Patent Law Practice Center

CAFC says the U.S. may file a CBM proceeding

The United States Court of Appeals for the Federal Circuit recently issued a decision in Return Mail, Inc. v. United States Postal Service, which upheld the invalidity of all challenged claims in a covered business method (CBM) challenge decided by the Patent Trial and Appeal Board (PTAB). In the CBM proceeding, the PTAB panel found the claims to be directed to patent ineligible subject matter under 35 U.S.C. § 101.

That patent claims were found to be directed to patent ineligible subject matter in a CBM proceeding is hardly newsworthy. No patent that has entered CBM has done anything other than fall to date. What is newsworthy, however, is that the Federal Circuit also upheld a controversial ruling of the PTAB, which determined that the United States has standing to bring a CBM challenge. Legally speaking, the United States, or in this case the United States Postal Service, is considered a person within the meaning of AIA § 18(a)(1)(B).

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Federal Circuit rejects Google’s petition for rehearing

On April 4, 2017, the United States Court of Appeals for the Federal Circuit issued a brief order denying panel rehearing and denying rehearing en banc in Unwired Planet, LLC v. Google, Inc.

Google filed a petition for both panel rehearing and rehearing en banc. A response to the petition was invited by the court and filed by Unwired Planet, LLC. No reason for the denial of Google’s petition was provided by the Federal Circuit, which is typical. The original panel decision, authored by Judge Reyna and issued on November 21, 2016, found that the Patent Trial and Appeal Board (PTAB) was using the wrong definition for what constitutes a covered business method (CBM) patent.

A covered business method patent is defined as a patent that claims a method for performing data processing or other operations used in the practice, administration, or management of a financial product or service. Specifically excluded from the definition of a covered business method patents are those that relate to technological inventions. See 37 C.F.R. 42.301(a). To determine whether a patent is for a technological invention, the PTAB is supposed to consider whether the claimed subject matter recites a technological feature that is novel and unobvious over the prior art, and solves a technical problem using a technical solution. See 37 C.F.R. 42.301(b). Nevertheless, the PTAB had been finding patents to be CBM patents when they covered matter incidental to a financial activity or complementary to a financial activity. For more see Federal Circuit slams PTAB.

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PTAB denies to institute CBM citing Enfish v. Microsoft

The Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO) recently declined to institute a CBM review of U.S. Patent No. 6,006,227, owned by Mirror World Technologies, LLC. See Apple, Inc. et al v. Mirror World Technologies, LLC. The decision is significant not only because the PTAB refused to institute a covered business method review, but because the panel — Administrative Patent Judges Thomas Giannetti, David McKone, and Barbara Parvis — cited the Federal Circuit’s recent decision in Enfish v. Microsoft when they found that the challenged claims of the ‘227 patent were not abstract.

The Petitioners argued that the challenged claims are directed to an abstract idea that is not patent-eligible subject matter. According to the Petitioners, “the challenged claims of the ‘227 patent are directed to the abstract idea of organizing items of information, i.e., ‘data units,’ in chronological order.” The patent owner responded that the Petitioners’ view “entirely omits the core concept of the claimed invention: using a ‘main stream’ and ‘substreams.’”

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New Post Grant Rules Become Effective, No Changes to Motions to Amend

On April 1, 2016, the United States Patent and Trademark Office published final rules in the Federal Register that relate to post grant proceedings. These new final rules went into effect on May 2, 2016, and amend the existing PTAB trial practice rules pertaining to inter partes review (IPR), post grant review (PGR), covered business method (CBM) review, and derivation proceedings brought into being by provisions of the America Invents Act (AIA).

In a nutshell, these new rules change existing practice by allowing new testimonial evidence to be submitted with a patent owner’s preliminary response, adding a Rule 11-type certification for papers filed in a proceeding, allowing a claim construction approach that emulates the approach used by a district court following Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) for claims of patents that will expire before entry of a final written decision, and replacing the current page limit with a word count limit for major briefing. These final rules are the culmination of a process started two years ago. For more information on the changes taking effect, please see Patent Office amends PTAB Trial Practice Rules.

Many had hoped that the Office would make it easier for patent owners to successfully amend patent claims in post grant proceedings, but the Office stood firm.

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House Judiciary Nixes CBM Extension

On Thursday, June 11, 2015, the House Judiciary Committee held a hearing for the purpose of marking up “the Innovation Act.”

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 regarding a proposed extension of covered business method (“CBM”) review. Those familiar with the America Invents Act (AIA) will undoubtedly recall that CBM reviews were ushered in as one of the three new post grant proceedings that could be used to challenge issues U.S. patents. The program was conceived to be temporary, and is scheduled to sunset on September 16, 2020. Issa’s amendment would have postponed the termination date of the program until December 31, 2026.

Unlike inter partes review (“IPR”), a petition for a CBM 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). Additionally, unlike with IPR, a CBM proceeding can raise issues surrounding both patent eligibility under 35 U.S.C. 101 and sufficiency of disclosure under 35 U.S.C. 112.

Issa stated during the hearing that, at the time Congress passed the AIA, the idea was to create CBM review for a trial period and the program would be extended if successful. Issa is mistaken. The complete name of the process even has the word “transitional” in the title. The entire purpose of CBM review was to allow for challenges to certain financial business method patents in a post grant proceeding that could raise patent eligibility and sufficiency of disclosure. Those issues are off the table in IPR. They can be raised in Post Grant Review (PGR), but PGR is only available to challenge patents that were examined under the first-to-file provisions of the AIA. Thus, Congress wanted to allow for a form of PGR for financial business method patents granted under pre-AIA first-to-invent rules.  Thus, there is a time limit to the useful period of this special variety of post grant review.

“We should be ending [CBM] rather than extending it,” Congressman John Conyers (D-MI) stated in response.

Congressman Collins (R-GA) also explained that he cannot support extending CBM, saying that “a property right should be a property right.” Collins also expressed confusion regarding why this matter is pressing at the moment, saying: “I am confused as to why we are considering the extension of a program that is scheduled to sunset in 2020. 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.” Ultimately, Collins urged his colleagues to oppose this “premature amendment.”

Congresswoman Suzan DelBene (D-WA) echoed the comments of Collins, but 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. DelBene pointed out that there have, indeed, been instances where the Patent Trial and Appeal Board (PTAB) has been accused of expansively interpreting its own jurisdiction beyond what Congress envisioned when the AIA was passed.

The amendment to extend CBM was defeated by a vote of 18-13. At least for now, it is not in the House bill. If and when the bill gets considered on the floor of the House, extension of CBM could resurface in one way or another.