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`Coming Technical Fix to CBM Statute | Patents Post Grant Blog
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`The Statutory Defect That May Doom Your CBM Petition
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`Posted On: Sep. 23, 2013 By: Scott A. McKeown
`Topics: Business Method Patent Challenge, Patent Trial & Appeal Board
`
`CBM Statute Inadvertently Excludes Best Source of CBM Prior Art
`
`In fashioning the Covered Business Method (CBM) statutes of the America Invents Act (AIA), Congress was
`sensitive to the resources of the USPTO. That is, Congress realized that certain types of ”secret prior art” would
`be very discovery intensive to analyze within the mandated 12 month time frame that the USPTO must conclude
`a CBM proceeding. An example of such art would be secret public use of a claimed method that predated a
`patent filing, such as described in Metallizing Engineering Co. v. Kenyon Bearing & Auto Parts Co. 153 F.
`2d 516 (CA2 1946). To avoid this type of discovery intensive prior art being applied in CBM proceeding,
`Congress excluded it under the definition of prior art provided in Section 18(C) of the AIA.
`
`The problem with Section 18 (C) is that its definition of prior art inadvertently excluded 102(e).
`
`AIA Sec. 18 recites as follows:
`
`(C) A petitioner in a transitional proceeding who challenges the validity of 1 or more claims in a
`covered business method patent on a ground raised under section 102 or 103 of title 35, United
`States Code, as in effect on the day before the effective date set forth in section 3(n)(1), may
`support such ground only on the basis of–
`
`(i) prior art that is described by section 102(a) of such title of such title (as in effect on the day
`before such effective date); or
`
`(ii) prior art that–
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`(I) discloses the invention more than 1 year before the date of the application for patent in the
`United States; and
`
`(II) would be described by section 102(a) of such title (as in effect on the day before the effective
`date set forth in section 3(n)(1)) if the disclosure had been made by another before the invention
`thereof by the applicant for patent.
`
`In a nutshell, Section 18(C) defines CBM art as only art that qualifies under 102(a); or that 102(b) art that is not
`secret. While it was not the intent of the drafters to exclude 102(e), or even 102(d) for that matter, the language
`of the statute indicates otherwise. Yet, excluding 102(e) cripples the statute with respect to its intended purpose
`— combatting suspect business method patents.
`
`102(e) art is also sometimes referred to as “secret” art as it is typically based on a patent application that was not
`known at the time of a later filing directed to the same invention. This first filed application is later published, and
`is effective as prior art against the second application based on its filing date. This type of prior art is especially
`prevalent in the CBM context as many such patents were pursued in the late 1990s in response to State Street
`Bank, and as a precursor to the “dot-com-bubble.” As patent applications did not publish in the 1990s, it is not
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`Coming Technical Fix to CBM Statute | Patents Post Grant Blog
`uncommon for an application filed in 1997 to be effective prior art against the same application filed in 2000, but
`the earlier filed application does not issue as a patent until 2002 (i.e., remains non-public). As this type of
`“secret” art is documented and requires no discovery, it is routinely considered by the USPTO in the patent
`examination context. This art was not the focus of the Sec. 18(C) carve out but is nevertheless exlcuded by the
`language of the statute.
`
`To date, many CBM filers have mistakenly assumed that 102(e) art was fair game understanding only that
`Congress provided a special definition of prior art in Sec. 18(C) to exclude secret public uses. Indeed filers such
`as Google have based entire petitions on 102(e) art in some cases. The PTAB has also instituted trials on 102(e)
`art. However, more recently, the PTAB has been sua sponte spotting the issue (CBM2013-00008).
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`Over the past month I have discussed this issue with legislative staffers working on the next round of patent
`reform initiatives, and drafted a fix for their consideration. My understanding is that this technical fix, along with
`other AIA technical fixes will be included in the next round of patent reform bills, and that the CBM fix will be
`made retroactive.
`
`One Response to “The Statutory Defect That May Doom Your CBM Petition”
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`1. Steve says:
`23 September 2013 at 21:06
`
`Yet; one man’s “technical” fix … is another man’s substantive change.
`
`This — and other intellectually dishonest “technical” fixes — abound in the various “reform” bills …
`floating like so much misguided and unnecessary flotsam and jetsam in the big-moneyed halls of Congress
`and the White House.
`
`Inventors be damned.
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