Microsoft Corporation Inc. v. ADC Technology Inc.

Addressing whether an abstract idea involves “financial product or service” in the context of covered business method (CBM) reviews, and providing additional guidance on the analysis, the Patent Trial and Appeal Board (PTAB or Board) found the challenged patent to be directed to financial products or services. Microsoft Corporation Inc. v. ADC Technology Inc., Case CBM2015-00026 (PTAB, July 3, 2015) (Tierney, APJ).

The petitioner sought a CBM review for a patent directed to transmitting video game and karaoke software. The parties disputed whether the patent was subject-matter eligible for a CBM review.

The petitioner argued that the claims required a host facility and that the patent taught that the host facility included a financial charging system and further performs a financial charging process when transmission of programs and/or data was complete. The patent owner argued that the claims did not recite a charging process and that no claim terms hinted to a financial activity.

The Board found that the patent was directed to solving the problem of purchasing game cassettes by transmitting video game and karaoke software. The Board explained that the patent described a financial charging process for its data transmission service. Noting that literal recitation of financial products or services were not required in a claim, the Board concluded that challenged patent claimed a system that was, at a minimum, complementary or incidental to a financial activity.

The petitioner also argued that the claims did not satisfy the technological invention exception because the claims contained general purpose computers, communication hardware and common programming. The petitioner further relied on its expert declarant in arguing that the claimed features were not novel or unobvious over the prior art. The patent owner argued that patentability of the claims was confirmed in a reexamination and appeal process. The patent owner also argued that the claims solved the technical problem of preventing unwarranted access to program and/or data.

The Board credited the testimony of the petitioner’s declarant and concluded that the claims were directed to generic hardware combined with routine programming. The Board also found that the patent owner failed to identify where the technical problem was discussed in the patent and found that the problem was identified as purchasing game cassettes. Thus, the Board concluded that the patent was eligible for a CBM review.

Practice Note: If a claim element is described (in this specification) as performing a financial activity, and the claim does not recite more than generic hardware and routine programming, the patent will likely be found eligible for CBM review (IP Update, Vol. 18, No. 6).