SEGA of Am., Inc. v. Uniloc USA, Inc.

Addressing the issue of what qualifies as a covered business method (CBM) under the America Invents Act (AIA), the U.S. Patent and Trademark Office’s (PTO’s) Patent Trial and Appeal Board (PTAB or Board) denied institution of a CBM review, finding the patent was directed to technology that restricts the use of software and had no particular relation to financial products or services. SEGA of Am., Inc. v. Uniloc USA, Inc., Case No. CBM2014-00183 (PTAB, Mar. 10, 2015) (Praiss, APJ).

SEGA filed a petition seeking a CBM review of a patent related to the creation and verification of unique user software licenses. The claimed system compared local and remote keys to determine if the user was allowed unrestricted use of the software. The issue was whether the claimed system met the definition of a CBM as defined in AIA § 18(d)(1), i.e., whether it is “used in the practice, administration, or management of a financial product or service.”

SEGA argued the patent was a CBM because the specification disclosed a registration process that required payment information. The Board explained held that in the context of the claimed system, payment details, including a credit card number, are not themselves financial transactions but are simply information unique to each user. The claimed system uses such information to generate unique local licensee keys. The Board concluded that generating this licensee key does not itself fit in the definition of a CBM.

SEGA also argued the challenged patent was similar to patent at issue in a previous CBM review, which was directed at determining a price. The Board distinguished the challenged patent, which is used to prevent software piracy, from the earlier considered patent that included such activities as moving money or extending credit.  As the Board explained, even in relation to the licensing of digital data or software, the challenged patent does not require a sale, process a payment, determine a cost, facilitate a payment or extend credit.

The Board thus denied the CBM petition on standing grounds, concluding that patent was not directed to a system for performing data processing or other operation in relation to a financial product or service or claim an activity financial in nature. Rather, the patent claims the creation and verification of a unique user software license, which may be based on a user’s credit card or other payment information.