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SIPCO, LLC v. Emerson Electric Co.

Patent’s Use of Limited-Range Wireless Communication May Invoke CBM’s “Technological Invention” Exception

SIPCO, LLC v. Emerson Electric Co., __ F.3d __, 2019 WL 4656205(Fed. Cir. Sept. 25, 2019) (O’Malley, Reyna (CIP/DIP), CHEN) (PTAB) (3 of 5 stars)

Fed Cir vacates CBM determination of invalidity based on § 101 subject matter ineligibility and § 103 obviousness. The PTAB erred in claim construction and in its analysis of CBM eligibility. SPICO’s patent related to communication via a two-step system, one wireless to a node (e.g., an ATM), and the second between the node and a recipient on the telephone network. The Board’s construction of “low-power transceiver” was erroneous; the opinion describes how the record required limiting the term to “limited transmission range,” which the Board had declined to do.

The Board acted neither arbitrarily nor capriciously in determining that claims requiring a vending machine or an ATM (e.g., as the node) fell within AIA § 18(d)(1)’s provision for CBM of certain patents “used in the practice, administration, or management of a financial product or service.” Unwired Planet, 841 F.3d 1376 (Fed. Cir. 2016), is not contradictory, and the opinion notes that “the claimed apparatus need only be ‘used in’ [financial product-related activities]” to satisfy AIA § 18(d)(1).

The Board erred in determining that the patent did not qualify as a “technological invention” under AIA § 18(d)(1). Properly construed, “the claims provide a technical solution to a technical problem.” Op. at 16. They thus satisfy at least part of the regulatory standard for a technological invention in 37 C.F.R. § 42.301(b), and the Board’s contrary determination was arbitrary and capricious. Chamberlain, __ F.3d __, 2019 WL 3938278 (Fed. Cir. Aug. 21, 2019), is not contrary because in that case the wireless technology was “well understood [and] off-the-shelf,” while SIPCO’s claim is a “more specific implementation.” Op. at 19 n.3. The opinion reasons that even if SIPCO’s patent employed conventional components, in “combine[d] certain communication elements in a particular way to address a specific technical problem with a specific technical solution,” Op. at 21, and cites Bascom, 827 F.3d 1341 (Fed. Cir. 2016). Because the Board did not analyze the remainder of § 42.301(b)’s standard for the technological invention exception, remand is necessary to “explain what part one of the regulation means and then apply it as so explicated.” Op. at 21–22.

Part-concurrence, part-dissent: Judge Reyna believes the Board correctly construed the “low-power transceiver” limitation. His opinion criticizes the majority for over-reliance on a “single passage in the written description,” raises questions about the majority’s approach of interpreting “low-power” to impose a distance limitation rather than a power one, and expresses concern about the majority’s absence of deference to the Board’s factual determination (partially based on expert opinion) that a PHOSITA would view “low-power” as not imposing a distance limitation.

KEYWORDS: COVERED BUSINESS METHOD; CLAIM CONSTRUCTION; SUBJECT MATTER ELIGIBILITY; TECHNOLOGICAL INVENTION