Click to open contact form.
Your Global Partners in the Business of Innovation

Two CBM Rulings, Two Different Answers

Publications / Feb 25, 2019

Article by Clyde Shuman

Two decisions by the Patent Trial and Appeal Board, entered the same day, highlight the nuances involved in covered business method (CBM) reviews.

In Google Inc. and Apple Inc. v. ContentGuard Holdings Inc., case no. CBM2015-00040, the Board again ruled that a digital rights management patent qualifies for CBM review, finding that Google and Apple proved certain claims invalid and reaffirming an earlier Board decision under the tighter eligibility standard for CBM reviews.

Google originally requested review of ContentGuard’s patent under the transitional program for CBM patents, and sought to invalidate five claims. The Board had determined that Google had established only that it was more likely than not that three of the claims were anticipated or obvious, and instituted a CBM review on those claims. Apple subsequently filed a petition for CBM review, granted with respect to the same claims, on the same grounds. The two reviews were joined.

On appeal of the Board’s decision finding the claims invalid, the Federal Circuit held that the Board had applied the incorrect standard for determining whether to institute a CBM review, namely, whether he claimed invention is “incidental to” or “complementary to” financial activity. The Court held, “it is not enough for the specification to describe how the invention could, in some instances, be used to facilitate financial transactions,” and vacated the Board’s decision, remanding for reconsideration not under the incorrect standard.

On remand, the Board again held that the patent was suitable for CBM review, and that the same three claims were anticipated and obvious. The Board said, “Both independent claim 1 and dependent claim 3 satisfy the definition for a covered business method patent as set forth in § 18(d)(1) of the AIA because they are ‘financial in nature,’ and they are not for a ‘technological invention.’ Accordingly, we conclude that [ContentGuard’s] patent is eligible for review under the transitional program for [CBM] patents.”

The patent covers technology that allows users access to digital content such as movies. In its decision, the Board focused on one claim that discusses steps for transferring rights associated with an item from a supplier to a customer. The Board said the claim’s requirements “directly align” with the patent’s stated objective: “We agree with petitioners that [this claim] is ‘financial in nature’ because central to the operation of this multi-tiered distribution scheme is the billing or payment of a fee that accompanies distributing or reselling a set of rights associated with an item from a supplier to a consumer.” The Board also highlighted a claim that mentions generating a license, also finding it “financial in nature.” As before, the Board found the challenged claims were invalid but granted ContentGuard’s motion to amend.

In Crane Merchandising Systems Inc. v. NewZoom Inc. and NewZoom LLC, case number CBM2018-00040, the Board refused to institute CBM review for a vending machine patent, finding the patent wasn’t eligible for CBM review because it covers a “technological invention.”

CBM review is designed for patents that are directed to a financial product or service. A patent is not eligible for review if it claims a technological invention. The Board said NewZoom’s patent did: “On balance, we determine that the [patent] is for a ‘technological invention,’ and therefore ineligible for CBM review.”

Specifically, the Board found that the patent addressed a technical problem in vending machines—products jamming—and solved that problem via a technical solution, using a sensor to detect when the product has been removed from the machine. If the product isn’t removed, the customer isn’t charged. The Board found that the sensor also “may be used to ‘signal the requirement for an attendant to inspect the vending machine.’”

To determine whether a patent is for a technological invention, the Board considers “whether 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.” 37 C.F.R. § 42.301(b). The Petitioner must “demonstrate that the patent for which review is sought is a [CBM] patent,” and that the claimed subject matter is not directed to a technological invention. 37 C.F.R. § 42.304(a).