To be or not to be is an important question in classic literature as well as in defending patents that may be challenged with a Covered Business Method (CBM) review. One patent owner faced this question—not for itself, but for a dependent claim—when its patent was challenged in Plaid Technologies Inc. v. Yodlee, Inc. (CBM2016-00070, paper 8).
CBM, in contrast to IPR, opens up challenges to a patent beyond those based on prior art—which frequently means a challenge to patent eligibility under §101. Once a trial is instituted on a CBM petition containing a challenge under §101, there is a high rate of cancellation of claims. On such challenges, the PTAB is statistically an even less favorable forum for patent owners than the district courts. Consequently, there can be significant advantages to a patent owner in avoiding institution of a CBM trial.
A CBM trial can only be instituted if at least one claim in a challenged patent is directed to a method or apparatus used in the practice, administration, or management of a financial product or service. In Plaid Technologies, the challenged patent contained mostly claims that did not mention any financial product or service. Rather, those claims were of general applicability, relating to a technique for better communication between a server and a mobile phone. But some dependent claims expressly mentioned use of that technique for financial services, such as billing.
As even a single claim related to a financial product or service can open the door to CBM review, the patent owner sought to answer Hamlet’s famous question with a statutory disclaimer to remove the claims that were expressly financial.
To be, or not to be, that is the question:
Whether 'tis Nobler in the mind to suffer
The Slings and Arrows of outrageous Fortune,
Or to take Arms against a Sea of troubles…
The patent owner concluded it would better to suffer the outrageous fortune of giving up those dependent claims than to take arms against a sea of troubles that typically befall a patent challenged under §101 in a CBM trial.
The patent owner reasoned that following a disclaimer under 35 U.S.C. § 253(a), the dependent claims must be treated as if they never existed. Thus, there were no claims related to a financial product or service in the patent.
The petitioner protested that the independent claims, from which the disclaimed claims depended, must encompass financial products or services—at least those financial services mentioned in the disclaimed dependent claims. The petitioner further argued that the independent claims related to a system, method, and service that typically is used with a financial product or service, even if not expressly mentioned as such.
The Board, however, sided with the patent owner. The panel in Plaid Technologies acknowledged that other panels had arrived at an opposite conclusion in similar circumstances. However, this panel pointed to a recent Federal Circuit case cautioning the Board to “focus on the claim language at issue” and to determine whether there is anything “explicitly or inherently financial in the construed claim language.” As all of the claims that were “explicitly or inherently financial” were gone from the patent, the Board found this patent not eligible for CBM.
Perhaps Shakespeare foreshadowed this result in Macbeth:
Out, out, brief candle!
Life's but a walking shadow, a poor player,
That struts and frets his hour upon the stage,
And then is heard no more.
At least for some panels, a CBM petition will be heard no more, once all claims that were “explicitly or inherently financial” are out. Patent owners should consider whether this approach can work for them. Petitioners, too, must factor this possibility into the calculus of planning a challenge to a patent. Whether the patent owner succeeds in avoiding CBM may not be known for six months after a petition is filed. By that time, the petitioner’s options may be limited.