Source: https://www.carterdeluca.com/news/covered-business-method-limit-covered-2/
Timestamp: 2019-04-19 04:31:38+00:00

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In an attempt to address both actual and perceived litigation abuse involving business method patents, Congress enacted a Covered Business Method (“CBM”) patent review process under Section 18 of the Leahy-Smith America Invents Act (“AIA”). This transitional program codified in Section 18 empowered the United States Patent and Trademark Office (“USPTO”) to conduct post-grant validity reviews of certain patents that qualify as CBM patents.
In order to initiate a validity review under this transitional program a patent challenger has to first demonstrate that the patent must qualifies as a CBM patent.
For purposes of this section, the term “covered business method patent” means 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.
During the trial and appeal proceedings, and following adoption of the AIA, SAP separately petitioned the USPTO’s Patent Trial and Appeal Board (“PTAB”) for a CBM review of the ‘350 patent pursuant to Section 18 on the grounds that claims 17 and 26-29 of the ‘350 patent were unpatentable for failing to comply with 35 U.S.C. §§ 101, 102, and 112. In order to analyze whether the claims of the ‘350 patent comply with 35 U.S.C. §§ 101, 102, and/or 112, the PTAB was required to first determine that the claims of the ‘350 patent were directed to a “covered business method” as the term is defined in 37 C.F.R. § 42.301(a), specifically, based on whether the claims were directed to “financial products or services.” Ultimately, the PTAB concluded that the ‘350 patent is a CBM patent, and thus qualifies for a CBM review, because “Versata’s ‘350 patent claims methods and products for determining a price and that these claims, which are complementary to a financial activity and relate to monetary matters, are considered financial products and services under § 18(d)(1).” (emphasis added). Upon finding that the ‘350 patent qualifies as a CBM patent, the PTAB initiated a CBM review of the validity of claims of the ‘350 patent and analyzed claims 17 and 26-29 under 35 U.S.C. § 101. The result of the review was a final written decision by the PTAB invalidating claims 17 and 26-29 of the ‘350 patent under 35 U.S.C. § 101. Versata appealed the PTAB’s final written decision to the CAFC.
We agree with the USPTO that, as a matter of statutory construction, the definition of “covered business method patent” is not limited to products and services of only the financial industry, or to patents owned by or directly affecting the activities of financial institutions such as banks and brokerage houses. The plain text of the statutory definition contained in § 18(d)(1)- “performing . . . operations used in the practice, administration, or management of a financial product or service”-on its face covers a wide range of finance-related activities. The statutory definition makes no reference to financial institutions as such, and does not limit itself only to those institutions.
To limit the definition as Versata argues would require reading limitations into the statute that are not there. This understanding of the text is reinforced by the scope of the entire § 18 program, and the general concern, including within the halls of Congress, regarding litigation abuse over business method patents. These concerns caused Congress to create a special program for these patents in the first place. Versata slip op. at 39.
Further, the CAFC offered little additional guidance as to its interpretation of the term “technological inventions.” Indeed, the Court went so far as to admit the term’s ambiguity by expressing that “Versata’s ‘350 patent … does not fall within the exception for technological inventions, whatever that exception may otherwise mean.” Versata slip op. at 39 (emphasis added). For its part, the PTAB in reaching its original decision relied on the definition of “technological inventions” set forth in 37 C.F.R. §42.301(b), which states “the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution.” Although the CAFC criticized the USPTO’s circular definition of the term, the CAFC relied on this definition and the Supreme Court’s statement in Alice that recitation of a general purpose computer to perform otherwise abstract steps “does not change the fundamental character of an invention.” With these definitions in mind the Court found that that the ‘350 patent claimed a non-technical procedure “akin to creating organizational management charts,” and therefore, is not a “technological invention” under Section 18.
These two determinations regarding CBMs and technological inventions seem to leave a logical gap. While many practitioners might agree that the invention in the ‘350 Patent was not technological, the failure to analyze why the claimed subject matter falls “well within” the definition of a CBM provides little guidance to practitioners. The only tie to a “financial product or service” in the claims are the words “price” and “pricing.” Seemingly, in the view of the CAFC, this limited connection to being “financial” is enough to trigger CBM review.
« Think that provisional application qualifies as prior art? Better think again.

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