By: Lisa Furby and John Marlott

A Covered Business Method (“CBM”) patent review permits a petitioner to challenge a patent having claims “used in the practice, administration, or management of a financial product or service,” and that do not claim a “technological invention.”  Only a party or real-party-in-interest that has been sued or charged with infringement of an eligible patent can seek CBM review.  CBM reviews are broader than inter partes reviews, allowing, for example, challenges based on §101 and §112 grounds.

The CBM program is a transitional program, with a “sunset” date in sight.  Unless Congress extends the program, the PTO will stop accepting CBM petitions in about two years, in September 2020.  In enacting the transitional CBM program, Congress sought to address problematic issues with issued patents primarily in the financial services industry.  Conventional wisdom was that, in the 1990s and 2000s, amidst ambiguous legal guidance, scarce prior art in patent form, and a shortage of examiners having relevant experience, the PTO issued a number of business method patents that should never have been granted.  The CBM program was intended as a streamlined method for challenging and eliminating low-quality business method patents.

Since AIA post-grant proceedings went live at the PTAB in 2012, over 550 CBM petitions have been filed.  But in the last year or so, CBM filings have slowed to a trickle.  According to the PTAB’s published June 2018 statistics, there have been only 30 CBM petitions filed in all of fiscal year 2018.  In some recent months, not a single CBM petition has been filed.  This trend may continue.

There are a number of potential reasons why CBM petitions have declined in popularity.  CBM filings may be on the wane because there are simply fewer CBM patents being asserted, especially in light of the Supreme Court’s Alice decision and subsequent case law applying Alice.  Also, the Supreme Court and the Federal Circuit have narrowed the types of patents that are eligible for CBM review.  In the early days of the CBM program, the PTAB took a fairly liberal approach in determining CBM eligibility, broadly defining both the term “financial” and the relationship between the claims and the “financial aspects.”  After recent court decisions, however, the PTAB now requires a more tightly-defined relationship between the patent claims and any alleged financial aspects.

Looking ahead, some believe there is value in maintaining the CBM program, prompting discussions on possibly extending and/or expanding the availability of CBM reviews beyond September 2020.  Congress is currently considering whether CBM reviews have served their purpose, or whether there is still a need for the CBM program.  Given that CBM petitions have slowed to a trickle, however, there may be little momentum to continue the program beyond its original sunset date.  Jones Day will continue to monitor any developments.

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John Marlott brings more than 30 years of intellectual property law experience to his role as lead counsel in IP disputes for Jones Day clients. He focuses on high-stakes district court and ITC patent litigation, post-grant patent proceedings before the PTAB, and appeals to the U.S. Court of Appeals for the Federal Circuit.