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PTAB Required to Provide Interpretation of Regulation Concerning Determination of Which Patents Qualify for CBM Review

| Adam AquinoAndrea Cheek

SIPCO, LLC v. EMERSON ELECTRIC CO.

Before O’Malley, Reyna, and Chen. Appeal from the Patent Trial and Appeal Board. Reyna concurring-in-part and dissenting-in-part

Summary: The language “unobvious over the prior art” in the USPTO’s regulation regarding whether a patent is for a “technological invention” for the purpose of determining whether the patent qualifies for CBM review is not necessarily coextensive with the meaning of “obvious” in the context of § 103.

Emerson petitioned for covered business method review of SIPCO’s patent. In instituting review, the Board determined that the patent was eligible for CBM review, finding that the claimed subject matter was not drawn to a technological invention because it did not “solve[] a technical problem using a technical solution” under the second prong of 37 C.F.R. § 42.301(b).  As part of its analysis, the Board rejected SIPCO’s argument that the claim term “low-power transceiver” should be limited to transceivers having a limited transmission range. In its Final Written Decision, the Board concluded that the challenged claims were patent-ineligible under § 101 and obvious under § 103.

The Federal Circuit reversed the Board’s claim construction determination and its finding that SIPCO’s patent did not meet the second prong of the “technological invention” definition in § 42.301(b), and remanded for further proceedings.  With respect to claim construction, the Federal Circuit reasoned that the specification correlated “low-power” with a limited transmission range, citing language in the specification that explained that a low-power transmitter was used to overcome problems associated with broader range transmission. Because the Federal Circuit found the intrinsic evidence sufficiently clear to construe the claim term, it found it unnecessary to consider extrinsic evidence relied on by the Board.  Under its construction, the Federal Circuit held that the claimed invention solved a technical problem (signal interference) with a technical solution (low-power, limited transmission range).  The Federal Circuit remanded for the Board to consider the first prong of § 42.301(b)— “whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art.”  The Federal Circuit noted that the Board should explain the meaning of the term “obvious” in the context of the regulation, declining to assume that the term is coextensive with obviousness under § 103.

Judge Reyna dissented, arguing that the majority improperly read a functional limitation into the claim from a preferred embodiment.

Editor: Paul Stewart