Source: https://maierandmaier.com/practice-areas/post-grant-practice/covered-business-method-patents/
Timestamp: 2019-04-22 02:10:34+00:00

Document:
The Transitional Program for Covered Business Method Patents (CBM) is a new review procedure, regarded by statute as a post-grant review (PGR), which will generally employ the same standards and procedures. Unlike the PGR procedure, however, there is no nine-month time limit for filing a petition for review of covered business method patents. In addition, a petitioner may only request review of business method claims if the petitioner has been sued for infringement of the patent or has been charged with infringement under that patent. Although post-grant review of covered business methods will be available for patents subject to both first-to-invent and first-to-file provisions, as of the effective date, there are limitations as to the prior art available under §§ 102 and 103 for patents subject to existing first-to-invent provisions.
Possible grounds for filing? Any ground of invalidity can serve as basis for petition, e.g. §101, §112, and, with caveats, §§102 and 103. Limited prior art shall apply for those challenged covered business method patents granted under first-to-invent provisions. Specifically, a petitioner in a transitional proceeding who challenges the validity of 1 or more claims in a covered business method patent having an effective filing date prior to March 16, 2013 based on prior art will be limited to relying on prior art defined by pre-AIA 35 U.S.C. §102.
Timing? The review may be ﬁled any time except for when PGR is available, starting September 16, 2012. This review applies to all patents, regardless of issue date, but the petition itself must be ﬁled before this portion of the America Invents Act sunsets on September 16, 2020.
Cost? Same as PGR. The fee for filing a petition for CBM is $12,000 to challenge the validity of up to 20 claims and $250 per each additional claim beyond the twentieth. If the petition for review is granted, there is a post-instituion fee of $18,000 for challenging up to 15 claims and a $550 fee per each additional claim beyond the fifteenth.
Statutory and regulatory requirements a petitioner must meet in a petition for a CBM? In a petition for a CBM, the petitioner must by statute (i) identify all real parties in interest; (ii) identify all claims challenged and all grounds on which the challenge to each claim is based; and (iii) provide copies of evidence relied upon. The petition must be accompanied by a fee. In addition, the petitioner must by rule (i) identify the grounds for standing; (ii) provide a claim construction for each challenged claim; (iii) specifically explain the grounds for unpatentability; and (iv) specifically explain the relevance of evidence relied upon.
Threshold for granting petition for hearing? Same as PGR. Petition for CBM must contain information that “if not rebutted,” demonstrates that it is more likely than not that at least one of the claims challenged in the petition is unpatentable.
Before who? Same as PGR. The Patent Trials and Appeals Board (PTAB). Each case will be heard by a panel of three technically-trained, patent-savvy judges in a single-phase trial.
Patent Owner Preliminary Response? Same as PGR. The patent owner has a right to file a preliminary response to the petition, within a time period set by the Director, that sets forth the reasons why no CBM should be instituted based on failure of the petition to meet any requirement of chapter 32 of title 35, United States Code. A patent holder may challenge the standing of a petitioner in the preliminary response. For example, a patent holder may provide evidence that the petitioner has filed a civil action challenging patentability prior to filing the petition or that the petitioner otherwise is estopped from challenging the patent owner’s claims.
The patent owner has no obligation to file a preliminary response and may, but is not required, inform PTAB if it does not intend to file a preliminary response.
Burdens and Standard for challenge? Same as PGR. The default evidentiary standard is a preponderance of the evidence, which is more favorable to the petitioner than the “clear and convincing evidence” standard used in district court. In addition, the Office will apply the broadest reasonable construction standard to CBMs, and there will be no presumption of validity.
Discovery? Same as PGR. Routine discovery includes cited documents, cross-examination of declaration testimony, and information inconsistent with positions advanced during the proceeding. The parties may agree mutually to provide additional discovery or either party may file an authorized motion seeking additional discovery.
The standard for additional discovery is “good cause.” Good cause (PGR and CBM) and interests-of-justice (IPR and Derivation Proceedings) are closely related standards, but on balance, the interests-of-justice standard is a slightly higher standard than good cause. While a good cause standard requires a party to show a specific factual reason to justify the needed discovery, interests-of-justice would mean that the Board would look at all relevant factors. The interests-of-justice standard covers considerably more than the good cause standard, and in using such a standard the Board will attempt to consider whether the additional discovery is necessary in light of ”the totality of the relevant circumstances.
Estoppel? The estoppel provisions are less restrictive than other post-issuance proceedings, only attaching to arguments that were actually raised in the CBM proceeding, not arguments that could have been raised. Attaches upon final written decision of the PTAB.
Appeal? Same as PGR. Dissatisfied party may appeal to the Court of Appeals for the Federal Circuit.
Staying power? CBM has stay provisions that may be attractive to a defendant in a co-pending lawsuit.
On January 9, 2013, the PTAB issued its first decision relating to CBMs under the AIA — SAP America, Inc. v. Versata Development Group, Inc. In May of 2011, Versata secured a $391 million dollar verdict in the Eastern District of Texas against SAP. At the time the petition decision was issued, the district court verdict was pending an appeal to the CAFC (on May 1, 2013, the CAFC upheld the damages).
Although Patent Owner challenged the CBM review petition as being deficient on all three grounds, the PTAB found otherwise and ordered institution of CBM review.
Third, the Board used the “machine” prong of the machine or transformation test to determine that the challenged claims did not qualify as “technological inventions.” Even though the claims required the use of a computer or software, the Board found that the claims lacked a technological feature because “no specific, unconventional software, computer equipment, tools or processing capabilities are required.” Accordingly, the challenged claims did not fall under the “technological inventions” exclusion from the definition of covered business method patents.
The PTAB agreed to expedite the trial schedule and held the oral hearing on April 17, 2013. The six month acceleration in the proceeding was provided in exchange for SAP dropping the prior art defenses, and agreeing to move forward only on their § 101 challenge to the Versata patent.
Versata filed suit against the USPTO on March 13, 2013, challenging the agency’s definition of a “business method,” and the ability to raise 101 as a statutory ground in a CBM. § 101 is argued as not being embraced by 35 U.S.C. § 282.
Although the PTAB’s decision in SAP v. Versata represents only a single data point, it arguably suggests that the PTAB is friendly to finding patents subject to CBM review. Consequently, a party that has been sued for infringement of a patent that might be characterized as relating to a business method may be well advised to consider seeking CBM review of the patent in question.

References: §101
 §112
 §102
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 § 101
 § 101
 § 282
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