United States Court of Appeals
`for the Federal Circuit
`______________________
`
`UNWIRED PLANET, LLC,
`Appellant
`
`v.
`
`GOOGLE INC.,
`Appellee
`______________________
`
`2015-1812
`______________________
`
`Appeal from the United States Patent and Trademark
`Office, Patent Trial and Appeal Board in No. CBM2014-
`00006.
`
`______________________
`
`Decided: November 21, 2016
`______________________
`
`WILLIAM M. JAY, Goodwin Procter LLP, Washington,
`DC, argued for appellant. Also represented by ELEANOR
`M. YOST; BRETT M. SCHUMAN, DAVID ZIMMER, San Fran-
`cisco, CA.
`
`JON WRIGHT, Sterne Kessler Goldstein & Fox, PLLC,
`Washington, DC, argued for appellee. Also represented by
`MICHAEL V. MESSINGER, JOSEPH E. MUTSCHELKNAUS,
`DEIRDRE M. WELLS; PETER ANDREW DETRE, Munger,
`Tolles & Olson, LLP, San Francisco, CA; ADAM R.
`LAWTON, Los Angeles, CA.
`______________________
`
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` UNWIRED PLANET, LLC v. GOOGLE INC.
`
`
`
` 2
`
`
`
`Before REYNA, PLAGER, and HUGHES, Circuit Judges.
`REYNA, Circuit Judge.
`Unwired Planet, LLC (“Unwired”) appeals from the
`final written decision of the Patent Trial and Appeal
`Board (“Board”) in Covered Business Method Patent
`Review No. 2014-00006. Google Inc. v. Unwired Planet,
`LLC, CBM2014-00006, 2015 WL 1570274 (P.T.A.B. Apr.
`6, 2015) (“CBM Final Decision”). Because the Board
`relied on an incorrect definition of covered business
`method (“CBM”) patent in evaluating the challenged
`patent, U.S. Patent No. 7,203,752 (the “’752 patent”), we
`vacate and remand.
`
`BACKGROUND
`U.S. Patent No. 7,203,752
`The ’752 patent is entitled “Method and System for
`Managing Location Information for Wireless Communica-
`tions Devices.” It describes a system and method for
`restricting access to a wireless device’s location infor-
`mation. The specification describes a system that allows
`users of wireless devices (e.g., cell phones) to set “privacy
`preferences” that determine whether “client applications”
`are allowed to access their device’s location information.
`’752 patent col. 1 ll. 60–65. The privacy preferences used
`to determine whether client applications are granted
`access may include, for example, “the time of day of the
`request, [the device’s] current location at the time the
`request is made, the accuracy of the provided information
`and/or the party who is seeking such information.” Id. at
`col. 1 l. 65 to col. 2 l. 1. “In operation, a client application
`will submit a request over a data network to the system
`requesting location information for an identified wireless
`communications device.” Id. at col. 3 ll. 30–33. The
`system then determines, based on the user’s privacy
`preferences, whether to provide the requested location
`information to a client application. Id. at col. 3 ll. 38–50.
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`UNWIRED PLANET, LLC v. GOOGLE INC.
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`3
`
`Claim 25 is representative for the purposes of this ap-
`peal. It claims:
`A method of controlling access to location infor-
`mation for wireless communications devices
`operating in a wireless communications net-
`work, the method comprising:
`receiving a request from a client application for
`location information for a wireless device;
`retrieving a subscriber profile from a memory, the
`subscriber profile including a list of authorized
`client applications and a permission set for
`each of the authorized client applications,
`wherein the permission set includes at least
`one of a spatial limitation on access to the lo-
`cation information or a temporal limitation on
`access to the location information;
`querying the subscribe[r] profile to determine
`whether the client application is an authorized
`client application;
`querying the subscriber profile to determine
`whether the permission set for the client ap-
`plication authorizes the client application to
`receive the location information for the wire-
`less device;
`determining that the client application is either
`not an authorized client application or not au-
`thorized to receive the location information;
`and
`denying the client application access to the loca-
`tion information.
`Id. at col. 16 ll. 18–40.
`
`
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` UNWIRED PLANET, LLC v. GOOGLE INC.
`
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` 4
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`
`
`CBM 2014-00006
`On October 9, 2013, Google Inc. (“Google”) petitioned
`for CBM review of claims 25–29 of the ’752 patent. See
`Leahy-Smith America Invents Act (“AIA”), Pub. L. No.
`112–29, § 18, 125 Stat. 284, 329–31 (2011).1 On April 8,
`2014, the Board instituted CBM review of all the chal-
`lenged claims. As a threshold matter, the Board reviewed
`whether the ’752 patent is a CBM patent. See AIA § 18(d);
`37 C.F.R. § 42.301. The Board based its review on
`“whether the patent claims activities that are financial in
`nature, incidental to a financial activity, or complemen-
`tary to a financial activity.” Google Inc. v. Unwired
`Planet, LLC, CBM2014-00006, 2014 WL 1396978, at *7
`(P.T.A.B. Apr. 8, 2014) (“CBM Institution Decision”)
`(citing Board decisions). After examining the ’752 pa-
`tent’s specification, the Board found the ’752 patent to be
`a CBM patent, reasoning:
`The ’752 patent disclosure indicates the “client
`application” may be associated with a service pro-
`vider or a goods provider, such as a hotel, restau-
`rant, or store, that wants to know a wireless
`device is in its area so relevant advertising may be
`transmitted to the wireless device. See [’752 pa-
`tent col. 11 ll.] 12–17. Thus, the subject matter
`recited in claim 25 of the ’752 patent is incidental
`or complementary to the financial activity of ser-
`vice or product sales. Therefore, claim 25 is di-
`rected to a method for performing data processing
`or other operations used in the practice, admin-
`istration, or management of a financial product or
`service.
`
`1 Section 18 of the AIA, pertaining to CBM review,
`is not codified. References to AIA § 18 in this opinion are
`to the statutes at large.
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`UNWIRED PLANET, LLC v. GOOGLE INC.
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`5
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`Id. The Board instituted the CBM review on four
`grounds: (1) claims 25–29 for unpatentable subject matter
`under 35 U.S.C. § 101, (2) claim 26 for lack of written
`description under 35 U.S.C. § 112, (3) claim 25 for obvi-
`ousness under 35 U.S.C. § 103 over two references, and
`(4) claim 25 for obviousness over a different combination
`of two references. CBM Institution Decision, 2014 WL
`1396978, at *1, *4, *20–21.
`The Board issued its final written decision on April 6,
`2015. The Board upheld only the first ground, finding
`that the challenged claims were directed to unpatentable
`subject matter under section 101. CBM Final Decision,
`2015 WL 1570274, at *18. Unwired appeals. Google does
`not cross-appeal. The only issues on appeal are whether
`the patents are CBM patents and whether the challenged
`claims are directed to patentable subject matter under
`section 101. We have jurisdiction under 28 U.S.C.
`§ 1295(a)(4)(A) and 35 U.S.C. § 329. Our jurisdiction
`includes review of whether the ’752 patent is a CBM
`patent. Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d
`1306, 1323 (Fed. Cir. 2015).
`STANDARD OF REVIEW
`We review Board determinations under the standards
`provided in the Administrative Procedure Act (“APA”), 5
`U.S.C. § 706. Pride Mobility Prods. Corp. v. Permobil,
`Inc., 818 F.3d 1307, 1313 (Fed. Cir. 2016); Power Integra-
`tions, Inc. v. Lee, 797 F.3d 1318, 1323 (Fed. Cir. 2015).
`“Under 5 U.S.C. § 706(2)(A), (E), the Board’s actions here
`are to be set aside if ‘arbitrary, capricious, an abuse of
`discretion, or otherwise not in accordance with law’ or
`‘unsupported by substantial evidence.’” Pride Mobility,
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` UNWIRED PLANET, LLC v. GOOGLE INC.
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` 6
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`
`
`818 F.3d at 1313.2 We review the Board’s statutory
`interpretation de novo. Belkin Int’l, Inc. v. Kappos, 696
`F.3d 1379, 1381 (Fed. Cir. 2012).
`DISCUSSION
`Unwired argues that the Board erred in applying a
`standard that is broader than the AIA contemplates to
`determine whether the ’752 patent was a CBM patent. It
`notes that the challenged claims themselves do not dis-
`close or otherwise describe a financial product or service.
`In Unwired’s view, the Board’s reliance on the sections of
`the specification discussing ways to monetize the inven-
`tion by selling advertising is improper speculation.
`Unwired further argues that the Board erred by looking
`to whether the claims are “incidental” or “complementary”
`to financial activity because these broad terms conflict
`with the AIA’s limits on covered patents.
`Google responds that the Board applied the correct
`definition of CBM patents in light of the comments the
`United States Patent and Trademark Office (“PTO”) made
`during the regulatory process. Google argues that the
`“Board’s broad application of CBM review is well-known
`and has been recognized by this Court.” Google Br. 24
`(citing Versata, 793 F.3d at 1324). Google further notes
`that the specification discusses using the claimed method
`to facilitate advertising, which would thereby facilitate
`financial activity.3 In Google’s view, proposed use of the
`
`
`2 When reviewing the Board’s decisions pursuant to
`the APA, we often use the terms “abuse of discretion” and
`“arbitrary and capricious” interchangeably. Japanese
`Found. for Cancer Research v. Lee, 773 F.3d 1300, 1304
`n.3 (Fed. Cir. 2014).
`3 Google also argues that the limitations of certain
`non-challenged claims should be considered. It did not
`
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`UNWIRED PLANET, LLC v. GOOGLE INC.
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`7
`
`claimed method in facilitating advertising is sufficient to
`support the Board’s determination that the ’752 patent is
`a CBM patent. We disagree.
`In accordance with the statute, a CBM review is
`available only for a “covered business method patent,”
`which the AIA defines as “a patent that claims a method
`or corresponding apparatus for performing data pro-
`cessing or other operations used in the practice, admin-
`istration, or management of a financial product or service,
`except that the term does not include patents for techno-
`logical inventions.” AIA § 18(d)(1).4
`The PTO adopted the statutory definition of CBM pa-
`tents by regulation without alteration. Transitional
`Program
`for Covered Business Method Patents—
`Definitions of Covered Business Method Patent and
`Technological Invention, 77 Fed. Reg. 48,734 (Aug. 14,
`2012) (“Transitional Program”). We have noted that the
`PTO has a “broad delegation of rulemaking authority in
`the establishment and implementation of” CBM review.
`Versata, 793 F.3d at 1325. “It might have been helpful if
`the [PTO] had used [its] authority to elaborate on its
`understanding of the definition [of CBM] provided in the
`statute.” Versata, 793 F.3d at 1325. But the PTO did not
`do so, instead adopting by regulation the statutory defini-
`tion of a CBM patent. 37 C.F.R. § 42.301(a).
`
`
`raise these arguments to the Board, J.A. 81, and we
`decline to consider them in the first instance. See Redline
`Detection, LLC v. Star Envirotech, Inc., 811 F.3d 435, 450
`(Fed. Cir. 2015).
`4 The parties do not dispute whether the ’752 pa-
`tent is a patent for a “technological invention.” See 37
`C.F.R. § 42.301(b).
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` UNWIRED PLANET, LLC v. GOOGLE INC.
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` 8
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`
`
`To reach its decision in this case, the Board did not
`apply the statutory definition. Instead, the Board stated
`that the proper inquiry “is whether the patent claims
`activities that are financial in nature, incidental to a
`financial activity, or complementary to a financial activi-
`ty.” CBM Institution Decision, 2014 WL 1396978, at *7
`(citing Board cases). The Board determined that the ’752
`patent was a CBM patent because the location service
`could involve an eventual sale of services. The Board
`noted that the specification provides that “client applica-
`tions may be service or goods providers whose business is
`geographically oriented,” such as a “hotel, restaurant,
`and/or store.” ’752 patent col. 11 ll. 12–13. These busi-
`nesses may wish to know a wireless device and its user
`are nearby so that “relevant advertising may be transmit-
`ted to the wireless communications device.” Id. at ll. 13–
`17. The Board relied on this discussion to find that the
`’752 patent is a CBM patent because “the subject matter
`recited in claim 25 of the ’752 patent is incidental or
`complementary to” potential sales resulting from adver-
`tising. CBM Institution Decision, 2014 WL 1396978, at
`*7. Indeed, the finding that sales could result from adver-
`tising related to the practice of the patent is the sole
`evidence the Board relied on to find that the ’752 patent is
`a CBM patent. See id.; Google Br. 29–30.
`It is not disputed that this “incidental” or “comple-
`mentary” language is not found in the statute.5 The
`origin of this language is a statement from Senator
`Schumer that the PTO quoted in its response to public
`
`
`5 By contrast, we endorsed the “financial in nature”
`portion of the standard as consistent with the statutory
`definition of “covered business method patent” in Blue
`Calypso, LLC v. Groupon, Inc., 815 F.3d 1331, 1340 (Fed.
`Cir. 2016).
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`9
`
`comments concerning its consideration of proposed inter-
`pretations of the statutory definition for a CBM patent.
`Transitional Program (response to comment 1) (quoting
`157 Cong. Rec. S5432 (daily ed. Sept. 8, 2011) (statement
`of Sen. Schumer) (appearing in the permanent edition of
`the Congressional Record at 157 Cong. Rec. 13,190
`(2011))).6 As part of this statement on general policy
`about how it will act “in administering the program,” the
`PTO response quotes a single floor comment during the
`Senate debate over the AIA as an example of the legisla-
`tive history. Id. The PTO did not adopt the general
`policy statement through ruling making procedures.
`
`
`6 The full text of comment 1 and the response is:
`Comment 1: Several comments suggested that the
`Office interpret “financial product or service”
`broadly.
`Response: The definition set forth in § 42.301(a)
`for covered business method patent adopts the
`definition for covered business method patent
`provided in section 18(d)(1) of the AIA. In admin-
`istering the program, the Office will consider the
`legislative intent and history behind the public
`law definition and the transitional program itself.
`For example, the legislative history explains that
`the definition of covered business method patent
`was drafted to encompass patents “claiming activ-
`ities that are financial in nature, incidental to a
`financial activity or complementary to a financial
`activity.” 157 Cong. Rec. 13,190 (2011) (statement
`of Sen. Schumer). This remark tends to support
`the notion that “financial product or service”
`should be interpreted broadly.
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` UNWIRED PLANET, LLC v. GOOGLE INC.
`
`General policy statements, however, are not legally
`binding and, without adopting a policy as a rule through
`rulemaking, an “agency cannot apply or rely upon a
`general statement of policy as law.” Pac. Gas & Elec. Co.
`v. Fed. Power Comm’n, 506 F.2d 33, 38 (D.C. Cir. 1974);
`Chrysler Corp. v. Brown, 441 U.S. 281, 302 n.31 (1979)
`(suggesting that general statements of policy “do not have
`the force and effect of law”); Hamlet v. United States, 63
`F.3d 1097, 1105 n.6 (Fed. Cir. 1995) (noting that a “sub-
`stantive rule” is “far more likely to be considered a bind-
`ing regulation” than a general statement of policy).
`Likewise, the legislative history cannot supplant the
`statutory definition actually adopted. Ratzlaf v. United
`States, 510 U.S. 135, 147–48 (1994) (“[W]e do not resort to
`legislative history to cloud a statutory text that is clear.”).
`To the extent the PTO’s response is viewed as reflecting
`the legislative history, “the views of a single legislator,
`even a bill’s sponsor, are not controlling.” Mims v. Arrow
`Fin. Servs., LLC, 132 S. Ct. 740, 752 (2012) (citing Con-
`sumer Prod. Safety Comm’n v. GTE Sylvania, Inc., 447
`U.S. 102, 118 (1980)).
`The legislative debate concerning the scope of a CBM
`review includes statements from more than a single
`senator. It includes inconsistent views, some of which
`speak more clearly and directly on the definition than
`does the single statement picked by the PTO. For exam-
`ple, various legislators offered divergent views on whether
`patents on check scanning methods and apparatuses are
`CBM patents. Senator Kyl urged that the CBM “section
`grew out of concerns” with patents on technology used to
`“clear checks electronically,” which he claimed should be
`covered as “products or services that are particular to or
`characteristic of financial institutions.” 157 Cong. Rec.
`3432–33 (2011) (statement of Sen. Kyl). Senator Durbin
`expressed concerns that the section should not cover
`patents on “novel machinery to count, sort, and authenti-
`cate currency and paper instruments.” 157 Cong. Rec.
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`UNWIRED PLANET, LLC v. GOOGLE INC.
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`13,186 (2011) (statement of Sen. Durbin). In response to
`those views, Senator Schumer assured that “it is not the
`understanding of Congress that such patents would be
`reviewed and invalidated under Section 18.” Id. (state-
`ment of Sen. Schumer). These views show clear conflict
`about whether methods and apparatuses used for count-
`ing money, sorting currency denominations, and authen-
`ticating financial instruments are within the definition of
`a CBM patent. Equally clear is that, under the Board’s
`current definition of the scope of CBM patents, such
`methods and apparatuses would be, at minimum, inci-
`dental to financial activity. Certainly, an apparatus used
`to sort currency denominations, or a method directed to
`authenticating financial instruments, are more related to
`the statutory definition than the patent in this case.
`Neither the legislators’ views nor the PTO policy
`statement provides the operative legal standard. The
`authoritative statement of the Board’s authority to con-
`duct a CBM review is the text of the statute. Exxon Mobil
`Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 568 (2005).
`The Board is only empowered to review “the validity of
`covered business method patents.” AIA § 18(a)(1). To be
`sure, claims that satisfy the PTO’s policy statement may
`also fall within the narrow statutory definition. See, e.g.,
`Blue Calypso, 815 F.3d at 1337, 1340 (CBM patent’s claim
`included “recognizing a subsidy” step to “financially
`induce” participant action) (emphasis in original). But
`patents that fall outside the definition of a CBM patent
`are outside the Board’s authority to review as a CBM
`patent. In any event, the PTO’s regulatory authority does
`not permit it to adopt regulations that expand its authori-
`ty beyond that granted by Congress. “Indeed, it is the
`quintessential function of the reviewing court to interpret
`legislative delegations of power and to strike down those
`agency actions that traverse the limits of statutory au-
`thority.” Office of Commc’n of United Church of Christ v.
`FCC, 707 F.2d 1413, 1423 (D.C. Cir. 1983).
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` UNWIRED PLANET, LLC v. GOOGLE INC.
`
`The Board’s application of the “incidental to” and
`“complementary to” language from the PTO policy state-
`ment instead of the statutory definition renders superflu-
`ous the limits Congress placed on the definition of a CBM
`patent. CBM patents are limited to those with claims
`that are directed to methods and apparatuses of particu-
`lar types and with particular uses “in the practice, admin-
`istration, or management of a financial product or
`service.” AIA § 18(d). The patent for a novel lightbulb
`that is found to work particularly well in bank vaults does
`not become a CBM patent because of its incidental or
`complementary use in banks. Likewise, it cannot be the
`case that a patent covering a method and corresponding
`apparatuses becomes a CBM patent because its practice
`could involve a potential sale of a good or service. All
`patents, at some level, relate to potential sale of a good or
`service. See 35 U.S.C. § 101.7 Take, for example, a patent
`for an apparatus for digging ditches. Does the sale of the
`dirt that results from use of the ditch digger render the
`patent a CBM patent? No, because the claims of the
`ditch-digging method or apparatus are not directed to
`“performing data processing or other operations” or “used
`in the practice, administration, or management of a
`financial product or service,” as required by the statute.
`AIA § 18(d); 37 C.F.R. § 42.301(a). It is not enough that a
`sale has occurred or may occur, or even that the specifica-
`tion speculates such a potential sale might occur.
`
`7
`Indeed, the fundamental incentive of obtaining a
`patent—the right to exclude—necessarily impacts the
`marketplace. See, e.g., C.R. Bard, Inc. v. M3 Sys., Inc.,
`157 F.3d 1340, 1367–68 (Fed. Cir. 1998) (discussing the
`relationship between a patent owner’s right to exclude
`and marketplace monopolies); Mallinckrodt,
`Inc.
`v. Medipart, Inc., 976 F.2d 700, 703–09 (Fed. Cir. 1992)
`(same).
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`We hold that the Board’s reliance on whether the pa-
`tent claims activities “incidental to” or “complementary
`to” a financial activity as the legal standard to determine
`whether a patent is a CBM patent was not in accordance
`with law. We do not reach the patentability of the chal-
`lenged claims under section 101.
`CONCLUSION
`We vacate the Board’s final written decision and re-
`mand the case for a decision in the first instance, and in
`accordance with this opinion, whether the ’752 patent is a
`CBM patent.
`VACATED AND REMANDED
`COSTS
`
` No costs.
`
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