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Wednesday, 23 November 2016 18:23

Limiting the Definition of a CBM Patent in Unwired Planet v. Google

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On November 21, 2016, the Federal Circuit reversed a CBM institution decision made by the PTAB in Unwired Planet, LLC. v. Google Inc., criticizing that the PTAB's defiintion of a CBM patent was overly broad. This case originated when Unwired Planet enforced U.S. Patent No. 7203752 (the '752 patent) against Google, which related to methods and systems for managing location information for wireless devices. In defense, Google concurrently petitioned the PTAB to institute both an IPR proceeding as well as a CBM proceeding in December, 2013, challenging the validity of the '752 patent. 

As some background and for those unfamiliar with post grant practice, a CBM ("Covered Business Method") is one mechanism for challenging the validity of an issued patent in front of the Patent Trial and Appeal Board (PTAB). Along with PGRs and IPRs enacted by the American Invents Act (AIA), CBMs are intended as a counter-measure against the enforcement of a myraid of poor quality (and many times invalid) patents which may have issued over the last decade. Compared to the other mechanisms, a CBM review is similar to a PGR review, but becomes available when a PGR review is no longer possible (i.e. 9 months after issuance). Notably, a CBM is available for both patents issued under first-to-invent, as well as first-to-file (post-AIA) rules. The caveat is however, that CBMs only pertain to "covered business method" patents, relating to "financial products or services".

In the instant case, the Federal Circuit reviewed this statutory understanding, noting that AIA Section 18(d) expressly defines a CBM as a patent claiming a method or apparatus used "in practice, administration, or management of a financial product or service". In diving through the AIA's legislative history, the court found that the USPTO improperly relied upon isolated statements of Senator Schumer, and adopted the position that the notion of a "financial product or service" should be interepreted broadly. The court noted that general policy statements, such as this, are not legally binding. See 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).

Moreover, the court cited various competing views throughout the legislative debate regarding the scope of CBM review, many of which were contradicting. For instance, Senator Durbin had urged that the section should not cover patents on "novel machinery to count, sort, and authenticate currency and paper instruments". It was in response to this view, that Senator Schumer assured that "it is not the understanding of Congress that such patents would be reviewed and invalidated under Section 18."

This indicated not only a limitation in scope, but also conflicting views on whether certain apparatuses or methods relating to the financial services themselves should be subject to CBM review. Therefore, the court held that the PTAB's present CBM definition, which included claims that were merely "incidental to" or "complementary to" a financial product or service, was improper and insufficient to qualify a patent for a CBM proceeding under 18(d) of the AIA. Rather, CBM patents are limited to those with claims that directed to methods and apparatuses of particular types and with particular uses in the practice, administration, or management of a financial product or service

For the full opinion --


Read 2532 times Last modified on Wednesday, 23 November 2016 19:22
Tony Guo

As a specialized technology counsel, Tony supports his clients in the high tech, creative, and online industries. His primary areas of practice include intellectual property protection, Internet law, and startups. Tony is a USPTO registered patent attorney, as well as a licensed lawyer in California and Florida. He comes from a background involving considerable hardware and software development experience, having worked in both development and IT roles in the tech and finance industries.

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