`
`NOTE: This disposition is nonprecedential.
`
`United States Court of Appeals
`for the Federal Circuit
`______________________
`
`APPLE INC., GOOGLE LLC,
`Appellants
`
`v.
`
`CONTENTGUARD HOLDINGS, INC.,
`Cross-Appellant
`
`v.
`
`ANDREI IANCU, UNDER SECRETARY OF
`COMMERCE FOR INTELLECTUAL PROPERTY
`AND DIRECTOR OF THE UNITED STATES
`PATENT AND TRADEMARK OFFICE,
`Intervenor
`______________________
`
`2016-2548, 2016-2557, 2016-2559, 2016-2629
`______________________
`
`Appeals from the United States Patent and Trade-
`mark Office, Patent Trial and Appeal Board in Nos.
`CBM2015-00040, CBM2015-00160.
`______________________
`
`Decided: July 11, 2018
`______________________
`
`
`ROBERT UNIKEL, Paul Hastings LLP, Chicago, IL,
`
`argued for all appellants. Appellant Google Inc. also
`
`

`

`
`
` 2
`
` APPLE INC. v. CONTENTGUARD HOLDINGS, INC.
`
`represented by ROBERT R. LAURENZI, Arnold & Porter
`Kaye Scholer LLP, New York, NY.
`
`JEFFREY PAUL KUSHAN, Sidley Austin LLP, Washing-
`
`ton, DC, for appellant Apple Inc. Also represented by
`THOMAS ANTHONY BROUGHAN,
`III, MICHAEL R.
`FRANZINGER; NATHANIEL C. LOVE, Chicago, IL.
`
`TIMOTHY P. MALONEY, Fitch, Even, Tabin & Flannery,
`
`Chicago, IL, argued for cross-appellant. Also represented
`by PAUL HENKELMANN.
`
` WILLIAM LAMARCA, Office of the Solicitor, United
`States Patent and Trademark Office, Alexandria, VA,
`argued for intervenor. Also represented by NATHAN K.
`KELLEY, THOMAS W. KRAUSE, FARHEENA YASMEEN
`RASHEED.
`
`______________________
`
`Before REYNA, BRYSON, and HUGHES, Circuit Judges.
`HUGHES, Circuit Judge.
`Apple Inc. and Google LLC appeal from the Patent
`Trial and Appeal Board’s decision to grant ContentGuard
`Holdings, Inc.’s motion to amend in a covered business
`method review of U.S. Patent 7,774,280. Because the
`Board applied the wrong legal standard to determine
`whether the ’280 patent qualified as a covered business
`method, we vacate and remand for further proceedings.
`I
`The ’280 patent relates to digital rights management
`(DRM) systems. DRM systems allow content owners to
`control how their digital works are subsequently used.
`For example, a DRM system might prevent downstream
`users from making unauthorized copies of digital works or
`require users to pay a fee before the system grants access
`to the content.
`
`

`

`APPLE INC. v. CONTENTGUARD HOLDINGS, INC.
`
`3
`
`According to the ’280 patent, one drawback of prior
`DRM systems is that content owners cannot control how
`their digital works are distributed unless the content
`owner remains a party to a transaction. For example, a
`publisher might authorize a distributor to provide digital
`content to an online retailer, who in turn sells the content
`to end-users. ’280 patent, col. 2, ll. 26–29. In prior art
`systems, once the publisher gives the content to the
`distributor, the publisher cannot control what rights the
`distributor grants to parties further downstream, such as
`the online retailer or the end-user. Id. col. 2, ll. 34–42.
`The ’280 patent purports to solve this problem by cre-
`ating a DRM with “usage rights,” “meta-rights” and “state
`variables.” According to the ’280 patent, “[u]sage rights
`define one or more manners of use of the associated
`document content.” Id. col. 2, ll. 14–16. Examples of
`usage rights include the right to view, use, or distribute a
`digital work. Id. col. 2, ll. 16–18. By contrast, “[m]eta-
`rights are the rights that one has to generate, manipu-
`late, modify, dispose of or otherwise derive other rights.
`Meta-rights can be thought of as usage rights to usage
`rights (or other meta-rights).” Id. col. 5, ll. 47–49. Final-
`ly, “[s]tate variables” represent the status of rights, such
`as how many copies of a digital work have been distribut-
`ed or viewed. Id. col. 7, l. 66–col. 8, l. 16.
`Using the ’280 patent’s DRM system, a publisher can
`grant meta-rights that specify what usage rights its
`distributor can grant to downstream parties like the
`online retailer or the end-user. Id. col. 6, ll. 36–60. For
`example, a publisher might specify that its distributor can
`allow the online retailer to sell only five copies of each
`digital work. Id. col. 6, ll. 47–60. Similarly, the publisher
`might also specify that the online retailer can only allow
`end-users to view the content or to print it once. Id. In
`the disclosed system, the online retailer can only grant
`rights to end users that have been “predetermined and
`
`

`

`
`
` 4
`
` APPLE INC. v. CONTENTGUARD HOLDINGS, INC.
`
`authorized” by upstream parties like the distributor or
`publisher. Id. col. 6, ll. 36–48.
`Claim 1 of the ’280 patent recites:
`1. A computer-implemented method for transfer-
`ring rights adapted to be associated with items
`from a rights supplier to a rights consumer, the
`method comprising:
`obtaining a set of rights associated with an item,
`the set of rights including a meta-right specifying
`a right that can be created when the meta-right is
`exercised, wherein the meta-right is provided in
`digital form and is enforceable by a repository;
`determining, by a repository, whether the rights
`consumer is entitled to the right specified by the
`meta-right; and
`exercising the meta-right to create the right speci-
`fied by the meta-right if the rights consumer is
`entitled to the right specified by the meta-right,
`wherein the created right includes at least one
`state variable based on the set of rights and used
`for determining a state of the created right.
`Id. col. 15, ll. 7–22.
`Petitioners Apple Inc. and Google LLC requested cov-
`ered business method (CBM) review of the ’280 patent,
`which the Board instituted. In its institution decision, the
`Board determined that the ’280 patent qualified as a CBM
`patent. After institution, ContentGuard moved to amend
`the ’280 patent. In its final written decision, the Board
`cancelled original claims 1, 5, and 11 of the ’280 patent,
`but granted ContentGuard’s motion to amend by adding
`substitute independent claim 37. Petitioners appeal from
`the Board’s decision to grant ContentGuard’s motion to
`amend. ContentGuard cross-appealed and argued that
`
`

`

`APPLE INC. v. CONTENTGUARD HOLDINGS, INC.
`
`5
`
`the ’280 patent did not qualify as a CBM patent. We have
`jurisdiction under 28 U.S.C. § 1295(a)(4)(A).
`II
`Our jurisdiction allows us to review whether the ’280
`patent qualifies as a CBM patent. Versata Dev. Grp., Inc.
`v. SAP Am., Inc., 793 F.3d 1306, 1323 (Fed. Cir. 2015).
`Whether a patent qualifies as a CBM patent is a question
`of law that we review de novo. Unwired Planet, LLC v.
`Google Inc., 841 F.3d 1376, 1379 (Fed. Cir. 2016). The
`Board concluded that the ’280 patent qualified as a CBM
`patent because it claimed an invention that is “incidental
`to” or “complementary to” financial activity. Since the
`Board’s decision, we expressly rejected this standard in
`Unwired Planet. Id. at 1382. Because the Board relied on
`an incorrect legal standard, we vacate the Board’s deci-
`sion.1
`Unwired Planet held that “the Board’s reliance on
`whether the patent claims activities ‘incidental to’ or
`‘complementary to’ a financial activity as the legal stand-
`ard to determine whether a patent is a CBM patent was
`not in accordance with law.” Id. We explained that “it
`cannot be the case that a patent covering a method and
`corresponding apparatuses becomes a CBM patent be-
`cause its practice could involve a potential sale of a good
`or service.” Id. Moreover “[i]t is not enough that a sale
`has occurred or may occur, or even that the specification
`
`
`1
`In Secure Axcess, LLC v. PNC Bank National
`Ass’n, we held that “the statutory definition of a CBM
`patent requires that the patent have a claim that con-
`tains, however phrased, a financial activity element.” 848
`F.3d 1370, 1381 (Fed. Cir. 2017). That decision, however,
`has since been vacated as moot by the Supreme Court.
`PNC Bank Nat. Ass’n v. Secure Axcess, LLC, 138 S. Ct.
`1982 (2018).
`
`

`

`
`
` 6
`
` APPLE INC. v. CONTENTGUARD HOLDINGS, INC.
`
`speculates such a potential sale might occur.” Id. In-
`stead, “CBM patents are limited to those with claims that
`are directed to methods and apparatuses of particular
`types and with particular uses ‘in the practice, admin-
`istration, or management of a financial product or ser-
`vice.’” Id. (quoting Leahy–Smith America Invents Act,
`Pub. L. No. 112–29, § 18(d), 125 Stat. 284, 331 (2011)).
`Here, the Board applied the improper “incidental or
`complementary” standard to find that the ’280 patent is a
`CBM patent. For instance, the Board observed that
`claim 1 recited a method for “transferring rights adapted
`to be associated with items from a rights supplier to a
`rights consumer.” J.A. 11. According to the Board, the
`transfer of rights from a supplier to a consumer “is an
`activity that, at the very least, is incidental or comple-
`mentary to a financial activity.” Id. Further, the Board
`also relied on portions of the specification that disclose
`how the transfer of rights “may require the payment of a
`fee or processing by a clearinghouse.” Id. (emphasis
`added). From this description, the Board reasoned that
`the patent is “at the very least, incidental or complemen-
`tary to a financial activity.” Id. 12.
`As we explained in Unwired Planet, the mere possibil-
`ity that a patent can be used in financial transactions is
`not enough to make it a CBM patent. 841 F.3d at 1382.
`Although the ’280 patent describes embodiments where
`the claimed DRM system is used to monetize digital
`works, it also explains how the claimed invention can be
`used in ways that do not involve financial transactions.
`For instance, the specification describes how the claimed
`invention can manage healthcare records. ’280 patent,
`col. 7, ll. 6–17. In one embodiment, patients can grant
`“meta-rights” to their hospitals, which allow their hospital
`to transfer specific access rights to a second hospital
`where the patient might need treatment. Id. We need
`not decide whether such embodiments preclude the ’280
`patent from qualifying as a CBM patent. Instead, we hold
`
`

`

`APPLE INC. v. CONTENTGUARD HOLDINGS, INC.
`
`7
`
`only that it is not enough for the specification to describe
`how the invention could, in some instances, be used to
`facilitate financial transactions.
`Petitioners and the Patent and Trademark Office, as
`intervenors, argue that the Board also determined the
`claims are “financial in nature” in its final written deci-
`sion. Accordingly, petitioners and the Patent and Trade-
`mark Office maintain that we can sustain the Board’s
`determination on that alternative ground. However,
`references to the “incidental to” or “complementary to”
`standard appear throughout the Board’s final written
`decision. See, e.g., J.A. 7–8, 11, 12. On the record before
`us, we are unable to discern whether the Board would
`have concluded that the ’280 patent qualifies as a CBM
`patent had it not applied this standard. On remand, the
`Board must determine whether the ’280 patent qualifies
`as a CBM patent in the first instance without relying on
`the “incidental to” or “complementary to” standard.
`III
`Because the Board applied an erroneous legal stand-
`ard, we vacate the Board’s determination that the ’280
`patent qualifies as a CBM patent and remand for further
`proceedings.
`VACATED AND REMANDED
`
`