their patents are summarily cancelled by a political, the end-justifies-the means, so-called court.
Of course, there are other responses as well (perhaps more below in the comments).
The bottom line here, as you might expect, is that there is not yet any consensus on whether to extend the CBM program. My own general framework begins with the recognition that CBM does no longer adds much value post Alice/Mayo and with district court eligibility determinations being done on the pleadings. However, I would like to see the empirical evidence. The point of creating legislation that sunsets is that it effectively places the burden of proof on anyone wanting to continue the program. That work has not yet been done.
The Covered Business Method Review program is a transitional program that sunsets in 2020. These AIA trails have been extremely effective at knocking-out patents that qualify for review. The question of the day is whether Congress should extend and possibly expand the program beyond the 2020 deadline and beyond the non-technological financial services limitations.