throbber
Filed on behalf of:
`
`Patent Owner Frontline Technologies, Inc.
`
`By:
`
`
`John P. Donohue, Jr., Esq.
`John E. McGlynn, Esq.
`Woodcock Washburn LLP
`2929 Arch Street
`Philadelphia, PA 19104
`Tel. (215) 568-3100
`Fax (215) 568-3439
`
`
`
`
`
`
`
`Paper No.______
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`______________
`
`CRS ADVANCED TECHNOLOGIES, INC.
`Petitioner
`v.
`Patent of FRONTLINE TECHNOLOGIES, INC.
`Patent Owner
`______________
`Case CBM2012-00005
`Patent 6,675,151
`_____________
`
`PATENT OWNER FRONTLINE TECHNOLOGIES, INC.’S
`REQUEST FOR REHEARING TO MODIFY DETERMINATION OF
`COVERED BUSINESS METHOD
`
`
`
`
`
`

`
`TABLE OF CONTENTS
`
`
`
`
`
`Rehearing Requested ....................................................................................... 1
`
`Standard of Review .......................................................................................... 2
`
`I. 
`
`II. 
`
`III.  Matters the Board Misapprehended or Overlooked ........................................ 2
`
`
`A. 
`
`The Board’s Standard is Inconsistent with the Immediately
`Surrounding Language of the Legislative History ................................ 4
`
`
`IV.  The Board’s Standard is Impractical ............................................................. 10
`
`V. 
`
`VI.  Conclusion ..................................................................................................... 14 
`
`Frontline’s 151 Patent is Not a Covered Business Method Patent ................ 12
`
`
`
`i
`
`

`
`Case CBM2012-00005
`Patent 6,675,151
`Attorney Docket No. FPT-L6
`
`
`
`
`
`Mail Stop PATENT BOARD
`Patent Trial and Appeal Board
`U.S. Patent & Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
`
`I.
`
`Rehearing Requested
`Pursuant to 37 C.F.R. §§42.71(c),(d),1 Patent Owner Frontline Technologies,
`
`Inc. (“Frontline”) requests a rehearing to modify the Board’s decision that U.S.
`
`patent number 6,675,151 (“the 151 patent”) is a covered business method patent
`
`under AIA §18(d). 37 C.F.R. §§42.71(c),(d). Frontline respectfully submits that
`
`the Board applied a legally erroneous standard in determining that the 151 patent
`
`was subject to review as a covered business method patent and thereby abused its
`
`discretion. Reconsideration and entry of a decision not to institute trial is
`
`respectfully requested.
`
`
`1 Although 37 C.F.R. §42.71(c) states that a decision to institute a proceeding is
`
`final and nonappealable, Frontline reserves the right to include in any appeal or
`
`request for judicial review, questions regarding elimination of an appeal from a
`
`decision to institute a proceeding under the Constitution and Laws of the United
`
`States, including the Due Process Clause.
`
`
`
`1
`
`

`
`
`II.
`
`Standard of Review
`
`Case CBM2012-00005
`Patent 6,675,151
`Attorney Docket No. FPT-L6
`
`“When rehearing a decision on petition, a panel will review the decision for
`
`an abuse of discretion.” 37 C.F.R. §42.71(c). “Abuse of discretion will lie when
`
`the tribunal’s decision rests on an error of law or on erroneous findings of fact, or
`
`if the decision manifests an unreasonable exercise of judgment in weighing
`
`relevant factors.” Bridgestone/Firestone Research v. Auto. Club, 245 F.3d 1359,
`
`1361 (Fed. Cir. 2001) (internal citations omitted) (reversing U.S. Patent and
`
`Trademark Office Trademark Trial and Appeal Board’s decision to cancel
`
`appellant’s registration). Here, the Board abused its discretion by applying a
`
`legally erroneous standard premised upon a misapplication of the AIA legislative
`
`history.
`
`III. Matters the Board Misapprehended or Overlooked
`Rule 42.71(d) specifies a procedure for requesting rehearing:
`
`. . . The request must specifically identify all matters the
`party believes the Board misapprehended or overlooked,
`and the place where each matter was previously
`addressed in a motion, an opposition, or a reply. . . . 37
`C.F.R. § 42.71(d).
`In its opinion, the Board misapprehended or overlooked the proper standard
`
`for determining whether a patent is a covered business method patent under the
`
`AIA § 18(d). The Board explained its standard as follows:
`
`
`
`2
`
`

`
`
`
`Case CBM2012-00005
`Patent 6,675,151
`Attorney Docket No. FPT-L6
`
`Thus, substitute fulfillment is an activity that is at least
`“incidental” and/or “complementary to a financial
`activity” and qualifies as a covered business method
`patent under § 18 of the AIA. (Decision Institution of
`Covered Business Method Review, hereinafter
`“Decision,” at 8).
`Frontline respectfully submits that the correct standard for determining
`
`whether a patent is a “covered business method patent” is recited in the statute as
`
`follows:
`
`For purposes of this section, the term “covered business
`method patent” means 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. AIA §
`18(d).
`The Board abused its discretion in applying the erroneous standard that “an activity
`
`that is at least ‘incidental’ and/or ‘complementary to a financial activity’ . . .
`
`qualifies as a covered business method patent under § 18 of the AIA.” (Decision at
`
`8).
`
`
`
`The Board’s standard is based upon a phrase appearing in the legislative
`
`history that is taken out of context. When viewed in its proper context, the phrase
`
`does not have the meaning or significance that is attached to it by the Board.
`
`
`
`3
`
`

`
`Frontline previously addressed the proper standard for determining whether
`
`Case CBM2012-00005
`Patent 6,675,151
`Attorney Docket No. FPT-L6
`
`
`
`a patent is a “covered business method” at pages 10 and 11 of its Preliminary
`
`Response. (See Patent Owner’s Preliminary Response Opposing Petition For
`
`Transitional Post-Grant Review Under § 18 of the Leahy-Smith America Invents
`
`Act and 35 U.S.C. § 321, hereinafter “Preliminary Response,” at 10-11). Frontline
`
`previously provided an analysis of the claims of the 151 patent under the proper
`
`standard at pages 10 through 17 of its Preliminary Response. (See Preliminary
`
`Response at 10-17). Frontline could not previously have addressed the Board’s
`
`“‘incidental’ and/or ‘complementary to a financial activity’” standard as Frontline
`
`had no way to know that Board would subsequently apply such a standard.
`
`A. The Board’s Standard is Inconsistent with the Immediately
`Surrounding Language of the Legislative History
`
`The Board’s standard that “an activity that is at least ‘incidental’ and/or
`
`‘complementary to a financial activity’ . . . qualifies as a covered business method
`
`patent” is premised on the following quotation from the legislative history:
`
`This language makes it clear that section 18 is intended
`to cover not only patents claiming the financial product
`or service itself, but also patents claiming activities that
`are financial in nature, incidental to a financial activity or
`complementary to a financial activity. 157 Cong. Rec.
`S5432 (daily ed. Sept. 8, 2011) (statement of Sen.
`Charles Schumer).
`
`
`
`4
`
`

`
`
`Respectfully, the Board has misinterpreted the legislative intent. When the
`
`Case CBM2012-00005
`Patent 6,675,151
`Attorney Docket No. FPT-L6
`
`referenced language is considered in the context of surrounding text, and in
`
`particular, the directly preceding paragraph, it becomes clear that the language was
`
`meant to emphasize that the statute applies to “data processing or other operations
`
`used in the practice, administration or management of a financial product or
`
`service” as opposed to solely covering the financial product or service. The
`
`relevant language from the legislative history is as follows:
`
`The plain meaning of “financial product or
`service” demonstrates that section 18 is not limited to the
`financial services industry. At its most basic, a financial
`product is an agreement between two parties stipulating
`movements of money or other consideration now or in
`the future. Types of financial products include, but are
`not limited to: extending credit, servicing loans, activities
`related to extending and accepting credit, leasing of
`personal or real property, real estate services, appraisals
`of real or personal property, deposit-taking activities,
`selling, providing, issuing or accepting stored value or
`payment instruments, check cashing, collection or
`processing, financial data processing, administration and
`processing of benefits, financial fraud detection and
`prevention, financial advisory or management consulting
`services, issuing, selling and trading financial
`instruments and other securities, insurance products and
`
`
`
`5
`
`

`
`Case CBM2012-00005
`Patent 6,675,151
`Attorney Docket No. FPT-L6
`
`services, collecting, analyzing, maintaining or providing
`consumer report information or other account
`information, asset management, trust functions, annuities,
`securities brokerage, private placement services,
`investment transactions, and related support services. To
`be eligible for section 18 review, the patent claims
`must only be broad enough to cover a financial
`product or service.
`The definition of “covered business method
`patent” also indicates that the patent must relate to
`“performing data processing or other operations used
`in the practice, administration, or management” of a
`financial product or service. This language makes it
`clear that section 18 is intended to cover not only
`patents claiming the financial product or service
`itself, but also patents claiming activities that are
`financial in nature, incidental to a financial activity or
`complementary to a financial activity. Any business
`that sells or purchases goods or services “practices” or
`“administers” a financial service by conducting such
`transactions. Even the notorious “Ballard patents” do
`not refer specifically to banks or even to financial
`transactions. Rather, because the patents apply to
`administration of a business transactions, such as
`financial transactions, they are eligible for review
`under section. To meet this requirement, the patent need
`
`6
`
`
`
`
`
`

`
`
`
`Case CBM2012-00005
`Patent 6,675,151
`Attorney Docket No. FPT-L6
`
`not recite a specific financial product or service. Id.
`(emphasis added).
`When read in context, the “incidental . . . or complementary” language was
`
`not intended to establish a standard for determining whether a patent is a “covered
`
`business method patent.” Rather, the language is meant to accentuate that not only
`
`are patents that claim financial products and services considered covered business
`
`method patents, as is described in the preceding paragraph of the legislative
`
`history, but patents relating to “performing data processing or other operations
`
`used in the practice, administration, or management” of a financial product or
`
`service, as described in the preceding sentence, are also covered business method
`
`patents. While the “incidental . . . or complementary” language attempts to express
`
`that the statute has breadth, according to the surrounding language, that breadth is
`
`limited by the context of the actual language of the statute – “the practice,
`
`administration, or management” of a financial product or service.
`
`The immediately successive sentences in the legislative history confirm that
`
`the legislative intent was not for the “incidental . . . or complementary” language to
`
`be considered a standard, but rather, that the actual language of the statute defines
`
`the limits of a covered business method. For example, the subsequent sentence
`
`provides an explanation for what activities qualify as “practic[ing]” and
`
`
`
`7
`
`

`
`
`“administer[ing]” financial product or services as those terms are used in the
`
`Case CBM2012-00005
`Patent 6,675,151
`Attorney Docket No. FPT-L6
`
`statute.
`
`Any business that sells or purchases goods or services
`‘practices’ or ‘administers’ a financial service by
`conducting such transactions. Id. (emphasis added).
`Accordingly, the legislative history explains that “practic[ing]” and
`
`“administer[ing]” a financial transaction as used in the statute is satisfied by
`
`actually “conducting such transactions.” Notably, whether or not there is
`
`“practic[ing]” and “administer[ing]” a financial transaction as prescribed by the
`
`statute is not described as being contingent upon whether the activities are
`
`“incidental . . . or complementary to a financial activity.”
`
`The subsequent two sentences likewise confirm that the legislative intent
`
`was to rely upon the actual language of the statute in defining covered business
`
`method patents. In particular, the next two sentences explain that an example set
`
`of patents—the “Ballard patents”— would be subject to review because they
`
`“apply to administration of a business transaction[]” consistent with the actual
`
`language of the statute.
`
`Even the notorious “Ballard patents” do not refer
`specifically to banks or even to financial transactions.
`Rather, because the patents apply to administration of a
`business transactions, such as financial transactions, they
`
`
`
`8
`
`

`
`Case CBM2012-00005
`Patent 6,675,151
`Attorney Docket No. FPT-L6
`
`
`
`are eligible for review under section. Id. (emphasis
`added).
`Notably absent is any discussion of whether activities are “incidental . . . or
`
`complementary to a financial activity.” Rather, it is the actual language of the
`
`statute, i.e., whether the patents apply to “administration” of a business transaction,
`
`that is used as the standard for determining that the “Ballard patents” would be
`
`“covered business method patents.”
`
`
`
`Accordingly, when read in context, it is clear that the phrase “incidental to a
`
`financial activity or complementary to a financial activity” was not intended as a
`
`standard for identifying a covered business method patent. To the contrary, the
`
`surrounding language confirms that it was the intent that the actual language of the
`
`statute be relied upon to make that determination. 2
`
`
`2 In response to suggestions that the Office interpret “financial product or service”
`
`broadly, the U.S. Patent Office cited to the above-noted comments of Senator
`
`Schumer as supporting “the notion that ‘financial product or service’ should be
`
`interpreted broadly.” The U.S. Patent Office did not state that Senator Schumer’s
`
`comments should be used to define a covered business method patent as one that
`
`claims subject matter incidental or complementary to a financial activity. 77 Fed.
`
`Reg. 48,735 (Aug. 14, 2012).
`
`
`
`9
`
`

`
`
`IV. The Board’s Standard is Impractical
`Not only is the standard that was applied by the Board inconsistent with the
`
`Case CBM2012-00005
`Patent 6,675,151
`Attorney Docket No. FPT-L6
`
`statute and legislative history, but the applied standard is impractical for being
`
`overinclusive. There are few patents covering computer technology that would not
`
`be a “covered business method patent” under the Board’s standard. With respect
`
`to Frontline’s 151 patent, the Board reasoned as follows:
`
`Both of the challenged independent claims, claims 3 and
`6, are directed to substitute fulfillment “for a plurality of
`different organizations.” These claims are broad enough
`to include substitute fulfillment for retail banks (or any
`other financial institution). Retail banks are involved in
`financial activity. In fact, one of a retail bank’s main
`purposes is to provide financial products and services to
`its customers. As explained in the Background of the
`Invention, the consequences of employee absence can
`affect the bank’s provision of these products and
`services. ’151 patent, col. 1, ll. 29-54. Thus, substitute
`fulfillment is an activity that is at least “incidental”
`and/or “complementary to a financial activity” and
`qualifies as a covered business method patent under § 18
`of the AIA. (Decision at 8).
`But following the Board reasoning, there is virtually no patent claiming computer-
`
`implemented subject matter that could possibly be used by a bank that would not
`
`
`
`10
`
`

`
`
`be subject to review as a “covered business method patent.” For example, a patent
`
`Case CBM2012-00005
`Patent 6,675,151
`Attorney Docket No. FPT-L6
`
`that claims aspects of an email or a voicemail system would be subject to review as
`
`a “covered business method patent” because it might be used by a bank and
`
`therefore, by the Board’s reasoning, be at least “incidental” and/or
`
`“complementary to a financial activity.” Likewise, a patent that claims aspects of
`
`the computerized operation of a copier system would be subject to review as a
`
`“covered business method patent” because it might be used by a bank and
`
`therefore, by the Board’s reasoning, be at least “incidental” and/or
`
`“complementary to a financial activity.” Still further, a patent that claims aspects
`
`of a computer processing for controlling light emitting diodes (LED’s) on a display
`
`within a bank would be subject to review as a “covered business method patent”
`
`because it might be used by a bank and therefore, by the Board’s reasoning, be at
`
`least “incidental” and/or “complementary to a financial activity.”
`
`The standard that was applied by the Board would classify patents within the
`
`definition of covered business method patents merely because the inventions they
`
`claim could be used in a way that is incidental to or complementary to financial
`
`activity regardless of the language of the patent claims.
`
`
`
`Even a casual review of the legislative history informs the reader that it was
`
`not the intent of Congress to subject every patent that claims a computer
`
`implemented method that might be used by a bank or other financial institution
`
`
`
`11
`
`

`
`
`would be subject to review as a “covered business method patent.” But this is the
`
`Case CBM2012-00005
`Patent 6,675,151
`Attorney Docket No. FPT-L6
`
`practical effect of the Board’s standard, and serves as strong evidence that the
`
`Board’s standard cannot be correct.
`
`V.
`
`Frontline’s 151 Patent is Not a Covered Business Method Patent
`
`Under the statute, a covered business method patent is one 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.” AIA § 18(d). If a patent does not claim “a method . . . for
`
`performing data processing or other operations used in the practice, administration,
`
`or management of a financial product or service” the patent necessarily is not in
`
`the class of “covered” business method patents, but instead is in the class of patents
`
`that are not “covered.” The language of the claims themselves is determinative.
`
`See 77 Fed. Reg. Vol. 157 (Part IV) at 48736 (August 14, 2012) (“Consistent with
`
`the AIA, the definition, as adopted, therefore is based on what the patent claims.
`
`Determination of whether a patent is a covered business method patent will be
`
`made based on the claims. A patent having one or more claims directed to a
`
`covered business method is a covered business method patent for purposes of the
`
`review, even if the patent includes additional claims.”).
`
`Here, the Petitioner has not carried its burden of demonstrating that language
`
`in the claims brings the 151 Patent within the class of “covered” business method
`
`
`
`12
`
`

`
`
`patents. The claim language recites “performing substitute fulfillment for a
`
`Case CBM2012-00005
`Patent 6,675,151
`Attorney Docket No. FPT-L6
`
`plurality of different organizations” as well as various processing operations. But
`
`the “performing substitute fulfillment” and related operations as recited in the
`
`claim is not “data processing or other operations used in the practice,
`
`administration, or management of a financial product or service.” Rather, the
`
`data processing recited in the claims is used in “performing substitute
`
`fulfillment for a plurality of different organizations.” Data processing used in
`
`“performing substitute fulfillment for a plurality of different organizations” as
`
`recited in the claims of the 151 patent is not “data processing . . . used in the
`
`practice, administration or management of a financial product or service” as
`
`recited in the statute. Even if for purposes of discussion the claimed data
`
`processing were used in “performing substitute fulfillment for” a bank or other
`
`financial institution,3 the data processing involves operations performing
`
`substitute fulfillment, and is not “used in the practice, administration or
`
`management of a financial product or service” as required by the statute. In the
`
`
`3 Both Frontline and the petitioner, CRS, Inc., provide substitute placement
`
`services to schools. In other words, their systems allow for locating substitute
`
`teachers to fill in for absent teachers. Neither party is in the business of providing
`
`substitute services to banks.
`
`
`
`13
`
`

`
`
`claims of the 151 patent, the “data processing” is used in an entirely different
`
`Case CBM2012-00005
`Patent 6,675,151
`Attorney Docket No. FPT-L6
`
`pursuit than “the practice, administration or management of a financial product or
`
`service.”
`
`Accordingly, because the claims of the 151 patent do not recite “processing .
`
`. . used in the practice, administration or management of a financial product or
`
`service,” the 151 patent is not a covered business method patent.
`
`VI. Conclusion
`Therefore, because the “‘incidental’ and/or ‘complementary to a financial
`
`activity’” standard that was applied by the Board is inconsistent with the legislative
`
`intent and has the practical effect of being over inclusive, the standard is legally
`
`incorrect and represents an abuse of discretion. Bridgestone/Firestone Research,
`
`245 F.3d at 1361. Frontline respectfully requests rehearing of the decision in order
`
`to modify the determination that the 151 patent is a covered business method
`
`patent. For the reasons set out above as well as in Frontline’s Preliminary
`
`Response, using the legally correct standard set out in language of the statute, the
`
`151 patent is not a covered business method patent and the petition should be
`
`denied.
`
`
`
`
`
`Respectfully submitted,
`
`14
`
`

`
`
`Dated: February 6, 2013
`
`
`
`
`
`
`
`Case CBM2012-00005
`Patent 6,675,151
`Attorney Docket No. FPT-L6
`
`By:
`
`/John P. Donohue, Jr./
`
`
`
`
`
`
`
`John P. Donohue, Jr., Reg. No. 29,916
`Woodcock Washburn, LLP
`Cira Centre – 12th Floor
`2929 Arch Street
`Philadelphia, PA 19103
`Phone: 215.568.3100
`Fax: 215.568.3439
`Email: donohue@woodcock.com
`
`Attorneys for Patent Owner Frontline
`Technologies, Inc.
`
`15
`
`

`
`CERTIFICATE OF SERVICE
`I, John P. Donohue, Jr., hereby certify that on this 6th day of February, 2013,
`the foregoing PATENT OWNER FRONTLINE TECHNOLOGIES, INC.’S
`REQUEST FOR REHEARING ON DETERMINATION OF COVERED
`BUSINESS METHOD was served electronically via email on the following
`counsel of record for Petitioner CRS Advanced Technologies, Inc.:
`E. Robert Yoches, Esquire
`Reg. No. 30,120
`Finnegan, Henderson, Farabow,
` Garrett & Dunner LLP
`901 New York Avenue, N.W.
`Washington, D.C. 20001-4113
`Email: bob.yoches@finnegan.com
`
`Aaron J. Capron, Esquire
`Reg. No. 56,170
`Finnegan, Henderson, Farabow,
` Garrett & Dunner LLP
`901 New York Avenue, N.W.
`Washington, D.C. 20001-4113
`Email: aaron.capron@finnegan.com
`
`Darrel C. Karl, Esquire
`Pro Hac Vice
`Finnegan, Henderson, Farabow,
` Garrett & Dunner LLP
`901 New York Avenue, N.W.
`Washington, D.C. 20001-4113
`Email: darrel.karl@finnegan.com
`
`
`
`
`
`
`Case CBM2012-00005
`Patent 6,675,151
`Attorney Docket No. FPT-L6
`
`/John P. Donohue, Jr./
` John P. Donohue, Jr.
` Reg. No. 29,916
`
`
`
`
`
`
`
`
`
`16
`
`

`
`Case CBM2012-00005
`Patent 6,675,151
`Attorney Docket No. FPT-L6
`
` Woodcock Washburn, LLP
` Cira Centre – 12th Floor
` 2929 Arch Street
` Philadelphia, PA 19103
` Phone: 215.564.8367
` Fax: 215.568.3439
` Email: donohue@woodcock.com
`
`
`
` Attorney for Frontline Technologies, Inc.
`
`17

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