Granting Institution in Part Where Intervening Case Law Was Found Insufficient to Prevent Estoppel as to One Challenged Claim CBM2015-00131


Takeaway:  A petitioner may be estopped from challenging a claim that was raised or reasonably could have been raised in a previous post-grant review, even in the face of intervening case law.

In its Decision granting in part institution of a covered business method patent review, the Board determined that “Petitioner has demonstrated that it is more likely than not that the challenged claims are unpatentable” under 35 U.S.C. § 101.  However, the Board also determined that Petitioner “is estopped from challenging claim 26 in this proceeding,” and instituted review of claims 3–6, 8–14, 16–25, 27–30, and 32–41, but not claim 26, of the ’598 patent.  The ’598 patent “relates to ‘a portable data carrier for storing and paying for data and to computer systems for providing access to data to be stored,’ and the ‘corresponding methods and computer programs.’”

Pursuant to § 325(e)(1), Petitioner “cannot ‘request or maintain’ a proceeding before the Office with respect to [this claim] ‘on any ground’ that [Petitioner] ‘raised or reasonably could have raised’ during CBM2014-00108.”  Thus, Petitioner “is estopped from maintaining a proceeding with respect to claim 26 based on § 101,” even though the “Supreme Court issued its decision in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014) after [Petitioner] filed its petition in CBM2014-00108” because § 325(e)(1) “does not make exceptions for intervening case law that clarifies jurisprudence.”  Thus, the Board denied covered business method patent review of claim 26 in the present proceeding.

The Board turned to claim construction under the “broadest reasonable interpretation in light of the specification . . . and the understanding of others skilled in the relevant art.”  For purposes of its Decision, the Board determined that the term “payment data” is the only term requiring an express construction.  The Board construed “payment data” to mean “data relating to payment for the requested data item.”

Regarding qualification of a covered business method patent, the Board previously determined that the ’598 patent is a “covered business method patent.”  The Board further disagreed with Patent Owner that AIA § 18(d)(1) “should be interpreted narrowly to cover only technology used specifically in the financial or banking industry.”  As the Board noted:

The Federal Circuit has expressly determined, however, that “the definition of ‘covered business method patent’ 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, such as banks and brokerage houses.” Versata Dev. Grp., Inc. v. SAP America, Inc., 793 F.3d 1306, 1325 (Fed. Cir. 2015). Rather, “it covers a wide range of finance-related activities.” Id. Further, contrary to Patent Owner’s view of the legislative history, the legislative history overall indicates that the phrase “financial product or service” is not limited to the products or services of the “financial services industry” and is to be interpreted broadly.

Thus, the Board determined that “because claim 8 recites ‘payment,’ as Patent Owner acknowledges . . . , the financial nature requirement of § 18(d)(1) is satisfied.”

Finally, the Board was “persuaded that claim 8 as a whole does not recite a technological feature that is novel and unobvious over the prior art” because the ’598 patent “makes clear that the asserted novelty of the invention is not in any specific improvement of software or hardware, but in the method of controlling access to data.”  Thus, the Board determined “that claim 8 recites merely known technological features, which indicates that it is not a patent for a technological invention” and “the problem being solved by claim 8 is a business problem—data piracy.”  The ’598 patent was thus eligible for review.

The Board next addressed the challenge under § 101.  “Petitioner asserts that the challenged claims are directed to an abstract idea without additional elements that transform it into a patent-eligible application of that idea, triggers preemption concerns, and fails the machine-or-transformation test.” (citations omitted).  Specifically, “Petitioner argues that the challenged claims are directed to the abstract idea of ‘payment for and/or controlling access to data,’” which Patent Owner did not dispute.  The Board was persuaded “that the challenged claims are more likely than not drawn to a patent-ineligible abstract idea” as the ’598 patent “makes clear that the heart of the claimed subject matter is restricting access to stored data based on supplier-defined access rules and payment data.”

The Board was also “not persuaded that the challenged claims of the ’598 patent add an inventive concept sufficient to ensure that the patent in practice amounts to significantly more than a patent on the abstract idea itself.”  Further, the Board noted that the specification “treats as well-known all potentially technical aspects of the claim.”

The Board was not persuaded that “the challenged claims are like those at issue in DDR Holdings.”  “According to Patent Owner, the challenged claims are ‘rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks—that of digital data piracy,’” “‘a challenge particular to the Internet.’” (quoting DDR Holdings, LLC v. Hotels.Com, LP., 773 F.3d 1245, 1257 (Fed. Cir. 2014)).  The Board was “not persuaded that the challenged claims specify interactions that depart from the routine use of the recited devices,” but instead determined “that the claims merely apply conventional computer processes to restrict access to data based on payment.”  Indeed, the Board was persuaded “that that the challenged claims are closer to the claims at issue in Ultramercial than to those at issue in DDR Holdings.

Moreover, the Board was not persuaded by Patent Owner’s preemption argument, which “[t]he Supreme Court has described . . . as ‘undergird[ing] our § 101 jurisprudence.’”  However, the concern “is a relative one” and “the absence of complete preemption does not demonstrate patent eligibility.”  The Board noted that the “two-part test elucidated in Alice and Mayo does not require us to anticipate the number, feasibility, or adequacy of non-infringing alternatives to gauge a patented invention’s preemptive effect in order to determine whether a claim is patent-eligible under § 101.”

The Board addressed Patent Owner’s remaining arguments that:

(1) section 101 is not a ground that may be raised in a covered business method patent review (id. at 30–32); and (2) the Office is estopped from revisiting the issue of § 101, which was inherently reviewed during examination (id. at 32–33); and (3) invalidating patent claims via covered business method patent review is unconstitutional (id. at 33–34).

The Board concluded that under Versata “our review of the issue of § 101 here is proper” and that “Patent Owner does not provide any authority for its assertion that “[t]he question of whether the challenged claims are directed to statutory subject matter has already been adjudicated by the USPTO, and the USPTO is estopped from allowing the issues to be raised in the present proceeding.”  Finally, the Board “decline[d] to consider Petitioner’s constitutional challenge as, generally, ‘administrative agencies do not have jurisdiction to decide the constitutionality of congressional enactments.’”  See, e.g., Riggin v. Office of Senate Fair Employment Practices, 61 F.3d 1563, 1569 (Fed. Cir. 1995).

In sum, the Board found that “Petitioner has demonstrated that it is more likely than not that the challenged claims of the ’598 patent—claims 3–6, 8–14, 16–25, 27–30, and 32–41—are unpatentable under 35 U.S.C. § 101.”

Apple Inc. v. Smartflash LLC, CBM2015-00131
Paper 8:  
Decision on Institution of Covered Business Method Patent Review
November 16, 2015
8,061,598 B2
Jennifer S. Bisk, Rama G. Elluru, Jeremy M. Plenzler, and Matthew R. Clements
Written by:  
Related Proceedings:  Smartflash LLC v. Apple Inc., Case No. 6:15-cv-145 (E.D. Tex.); Smartflash LLC v. Google, Inc., Case No. 6:14-cv-435 (E.D. Tex.); Smartflash LLC v. Apple Inc., Case No. 6:13-cv-447 (E.D. Tex.); Smartflash LLC v. Samsung Electronics Co. Ltd., Case No. 6:13-cv-448 (E.D. Tex.); Smartflash LLC v. Amazon.Com, Inc., Case No. 6:14-cv- 992 (E.D. Tex.); CBM2014-00108; CBM2014-00109 (consolidated with CBM2014-00108); CBM2015- 00017; and additional petitions requesting covered business method patent reviews of related patents.