United States: Petitions Seeking CBM Review Continue Uphill Battle After Unwired Planet

In a series of cases addressing the standard for initiating a covered business method (CBM) review, both the US Court of Appeals for the Federal Circuit and the Patent Trial and Appeal Board (PTAB) reached the same conclusion, finding the patents not eligible for CBM review. Secure Axcess, LLC v. PNC Bank National Association, Case No. 16-1353 (Fed. Cir., Feb. 21, 2017) (Plager, J) (Lourie, J, dissenting); Twilio Inc. v. Telesign Corporation, Case No. CBM2016-00099 (PTAB, Feb. 27, 2017) (Arbes, APJ); Google Inc. v. Klaustech, Inc., Case No. CBM2016-00096 (PTAB, Feb, 27, 2017) (Zecher, APJ). These decisions come on the heels of the Federal Circuit's Unwired Planet decision, where the Court found Unwired Planet's patent to be ineligible for CBM review because the PTAB improperly used an overly broad definition of a CBM patent ( IP Update, Vol. 19, No. 12).

In Secure Axcess, the patent at issue relates to computer security with a focus on authenticating a web page. The PTAB instituted CBM review of Secure Axcess's patent, explaining 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." The PTAB also reasoned that the patent disclosed a need by financial institutions to ensure that customers are confident that a financial institution's web page is authentic. In its final written decision, the PTAB maintained that Secure Axcess's patent was subject to CBM review. Secure Axcess appealed.

On appeal, the Federal Circuit reversed the PTAB, concluding that "the statutory definition of a CBM patent requires that the patent have a claim that contains . . . a financial activity element." The Court explained that Congress intended the CBM program to be more limited in scope, and that a broad reading of the statute would allow any patent to qualify for CBM review if it claimed a method or corresponding apparatus for performing any operations that happen to be used in "the practice, administration, or management of a financial product or service." According to the Court, to find otherwise would give the CBM program "a virtually unconstrained reach." In this case, as part of its broader discussion of what is a "financial product or service," the PTAB concluded that "[t]he method and apparatus claimed by the [] patent perform operations used in the practice, administration, or management of a financial product or service and are incidental to a financial activity" (emphasis in original). Citing Unwired Planet, the Court explained that the phrase "incidental to a financial activity" is not part of the statutory definition of a CBM patent. Thus, by expanding the definition, the PTAB reached beyond the question of whether the claims, as understood in light of the written description, met the statutory definition. For these reasons, the Court vacated the PTAB's ruling and remanded the case back to the PTAB.

In dissent, Judge Lourie argued that that the claims of the patent are directed to "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" (emphasis in original). He also argued that the patent met the statutory definition for a "financial product or service" because of the discussion in the specification regarding specific applications in the management of a financial service. Judge Lourie acknowledged that the term "financial" does not appear in the patent claims, but argued that should not decide the outcome because, as a matter of patent law, claims are not required to recite uses of products.

In Telesign, the PTAB denied institution of a CBM review of a patent directed to the verification of user identity during an online registration process. The PTAB determined that the claims of the challenged patent failed to meet this definition. Citing the Federal Circuit decision in Unwired Planet, the PTAB explained that the challenged patent must have at least one claim that contains "a financial activity element" to be eligible for CBM review. In this case, the PTAB found the words "service" and "notification event," as used in the claims, to be "generic, context-neutral terms, without any express or implicit connection to financial products or services." Even though the PTAB agreed with the petitioner that the specification describes embodiments pertaining to finance-related services, the specification does not indicate that such embodiments are limited to finance-related activities. Rather, the specification describes the embodiments in contexts beyond those that are financial in nature. 

In Klaustech, Google filed a petition challenging claims of Klaustech's patent directed to internet advertising with centralized control of ad content being presented at a browser. Before the patent owner's preliminary response, the PTAB afforded the petitioner an opportunity to file a paper in view of the Federal Circuit's decision in Unwired Planet. After considering the issues, the PTAB declined to institute CBM review, finding that the patent did not include any claim that satisfied the financial prong of the CBM patent eligibility test. The PTAB also considered Secure Axcess, but found that that case did not alter the final outcome or analysis, concluding it was consistent with Unwired Planet

The PTAB explained that the CBM patent eligibility test is focused on the claim language and requires determining whether the claims recite explicit or inherent terminology or limitations that are financial in nature. The PTAB was not persuaded by petitioner's argument that the claims, when read in light of the specification, are directed to a CBM, explaining that the examples in the specification were permissive and did not limit the scope of the claims to being financial in nature. Although the PTAB acknowledged that internet advertising involves the sale of ad space, it concluded that the fact that a sale has occurred or may occur is not sufficient to transform a patent into a CBM-eligible patent when the challenged claims neither recite a sale nor are otherwise directed to the practice, administration or management of a financial product or service.

Practice Note: Going forward, petitioners seeking CBM review should be careful to make a showing that the challenged patent claims specifically relate to finance, since, in the wake of Unwired Planet, the PTAB is giving significant scrutiny to the "financial product or service" aspect of the CBM definition. 

Petitions Seeking CBM Review Continue Uphill Battle After Unwired Planet

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
McDermott Will & Emery
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
McDermott Will & Emery
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions