The Patent Trial and Appeal Board recently ruled, in a case of first impression, that a patent challenged under the Covered Business Method (“CBM”) transitional review program was not directed to a financial product or service. In PNC Financial Services Group, Inc. v. Intellectual Ventures I, LLC, CBM2014-32 (“PNC Financial”), the petitioners challenged U.S. patent 7,757,298 on grounds that claims 1-16 were unpatentable under 35 U.S.C. §101. But the Board did not even reach the merits of the dispute because it determined, as a threshold matter, that the challenged patent failed to qualify for CBM review.
As defined by the AIA, “covered business method patent” means a
patent that claims a method or corresponding apparatus … used in the practice, administration or management of a financial product or service, except that the term does not include patents for technological inventions.1
In previous cases, the Board has interpreted “covered business method” broadly to encompass patents claiming activities that are financial in nature, incidental to a financial activity or complementary to a financial activity, and to not be limited to the financial services industry.2 Even where the challenged claims do not specifically recite financially-related elements, the Board has relied upon discussion of financial matters in the specification to establish that a patent qualifies for CBM review.3
However, in PNC Financial the Board found that the ’298 patent did not meet the requirements of a CBM-eligible patent. According to the Board, the ’298 patent relates to “methods and apparatus for identifying and characterizing errant electronic files stored on computer storage devices.”4 Although petitioners asserted that the ’298 patent qualified for CBM review, the only argument they made to establish that the patent is directed to a financial product or service was that the patent owner accused petitioners of infringing the ’298 patent by offering financial services. Petitioners did not point to anything in the ’298 patent or prosecution history, or any other evidence, as tending to show that the patent relates to a financial product or service. Rather, according to petitioners, the ’298 patent is “deemed” to be directed to a financial product or service as a result of the infringement allegation against petitioners’ financial services.5 In its preliminary response, patent owner argued, inter alia, that the ’298 patent is directed to computer administrative operations common in business environments with no particular relation to the financial services sector, and that petitioners’ approach “would lead to inconsistent findings that the same patent is a covered business method patent in some cases — but not others — depending upon the nature of the accused product.”6
In denying the petition, the Board found that the ’298 patent did not fall within the financial product or service requirement. First, the Board explained that the claims of the ʼ298 patent describe software systems that have general utility not specific to any application, and that they do not refer to data processing or other operations used with a financial product or service, or to activities of a financial nature or that are incidental or complementary to a financial activity.7 Next, the Board noted that petitioners did not cite any portion of the ’298 patent specification, claims or file history to support its argument, and that even petitioner’s own expert declaration provided no discussion showing how the patent was allegedly directed to a financial product or service.8
Ultimately, the Board found that petitioners’ argument boiled down to nothing more than the fact that the patent was asserted against financial services provided by petitioners. The sole legal support for that position was a statement by Senator Schumer from the legislative history that “if a patent holder alleges that a financial product or service infringes its patent, that patent shall be deemed to cover a ‘financial product or service.”9
However, the Board squarely rejected petitioners’ argument. Taking Senator Schumer’s statement into context along with the balance of the AIA legislative history, the Board ruled that the statement does not open up all patents asserted against a financial institution to CBM review; rather, asserting a patent against a financial product or service is one factor to be considered.10 Drawing a bright-line position, the Board held that the mere assertion of a patent against a financial institution, without more, is not sufficient to turn a general data processing patent into a covered business method patent.11 Since petitioners offered no other evidence that the ’298 patent is directed to a financial product or service, the Board denied the petition on this basis.12
Thus, the lesson of PNC Financial is clear: a party seeking to challenge a patent under the CBM program should not rely solely on the fact that the patent was asserted against a financial product or service. Rather, a challenger should provide some evidence from the patent itself or from the patent’s file history tending to show that the patent meets the financial product or service requirement.