Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-15-01812/USCOURTS-ca13-15-01812-0/pdf.json

Parties Involved:
Google Inc.
Appellee
Unwired Planet, LLC
Appellant

Document Text:

United States Court of Appeals 

for the Federal Circuit ______________________ 

UNWIRED PLANET, LLC,

Appellant

v.

GOOGLE INC.,

Appellee

______________________ 

2015-1812

______________________ 

Appeal from the United States Patent and Trademark 

Office, Patent Trial and Appeal Board in No. CBM2014-

00006.

______________________ 

Decided: November 21, 2016

______________________ 

WILLIAM M. JAY, Goodwin Procter LLP, Washington, 

DC, argued for appellant. Also represented by ELEANOR 

M. YOST; BRETT M. SCHUMAN, DAVID ZIMMER, San Francisco, CA.

JON WRIGHT, Sterne Kessler Goldstein & Fox, PLLC, 

Washington, DC, argued for appellee. Also represented by

MICHAEL V. MESSINGER, JOSEPH E. MUTSCHELKNAUS,

DEIRDRE M. WELLS; PETER ANDREW DETRE, Munger, 

Tolles & Olson, LLP, San Francisco, CA; ADAM R.

LAWTON, Los Angeles, CA.

______________________ 

Case: 15-1812 Document: 55-2 Page: 1 Filed: 11/21/2016
2 UNWIRED PLANET, LLC v. GOOGLE INC. 

Before REYNA, PLAGER, and HUGHES, Circuit Judges.

REYNA, Circuit Judge. 

Unwired Planet, LLC (“Unwired”) appeals from the 

final written decision of the Patent Trial and Appeal 

Board (“Board”) in Covered Business Method Patent 

Review No. 2014-00006. Google Inc. v. Unwired Planet, 

LLC, CBM2014-00006, 2015 WL 1570274 (P.T.A.B. Apr. 

6, 2015) (“CBM Final Decision”). Because the Board 

relied on an incorrect definition of covered business 

method (“CBM”) patent in evaluating the challenged 

patent, U.S. Patent No. 7,203,752 (the “’752 patent”), we 

vacate and remand. 

BACKGROUND

U.S. Patent No. 7,203,752

The ’752 patent is entitled “Method and System for 

Managing Location Information for Wireless Communications Devices.” It describes a system and method for 

restricting access to a wireless device’s location information. The specification describes a system that allows 

users of wireless devices (e.g., cell phones) to set “privacy 

preferences” that determine whether “client applications” 

are allowed to access their device’s location information. 

’752 patent col. 1 ll. 60–65. The privacy preferences used 

to determine whether client applications are granted 

access may include, for example, “the time of day of the 

request, [the device’s] current location at the time the 

request is made, the accuracy of the provided information 

and/or the party who is seeking such information.” Id. at 

col. 1 l. 65 to col. 2 l. 1. “In operation, a client application 

will submit a request over a data network to the system 

requesting location information for an identified wireless 

communications device.” Id. at col. 3 ll. 30–33. The 

system then determines, based on the user’s privacy 

preferences, whether to provide the requested location 

information to a client application. Id. at col. 3 ll. 38–50.

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UNWIRED PLANET, LLC v. GOOGLE INC. 3

Claim 25 is representative for the purposes of this appeal. It claims: 

A method of controlling access to location information for wireless communications devices 

operating in a wireless communications network, the method comprising: 

receiving a request from a client application for 

location information for a wireless device; 

retrieving a subscriber profile from a memory, the 

subscriber profile including a list of authorized 

client applications and a permission set for 

each of the authorized client applications, 

wherein the permission set includes at least 

one of a spatial limitation on access to the location information or a temporal limitation on 

access to the location information; 

querying the subscribe[r] profile to determine 

whether the client application is an authorized 

client application; 

querying the subscriber profile to determine 

whether the permission set for the client application authorizes the client application to 

receive the location information for the wireless device; 

determining that the client application is either 

not an authorized client application or not authorized to receive the location information; 

and 

denying the client application access to the location information. 

Id. at col. 16 ll. 18–40.

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4 UNWIRED PLANET, LLC v. GOOGLE INC. 

CBM 2014-00006

On October 9, 2013, Google Inc. (“Google”) petitioned 

for CBM review of claims 25–29 of the ’752 patent. See

Leahy-Smith America Invents Act (“AIA”), Pub. L. No.

112–29, § 18, 125 Stat. 284, 329–31 (2011).1 On April 8, 

2014, the Board instituted CBM review of all the challenged claims. As a threshold matter, the Board reviewed 

whether the ’752 patent is a CBM patent. See AIA § 18(d); 

37 C.F.R. § 42.301. The Board 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.” Google Inc. v. Unwired 

Planet, LLC, CBM2014-00006, 2014 WL 1396978, at *7 

(P.T.A.B. Apr. 8, 2014) (“CBM Institution Decision”)

(citing Board decisions). After examining the ’752 patent’s specification, the Board found the ’752 patent to be 

a CBM patent, reasoning: 

The ’752 patent disclosure indicates the “client 

application” may be associated with a service provider or a goods provider, such as a hotel, restaurant, or store, that wants to know a wireless 

device is in its area so relevant advertising may be 

transmitted to the wireless device. See [’752 patent col. 11 ll.] 12–17. Thus, the subject matter 

recited in claim 25 of the ’752 patent is incidental 

or complementary to the financial activity of service or product sales. Therefore, claim 25 is directed to a method for performing data processing 

or other operations used in the practice, administration, or management of a financial product or 

service.

 

1 Section 18 of the AIA, pertaining to CBM review, 

is not codified. References to AIA § 18 in this opinion are 

to the statutes at large.

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Id. The Board instituted the CBM review on four 

grounds: (1) claims 25–29 for unpatentable subject matter 

under 35 U.S.C. § 101, (2) claim 26 for lack of written 

description under 35 U.S.C. § 112, (3) claim 25 for obviousness under 35 U.S.C. § 103 over two references, and 

(4) claim 25 for obviousness over a different combination 

of two references. CBM Institution Decision, 2014 WL 

1396978, at *1, *4, *20–21. 

The Board issued its final written decision on April 6, 

2015. The Board upheld only the first ground, finding

that the challenged claims were directed to unpatentable 

subject matter under section 101. CBM Final Decision, 

2015 WL 1570274, at *18. Unwired appeals. Google does 

not cross-appeal. The only issues on appeal are whether 

the patents are CBM patents and whether the challenged 

claims are directed to patentable subject matter under 

section 101. We have jurisdiction under 28 U.S.C. 

§ 1295(a)(4)(A) and 35 U.S.C. § 329. Our jurisdiction 

includes review of whether the ’752 patent is a CBM

patent. Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 

1306, 1323 (Fed. Cir. 2015).

STANDARD OF REVIEW

We review Board determinations under the standards 

provided in the Administrative Procedure Act (“APA”), 5 

U.S.C. § 706. Pride Mobility Prods. Corp. v. Permobil, 

Inc., 818 F.3d 1307, 1313 (Fed. Cir. 2016); Power Integrations, Inc. v. Lee, 797 F.3d 1318, 1323 (Fed. Cir. 2015). 

“Under 5 U.S.C. § 706(2)(A), (E), the Board’s actions here 

are to be set aside if ‘arbitrary, capricious, an abuse of 

discretion, or otherwise not in accordance with law’ or 

‘unsupported by substantial evidence.’” Pride Mobility, 

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6 UNWIRED PLANET, LLC v. GOOGLE INC. 

818 F.3d at 1313.2 We review the Board’s statutory 

interpretation de novo. Belkin Int’l, Inc. v. Kappos, 696 

F.3d 1379, 1381 (Fed. Cir. 2012). 

DISCUSSION

Unwired argues that the Board erred in applying a 

standard that is broader than the AIA contemplates to 

determine whether the ’752 patent was a CBM patent. It 

notes that the challenged claims themselves do not disclose or otherwise describe a financial product or service. 

In Unwired’s view, the Board’s reliance on the sections of 

the specification discussing ways to monetize the invention by selling advertising is improper speculation. 

Unwired further argues that the Board erred by looking 

to whether the claims are “incidental” or “complementary” 

to financial activity because these broad terms conflict 

with the AIA’s limits on covered patents. 

Google responds that the Board applied the correct 

definition of CBM patents in light of the comments the 

United States Patent and Trademark Office (“PTO”) made 

during the regulatory process. Google argues that the 

“Board’s broad application of CBM review is well-known 

and has been recognized by this Court.” Google Br. 24 

(citing Versata, 793 F.3d at 1324). Google further notes 

that the specification discusses using the claimed method 

to facilitate advertising, which would thereby facilitate 

financial activity.3 In Google’s view, proposed use of the 

 

2 When reviewing the Board’s decisions pursuant to 

the APA, we often use the terms “abuse of discretion” and 

“arbitrary and capricious” interchangeably. Japanese 

Found. for Cancer Research v. Lee, 773 F.3d 1300, 1304 

n.3 (Fed. Cir. 2014). 

3 Google also argues that the limitations of certain 

non-challenged claims should be considered. It did not 

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UNWIRED PLANET, LLC v. GOOGLE INC. 7

claimed method in facilitating advertising is sufficient to 

support the Board’s determination that the ’752 patent is 

a CBM patent. We disagree.

In accordance with the statute, a CBM review is 

available only for a “covered business method patent,” 

which the AIA defines 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.” AIA § 18(d)(1).4 

The PTO adopted the statutory definition of CBM patents by regulation without alteration. Transitional 

Program for Covered Business Method Patents—

Definitions of Covered Business Method Patent and 

Technological Invention, 77 Fed. Reg. 48,734 (Aug. 14, 

2012) (“Transitional Program”). We have noted that the 

PTO has a “broad delegation of rulemaking authority in 

the establishment and implementation of” CBM review. 

Versata, 793 F.3d at 1325. “It might have been helpful if 

the [PTO] had used [its] authority to elaborate on its 

understanding of the definition [of CBM] provided in the 

statute.” Versata, 793 F.3d at 1325. But the PTO did not 

do so, instead adopting by regulation the statutory definition of a CBM patent. 37 C.F.R. § 42.301(a). 

 

raise these arguments to the Board, J.A. 81, and we 

decline to consider them in the first instance. See Redline 

Detection, LLC v. Star Envirotech, Inc., 811 F.3d 435, 450 

(Fed. Cir. 2015).

4 The parties do not dispute whether the ’752 patent is a patent for a “technological invention.” See 37 

C.F.R. § 42.301(b). 

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8 UNWIRED PLANET, LLC v. GOOGLE INC. 

To reach its decision in this case, the Board did not 

apply the statutory definition. Instead, the Board stated 

that the proper inquiry “is whether the patent claims 

activities that are financial in nature, incidental to a 

financial activity, or complementary to a financial activity.” CBM Institution Decision, 2014 WL 1396978, at *7

(citing Board cases). The Board determined that the ’752

patent was a CBM patent because the location service 

could involve an eventual sale of services. The Board 

noted that the specification provides that “client applications may be service or goods providers whose business is 

geographically oriented,” such as a “hotel, restaurant, 

and/or store.” ’752 patent col. 11 ll. 12–13. These businesses may wish to know a wireless device and its user 

are nearby so that “relevant advertising may be transmitted to the wireless communications device.” Id. at ll. 13–

17. The Board relied on this discussion to find that the 

’752 patent is a CBM patent because “the subject matter 

recited in claim 25 of the ’752 patent is incidental or 

complementary to” potential sales resulting from advertising. CBM Institution Decision, 2014 WL 1396978, at 

*7. Indeed, the finding that sales could result from advertising related to the practice of the patent is the sole 

evidence the Board relied on to find that the ’752 patent is 

a CBM patent. See id.; Google Br. 29–30. 

It is not disputed that this “incidental” or “complementary” language is not found in the statute.5 The 

origin of this language is a statement from Senator 

Schumer that the PTO quoted in its response to public 

 

5 By contrast, we endorsed the “financial in nature” 

portion of the standard as consistent with the statutory 

definition of “covered business method patent” in Blue 

Calypso, LLC v. Groupon, Inc., 815 F.3d 1331, 1340 (Fed. 

Cir. 2016). 

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comments concerning its consideration of proposed interpretations of the statutory definition for a CBM patent. 

Transitional Program (response to comment 1) (quoting

157 Cong. Rec. S5432 (daily ed. Sept. 8, 2011) (statement 

of Sen. Schumer) (appearing in the permanent edition of 

the Congressional Record at 157 Cong. Rec. 13,190 

(2011))).6 As part of this statement on general policy 

about how it will act “in administering the program,” the 

PTO response quotes a single floor comment during the 

Senate debate over the AIA as an example of the legislative history. Id. The PTO did not adopt the general 

policy statement through ruling making procedures. 

 

6 The full text of comment 1 and the response is: 

Comment 1: Several comments suggested that the 

Office interpret “financial product or service” 

broadly.

Response: The definition set forth in § 42.301(a) 

for covered business method patent adopts the 

definition for covered business method patent 

provided in section 18(d)(1) of the AIA. In administering the program, the Office will consider the 

legislative intent and history behind the public 

law definition and the transitional program itself. 

For example, the legislative history explains that 

the definition of covered business method patent 

was drafted to encompass patents “claiming activities that are financial in nature, incidental to a 

financial activity or complementary to a financial 

activity.” 157 Cong. Rec. 13,190 (2011) (statement 

of Sen. Schumer). This remark tends to support 

the notion that “financial product or service” 

should be interpreted broadly.

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10 UNWIRED PLANET, LLC v. GOOGLE INC. 

General policy statements, however, are not legally 

binding and, without adopting a policy as a rule through 

rulemaking, an “agency cannot apply or rely upon a 

general statement of policy as law.” Pac. Gas & Elec. Co. 

v. Fed. Power Comm’n, 506 F.2d 33, 38 (D.C. Cir. 1974); 

Chrysler Corp. v. Brown, 441 U.S. 281, 302 n.31 (1979)

(suggesting that general statements of policy “do not have 

the force and effect of law”); Hamlet v. United States, 63 

F.3d 1097, 1105 n.6 (Fed. Cir. 1995) (noting that a “substantive rule” is “far more likely to be considered a binding regulation” than a general statement of policy). 

Likewise, the legislative history cannot supplant the 

statutory definition actually adopted. Ratzlaf v. United 

States, 510 U.S. 135, 147–48 (1994) (“[W]e do not resort to 

legislative history to cloud a statutory text that is clear.”). 

To the extent the PTO’s response is viewed as reflecting

the legislative history, “the views of a single legislator, 

even a bill’s sponsor, are not controlling.” Mims v. Arrow 

Fin. Servs., LLC, 132 S. Ct. 740, 752 (2012) (citing Consumer Prod. Safety Comm’n v. GTE Sylvania, Inc., 447 

U.S. 102, 118 (1980)). 

The legislative debate concerning the scope of a CBM 

review includes statements from more than a single

senator. It includes inconsistent views, some of which 

speak more clearly and directly on the definition than 

does the single statement picked by the PTO. For example, various legislators offered divergent views on whether 

patents on check scanning methods and apparatuses are 

CBM patents. Senator Kyl urged that the CBM “section 

grew out of concerns” with patents on technology used to 

“clear checks electronically,” which he claimed should be 

covered as “products or services that are particular to or 

characteristic of financial institutions.” 157 Cong. Rec. 

3432–33 (2011) (statement of Sen. Kyl). Senator Durbin 

expressed concerns that the section should not cover 

patents on “novel machinery to count, sort, and authenticate currency and paper instruments.” 157 Cong. Rec. 

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UNWIRED PLANET, LLC v. GOOGLE INC. 11

13,186 (2011) (statement of Sen. Durbin). In response to 

those views, Senator Schumer assured that “it is not the 

understanding of Congress that such patents would be 

reviewed and invalidated under Section 18.” Id. (statement of Sen. Schumer). These views show clear conflict 

about whether methods and apparatuses used for counting money, sorting currency denominations, and authenticating financial instruments are within the definition of 

a CBM patent. Equally clear is that, under the Board’s 

current definition of the scope of CBM patents, such 

methods and apparatuses would be, at minimum, incidental to financial activity. Certainly, an apparatus used 

to sort currency denominations, or a method directed to 

authenticating financial instruments, are more related to 

the statutory definition than the patent in this case.

Neither the legislators’ views nor the PTO policy 

statement provides the operative legal standard. The 

authoritative statement of the Board’s authority to conduct a CBM review is the text of the statute. Exxon Mobil 

Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 568 (2005).

The Board is only empowered to review “the validity of 

covered business method patents.” AIA § 18(a)(1). To be 

sure, claims that satisfy the PTO’s policy statement may

also fall within the narrow statutory definition. See, e.g.,

Blue Calypso, 815 F.3d at 1337, 1340 (CBM patent’s claim 

included “recognizing a subsidy” step to “financially

induce” participant action) (emphasis in original). But 

patents that fall outside the definition of a CBM patent 

are outside the Board’s authority to review as a CBM 

patent. In any event, the PTO’s regulatory authority does 

not permit it to adopt regulations that expand its authority beyond that granted by Congress. “Indeed, it is the 

quintessential function of the reviewing court to interpret 

legislative delegations of power and to strike down those 

agency actions that traverse the limits of statutory authority.” Office of Commc’n of United Church of Christ v. 

FCC, 707 F.2d 1413, 1423 (D.C. Cir. 1983). 

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12 UNWIRED PLANET, LLC v. GOOGLE INC. 

The Board’s application of the “incidental to” and 

“complementary to” language from the PTO policy statement instead of the statutory definition renders superfluous the limits Congress placed on the definition of a CBM 

patent. CBM patents are limited to those with claims 

that are directed to methods and apparatuses of particular types and with particular uses “in the practice, administration, or management of a financial product or 

service.” AIA § 18(d). The patent for a novel lightbulb 

that is found to work particularly well in bank vaults does 

not become a CBM patent because of its incidental or 

complementary use in banks. Likewise, it cannot be the 

case that a patent covering a method and corresponding 

apparatuses becomes a CBM patent because its practice 

could involve a potential sale of a good or service. All 

patents, at some level, relate to potential sale of a good or 

service. See 35 U.S.C. § 101.7 Take, for example, a patent 

for an apparatus for digging ditches. Does the sale of the 

dirt that results from use of the ditch digger render the 

patent a CBM patent? No, because the claims of the 

ditch-digging method or apparatus are not directed to 

“performing data processing or other operations” or “used 

in the practice, administration, or management of a 

financial product or service,” as required by the statute. 

AIA § 18(d); 37 C.F.R. § 42.301(a). It is not enough that a 

sale has occurred or may occur, or even that the specification speculates such a potential sale might occur. 

 

7 Indeed, the fundamental incentive of obtaining a 

patent—the right to exclude—necessarily impacts the 

marketplace. See, e.g., C.R. Bard, Inc. v. M3 Sys., Inc., 

157 F.3d 1340, 1367–68 (Fed. Cir. 1998) (discussing the 

relationship between a patent owner’s right to exclude 

and marketplace monopolies); Mallinckrodt, Inc. 

v. Medipart, Inc., 976 F.2d 700, 703–09 (Fed. Cir. 1992) 

(same). 

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We hold that the Board’s reliance on whether the patent claims activities “incidental to” or “complementary 

to” a financial activity as the legal standard to determine 

whether a patent is a CBM patent was not in accordance 

with law. We do not reach the patentability of the challenged claims under section 101.

CONCLUSION

We vacate the Board’s final written decision and remand the case for a decision in the first instance, and in 

accordance with this opinion, whether the ’752 patent is a 

CBM patent. 

VACATED AND REMANDED

COSTS

No costs.

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