Dollar SignsIf a patented mobile phone app can locate a nearby ATM machine, are the claims of that patent subject to CBM review because ATMs are used in financial transactions? What if the claim could cover a business entity that, incidentally, might also push advertisements to a mobile phone? Is it enough that a claim is merely “incidental to” a financial product or service, or, must a claim actually require that something be used to practice, administer, or manage a financial product or service? These are central questions currently under consideration at the CAFC in Unwired Planet LLC v. Google Inc., Nos. 15-1810 and 15-1812 (audio recordings). The PTAB found these facts sufficiently supported CBM review.  However, during recent oral arguments on appeal, the judges of the CAFC panel seemed skeptical, focusing on the text of the underlying statute and its implementing rules.

Whether the CAFC accepts the scope of the covered business method as including claims that arguably cover activities that are “incidental or complimentary to a financial activity,” as currently implemented by the PTAB, will impact the number of patents that are eligible for CBM review.

The pending CAFC appeals arise out of corresponding PTAB final decisions in CBM proceedings directed to U.S. Patent No. 7,024,205 (CBM2014-00005) and U.S. Patent No. 7,203,752 (CBM2014-00006).

The ‘205 patent is directed toward a method of providing location-based services in a wireless network, such as locating specific services in the vicinity of a mobile telephone. Claim 1 of the ‘205 patent recites a “method for providing location based services in a wireless network” that prioritizes service provider information based on location information and other prioritization information.

In its petition for CBM2014-00005, Google argued that the ‘205 patent is eligible for CBM review because the invention is at least incidental or complementary to a financial product or service. To support this argument, the petitioner pointed to sections of the specification that describe using the application to retrieve information about ATMs and those that describe potentially using credit card numbers or other financial information to process a location-based service requests, generate revenue from subscribers, or consummate a transaction.

Unwired Planet argued that the ‘205 patent was not eligible for CBM review because the claims did not directly claim a method used in the practice, administration, or management of a financial product or service. Unwired Planet asserted that CBM eligibility cannot be based on the mere possibility that a method or apparatus may be used in activities related to a financial service or product.  Unwired Planet contended the PTAB could consider only the words of the claim, and the claim must recite some control of a financial product or service.

In its Institution Decision, the PTAB rejected Unwired Planet’s proposal. Google Inc. v. Unwired Planet, LLC, CBM2014-00005, Paper 10 (PTAB, April 8, 2014). Citing its institution decision in SAP America, Inc. v. Versata Development Group., Inc., CBM2012-00001, Paper 10 (PTAB, January 19, 2013), the PTAB maintained that “the term financial product or service is to be interpreted broadly and encompass patents claiming activities that are financial in nature, incidental to a financial activity, or complementary to a financial activity.” Based on the patent’s example of the method’s use to locate ATMs that do not charge a transaction fee and the potential generation of revenues from use of the system, the PTAB held that the matter of claim 1 “is at least incidental or complimentary to a financial activity, and thus, are directed to a financial product or service and eligible for covered business method patent review.”

The ‘752 patent is directed toward a system and method for managing location information for wireless communications devices. The challenged claims (25-29) recite a method for controlling access to location information for wireless communication devices operating in a wireless communications network, wherein a client application requests location information for a wireless device. The specification described client applications as including “service or goods providers whose business is geographically oriented,” such as hotels, restaurants, or stores.

In CBM2014-00006, Google argued that claim 25 is CBM eligible because the recited “client application” could include banks or other financial service companies. Unwired Planet argued that, because the claims were not limited to a financial application nor encompassed an application related to a financial institution, the patent could not be eligible for CBM review.  The PTAB, rejecting the positions of both Google and Unwired Planet, found that the ‘752 patent is a covered business method because claim 25 could cover a business that wants to know whether a wireless device in nearby so that relevant advertising may be transmitted to the wireless device. The PTAB reasoned that such activity qualifies as a CBM because it is “incidental or complementary to the financial activity of service or product sales.”

During oral argument before the CAFC, there was much discussion relative to the effect of the decision in Versata Development Group, Inc., v. SAP America, Inc., 793 F.3d 1306 (Fed. Cir. 2015) (discussed previously here). In Versata, the CAFC determined that the definition of a CBM patent under § 18 is not limited to products and services of only the financial industry, or to patents owned by or directly affecting the activities of financial institutions. Rather, because the statute on its face covers a wide range of finance-related activities, the CAFC deferred to the expertise of the USPTO and the PTAB, which interpreted the statute broadly to encompass patents claiming activities that are financial in nature, incidental to a financial activity or complementary to a financial activity.  However, in Versata, the claims were much more directly linked to a financial transaction, expressly claiming a “method for determining a price of a product offered to a purchasing organization.” In contrast, the link to an underlying financial transaction in both of the ‘205 and the ‘752 patents is not clearly expressed in the claims, but rather, as stated by the PTAB, is more “incidental or complimentary to a financial activity.”

Another twist to these appeals comes from the intervening Supreme Court decision in Cuozzo Speed Technologies, Inc. v. Lee (reported here), in which the Court held that the “no appeal” provision of 35 U.S.C. §314(d) precludes appeal of the PTAB’s institution decisions in IPRs, even after a final decision. However, the Supreme Court expressly stated that the “no appeal” provision of §314(d) does not “enable the agency to act outside its statutory limits.” A similar “no appeal” provision is applicable to institution decisions in CBMs under 35 U.S.C. § 324(e). Thus, in view of Cuozzo, probably the most important question before the CAFC is whether the PTAB’s interpretation of what constitutes a “covered business method” is a reasonable administrative interpretation of the AIA §18 statute.

Whether the CAFC agrees that AIA §18 covered business methods include claimed subject matter merely “incidental or complimentary to a financial activity,” will impact the number of patents that are eligible for CBM review. For petitioners, “incidental or complementary” would be a significant advantage for challenging non-PGR patents at the PTAB. For patent owners, such a holding would make it harder to avoid AIA challenges at the PTAB, especially for computer-based method patents, since almost any method could eventually be tied to a financial transaction somehow. The question then would be, how remote must that tie be to not be “incidental”?