The Federal Circuit issued a decision in Secure Axcess, LLC v. PNC Bank Nat’l Ass’n, No. 2016-1353, 2017 WL 676601 (Fed. Cir. Feb. 21, 2017). In its decision, authored by Judge Plager, the Federal Circuit applied the Unwired Planet decision and reversed the Patent Trial and Appeals Board (“PTAB”) and reiterated that a Covered Business Method (“CBM”) Patent must claim a “method or apparatus . . . used in the practice, administration, or management of a financial product or service,” expressly excluding patents which claim methods or apparatuses that are merely “incidental to a financial activity.” Id. at *8.
Section 18(d) of the AIA provides that a patent meets CBM Review eligibility if it claims a method or apparatus for “performing data processing or other operations used in the practice, administration, or management of a financial product or service,” with a provision excluding “patents for technological inventions.” In Secure Axcess, the PTAB interpreted Section 18(d) to cover patents that claim methods “incidental to a financial activity.” Id. The Federal Circuit rejected this interpretation as going beyond the scope of the statute and “not [being] in accordance with law.” Id. at *5.
First, the Federal Circuit reasoned that because the issue concerned the scope of the statutory definition of a CBM patent, the question is one of law. Id. Thus, the Federal Circuit applied a de novo standard of review to the decision. Id. The Federal Circuit reasoned that in reviewing the PTAB’s decision to institute, it was reviewing whether the PTAB had acted “in excess of statutory jurisdiction, authority, or limitations.” Id.
Second, the Federal Circuit considered the statutory definition of CBM Patent from Section 18(d) of the AIA. The Federal Circuit’s analysis divided the definition into two parts: 1. “a patent that claims a method or apparatus for performing data processing or other operations” and 2. “used in the practice, etc., of a financial product or service.”
In evaluating the first clause, “a patent that claims a method or apparatus for performing data processing or other operations,” the Federal Circuit held that the claims determine whether a patent is a business method patent. The Federal Circuit further held that the method or apparatus must explicitly claim the “use” in the practice of the “financial product or service.” The Federal Circuit reasoned if CBM Review covered “any operations that happen to be used in the ‘practice, administration, or management of a financial service’ . . . nearly anything that is invented” would be covered, vitiating the restriction.
In evaluating the second clause “used in the practice, etc., of a financial product or service,” the Federal Circuit held that “used in the practice” entails more than just “incidental to” or “complementary to” financial activity. The Federal Circuit did not define “used in the practice,” but stated that the practice or use must be “financial in nature,” referring to its decision Blue Calypso. Blue Calypso, LLC v. Groupon, Inc., 815 F.3d 1331 (Fed. Cir. 2016). The Federal Circuit did provide some guidance in stating that “the claim need only require one of a ‘wide range of financial activities.’”
Mirroring the reasoning in Secure Axcess, the PTAB issued a ruling in Google Inc., v HBAC MatchMaker Media, Inc. CBM2016-00097, Paper 16 (February 27, 2017). In Google, the challenged patent was directed to targeted electronic advertising on a webpage. The PTAB declined to institute the CBM Review, stating advertising alone is not financial activity without the claims specifically targeting an activity that is financial in nature.
In Google, the Petitioner had argued that advertising time is bought and sold, and the buying and selling made it a financial activity. The PTAB rejected the argument stating that buying and selling advertising time does not make advertising a financial activity. The PTAB analogized the advertising patent to a patent for a ditch digging device. The PTAB reasoned that a ditch digging device creates soil which can be bought and sold, but the buying and selling of soil does not make the ditch digging a financial activity, just as buying and selling advertising time does not make advertising a financial activity.
Second, the PTAB considered the argument that advertising leads to sales. The PTAB reasoned that possible sales from advertising are too speculative to be considered financial activity. The PTAB’s analysis focused on the fact that the claims themselves do not have the “financial activity” and since the claims did not contain financial activity, the sales, the patents were deemed to not be CBM patents.
With a CBMR challenge the only method of requesting a Section 101 challenge at the PTAB, these decisions suggest a trend in reigning in CBMR eligibility, swinging the pendulum slightly back in favor of Patentees at this time.