Final Written Decision Finding Standing Based on Eminent Domain Lawsuit CBM2014-00116


Takeaway: Standing for a covered business method patent review was demonstrated by a suit for unlicensed use of the patent under an eminent domain statute, 28 U.S.C. § 1498.

In its Final Written Decision, the Board found that Petitioner had demonstrated by a preponderance of the evidence that claims 39-44 of the ’548 patent are unpatentable. Also, the Board denied-in-part and dismissed-in-part each of Patent Owner’s and USPS’s Motion to Exclude.

The ’548 patent “relates to a system and method of processing returned mail.” The Board found that Petitioner had standing to file its Petition because it had been sued for unlicensed use of the ’548 patent under an eminent domain statute, 28 U.S.C. § 1498 in Return Mail, Inc. v. United States, No. 1:11-cv-00130 (Fed. Cl. Filed Feb. 28, 2011). Patent Owner had argued that such an action is not a suit for infringement under 35 U.S.C. §§ 271 and 281 as required for standing in a covered business method review, but the Board indicated that the unlicensed use provision in the suit is equivalent to a suit for infringement and that standing was demonstrated accordingly.

The Board first analyzed whether the ’548 patent is a covered business method patent. Petitioner contended that independent claim 39 includes subject matter that is financial in nature because it “provides a method for easing the administrative burden of finance companies, mortgage companies, and credit card companies by making relaying updated mailing address data more cost effective.” Patent Owner did not dispute that claim 39 recites subject matter that is financial in nature. The Board maintained its decision in the Decision on Institution that claim 39 satisfies the “financial product or service” component of the definition of covered business method patent, because the definition includes “performing . . . operations used in the practice, administration, or management of a financial product or service” and the method of claim 39 performs operations incidental to a financial activity. Specifically, the Board noted that although there is some dispute in the legislative history of the AIA on the scope of covered business method patents, at least one legislator viewed “transmission or management of data” and “back office operations – e.g. payment processing” as ancillary activities within the scope of a financial product or service.

Petitioner also argued that “the claims employ no specific technology, and ‘recite only nominal, generic, long-existing technologies, such as the common telephone, any computer, or any Internet or intranet address or location,’” and that the claimed features are not novel or nonobvious and does not introduce a technical solution to a technical problem. In its Decision on Institution, the Board agreed with Petitioner. Patent Owner argued in its Response that “the ’548 patent solves technical problems in processing return mail, including an inability to handle large volumes of mail efficiently and inaccuracy of processing.” Specifically, Patent Owner discussed the use of a processor and an optical scanner in its system, and “the specification’s preferred embodiment encodes the sender’s preference by creating a bar code with the information.” The Board was not persuaded by Patent Owner’s argument, because claim 39 does not claim those features.

The Board determined that claims 39-44 are directed to nonstatutory subject matter. Petitioner contended that claim 39 recites “the abstract idea of relaying mailing address data with only insignificant extra-solution activity, and fails the machine-or-transformation test.” The Board agreed with Petitioner and determined that all of the claimed steps could be performed in the human mind, with the exception of the transmitting step, and that no particular hardware is disclosed in the ’548 patent as required to perform the steps recited in claim 39. Patent Owner argued that “the challenged claims improve the technological process of return mail processing and do not exclude other methods of doing the same, citing others obtaining patents in the same technology space.” The Board noted that the Alice decision was after some of those patents and that those other patents may be drawn to more specific methods and systems. Further, the Board did not agree with Patent Owner’s expert’s analysis of the two-part test established by Alice or that the claims included meaningful limitations distinct from the abstract idea.

The Board also did not agree with Patent Owner that the claims satisfy the machine or transformation tests. Patent Owner argued that the claims require “a number of machines arranged, interlinked and programmed to perform specific tasks that are integral to performing the purposes of the patent.” However, the Board agreed with Petitioner that the claims recite only conventional and generic hardware. Also, Patent Owner argued that “the challenged claims meet the transformation test, in that the decode step transforms information from one state into another.” However, the Board was not persuaded that such a process was not conventional or well-known. Accordingly, the Board concluded that Petitioner had shown, by a preponderance of the evidence, that claims 39-44 of the ’548 patent are directed to non-statutory subject matter under 35 U.S.C. § 101.

The Board was not persuaded that claims 39-44 are anticipated by 1997 ACS. The Petition used the 1997 ACS as a printed publication and not for the actual function of the system or what would have been performed in any public use of the system. The Board determined that the disputes between the parties seem to be over what the CFS units did and what equipment was deployed, and not what was actually printed in 1997 ACS, which the Board determined did not disclose all of the claimed features.

The United States Postal Service (USPS) and The United States of America, as represented by the Postmaster General v. Return Mail, Inc., CBM2014-00116
Paper 41: Final Written Decision
Patent 6,826,548 B2
Dated: October 15, 2015
Before: Kevin F. Turner, Barbara A. Benoit, and Jo-Anne M. Kokoski
Written by: Turner