SightSound v. Apple: When Is A Patent A CBM Patent?

The Federal Circuit recently revisited a question first answered earlier this year in Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306 (Fed. Cir. 2015) (Versata II): When is a patent eligible for Covered-Business Method Review (CBM review) under AIA §18?

In SightSound Techs., LLC v. Apple Inc. (Fed. Cir. 2015), SightSound appealed a decision by the Patent Trial and Appeal Board (the Board) in which several of SightSound's patent claims were subjected to CBM review and determined to be obvious. The claims at issue were generally directed to transferring digital content from a first party to a second party in exchange for a fee. See U.S. Patent No. 5,191,573 claims 1, 2, 4, and 5 and U.S. Patent No. 5,966,440 claims 1, 64, and 95.

Claim 1 of the '573 patent, for example, recites a method of transmitting digital audio in exchange for money:

1. A method for transmitting a desired digital audio signal stored on a first memory of a first party to a second memory of a second party comprising the steps of:

transferring money electronically via a telecommunication line to the first party at a location remote from the second memory and controlling use of the first memory from the second party financially distinct from the first party, said second party controlling use and in possession of the second memory;

connecting electronically via a telecommunications line the first memory with the second memory such that the desired digital audio signal can pass therebetween;

transmitting the desired digital audio signal from the first memory with a transmitter in control and possession of the first party to a receiver having the second memory at a location determined by the second party, said receiver in possession and control of the second party; and

storing the digital signal in the second memory.

A key issue in SightSound's appeal was whether the Board was correct in classifying the SightSound patents as "covered business method patents" (CBM patents)—a threshold requirement for instituting a CBM review.

A CBM patent is defined by statute as "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." See AIA §18(d)(1).

First, SightSound argued that the claims at issue were outside the statutory definition because they were not directed to...