On November 21 2016 in a rare reversal of a Patent Trial and Appeal Board (PTAB) decision, the Federal Circuit in Unwired Planet, LLC v Google Inc determined that the PTAB had incorrectly used an overly broad definition of a 'covered business method' (CBM) patent in instituting a CBM review of a challenged patent. The court held that the PTAB had improperly relied on legislative history that was not reflected in the more limited final statutory definition.
The America Invents Act created three forms of review proceeding for challenging patent claims before the PTAB:
- post-grant review;
- inter partes review; and
- CBM patent review.
CBM reviews are a special form of post-grant review that can be filed only when the time-limited post-grant review is unavailable and provide a route for attacking a type of patent (ie, a patent directed towards financial products or services) that was of special concern to the legislature.
Section 18(d)(1) of the America Invents Act defines a 'CBM' patent as "a patent that claims a method or corresponding apparatus for 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". The US Patent and Trademark Office regulations adopted this definition without change.
Unwired Planet was the owner of the patent in suit (US 7,203,752), which described a system and method for managing location information in wireless communications devices (eg, cell phones). A user can set privacy preferences that determine whether third-party client applications can access the device's location information. When a client submits a request to the system requesting location information for a particular wireless device, the system determines whether to provide the requested information based on the privacy preferences.
Google petitioned for CBM review of some of the claims from the patent. The PTAB made a threshold determination that the claims fell within the scope of a CBM patent. However, the PTAB based its review on "whether the patent claims activities that are financial in nature, incidental to a financial activity, or complementary to a financial activity". Because the client application could be associated with a service or goods provider (eg, a hotel, restaurant or store) that wished to send advertising to wireless devices in the area, the PTAB held that the subject matter of the claims was incidental or complementary to the financial activity or service or product sales.
The Federal Circuit reversed, holding that the PTAB had erred in applying a standard that was broader than the statutory standard established in the America Invents Act. More specifically, whether claims are "incidental" or "complementary" to financial activity conflicts with the final statutory definition of CBM. This language is not found in the America Invents Act definition and appears only in a statement from a single senator in the legislative history. However, the legislative history contains inconsistent views and statements, and the views of a single legislator are not controlling.
The Federal Circuit further noted that the PTAB's overly broad definition would render the America Invents Act statutory limitation on CBM review superfluous because nearly any patent would, "at some level, relate to a potential sale of a good or service". In this case, the challenged claims did not disclose or describe a financial product or service, and thus were not CBM claims under the America Invents Act definition.
The Federal Circuit's ruling will be beneficial for patent owners. The more limited interpretation of CBM should significantly limit the number of patent claims that can be subjected to CBM review. Opponents seeking to challenge these patents will need to bring challenges under the inter partes review procedures, which permits challenges on more limited substantive grounds.
This article first appeared in IAM. For further information please visit www.iam-media.com.