When Sleeping Dogs Aren't Allowed to Lie

As we close year two of patent reform, we should be mindful that we only have six more years to use Covered Business Method review under the America Invents Act. Why should we care that only six years of CBM review remain? It offers defendants accused of infringing a qualifying patent one of the most powerful tools available to beat back an accuser who won't let sleeping dogs lie.

The Advantages of CBM Review

The power of the CBM review comes from not only the range of challenges available to a petitioner, but also from the speed of resolution.A petitioner can challenge a qualifying patent under §101 and §112, in addition to §102 and §103. Once instituted, the CBM review will conclude and the petitioner will have an answer in a speedy 12 months.

The CBM petitioner may seek to stay any underlying litigation, and the statute even proscribes four factors for the district court to consider for a motion to stay. AIA, §18(b)(1). The district court's decision on a motion to stay is immediately appealable to the Federal Circuit. AIA, §18(b)(2). Indeed, the Federal Circuit recently reversed a district court's denial of a motion to stay, without resorting to the clear Congressional intent in the legislative history. VirtualAgility Inc. v., Inc., slip op. 2014-1232 (Fed. Cir. July 10, 2014).

Lastly, estoppel is limited to the grounds actually raised in the petition. If we don't raise it, we can still use it in litigation. There's no need for speculation or angst about how a court may rule on whether something "could/should have been raised." If it isn't raised in the petition, it's fair game.

The opportunity for settlement to terminate the petitioner or the trial altogether offers another potential benefit of CBM review. On a proper joint request to terminate which includes a copy of the settlement agreement, the PTAB will terminate the petitioner. Whether the PTAB terminates the patent owner depends on the circumstances. For example, if the trial is in an advanced stage, the PTAB may choose to proceed to a final written decision. Interthinx, Inc. v. Corelogic Solns., LLC, CBM2012-00007, Paper 47 (Termination of Petitioner Pursuant to Settlement) at 2.

True, the filing fees are $30,000 for 15 claims and an 80-page petition. Given the caliber of the judges, the speed of the review, and the opportunity for settlement well before the eve of a jury trial, these limits may be a small price to pay.

Statistics Reflect the Efficacy of CBM Review

During the 11th Annual Patents for Financial Services Summit, Judge Thomas Giannetti, Lead Administrative Patent Judge, presented these statistics related to CBM review through June 18, 2014:

  • 185 CBMs had been filed and 1351 IPRs had been filed.
  • For the filed CBMs, 84 challenged less than all claims and 101 challenged all claims. 114 raised §101 grounds and 67 raised §112 grounds.
  • So far, 21 CBM petitions have been denied and 68 CBMs have been instituted. Stated differently, of the 89 CBM petitions the PTAB had considered through June 16, 2014, 76% were instituted and 24% were denied.
  • For the 68 CBMs instituted, 12 challenged less than all claims and 56 challenged all claims.
  • The PTAB has issued 11 Final Written Decisions. 8 decisions found all claims unpatentable, 2 decisions found some claims unpatentable, and only 1 decision found no claims unpatentable.
  • The breakdown of the unpatentability grounds is:

§102: 18%

§103: 64%

§112: 0%

§101: 27%

A Broad Array of Patents Qualify for CBM Review

Over the last two years, the PTAB has clarified what asserted patents qualify for CBM review. First, "financial" means "relating to monetary matters." SAP America, Inc. v. Versata Development Group, Inc., CBM2012-00001, Paper 36 (Institution Decision) at 23. "Financial product or service" is not limited to "products or services that a financial holding company could offer." Id. at 22. The statute does not "require the literal recitation of the terms—financial products or services'" in the challenged patent. Id. at 23. Second, the challenged patent qualifies "if the subject matter of at least one claim is directed to a covered business method." Liberty Mutual Ins. Co. v. Progressive Casualty Ins. Co., CBM2012-00004, Paper 60 (Final Written Decision) at 6. The statute does not require "a test that must be applied on a claim-by-claim basis to justify review of each claim." Id. Third, a petitioner will disqualify a covered business method patent from CBM review by filing a declaratory judgment for invalidity before filing its CBM review petition. Recently, the PTAB designated its first precedential opinion clarifying that the PTAB "may not institute a covered business method patent review of a challenged patent when the petitioner filed a civil action challenging the validity of a claim of the patent before the date on which the petition for review is filed." SecureBuy, LLC v. CardinalCommerce Corp., CBM2014-00035, Paper 12 (Institution Decision) at 3.

With the very broad interpretation of "financial product or service" and the need for just one claim directed to a covered business method, an accused infringer may get the benefit of CBM review in a wide variety of asserted patents.

The petitioner must also prove that the covered business method patent does not include a "technological invention," meaning "whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution." 37 C.F.R. §42.301(b). While the Office Patent Trial Practice Guide provides some guidance about what claim drafting techniques do not render a patent a technological invention, simply regurgitating the language of that guidance will not suffice. Instead, the petitioner must come forward with specific and persuasive reasons the patent as a whole does not include a technological invention, including expert testimony. Motorola Mobility, LLC v. Intellectual Ventures I, LLC, CBM2014-00084, Paper 18 (Institution Decision) at 7.


CBM review standards may be broad, however, it is clear that the PTAB expects the petitioner to come forward with persuasive and specific arguments supporting the patent's qualification as a covered business method patent. Rather than view an infringement accusation as a crisis, a slight change of perspective may reveal an opportunity to eliminate a threat once and for all. Given the landscape of CBM review, a patent owner should carefully evaluate whether to let the sleeping dog lie.