On September 10, 2015 in the case Symphony Health Solutions Corp. v. IMS Health Inc., (CBM2015-00085) the U.S. Patent Trial and Appeal Board (PTAB) granted institution of a Covered Business Method (CBM) review under the Leahy-Smith America Invents Act to determine whether an issued U.S. patent related to healthcare “data scrubbing” software is invalid. This ruling marks the first time the United States Patent & Trademark Office (USPTO) has definitively ruled that a patent directed to de-identifying patient information from healthcare data may be challenged in a CBM review.
The America Invents Act, passed by Congress in September 2011, provided a new type of invalidity proceeding at the PTAB called a Covered Business Method review. Litigants accused of patent infringement may now file a CBM petition at the PTAB to challenge the validity of “covered business method” patents before a panel of administrative patent judges at the USPTO. To be eligible for CBM review under the new Act, a patent must be a “covered business method” patent and must be directed to “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.” AIA § 18(d)(1).
Ever since the new CBM proceedings began in November 2012, an open question for healthcare providers and healthcare IT companies has been whether U.S. patents directed to healthcare data analytics might fall within the scope of “covered business method” patents and thus be subject to CBM review. This question has been especially important for healthcare companies accused of infringing patents owned by competitors.
In Symphony Health, the patent owner IMS Health Inc. sued Symphony Health Solutions Corp. for patent infringement in December 2013 alleging infringement of U.S. Patent No. 8,473,452 (“the ’452 Patent”). The ’452 Patent relates to a system and method for gathering and analyzing health care related data, specifically, techniques for de-identifying individuals from pharmaceutical data to maintain privacy and comply with laws passed to prevent the transmission of personal information within healthcare claims. In response to the allegation of patent infringement, Symphony filed a petition in February 2015 asking the PTAB to initiate a CBM review and to invalidate numerous Claims in the ’452 patent.
Three weeks ago, the USPTO granted institution of the CBM review, ruling that several Claims in IMS’s ’452 Patent fall within a broad statutory interpretation of what constitutes a “covered business method” patent. By granting institution of the proceeding, the PTAB sided with Symphony and determined it is “more likely than not” that the challenged Claims in the ’452 Patent will be ruled invalid for lack of patentable subject matter. (CBM2015-00085 at *28). Further, the PTAB stated:
The ’452 patent claims a system and method that de-identifies health care records. For example, each claim recites a “health care field” relating to “health care data,” which is described in the specification as including claims data, such as pharmaceutical, medical and hospital claims data, i.e., claims for receiving payment or reimbursement. The system and method are disclosed as being used to generate reports such as market shares, sources of business, and patient demographics. Further, the specification discusses the use of the claimed system ‘in a number of ways to help make business decisions,’ including enhanced sales force targeting, early warning of market share shifts, and accurate intelligence on market size and demand. On the present record, we determine that the claimed system and method recite activities used in the practice, administration, or management of a financial product or service. Id. at *11 (internal citations omitted).
Healthcare companies are frequent targets of patent infringement accusations, especially by non-practicing entities (NPE or “patent troll”). The USPTO’s expansion of “covered business method” proceedings to include healthcare data analytics patents offers a powerful tool for healthcare companies to fight back against accusations of patent infringement. Based on recent statistics, over 90% of patent claims challenged in instituted CBM proceedings are invalidated. It should be noted that CBM reviews must be completed within one year of institution of the proceeding (the time may be extended up to six months for good cause). See 37 C.F.R. § 42.300(c); 35 U.S.C. § 326(a)(11). Additionally, the burden of proof for invalidity in CBM proceedings is lower than similar proceedings in a district court – a CBM petitioner must only prove unpatentability by a “preponderance of the evidence” (35 U.S.C. §§ 316(e), 326(e)), whereas proof of invalidity at a federal district court requires “clear and convincing” evidence.