Interplay Between “Technological Invention” and “Significantly More” in PTAB CBM Review

Introduction

On July 18, 2017, the United States Patent and Trademark Office Patent Trial and Appeal Board (“PTAB”) instituted a covered business method (“CBM”) patent review for U.S. Patent No. 8,955,029 (“the ’029 patent”) on grounds of unpatentability under 35 U.S.C. § 101.[1]

The ’029 patent is directed to “renting or purchasing data products for immediate, on-demand delivery, which may be formatted and transferred to a portable medium for use in any existing playback device.”[2] Independent Claim 35 recites:

35. A system for receiving, processing, and storing of rented digital data, comprising:

circuitry for receiving rented digital data;

memory circuitry comprising at least one storage device for storing the rented digital data as stored rented digital data;

playback circuitry that reads the stored rented digital data from said at least one storage device and converts the stored rented digital data to electronic signals for driving a playback device;

processing circuitry comprising software to control operations of said memory circuitry and said playback circuitry and to control at least one operation performed upon the stored rented digital data as permitted by at least one restriction on the use of the rented digital data and to enact a virtual return of the stored rented digital data; and

a user interface operatively connected to said processing circuitry for programming one or more processing functions to be performed by said processing circuitry,

wherein the at least one operation performed upon the stored rented digital data is a transfer of the stored rented digital data along with control data to a portable playback device wherein said control data is used by the portable playback device for performing a virtual return of the stored rented digital data that has been transferred to said portable playback device.[3]

A covered business method patent is 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, except that the term does not include patents for technological inventions.”[4] Thus, in order to institute a CBM review, the petitioner must establish both that the patent has at least one claim that contains a “financial activity element” and that the claims as a whole do not meet the “technological inventions” exception.[5]

Institution Decision

In its institution decision, the PTAB found that Claim 35 recites a financial activity element by reciting the term “rented digital data.” According to the PTAB, rental of data “is a financial activity and a financial service.” The finding that a single claim recites a financial activity is sufficient for a patent to be eligible for CBM review.

To determine whether a patent falls within the technological invention exception, the PTAB follows a two-pronged approach. First, the PTAB determines whether the claim as a whole recites a technological feature that is novel and unobvious over the prior art. The second prong examines whether the claim as a whole solves a technical problem using a technical solution. According to the PTAB, a deficiency in only one prong is sufficient to determine whether the claims qualify for the technological invention exception. The PTAB concluded that the claims were not for a technological invention because the claims did not meet the first prong. Thus, the ’029 patent was found eligible for CBM patent review.

One interesting aspect of this CBM institution decision is that the PTAB acknowledged the interplay between determination of whether a patent is eligible for CBM review under the technological invention exception and the “significantly more” analysis under 35 U.S.C. § 101. Specifically, the PTAB stated that although there may be differences between prong two of the “technological invention” framework and the “significantly more” analysis under 35 U.S.C. § 101, “as a practical matter,” the analysis of “significantly more” is applicable to the analysis under prong two of the technological invention framework.

Takeaways

One strategic takeaway for CBM petitioners may be to include § 101 challenges in a CBM petition to bolster the assertion that the challenged claims do not “solve[] a technical problem using a technical solution.” This PTAB panel found overlap in the analysis applied for assessing whether the claims include a “technical solution” and the “significantly more” analysis under 35 U.S.C. § 101.

For applicants, the PTAB’s Trial Practice Guide offers some guidance on claim drafting techniques that would not qualify as a “technological invention.” Examples include:

- Mere recitation of known technologies, such as computer hardware, communication or computer networks, software, memory, computer–readable storage medium, scanners, display devices or databases, or specialized machines, such as an ATM or point of sale device

- Reciting the use of known prior art technology to accomplish a process or method, even if that process or method is novel and non–obvious

- Combining prior art structures to achieve the normal, expected, or predictable result of that combination.

This decision also highlights the influence of certain claim terms which may lead to a CBM institution decision. It is possible that by omitting the term “rented” from the claims, the Applicant may have avoided the financial activity element, and the patent may not have been eligible for CBM review.

Links

The ’029 Patent

CBM2017-00031 - Institution Decision

PTAB Trial Practice Guide