The Patent Trial and Appeal Board (PTAB or Board) found challenged claims directed to data security to be subject to covered business method (CBM) patent review notwithstanding the absence of claim limitations directed to a financial product or service, and concluded that the patent was subject matter ineligible under § 101. Square, Inc. v. Protegrity Corp., Case No. 2014-00182 (PTAB, Mar. 2, 2016) (Petravick, APJ).

Square filed a petition for CBM review of Protegrity’s patent on grounds of patent ineligible subject matter under § 101, characterizing the claims as directed to the business method disclosed in the patent specification. A CBM patent is one 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.” America Invents Act § 18(d)(1). The legislative history indicates that “financial product or service” should be interpreted broadly.

Protegrity argued that the challenged claims were not directed to a financial product or service because “not a single word in a single claim of the . . . patent is purportedly directed to a ‘financial product or service’” (emphasis in original). The Board nevertheless instituted, explaining in its final written decision that it does not interpret the statute as requiring “literal recitation of terms of data processing of financial products or services.” Patent claims must only be broad enough to cover a financial product or service. In this regard, the Board noted that the patent discloses protection attributes that are used to protect against unauthorized access of data portions in a database, and that “banking is a field where protection against unauthorized access to databases that are used for administering and storing sensitive information is desired. . . . Banking is a financial activity.”  

The Board further noted that the patent specification included a figure depicting a “financial manager” as a person authorized to access the data element types disclosed in the patent. In addition, the Board pointed out that a declarant on behalf of the patent owner testified that the standard examples of market concern include protection of data items such as credit card numbers, credit card PIN numbers and salary information. Looking at the totality of circumstances, the Board agreed with Square that a preponderance of the evidence showed that at least one claim of the patent encompasses activities “that are financial in nature, incidental to a financial activity, or complementary to a financial activity.”  

The Board rejected the patent owner’s argument that previous Board decisions demonstrate that the challenged patent is not a CBM patent. The panel noted that the prior Board decisions are neither precedential nor binding on the current panel. In addition, the panel explained that review of the allegedly conflicting decisions shows that “whether the patent is a covered business method patent rests upon the specific facts of those proceedings.” 

Practice Note: For more information on CBM review and the topic of “financial product or service,” see this issue’s article onBlue Calypso, LLC v. Groupon, Inc.