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`IP: The power of the covered
`business method review
`
`The AIA provides an effective new tool for companies accused of
`infringement of financial patents
`
`BY LORI A. GORDON
`January 1, 2013 • Reprints
`
`Companies offering financial products or services are frequent targets of patent
`infringement accusations. The new “covered business method review” (CBM)
`created by the America Invents Act (AIA) provides these companies with a
`powerful new tool to challenge the patentability of a certain class of patents at the
`U.S. Patent and Trademark Office (PTO). CBM offers a faster proceeding (18 to
`24 months), a wider range of patentability challenges and more favorable
`estoppels than other forms of contested proceedings before the PTO, such as
`inter partes review and post grant review.
`
`CBM first became available on Sept. 16, 2012. Since then, 15 petitions for CBM
`have been filed. SAP America filed the first CBM petition against a patent for
`pricing products held by Versata Software. Liberty Mutual Insurance Co. filed 10
`CBM petitions against various insurance patents held by Progressive Casualty
`Insurance Co.. CRS Advanced Technology, Interthinx, MeridianLink and a group
`including Bloomberg, Charles Schawb, E*Trade, and TD Ameritrade filed the
`remaining four petitions . This article provides guidance to parties considering
`CBM and insight into how CBM has been used in the first three months of its
`existence.
`
`Is the asserted patent eligible for CBM?
`
`A “covered business method patent” is a patent directed to “performing data
`processing or other operations used in the practice, administration or
`management of a financial product or service, except that the term does not
`include patents for technological inventions.” The technological invention
`exclusion is not intended to exclude a patent simply because it recites
`technology. To fall within the exclusion, the claimed subject matter as a whole
`must recite a technological feature that is novel and unobvious over the prior art
`and solves a technical problem using a technical solution. Many of the claims
`challenged in pending CBMs recite some form of technology such as a
`processor or a database. One may glean from the legislative history, the PTO
`rules and the filed CBM petitions that the scope of “covered business method
`patents” is currently viewed very broadly.
`
`Is a party eligible to initiate a CBM?
`
`Maxim Exhibit 2004 - PNC/JPMC, CBM2014-00039 - Page 2004-001
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`Any party directly sued for patent infringement is eligible to file a CBM against
`asserted claims, provided the other eligibility requirements are also met. In each
`of the 15 filed CBMs, the petitioner was first sued for infringement of the patent
`for which review was requested. Absent being sued for infringement, a party
`charged with infringement and having sufficient basis to file a declaratory
`judgment (DJ) action can also file a CBM petition. To date, no CBM petitioner
`has argued for eligibility under the “charged with infringement” standard.
`
`A party gets one bite at the apple to initiate an inter partes validity challenge
`under the AIA. If a party has filed a DJ action challenging validity or has
`challenged validity at the PTO in a prior inter partes or post grant review, that
`party is barred from filing a subsequent CBM.
`
`Is PTO the optimal forum?
`
`Although the facts of an individual case will drive the decision to challenge
`patentability at the PTO using a CBM, several factors are important to consider.
`
`Standard of review: The standard of review for patent validity at the PTO is
`the lower “preponderance of the evidence” standard, while district courts and
`the International Trade Commission (ITC) apply the higher “clear and
`convincing evidence” standard.
`Claim construction: In PTO contested cases, such as a CBM, claims are
`construed under the broadest reasonable interpretation standard. Thus, in a
`CBM, the potential exists that more references can be applied, which
`increases the likelihood that a claim will be found invalid.
`Decision makers: A panel of patent-focused, technically trained
`administrative law judges decides PTO contested cases, whereas a district
`court jury often decides validity.
`Grounds: CBM offers a wide range of grounds to challenge patentability,
`including failure to recite patentable subject matter (35 U.S.C. § 101), failure
`to comply with written description/enablement requirements (35 U.S.C. §
`112) and prior art challenges (35 U.S.C. §§102 and 103).
`Estoppel: Unlike inter partes or post grant review, CBM estoppels only
`attach to arguments raised during the CBM proceeding. Issues that could
`have been raised in the CBM, but were not, can be presented in a district
`court or ITC litigation should the CBM be unsuccessful.
`
`When can a CBM petition be filed?
`
`Unlike inter partes review, in which a party has one year from service of a
`complaint to file, an eligible party can file a CBM petition at any time prior to or
`during litigation. In fact, 14 of the pending CBMs were filed more than a year
`after the corresponding litigation was instituted with two being filed after a jury
`verdict was reached. However, if the petitioner desires a stay in the co-pending
`litigation, the petition should file a CBM petition as early as possible. In the
`corresponding litigations for 12 of the pending CBMs, the petitioner requested a
`stay of the district court litigation soon after the petitions were filed.
`
`About the Author
`Lori A. Gordon
`
`Lori A. Gordon (lgordon@skgf.com) is a director at Washington,
`DC-based intellectual property law firm Sterne, Kessler,
`Goldstein & Fox P.L.L.C. who holds significant experience in
`inter partes proceedings at the USPTO including patent
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`Page 2004-002
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`reexaminations, as well as district court litigation.
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