In Supplemental Examination, Discretion Is The Better Part Of Valor

Decision: Supplemental Examination No. 96/000,096

Holding: Some reexamined claims canceled, other amended claims survived. The surviving claims remain in doubt in view of a later covered business method review (CBM) proceeding.

Background: Under the America Invents Act (“AIA”), supplemental examinations allow patent owners to ask the U.S. Patent and Trademark Office (“USPTO”) to consider, reconsider, or correct information potentially relevant a patent's enforceability. 35 U.S.C. § 257(a). In requesting supplemental examination, the patent owner may present up to twelve items “believed to be relevant into the patent.” 37 C.F.R. § 1.605(a). Within three months of the request, the USPTO decides whether the request raises a substantial new question of patentability (“SNQ”). 37 C.F.R. § 1.620(a). Patent owners may explain why each item does not raise an SNQ in their requests. 37 C.F.R. § 1.610(c)(4). But if the USPTO disagrees, it orders an ex parte reexamination of the patent. 37 C.F.R. § 1.625(b).

While supplemental examination invites further review of a patent, §257(c) of the Patent Act potentially shields a patent subjected to this examination from an unenforceability attack using information submitted during the proceeding. 35 U.S.C. § 257(c). And because the submitted items are not limited to patents and printed publications—as in conventional ex parte reexaminations—supplemental examinations allow patent owners to cure a wider range of potential problems.

Enticed by § 257(c)'s shield, some patent owners have started using supplemental examination to seek reevaluation of their patents' eligibility in the wake of Alice Corp. v. CLS Bank Int'l, 573 U.S. 208 (2014). See, e.g., Weisfeiler, et al., Supplemental Examinations and Supplemental Examinations and Alice: The Bare Essentials of When Not to Poke the Bear, AIA blog, July 9, 2019. This article explores how one patent owner took this approach and outlines lessons learned from the experience. It also examines (1) how far the protection of § 257(c) extends and (2) how supplemental examinations interplay with co-pending Patent Office and district court proceedings.

1. Supplemental Examination 96/000,096: How Alice May Raise an SNQ

   Signature Systems (“Signature”) owns U.S. Patent No. 8,423,402 (“the '402 patent”). The '402 patent generally describes methods for allowing users to earn, exchange, and redeem reward points. Using the claimed method, users can convert one type of reward points (e.g., frequent flyer miles) into another (e.g., credit card rewards). This process enables users to pool disparate rewards and use them more effectively over an exchange.

   In January 2015, Signature sued American Express alleging infringement of the '402 patent. See Complaint, Signature Sys., LLC v. Am. Express Co., No. 1:15-cv-20063 (S.D. Fla.). Shortly thereafter, Signature filed Supplemental Examination No. 96/000,096 (“the '096 SE”), seeking review of all sixteen claims. The only item of information presented in the '096 SE was the Supreme Court's Alice decision. Alice held that claims implementing abstract ideas on generic computers are ineligible for patenting under 35 U.S.C. § 101. Because the '402 patent issued prior to Alice, Signature identified the case as potentially impacting the patent's eligibility. See Request for Supplemental Examination, at 18.

   Signature nevertheless maintained the '402 patent's validity. In Signature's estimation, the claims remained patent-eligible because they recited “specific and detailed steps [which] limit [their] applicability to a narrow subset of any alleged abstract idea of 'exchanging reward points.'” Id. at 27.

   The USPTO disagreed. Applying Alice, the Director found a SNQ on all 16 claims and ordered reexamination. According to the USPTO, the '402 patent was directed to the abstract idea of “earning, exchanging and redeeming reward points.” See Reasons for SNQ, at 3. In the Office's view, this idea was similar to “using advertising as an exchange or currency,” a concept ruled ineligible in Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715 (Fed. Cir. 2014). See Reasons for SNQ, at 3 (citing 79 Fed. Reg. 74,622). In Ultramercial, the Federal Circuit found a method for distributing copyrighted material over the Internet in exchange for viewing an advertisement invalid as an abstract idea. See Ultramercial, 772 F.3d at 715-16. Because the '402 patent was directed to an idea resembling those struck down, the USPTO concluded, “a reasonable Examiner would consider Alice important in deciding whether [the claims are] patentable.” Reasons for SNQ, at 3.

   In an ensuing Office action, the examiner rejected the claims under 35 U.S.C. § 101. Office Action in Ex Parte Reexamination, at 3. The...