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Attorneys

Challenging Business Method Patents

Published through Meritas

By: Audrey Millemann

Congress has been listening. Under a new program enacted as part of the America Invents Act ("AIA"), business method patents can be challenged in a specific procedure in the PTO. The program is called the "Transitional Program for Covered Business Method Patents" and is referred to as CBM Review. It went into effect in September 2012 and has a sunset provision of September 2020.

Under CBM Review, a defendant accused of infringement of a patent covering a business method may challenge the validity of the patent. CBM Review is conducted before a new administrative law board, the Patent Trial and Appeal Board ("PTAB").

The AIA defines a covered business method as a method or apparatus directed to data processing or other financial products or services. The statute excludes patents covering "technological inventions," which is defined as inventions that solve a technical problem using a technical solution.

The purpose of CBM Review is to provide a quick and less costly alternative to federal court litigation for determining the validity of business methods patents. In CBM Review, a patent may be challenged as invalid on any number of grounds, including that the claims are directed to unpatentable subject matter under 35 U.S.C. section 101, in particular, abstract ideas. Business method patents can also be challenged on the basis or prior art.

Unlike other previous methods for challenging patents in the PTO, CBM Review is intended to be quick. The process begins when a petition is filed in the PTO by a party threatened with or sued for patent infringement. The petition must show that at least one claim in the patent is "more likely than not" unpatentable. The patent owner has three months to file a response. Within six months of the petition’s filing, a panel of patent administrative law judges decides whether to grant the petition. If the petition is granted, CBM Review is instituted. The process, called a trial, is adversarial and involves both the patent owner and the challenger, and includes discovery, motions, and an oral hearing. The patent owner may seek to amend the claims and the challenger may oppose the amendment. The process must be completed by the PTAB with a final decision within one year of its institution, although it can be extended 6 months for good cause.

CBM Review should only be undertaken after a careful consideration of strategy because estoppel applies to subsequent action by the petitioner. The petitioner may not assert a grounds for invalidity in a subsequent PTO proceeding that was raised or reasonably could have been raised in the CBM Review, nor may the petitioner assert in a subsequent district court patent infringement case a grounds that was raised in the CBM Review. Thus, the petitioner should be sure that CBM Review is the best process and forum for its challenge.

So far, the PTAB has moved expeditiously in administering CBM Review. The first petition for CBM Review, filed on September 16, 2012, was granted in January 2013 and the PTAB issued its written decision in June 2013. In its decision, the PTAB invalidated all of the challenged claims as unpatentable abstract ideas.

As of January 30, 2014, 113 petitions for CBM Review had been filed. The majority of the petitions that have been filed are in the electrical and computer fields. Up to the present, the PTAB has instituted CBM Review in about 85% of the petitions filed. Of those, several cases have been settled, the PTAB has invalidated several patents, and many cases are still ongoing.