NRT Technology Corporation was not successful in petitioning the PTAB to institute CBM review of U.S. Patent No. 6,081,792, but was successful in moving a district court to dismiss an infringement action concerning the same patent on the basis that the patent claims ineligible (abstract) subject matter. Global Cash Access, Inc. v. NRT Tech. Corp., Case No. 2:15-cv-00822 (D. Nev. Mar. 25, 2016) (Order) (granting motion to dismiss). The apparently inconsistent PTAB and district court dispositions will no doubt encourage accused-infringers/putative-petitioners who do not succeed in initiating AIA (trial) review under a low evidentiary burden to try to invalidate the patent in district court under a higher evidentiary standard. Further, these decisions collectively demonstrate how a PTAB’s institution decision denying AIA review can be, without an appeal, effectively nullified by a parallel or later court proceeding.

Before the PTAB, NRT petitioned for CBM review (CBM2015-00167) of all nine claims of the ’792 patent, which generally discloses (and claims) methods of using a modified automated teller machine (ATM) that allows a customer to obtain cash from an account via various processes (such as an ATM process or a point-of-sale (POS) process) using both debit and credit cards. The PTAB concluded that the patent qualifies as a covered business method patent, but that the patent does not claim subject matter ineligible under 35 U.S.C. § 101. The PTAB rejected NRT’s argument that the claimed methods are directed to fundamental economic practices and, thus, are ineligible for a patent. NRT’s argument, according to the PTAB, was based on an oversimplification of what the patent claims, and NRT’s analysis omitted consideration of the claimed method steps as an ordered combination to determine whether the combination renders the claims patent eligible. Consistently, the PTAB also found unpersuasive NRT’s prior art-based challenges to these claims, further suggesting that the claimed methods do not encompass well-understood, routine, conventional activities already used to obtain cash. Accordingly, the PTAB denied CBM review, effectively determining that it was less likely than not that any of the challenged claims was unpatentable.

Later presented with the same issue and facts on a motion to dismiss the infringement action at the pleading stage, the district court not only effectively concluded that at least one of the challenged claims is unpatentable, but affirmatively concluded that all of the challenged claims are invalid under § 101 by clear and convincing evidence. Thus, NRT ultimately obtained from a district court what it could not even initially get from the PTAB (the PTAB’s non-institution decision is unreviewable on appeal). While the PTAB determined that the “claims are directed to particular methods of providing money to an account’s holder using an ATM via a POS transaction after an ATM transaction had failed,” the district court concluded that the “claims, as a whole, are directed to the abstract idea of obtaining cash from a bank account through an alternative transaction after a first transaction fails.”

The district court “disagree[d] with the PTAB’s threshold analysis” yet offered no explanation for its disagreement. Too bad, because one can hardly discern a substantive difference in the two arbiters’ comprehension of what the claims recite, yet the two reach opposite legal conclusions after considering the same Supreme Court precedents: Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014), and Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012). Apparently one of the two arbiters is wrong in its conclusion of patent eligibility. However, perhaps the Supreme Court’s recent precedents concerning non-statutory exceptions to patent eligibility, as a threshold inquiry to patent validity, are not sufficiently clear to avoid these inconsistent legal conclusions.