E-Loan, Inc. v. IMX, Inc.

Considering whether to institute a covered business method (CBM) review for a patent directed to mortgage loan systems and methods, the Patent Trial and Appeal Board (PTAB or Board) agreed that the patent was a covered business method patent, but found the unpatentability assertions to be lacking and denied institution. E-Loan, Inc. v. IMX, Inc., Case No. CBM2015-00144 (PTAB, Oct. 16, 2015) (Calve, APJ).

IMX brought suit against E-Loan, asserting infringement of a patent directed to processing mortgage loan applications. That case was stayed after the U.S. Patent and Trademark Office (USPTO) granted E-Loan’s request for ex-parte reexamination based on four prior art references. That proceeding was instituted prior to the availability of the 2013 AIA post-issuance proceedings. That re-examination concluded with most claims cancelled, but with four claims making it through unscathed. Meantime, E-Loan had filed another request forex-parte re-examination, asserting five additional prior art references, but the USPTO denied that request.

A week after the first ex parte reexamination concluded, E-Loan filed a petition for CBM review, asserting that the four remaining claims are directed to ineligible subject matter under § 101. The Board first considered whether the patent was subject to CBM review and concluded that the claimed loan application processing qualified as a financial product or service, giving short shrift to IMX’s counter-arguments that the claims covered only the beginning stages of that process and could be used in other industries. Next turning to the technological invention exception, the Board disagreed with IMX that the patentability confirmation from ex parte re-examination was relevant. The Board instead concluded that the claims solved the non-technical, business problem of the conventional, paper-intensive loan application process. The Board thus found the claims subject matter eligible for CBM review. The Board largely relied on the patent’s own characterizations of automating previously manual processes to conclude that the claims likely cover ineligible subject matter. The Board thus instituted the CBM review.

Three days later, E-Loan filed yet another CBM request, this time asserting obviousness based on a combination of three newly advanced prior art references. The Board largely repeated its earlier financial service and technological invention discussion to again find the claimed subject matter to be eligible for CBM review. Then, turning to the merits, the Board concluded that the prior art combination lacked the bidding step called for by the claims and consequently denied E-Loan’s request to institute the second CBM review.