CRS Advanced Technologies, Inc. v. Frontline Technologies, Inc.

In a Covered Business Method (CBM) post-issuance review, the Patent Trial and Appeal Board (PTAB) cancelled all claims under review, concluding that the challenged claims were directed to non-eligible subject matter directed to a well-known process, merely implementing it in a networked computing environment.  In doing so, the Board offered an extensive review of Supreme Court and U.S. Court of Appeals for the Federal Circuit precedent on the issue of patent-eligible subject matter.  CRS Advanced Technologies, Inc. v. Frontline Technologies, Inc., Case CBM2012-00005 (PTAB, Jan. 21, 2014) (Medley, APJ.).

Responding to litigation commenced by Frontline, CRS filed a petition for CBM review of the asserted Frontline patent, which relates to human resources management, in particular temporary staffing or “substitute fulfillment.” The patent explains the invention as being directed to “automating the performance of substitute fulfillment to assign a replacement worker to substitute for a worker during a temporary absence, performing placement of floating workers, tracking absences and entitlements of workers, notifying interested parties regarding unexpected events and daily announcements, and bidding for temporary worker.”

CRS contended that the challenged claims were proper subject matter for CBM review and unpatentable under Section 101 as covering the abstract idea of a method hiring temporary workers.  Frontline argued in response that the claims were not directed to “business methods” because “[t]here are no claim elements directed to money, financial transactions, or any type of activity that is inherently a financial product or service.”  The Patent and Trademark Office (PTO), in instituting a CBM proceeding, noted that the legislative history of the America Invents Act (AIA) explained that the definition of covered business method patent encompassed patents “claiming activities that are financial in nature, incidental to a financial activity or complementary to a financial activity.”

In its final written decision, the Board recounted Supreme Court and Federal Circuit precedent defining the boundaries of eligible subject matter under Section 101.  In particular, the Board looked to the machine-or-transformation test endorsed by the Supreme Court in Bilski II (IP Update, Vol. 13, No. 7) and the analysis in SiRF (IP Update, Vol. 13, No. 4) where the Federal Circuit explained that claims were directed to patent-eligible subject matter only  computing technology was integral to the claimed process.  The Board concluded that the challenged claims were directed to abstract methods of substitute fulfillment that simply took the known, pre-existing process of substitute fulfillment and implemented it in a networked computing environment.

The Board dismissed Frontline’s argument that the challenged claims were similar to the eligible GPS-based claims in SiRF because its claims utilized “one or more computers,” “Internet communication link” and “website.” The Board noted that those terms recite technology that was employed only for the purpose of creating more efficient communication and data storage, which were the basic functions of those components: “[i]n other words, the claims here, even with the recitation of computing technology, are not part of a ‘technological advance’ of any sort.” Applying its method claim analysis to the challenged system claims, which essentially tracked the method claims but added a “database” and “system” for performing the method, the Board noted that these claims were simply an alternative claim format and were patent ineligible for the same reasons: “[a]s the Supreme Court has explained, the form of the claims should not trump basic issues of patentability.”

Practice Note:  Because subject matter eligibility is available as a ground for challenging claims under CBM review (unlike inter partesreview) and is statistically relatively successful if a proceeding is instituted by the Board, petitioners (who are defendants in district court litigation) may consider whether any claims in an asserted patent may be subject to CBM, even claims that are not asserted in the related litigation.