Federal Circuit Vacates PTAB Decision Applying Incorrect Definition for CBM Patents

Federal CircuitUnwired Planet, LLC v. Google Inc., (Fed. Cir. Nov. 21, 2016) (Before Reyna, Plager, Hughes, J.).

Google petitioned for Covered Business Method (“CBM”) review of claims 25-29 of U.S. Patent No. 7,203,752 (the ’752 patent). The patent describes a system and method for restricting “client applications” from accessing location information of a wireless device based on “privacy preferences” set by users of the device. The Patent Trial and Appeal Board (“PTAB”) instituted CBM review on four grounds: (1) claims 25-29 for unpatentable subject matter under section 101, (2) claim 26 for lack of written description under section 112, (3) claim 25 for obviousness under section 103 over two references, and (4) claim 25 for obviousness over different combinations of two references.

The PTAB found that the ’752 patent was a CBM patent because “the subject matter recited in claim 25 of the ’752 patent is incidental or complementary to the financial activity of service or product sales.”  In its final written decision, the PTAB only upheld the first ground, finding that claims 25-29 were directed to unpatentable subject matter under section 101. Unwired appealed, arguing that the claims were not directed to unpatentable subject matter and that the PTAB should not have instituted review in the first place because the ’752 patent is not a CBM patent.

Under the America Invents Act (“AIA”), CBM review is only available for a “covered business method patent,” which is defined as “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 instituting CBM review of the ’752 patent, the PTAB did not apply the statutory definition of a CBM patent.  It stated the inquiry as “whether the patent claims activities that are financial in nature, incidental to a financial activity, or complementary to a financial activity.”

As the Court pointed out, the words “incidental” and “complementary” are not found anywhere in the statute. They originate from a single statement made by Senator Chuck Schumer during the Senate debate over the AIA. While general policy statements and legislative history are helpful, they are not legally binding and cannot supplant the text of the statute. The Court noted that “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.” For example, the “patent for a novel light bulb 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.” The Court vacated the PTAB’s decision and remanded for further consideration under the proper definition. The Court did not reach the patentability of the challenged claims under section 101.

For a patent to be a CBM patent, “[i]t is not enough that a sale has occurred or may occur, or even that the specification speculates such a potential sale might occur.” Claimed methods incidental or complimentary to financial services are not necessarily reviewable as CBM patents. The claims as they were written must be directed to methods and apparatuses that have particular uses in connection with a financial product or service.

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Robert Schaffer

Robert Schaffer is an intellectual property partner at Troutman Sanders. Bob applies more than 30 years of experience to IP counseling and litigation. His work includes patent procurement, strategic planning and transactional advice, due diligence investigations, district court patent cases, and Federal Circuit appeals. He regularly handles complex and high-profile domestic and international patent portfolios, intellectual property agreements and licensing, IP evaluations for collaborations, mergers, and acquisitions. In disputed court cases Bob’s work includes representing and counseling client in ANDA litigations, complex patent infringement cases and appeals, and multidistrict and international cases. In disputed Patent Office matters his work includes representing and counseling clients in interferences, reexaminations, reissues, post-grant proceedings, and in European Oppositions. For more information and to contact Bob please visit his profile page at the Troutman Sanders website.

Robert Schaffer

Joseph Robinson has over 20 years of experience in all aspects of intellectual property law. He focuses his practice in the pharmaceutical, life sciences, biotechnology, and medical device fields. His practice encompasses litigation, including Hatch-Waxman litigation; licensing; counseling; due diligence; and patent and trademark prosecution. He has served as litigation counsel in a variety of patent and trademark disputes in many different jurisdictions, and has also served as appellate counsel before the Court of Appeals for the Federal Circuit. Joe also focuses on complex inter partes matters before the U.S Patent and Trademark Office, inventorship disputes, reexaminations and reissues. His experience includes numerous interferences, a particular advantage in new U.S. Patent and Trademark Office post-grant proceedings. He also counsels on patent–related U.S. Food and Drug Administration issues, including citizen petitions, Orange Book listing, and trademark issues. For more information and to contact Joe please visit his profile page at the Troutman Sanders website.

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