By: Sean Benevento[1], Mike Lavine, and Matt Johnson

The PTAB recently clarified eligibility for a covered business method review (CBM). See Xerox Corp. v. Bytemark, Inc., No. CBM2018-00011 (P.T.A.B. July 12, 2018) (Paper 12). To establish standing for CBM review, a petitioner must show that the patent in question is a CBM patent. 37 C.F.R. § 42.304. CBM patents “claim[] 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 . . . .” Leahy-Smith America Invents Act (AIA), Pub. L. No. 112-29, § 18(d)(1), 125 Stat. 284, 329-31 (2011).

In Xerox Corp., the Petitioners requested CBM review of U.S. Patent No. 8,494,967 (’967 patent), which claims a system that allows human ticket-takers to verify already-purchased electronic tickets without having to use a barcode scanner. See No. CBM2018-00011, Paper 12 at 2, 4. Petitioners argued that the ’967 patent is a CBM patent because (1) the utilization and validation of a purchased ticket constitutes a “financial product or service,” and (2) the claimed activities “associated with” the purchased ticket are financial activities. Id. at 9. The Patent Owner responded that the ’967 patent is not a CBM patent because its claims only cover “post-sale” activity. Id.

The PTAB explained that, under the AIA, only the claim language is relevant to determine whether a patent is eligible for CBM review. See id. at 10 (citing Blue Calypso, LLC v. Groupon Inc., 815 F.3d 1331, 1340 (Fed. Cir. 2016)). To obtain review, it is not sufficient that a patent’s claims are merely “incidental” or “complimentary” to financial activity, nor is it sufficient that “its practice could involve a potential sale of a good or service.” Id. at 11. Even if “a sale has occurred or may occur,” it is not necessarily a CBM patent. Id. However, the PTAB noted that CBM review might be warranted where a claimed invention is “financial in nature . . . .” Id. at 11 n.5 (internal quotation marks omitted) (quoting Blue Calypso, LLC, 815 F.3d at 1340).

Here, the PTAB held that there was “nothing explicitly or inherently financial in the claim language” because it was directed toward validation of the ticket and it referred to activity that occurred after purchase. Id. at 13, 14. At most, validation was “complementary to the purchase of a ticket,” so CBM review was not available. Id. at 14.

The PTAB also rejected Petitioners’ argument that activity “associated with” the purchased ticket created eligibility for CBM review. Id. at 16. The Board explained that “associated with” means “incidental to,” and claims that are merely incidental to financial activity do not establish standing for CBM review. Id. at 16-17. Petitioners pointed out that Patent Owner’s website claims its software “can be used to add mobile . . . payments,” but the PTAB also rejected this argument because the fact that a patent may involve a potential sale is not sufficient, either. Id. at 19.

Takeaway:  To establish a patent’s eligibility for CBM review, a petitioner must show there is something “explicitly or inherently financial in the claim language.” It is not sufficient to merely demonstrate the language is incidental or complimentary to financial activity. Similarly, the fact that a patent might involve a sale does not alone establish that it is a CBM patent.

[1] Sean Benevento is a member of Jones Day’s Summer Associate class of 2018.

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Matt Johnson is one of the Firm's primary contacts on practice before the PTAB. Matt consults on nearly every one of Jones Day's over 225 PTAB cases to date. He currently serves as co-chair of Jones Day's PTAB practice.