Featured / Symposia

I’m pleased to announce that, this week and next, Fed Circuit Blog will host its first online symposium. This symposium will focus on the anticipated sunset of the Patent Trial and Appeal Board’s statutory directive to hold “covered business method review” proceedings—hearings to review the patentability of claims included in “covered business method patents.” The Federal Circuit, of course, hears appeals from parties dissatisfied with judgments rendered by the PTAB in these CBMR proceedings, and over the last several years the court has issued a number of opinions in this context. Here, I provide background on these proceedings and introduce some of the topics participants in our symposium will address in their guest blog posts.

Congress and President Obama created CBMR when they enacted the Leahy-Smith America Invents Act on September 16, 2011. Section 18 of the AIA, entitled “Transitional Program for Covered Business Method Patents,” ordered the Director of the U.S. Patent and Trademark Office to “issue regulations establishing and implementing a transitional post-grant review proceeding for review of the validity of covered business method patents.”

The AIA, in turn, defined a “covered business method patent” 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.”

Notably, a year and a half before the enactment of the AIA, the Supreme Court, in Bilski v. Kappos, ruled that the patent statute “precludes the broad contention that the term ‘process’ categorically excludes business methods” from patent eligibility. The Court also explicitly rejected the argument that the patent statute should “exclude all business methods simply because business method patents were rarely issued until modern times.”

At the same time, the Court explained that, while the patent statute “appears to leave open the possibility of some business method patents, it does not suggest broad patentability of such claimed inventions.”

Indeed, the Court highlighted that, “even if a particular business method fits into the statutory definition of a ‘process,’ that does not mean that the application claiming that method should be granted.” Instead, the Court noted, “[i]n order to receive patent protection, any claimed invention must be novel, § 102, nonobvious, § 103, and fully and particularly described, § 112.” The Court went on to explain that “[t]hese limitations serve a critical role in adjusting the tension, ever present in patent law, between stimulating innovation by protecting inventors and impeding progress by granting patents when not justified by the statutory design.”

The AIA, again following Bilski in time, stated that “[n]othing in this section shall be construed as amending or interpreting categories of patent-eligible subject matter set forth under section 101 of title 35, United States Code.” Notably, however, the AIA indicated that CBMR “shall employ the standards and procedures of a post-grant review.” The AIA stated that a petitioner in a post-grant review proceeding may challenge patentability “on any ground that could be raised under paragraph (2) or (3) of section 282(b).” And courts have interpreted Section 282(b) to permit challenges to patentability based on patent eligibility under Section 101 in addition to the more explicit defenses of novelty under Section 102, non-obviousness under Section 103, and the disclosure requirements of Section 112. So, in short, CBMR would permit review of claims in “covered business method patents” to ensure compliance with each of these patentability requirements.

Interestingly, however, the AIA indicated CBMR would be temporary. The Act included a sunset provision stating that “this subsection, and the regulations issued under this subsection, are repealed effective upon the expiration of the 8-year period beginning on the date that the regulations issued under . . . paragraph (1) take effect.” Given that the AIA dictated that the regulations would “take effect upon the expiration of the 1-year period beginning on the date of the enactment of this Act,” this sunset is scheduled to take effect next week, on September 16, 2020.

In this way the AIA set up a temporary mechanism for the PTAB to analyze the validity of claims in certain issued patents. Traditionally, with a few exceptions, disputes over the validity of patent claims were decided in federal district court. Given that other existing mechanism, the writers of the legislation saw the potential for multiple proceedings—one before a federal district court and one before the PTAB—and sought to address it. The AIA indicates that, “[i]f a party seeks a stay of a civil action alleging infringement of a patent . . . relating to a transitional proceeding for that patent, the court shall decided whether to enter a stay” based upon four factors identified in the statute.

Over time, the Federal Circuit has been called upon to handle appeals from the PTAB and federal district courts related to these provisions in the AIA related to CBMR proceedings.

In the coming week we will be presenting blog posts by various knowledgeable commentators, including a former Acting Director of the USPTO, leading practitioners, and law professors addressing these provisions and other more fundamental aspects of CBMR proceedings. As you will see, there is a fierce debate going on right now about various aspects of CBMR: why it was created, whether it is working, its long term impact on the patent system, and whether its sunset should be eliminated. In short, these posts will address the ramifications of CBMR and its anticipated sunset.