Defining The Covered Business Method Patent

In the America Invents Act ("AIA"), Congress granted the Patent Trial and Appeal Board ("PTAB," "the Board") heightened jurisdiction to hear challenges to patents related to performing data processing or other operations used in the practice, administration, or management of a financial product or service.1 Patents that fall within the definition of a "covered business method" can be subjected to challenges in a Covered Business Method ("CBM") post-grant review proceeding beyond those available for other non-covered patents. 2 The prospect of additional challenge grounds and expanded time period availability makes CBM proceedings an attractive option when available, but the precise scope regarding which patents are eligible for CBM review has remained fuzzy thus far.

The bright-line rule as to which patents qualify for CBM reviews has eluded practitioners to date. But input into that definition has come from a variety of sources. A broad definition was provided by Congress in the AIA with instructions for the U.S. Patent Office to further define in the ensuing regulations. 3 The Patent Office issued regulations further describing the scope of a CBM patent and provided additional commentary with its rulemaking. 4 In operation, the PTAB has further contributed to the definition through its decisions on CBM eligibility. Finally, the Federal Circuit in the Versata appeal noted its willingness to join in the covered business method patent debate by stating that it has jurisdiction to review the PTAB's CBM standing decisions. 5

The following Commentary compiles the definitional inputs supplied by each of these four parties to help establish the meaning of covered business method patent.

Covered Business Method Patents are patents that include a claim: Used in the practice, administration, or management of a financial product or service; and That is not directed to a technological invention. —Leahy-Smith America Invents Act § 18(d)(1).

Congressional and Patent Office Definitions

In section 18(d)(1) of the AIA, Congress defined a CBM patent as one 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." 6 The Patent Office then promulgated rules for CBM reviews, considering the legislative intent and history behind the AIA's definition, and concluded that the AIA's CBM patent definition was drafted to encompass patents "claiming activities that are financial in nature, incidental to a financial activity or complementary to a financial activity." 7 In addition, the Patent Office added "[the legislative history] supports the notion that 'financial product or service' should be interpreted broadly," and "is not limited to the products or services of the financial services industry." 8 Finally, in response to a comment regarding the scope of subject matter review, the Patent Office stated, "A patent need have only one claim directed to a covered business method to be eligible for review." 9 Regarding the carveout for "technological inventions," the Patent Office added that "technological inventions are those patents whose novelty turns on a technological innovation over the prior art and are concerned with a technical problem which is solved with a technical solution." 10

The Patent Office provided additional discussion and, perhaps most helpful, examples in its commentary which accompanied the rules and the PTAB's Trial Practice Guide. Regarding technological inventions, the Patent Office stated that "mere recitation of known technologies, such as computer hardware, communication or computer networks, software, memory [or] computer readable storage mediums...," would not typically render a patent a technological invention. 11 Furthermore, "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...[or] combining prior art structures to achieve the normal, expected or predictable result of that combination," would not qualify as a technological invention. 12

Examples of eligible CBM patents included "a patent that claims a method for hedging...