The Court of Appeals for the Federal Circuit reversed a decision by Patent Trial and Appeal Board (“Board” or “PTAB”) and held that solving web site problems related to customers of financial institutions is not covered business method (“CBM”) patent under § 18 of the Leahy-Smith America Invents Act (“AIA”) because the patent does not have claims to a method or apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service. Secure Axcess LLC v. PNC Bank National Association, et al., Case No. 2016-1353 (Fed. Cir. Feb. 21, 2017) (Available Here).
Patent Owner Secure Axcess challenged a Final Written Decision of the Patent Trial and Appeal Board (“Board” or “PTAB”) wherein the Board reaffirmed its determination that the ‘191 patent at issue owned by Secure Axcess, was a covered business method (“CBM”) patent under § 18 of the Leahy-Smith America Invents Act (“AIA”), Pub. L. No. 112-29, 125 Stat. 284 (2011). The Court Claims agreed with Secure Axcess on the first point and reversed the CBM finding of the PTAB.
The ‘191 patent is entitled “System and Method for Authenticating a Web Page.” According to the patent, the ”invention relates generally to computer security, and more particularly, to systems and methods for authenticating a web page.”
The representative claim states: “A method comprising: [a] transforming, at an authentication host computer, received data by inserting an authenticity key to create formatted data; and [b] returning, from the authentication host computer, the formatted data to enable the authenticity key to be retrieved from the formatted data and to locate a preferences file, [c] wherein an authenticity stamp is retrieved from the preferences file.”
Per the PTAB,”[t]he ‘191 patent is directed to solving problems related to providing a web site to customers of financial institutions … the ‘191 patent covers the ancillary activity related to a financial product or service of Web site management and functionality and so, according to the legislative history of the AlA, the method and apparatus of the ‘191 patent perform operations used in the administration of a financial product or service.”
Per Secure Axcess, the problem is how does one electronically distinguish between “‘www.bigbank.com’ vs. ‘www.b[l]gbank.com’.
The patent owner’s allegations of infringement by “approximately fifty financial institutions is a factor weigh toward the conclusion that the ‘191 patent claims a method or apparatus that at
least is incidental to a financial activity, even if other types of companies also practice the claimed invention.”
Secure Axcess raised two issues on appeal. First, whether the ’191 patent is a ‘covered business method’ or CBM patent subject to review under Section 18 of the AlA. The second issue is whether the particular claim constructions made by the Board are unreasonable even under the ‘broadest reasonable interpretation’ (BRI) standard applied by the Board/
Congress defined a “covered business method patent” as: “a patent that claims 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 ….” § 18(d)(l).
The first definitional question presented by this statutory provision is whether the requirement that the patent claim ‘something’ applies only to the first clause – a method or corresponding apparatus for performing data processing or other operations – or whether it applies to that clause and the second clause – used in the practice, etc., of a financial product or service. “To sharpen the question in a way relevant to this case, we must first ask, what is meant by the phrase ‘a patent that claims’ something?”
The answer invokes one of the most familiar, settled concepts in patent law, derived directly from 35 U.S.C. § 112(b) of the Patent Act. It is referring to the claims of the patent, which, as properly construed, define “the scope of the patentee’s rights.” See Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, 835 (2015) (quoting Markman v. Westview Instruments, Inc., 517 U.S. 370, 372 (1996)).
Reading the statute as applying only to the first phrase in the statutory definition would give the CBM program a virtually unconstrained reach. Under that reading, a patent would qualify if it claimed a method or corresponding apparatus for performing any type of operation that happen to be used in “the practice, administration, or management of a financial product or service.”
Persons sued for infringement have no more than one year to petition for Inter partes review or IPR, and are restricted to presenting only certain §§ 102 and 103 grounds of unpatentability, thus excluding grounds based on, for example, § 101 or § 112.
In this case, the PTAB’s broadened definition of a CBM patent led it, in deciding the status of the ‘191 patent, to reach out beyond the question of whether the claims, as understood in light of the written description, met the statutory definition.
“In sum, if a patent that fits the term covered business method patent, as defined in AIA § 18(d)(l), is to be usefully distinguished from all other patents, the distinction will not lie based on non-statutory phrases like ‘incidental to’ or ‘complementary to’ financial activity. Such phrases can have unintended consequences. For example, it is safe to assume that most, if not virtually all, inventors of methods or products claimed in a patent have some expectation that complementary financial activity will result-stated another way, that eventually their invention will produce financial rewards for their efforts. A definition that could sweep that broadly obviously will not do. Necessarily, the statutory definition of a CBM patent requires that the patent have a claim that contains, however phrased, a financial activity element.”