United States: Federal Circuit Denies En Banc Review Of CBM Eligibility In Secure Axcess

A patent may be challenged under an America Invents Act ("AIA") covered business method ("CBM") review if it "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 . . . ."55

As discussed in our last newsletter, in Secure Axcess, LLC v. PNC Bank Nat'l Ass'n56, the United States Court of Appeals for the Federal Circuit (the "CAFC") 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 CBM review. The appellees subsequently petitioned for rehearing en banc. On June 6, 2017, the CAFC refused to revisit its earlier decision, denying the petition for en banc review in a 7-5 split.57

Judge Taranto, with whom Judge Moore joined, concurred in the denial of rehearing and explained that "the panel opinion in this case adopts a resolution that soundly resolves an ambiguity in the statutory language" of AIA § 18(d)(1)—i.e., that the verb "claims" applies to both the "method or corresponding apparatus for performing data processing" language and the "used in practice, administration, or management of a financial product or service" language, and not only to the "method or corresponding apparatus for performing data processing" language.58 In addition, Judge Taranto found that the panel opinion "is consistent with every one of our precedents and with a number of Patent Trial and Appeal Board decisions dating to when the program began."59 Further review of the CBM issue here, he wrote, would be "a poor use of judicial resources."60 He also disagreed with the dissent's reading of the statute and found their proposed approach impractical: "the dissent's effort to confine the scope of the CBM program to the intended 'business method patents' boundary is also intrinsically indeterminate to an unacceptable degree."61

Judge Plager concurred in the denial of panel rehearing and wrote separately to address a popular, but mistaken, criticism that the CAFC's "panel opinion was designed to accomplish, or inadvertently resulted in, a significant narrowing of the Director's ability to institute [CBM] reviews . . . ."62

Judge Lourie, with whom Chief Judge Prost and Judges Dyk, Wallach, and Hughes joined, dissented because "the statutory interpretation question presented here certainly satisfies the requirements for en banc review . . . ."63Judge Lourie found that the majority's interpretation severely limits what constitutes a CBM patent, and thus frustrates Congress's intent that CBM review be a widely-applicable substitute for expensive district court litigation.64This dissent held that the claims of the patent at issue, when read in light of the specification, were clearly 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."65 The identities of the parties—all financial institutions—confirmed this.66

Judge Dyk, with whom Judges Wallach and Hughes joined, opined in a separate dissent regarding the appealability of the predicate question of whether a patent qualifies for CBM review.67 Under 35 U.S.C. § 324(e), the determination of whether to institute a post-grant review is final and nonappealable.68Thus, according to Judge Dyk, because the decision to institute hinged in this case on whether the patent is a covered business method, the appeal is barred under § 324(e).69The CAFC previously opined on this issue in Versata Dev. Grp., Inc. v. SAP Am., Inc.,70 and held that § 324(e) does not bar CAFC review of the PTAB's determination that a patent is CBM-eligible because the appellate review is of the ultimate authority of the PTAB to invalidate a patent and the restriction of that authority in § 18 to CBM patents.71 Judge Dyk urged that Versata was wrongly decided, noting that the decision in that case issued before the Supreme Court's decision in Cuozzo Speed Techs., LLC v. Lee,7273

With such a vigorous split, the next step could be a writ of certiorari to the Supreme Court.


55 AIA § 18(d)(1).

56 848 F.3d 1370 (Fed. Cir. 2017), reh'g denied, No. 2016-1353 (Fed. Cir. June 6, 2017).

57 Secure Axcess, LLC v. PNC Bank Nat'l Ass'n, No. 2016-1353 (Fed. Cir. June 6, 2017).

58 Id. at 2–3.

59 Id. at 2.

60 Id.

61 Id. at 8.

62 Id. at 1–2 (Plager, J., concurring).

63 Id. at 2 (Laurie, J., dissenting).

64 Id. at 3.

65 Id. at 6 (emphasis in original).

66 Id. at 7–8.

67 Id. at 2–3 (Dyk, J., dissenting).

68 CBM proceedings are regarded as a post-grant review and employ those same standards. AIA § 18(a)(1).

69 Secure Axcess, No. 2016-1353, slip op. at 2–3 (Fed. Cir. June 6, 2017) (Dyk, J., dissenting).

70 793 F.3d 1306 (Fed. Cir. 2015).

71 Id. at 1322.

72 136 S.Ct. 2131 (2016).

73 Id. at 2142; Secure Axcess, No. 2016-1353, slip op. at 3–4 (Fed. Cir. June 6, 2017) (Dyk, J., dissenting).

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