A CBM 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." AIA § 18(d)(1), 125 Stat. at 331; see 37 C.F.R. § 42.301(a). "In determining whether a patent is for a technological invention . . . the following will be considered on a case-by-case basis: whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution." 37 C.F.R. § 42.301(b); see, e.g., SAP Am., Inc. v. Arunachalam, No. CBM2014-00018, Paper No. 33, at 12 (P.T.A.B. Mar. 6, 2015).
This article summarizes the analysis the PTAB applied in CBM reviews instituted on section 101 grounds. Based on the foregoing, strategies for combating a petition for CBM review are proposed.
PTAB's Analysis of Petitions for CBM Review
The PTAB begins its analysis of petitions for CBM review by determining whether the patent for which review is requested meets the criteria for a CBM patent. Thus, it must be financial in nature and must not be a patent for a technological invention. If the PTAB determines that the patent does not meet these criteria, the CBM program is unavailable for the review of that patent, and the PTAB will deny the petition for CBM review. If the PTAB determines that the patent is a CBM patent, then the PTAB considers the grounds for invalidity asserted in the petition. This article addresses the PTAB's analysis in CBM reviews of patent-eligible subject matter under section 101.
The PTAB generally begins its analysis of patentability under section 101 by construing the challenged claims, applying the broadest reasonable interpretation standard. See, e.g., SAP Am., Inc. v. Versata Dev. Grp., Inc., No. CBM2012-0001, Paper No. 70, at 6–7 (P.T.A.B. June 11, 2013) (quoting Bancorp Servs., LLC v. Sun Life Assurance Co. of Can., 687 F.3d 1266, 1273–74 (Fed. Cir. 2012) ("[I]t will ordinarily be desirable—and often necessary—to resolve claim construction disputes prior to a § 101 analysis, for the determination of patent eligibility requires a full understanding of the basic character of the claimed subject matter.")).
After construing the claims, the PTAB follows the two-step analysis applied by the Supreme Court to determine patentability under section 101. First, it must determine whether the subject claim is drawn to ineligible subject matter—i.e., a law of nature, a natural phenomenon, or an abstract idea. See, e.g., Samsung Elecs. Am., Inc. v. Smartflash LLC, No. CBM2014-00194, Paper No. 9, at 12–20 (P.T.A.B. Mar. 30, 2015); SAP Am., Inc. v. Arunachalam, No. CBM2013-00013, Paper No. 61, at 15 (P.T.A.B. Sept. 18, 2014) (citing Alice, 134 S. Ct. at 2356; Mayo, 132 S. Ct. at 1296–97). If the claim is directed to patent-ineligible subject matter, the second step is to determine whether the additional claim elements are "sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself." SAP, No. CBM2013-00013, Paper No. 61, at 15. In applying the second step of the analysis, the PTAB in one case found that the claim limitations did not transform the claim into patent-eligible subject matter where the "specification treats as well-known all potentially technical additions to the claims." Samsung Elecs. Am., Inc. v. Smartflash LLC, No. CBM2014-00193, Paper No. 7, at 13 (P.T.A.B. Apr. 2, 2015).
Strategies for Combating Petitions for CBM Review
Strategies to combat petitions for CBM review fall into two categories: establish either that (1) the patent that is the subject of the petition is not a CBM patent and, therefore, not subject to CBM review; or (2) the challenged claims are patent-eligible under section 101. Among the potential strategies for combating a petition for CBM review are the following: (1) not asserting the patent, because the CBM review program is only applicable to asserted patents; (2) establishing that the patent in question is not a CBM patent because either (i) the patent does not meet the financial-in-nature requirement of AIA section 18(d)(1), or (ii) the patent is for a technological invention; (3) establishing that the invention is not drawn to an abstract idea; (4) establishing that the existing claim limitations are sufficient to prevent the claim from preempting the abstract idea; or (5) filing a motion to amend with substitute claims containing limitations sufficient for the claim to be either (i) a patent-eligible application of an abstract idea, or (ii) for a technological invention.
Establish that the patent is not a CBM patent. The CBM review program is applicable only to CBM patents. AIA § 18, 125 Stat. at 329–31. A patent is eligible for CBM review if it has at least one claim drawn to a CBM. See, e.g., Samsung, No. CBM2014-00194, Paper No. 9, at 7–8.
To be a CBM patent, a patent must meet the financial-in-nature requirement of AIA section 18(d)(1). See, e.g., Samsung, No. CBM2014-00194, Paper No. 9, at 8–19. The PTAB has rejected the argument that the financial-in-nature requirement of section 18(d)(1) should be interpreted narrowly to cover only technology used specifically in the financial or banking industry. It is sufficient, for example, to satisfy the financial-in-nature requirement of section 18(d)(1) that a claim requires payment to be made. Further, the PTAB has noted that the "legislative history explains that the definition of covered business method patent was drafted to encompass patents 'claiming activities that are financial in nature, incidental to a financial activity or complementary to a financial activity.'" Samsung, No. CBM2014-00194, Paper No. 9, at 9 (quoting Transitional Program for Covered Business Method Patents—Definitions of Covered Business Method Patent and Technological Invention, 77 Fed. Reg. 48,734, 48,735–36 (Aug. 14, 2012)).
Because the definition of CBM patent excludes patents for technological inventions, one avenue for combating a petition for CBM review is to establish that the patent is for a technological invention. However, while the PTAB construes CBM patents broadly in determining whether the financial-in-nature requirement is met, the PTAB construes narrowly the exclusion for patents for technological inventions. Compare Samsung, No. CBM2014-00194, Paper No. 9, at 8–19, with Samsung Elecs. Am., Inc. v. Smartflash LLC, No. CBM2014-00204, Paper No. 9, at 11–13 (P.T.A.B. Mar. 30, 2015).
Merely reciting a generic hardware device known in the prior art is not sufficient for a claim to be considered drawn to a technological invention. Thus, claims drawn to a general purpose computer programmed to perform routine tasks, without more, will not be found patent-eligible. See U.S. Bancorp, No. CBM2013-00014, Paper No. 33, at 6. "[T]he use of a computer to perform direct deposit with electronic funds transfer [is not sufficiently limiting because it] 'simply performs more efficiently what could otherwise be accomplished manually.'" Id. at 16 (quoting Bancorp, 687 F.3d at 1279). For example, the PTAB held that claims reciting "user interface," "data carrier interface," "program store," "processor," "mobile communications device," and "audio/video player" were not drawn to a technological invention. Samsung Elecs. Am., Inc. v. Smartflash LLC, No. CBM2014-00200, Paper No. 9, at 11–13 (P.T.A.B. Mar. 30, 2015).
The PTAB rejected an argument that claims were directed to a technological invention where the asserted novelty of the invention was not any specific improvement to software or hardware, but in a method of controlling access to data. Samsung Elecs. Am., Inc. v. Smartflash LLC, No. CBM2014-00190, Paper No. 9, at 9–10 (P.T.A.B. Apr. 2, 2015). The PTAB found significant the patent's acknowledgement that the "physical embodiment of the system is not critical and a skilled person will understand that the terminals, data processing systems and the like can all take a variety of forms." Id. at 10.
Establish that the claims are not abstract. Showing that specialized computer hardware is necessary to implement the claimed methods will likely suffice to establish that the claims are not abstract. See Int'l Sec. Exch., LLC v. Chi. Bd. Options Exch., Inc., No. CBM2013-00049, Paper No. 53, at 13 (P.T.A.B. Mar. 2, 2015). But specifically programming generic hardware to implement the claimed methods is unlikely to be sufficient. An argument that the claimed methods cannot be performed manually also has been unsuccessful. Id. at 15, 18.
Arguments that claim limitations involve a specialized computer or are otherwise limited will not be successful in establishing that claims are drawn to a technological invention or are not abstract if deemed to be reading unclaimed features discussed in the specification into the claims. See, e.g., Fid. Nat'l Info. Servs., Inc. v. Checkfree Corp., No. CBM2013-00030, Paper No. 51, at 4–5 (P.T.A.B. Dec. 22, 2014). In Checkfree, the PTAB rejected the patent owner's argument that, because the specification discloses algorithms and source code, the payment service provider computer is programmed specially to perform the payment form determination and payment direction steps recited in claim 1 and to possess the corresponding capabilities specified for the system components in claims 11 and 21. The PTAB refused to read those limitations into claims in which these features were not recited. Id. at 6–7.
Similarly, "the use of the Internet is not sufficient to save otherwise abstract claims from ineligibility under § 101." Regions Fin. Corp. v. Ret. Capital Access Mgmt. Co., No. CBM2014-00012, Paper No. 28, at 19 (P.T.A.B. Mar. 23, 2015) (quoting Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 716 (Fed. Cir. 2014)). The PTAB rejected a patent owner's argument that "claim limitations such as a Web application, a point-of-service ('POSvc') application operating in a service network atop the World Wide Web, and a routed transactional data structure, indicate that the claim is directed to a technological invention," finding that those contentions were based on claim constructions that the PTAB declined to adopt. See SAP, No. CBM2013-00013, Paper No. 61, at 13–15. The PTAB noted that the claim was not drawn to the web application or the network, but to a method of performing a transaction. Id. at 13–14.
Establish That the Claims Are Patent-Eligible under Supreme Court Precedent
For CBM patents, to successfully combat a CBM petition grounded on section 101, the patent owner must establish patent eligibility (although technically the petitioner has the burden of proof) under Supreme Court precedent.
The PTAB has found many claimed inventions in business method patents issued from applications filed pre-Bilski to be abstract where they can be performed by human thought alone. See, e.g., Regions Fin. Corp., No. CBM2014-00012, Paper No. 28, at 18 (quoting CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1373 (Fed. Cir. 2011) ("[A] method that can be performed by human thought alone is merely an abstract idea and is not patent-eligible under § 101.")). In final written decisions issued in CBM reviews, the PTAB has held patent-ineligible, under section 101, claims drawn to methods and apparatus for: pricing products and services (SAP Am., Inc. v. Versata Dev. Grp., Inc., No. CBM2012-00001, Paper No. 81 (P.T.A.B. Sept. 13, 2013)); appraising real estate (Interthinx, Inc. v. Corelogic Solutions, LLC, No. CBM2012-00007, Paper No. 58 (P.T.A.B. Jan. 30, 2014)); transferring funds between a checking account and a savings account (SAP Am., Inc. v. Arunachalam, No. CBM2013-00013, Paper No. 63 (P.T.A.B. Nov. 21, 2014)); converting future Social Security payments into currently available funds (U.S. Bancorp, No. CBM2013-00014, Paper No. 33); managing a collaborative activity (Salesforce.com, Inc. v. VirtualAgility, Inc., No. CBM2013-00024, Paper No. 47 (P.T.A.B. Sept. 16, 2014)); generating sales leads (LinkedIn Corp. v. AvMarkets Inc., No. CBM2013-00025, Paper No. 30 (P.T.A.B. Nov. 10, 2014)); making payments to merchants (Checkfree, No. CBM2013-00030, Paper No. 51); managing the risk of a maker of an options market in an automated trading system (Int'l Sec. Exch., No. CBM2013-00049, Paper No. 53); and causing an advertisement associated with an Internet search to be displayed along with the search results (Am. Express Co. v. MetaSearch Sys., LLC, No. CBM2014-00001, Paper No. 70 (P.T.A.B. Mar. 13, 2015)).
Although many of the PTAB's final written decisions in CBM review proceedings cite to expert testimony provided by the petitioner and the patent owner, the PTAB does not require expert testimony in cases involving easily understood technology. See, e.g., Regions Fin. Corp., No. CBM2014-00012, Paper No. 28, at 21. Expert testimony offered in support of patent owners' arguments that claims were not abstract or involved a technological invention has been of limited effectiveness. Expert testimony that the claimed methods require specialized and customized hardware and software are unlikely to establish patent eligibility where the testimony generally relates to commercial embodiments and is not supported by the patent specification. See, e.g., Int'l Sec. Exch., No. CBM2013-00049, Paper No. 53, at 15.
PTAB Decision Distinguishing Patent-Eligible vs. Patent-Ineligible Claims
Some guidance for combating CBM petitions grounded on section 101 may be gleaned from comparing claims the PTAB held to be patent-eligible with claims it held not to be patent-eligible, as in SAP America, Inc. v. Pi-Net International, Inc., No. CBM2013-00013, Paper No. 15, at 2 (P.T.A.B. Sept. 19, 2013), confirmed by SAP, No. CBM2013-00013, Paper No. 61, at 15–18. The claims involved a method for transferring funds between accounts using the Internet. In that decision, claim 1 and dependent claims 2, 3, and 11 were held patent-ineligible. Claim 1 was drawn to a "method for performing a real time Web transaction" and recited "transferring funds in real time using a 'routed transactional data structure.'" Id. at 20. The PTAB found that the limitation "routed transactional data structure" did not impose a meaningful limit on the scope of the abstract idea of transferring funds.
On the other hand, the PTAB held claim 4, which depended from claim 1 and recited that "object routing is used to complete the transfer of funds," to be patent-eligible. Id. at 21. The PTAB found that "object routing," as the PTAB had construed the term, "is a specific technique that plays a significant part in carrying out the invention recited in claim 4." The PTAB said this was a meaningful limitation because "[c]laim 4 would not cover methods that do not use object routing to complete the transfer of funds." Id. Thus, claim 4 (and claims 5 and 6, which depended from claim 4) did not preempt all practical applications of the abstract idea of transferring funds between accounts using the Internet. The PTAB contrasted "object routing," which the PTAB said "requires the use of individual networked objects to route a user from a selected transactional application to the processing provided by the service provider," with "routed transactional data structure," which the PTAB said was abstract and does not play a significant part in permitting the claimed method to be performed. SAP, No. CBM2013-00013, Paper No. 61, at 15–18. "Switching the processing of information from one resource to another, such as from one program or data base to another, is a well-known abstract concept that is not limited to any particular technical approach, such as object routing, as recited in claim 4." Id. at 17.
A CBM patent is likely to be challenged under the CBM review program by a party sued for, or charged with, infringement. Given the experience of patent owners with CBM reviews so far, careful consideration should be given to whether a patent claim is patent-eligible before asserting the patent. Many business method patent claims drafted before the Supreme Court's decisions in Bilski, Mayo, and Alice are unlikely to survive a CBM review.
The CBM review program is only available for CBM patents, which are limited to patents that are financial in nature and do not include patents for technological inventions. To combat a CBM petition based on section 101, it is necessary to establish that no claim of the patent is a CBM patent or that the claims are patent-eligible under Bilski, Mayo, and Alice. Claims must not be drawn to an abstract idea or, if they are, then the claims must add limitations that are significantly more than the abstract idea so as not to preempt the abstract idea itself. Merely adding limitations relating to generic functions of a computer or the Internet, for example, to method claims reciting mental steps is unlikely to bring such claims into the realm of a technological invention. On the other hand, a true technical solution to a technical problem is likely to be patent-eligible, even if it relates to a method of doing business.
Keywords: litigation, intellectual property, patent eligibility, covered business method review, technological inventions, abstract ideas