United States: Federal Circuit Continues To Narrow Scope Of CBM Qualification

In Secure Axcess, LLC v. PNC Bank National Ass'n.,1 the Federal Circuit reversed the PTAB's determination that a challenged patent—relating "generally to computer security, and more particularly, to systems and methods for authenticating a web page"—qualified for covered business method ("CBM") review. This opinion follows on the heels of another Federal Circuit decision, Unwired Planet (discussed above), which also curtailed the PTAB's broad application of the CBM procedure.

The written description of the patent at issue in Secure Axcess focuses on web page authentication, but includes sporadic references to activities that are financial in nature, including representative examples of bank website authentication. The specification also explains how the invention could be used to facilitate "online commerce transactions."

In its initial written decision, the PTAB determined that the challenged patent was eligible for CBM review. It maintained this determination in its final written decision and held that claims 1–32 were unpatentable under Section 103.

AIA Section 18(d) defines "covered business 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 . . . ."

In determining that the patent qualified as a CBM patent, the PTAB rejected the patent owner's contention that the statutory phrase "financial product or service" included "only financial products such as credit, loans, real estate transactions, check cashing and processing, financial services and instruments, and securities and investment products."2 The PTAB reasoned that because the "patent is directed to solving problems related to providing a web site to customers of financial institutions . . . [the] patent covers the ancillary activity related to a financial product or service of Web site management and functionality and so, according to the legislative history of the AIA, the method and apparatus of the . . . patent perform operations used in the administration of a financial product or service."3 The PTAB also noted that the patent owner's allegations of infringement by "approximately fifty financial institutions is a factor weighing toward the conclusion that the patent claims a method or apparatus that at least is incidental to a financial activity, even if other types of companies also practice the same invention."4

The Federal Circuit reversed and held that a patent only qualifies for CBM if it claims a "method or corresponding apparatus . . . used in the practice [ ] of a financial product or service" and that it was error for the PTAB (1) to expand the statutory language "financial product or service" to cover methods and apparatuses merely incidental to a financial activity, and (2) to consider Secure Axcess's choice of litigation targets—all financial institutions—as a factor relevant to the challenged patent's qualification for CBM review.5 As it did in Unwired Planet, the Federal Circuit reasoned that "financial product or service" could not be read to cover inventions that are merely "incidental" or "complementary" to financial activity because nearly all inventions have some expectation of complementary financial activity. The court highlighted the PTAB's reliance on Secure Axcess's choice of litigation targets as an example of how the PTAB's broadened definition can lead to considerations beyond the question of whether the claims themselves, as understood in light of the written description, meet the statutory definition. The court reasoned that "a patent owner's choice of litigation targets could be influenced by a number of considerations . . . [which] do not necessarily define a patent as a CBM patent, nor even necessarily illuminate an understanding of the invention as claimed."6

Secure Axcess asked the Federal Circuit for a remand to decide the CBM question under the correct definition. But the court went one step further and held that the challenged patent did not qualify for CBM review. Judge Lourie dissented, opining that the claims themselves were directed to financial products or services, irrespective of the PTAB's use of an overly broad definition of what qualifies as a CBM patent.

Footnotes

1 2017 WL 676601 (Fed. Cir. Feb. 21, 2017).

2 Id. at *3.

3 Id.

4 Id. at *4.

5 Id. at *6–8.

6 Id. at *8.

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