In SightSound Techs., LLC v. Apple, Inc., Appeal Nos. 2015-1159, -1160, the Federal Circuit affirmed a PTAB decision finding certain claims to be invalid for obviousness during a CBM proceeding.
Apple filed CBM petitions against two SightSound patents relating to methods for the electronic sale and distribution of digital audio and video. The petitions only specifically alleged anticipation under § 102 but also included facts supporting obviousness under § 103. The PTAB determined that the patents are CBM patents and exercised its discretion to initiate review on obviousness grounds. For fairness, SightSound was given the opportunity to respond to the obviousness issue. The PTAB invalided the patent claims as obvious. SightSound appealed.
The Federal Circuit first held that it lacked jurisdiction to review the PTAB’s decision to institute on grounds not explicitly raised in the petitions. 35 U.S.C. § 324(e) makes the determination to institute a CBM, including the grounds upon which it is instituted, final and nonappealable, similar to § 314(d) for determinations to institute an IPR.
However, the Federal Circuit also held that it has jurisdiction to review the PTAB’s determination of whether SightSound’s patents are CBM patents that qualify for CBM proceedings. Applying the arbitrary and capricious standard, the court affirmed the Board’s decision that the patents are CBM patents. The court noted that SightSound’s patents recite the electronic movement of money between financially distinct entities, an activity that is “financial in nature,” and do not include novel and non-obvious technological features that would otherwise exclude them from CBM treatment.