Amendment to extend CBM defeated in House Judiciary Committee

By Gene Quinn
June 11, 2015

Congressman Darrell Issa (R-CA) at the National Press Club, Feb. 11, 2015.

Congressman Darrell Issa (R-CA) at the National Press Club, Feb. 11, 2015.

Earlier today the House Judiciary Committee embarked upon a markup of the Innovation Act (H.R. 9). As I am writing this article the Committee is on recess until at least 1pm ET, but it is a busy day in the House of Representatives. The House Democrats are having a meeting to discuss their strategy for the trade bill vote expected on Friday, which Congressman Jerrold Nadler (D-NY) suggested would likely go past the 1pm hour, a sentiment that Congresswoman Zoe Lofgren (D-CA) agreed with. The House of Representatives also have votes scheduled for 1:30pm today, so it is possible (if not likely) that the hearing will not reconvene until 2:30pm or later. Congressman Bob Goodlatte (R-VA), who is Chair of the House Judiciary Committee, agreed not to restart the hearing if the Democrats are not present. Stay tuned for additional coverage on the hearing today, tomorrow and early next week.

One of the issues that took up a significant amount of time during the first half of the hearing was an amendment submitted by Congressman Darrell Issa (R-CA), which proposed an extension of the transitional program covered business method review program at the United States Patent and Trademark Office (USPTO). This transitional program, more commonly referred to simply as CBM, is a trial proceeding conducted at the Patent Trial and Appeal Board (PTAB). For the most part CBM proceedings employ the standards and procedures of a post grant review, but there are certain exceptions.

The PTAB may institute a transitional proceeding only for a patent that is a so-called “covered business method patent.” A covered business method patent is 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. The transitional program for the review of covered business method patents took effect on September 16, 2012, but is scheduled to sunset on September 16, 2020. Unlike inter partes review (IPR), a petition for a transitional proceeding for a covered business method patent may NOT be filed unless the real party-in-interest or privy has been sued for infringement of the patent or has been charged with infringement under that patent. “Charged with infringement” means “a real and substantial controversy regarding infringement of a covered business method patent such that the petitioner would have standing to bring a declaratory judgment action in Federal court.” 37 CFR 42.302(a).

[Patent-Reform]

The amendment submitted by Issa sought to extend CBM by pushing back the sunset period until December 31, 2026. According to Issa, at the time the Congress passed the America Invents Act (AIA) the idea was to create CBM review for a trial period. Those who remember the AIA debates and are familiar with CBM know that not to be the case, a point later made by several members of the Committee who opposed the Issa amendment. Nevertheless, Issa would go on to say that CBM has been an effective way to challenge poorly written, vague and overbroad patents. In Issa’s view CBM has been successful and should be extended for an additional six (6) years.

Congressman Nadler would also go on to say that he supported the amendment and that the recognized that there are patents that never should have been granted by the USPTO. In Nadler’s view, the Issa amendment does nothing more than continue to week out patents that never should have issued. Nadler urged members of the Committee to support the amendment to extend CBM review.

“We should be ending [CBM] rather than extending it,” Congressman John Conyers (D-MI) explained. Conyers would go on to point out that the AIA specifically created a transitional program for CBM and that extension of the program “would work injustice on legitimate patent holders.” Conyers also explained that the USPTO has expanded the scope of the program beyond the intent of the AIA, ensnaring independent inventors and small businesses, which was not the original intent. CBM has become “a new tool for infringers to drain legitimate patent holders of resources,” Conyers explained.

Congressman Collins also explained that he cannot support extending CBM, saying that “a property right should be a property right,” objecting to the disparate treatment of patents as being unfair. Collins also pointed out that despite what Congressman Issa said to the contrary, CBM was never envisioned as a pilot program, pointing to the title which itself acknowledges directly that the program was always intended to be transitional and to sunset. “I am confused as to why we are considering the extension of a program that is scheduled to sunset in 2020,” Collins said. “Why are we debating this here today… do we really know how CBM will affect our economy… we should be having this debate in 2020… Are we really going to extent a discriminatory program based on hypotheticals?” Ultimately, Collins urged his colleagues to oppose this “premature amendment.”

Congresswoman Suzan DelBene (D-WA) also echoed the comments of Collins, saying that it is premature to even be debating an extension on a transitional program expires in 2020, which was never conceived as a pilot program. DelBene also took issue with earlier comments of those in support of the amendment who said that there was no evidence that CBM has been inappropriately expanded beyond financial services patents, pointing out that there have been instances where the Patent Trial and Appeal Board has been accused of a creep relative to jurisdiction.

The Issa amendment to extend CBM was defeated by a vote of 18-13.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and President & CEO ofIPWatchdog, Inc.. Gene founded IPWatchdog.com in 1999. Gene is also a principal lecturer in the PLI Patent Bar Review Course and Of Counsel to the law firm of Berenato & White, LLC. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

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Discuss this

There are currently 3 Comments comments.

  1. Mark Nowotarski June 11, 2015 1:53 pm

    One of the unforeseen benefits of the CBM program is we are getting a number of PTAB decisions on what is and is not “technological” regarding business method inventions. These are found in the decisions not to institute a CBM review. If a claim covers a technological improvement, then it is not eligible for a CBM.

  2. Anon June 12, 2015 8:13 am

    Mark,

    I have to wonder about the binding/non-binding nature of such legislation from the bench (an Article I bench at that).

    I would posit that you are looking at a bug and not a feature of U.S. statutory law (making).

  3. Mark Nowotarski June 12, 2015 8:34 am

    True, but the feedback I’ve gotten recently from business method examiners is that in the current environment of “allow nothing”, any authority they can rely on to convince their management that a claim is allowable under 101 is appreciated.