from the United States Patent and Trademark Office, Patent
Trial and Appeal Board in No. CBM2014-00100.
PETITIONS FOR REHEARING EN BANC
Prost, Chief Judge, Newman, Plager [*] , Lourie, Dyk, Moore, O'Malley,
Reyna, Wallach, Taranto, Chen, and Hughes, Circuit Judges.
U.S. Bank National Association and U.S. Bancorp and appellees
PNC Bank National Association; Santander Bank, N.A.; and
Nationwide Bank filed separate petitions for rehearing en
banc. A response to the petitions was invited by the court
and filed by the appellant Secure Axcess, LLC. Two motions
for leave to file amici curiae briefs were also filed and
granted by the court.
petitions were referred to the panel that heard the appeal,
and thereafter the petitions, response, and briefs of amici
curiae were referred to the circuit judges who are in regular
active service. A poll was requested, taken, and failed.
consideration thereof, It Is Ordered That:
petitions for panel rehearing are denied.
petitions for rehearing en banc are denied. The mandate of
the court will be issued on June 13, 2017.
Taranto, Circuit Judge, with whom Moore, Circuit Judge,
joins, concurring in the denial of rehearing en banc.
case involves a targeted and time-limited pro-gram-"a
transitional post-grant review proceeding for review of the
validity of covered business method [CBM] patents."
Leahy-Smith America Invents Act (AIA) § 18(a)(1), Pub.
L. No. 112-29, 125 Stat. 284, 329 (2011). The program is now
more than halfway through its specified eight-year life; it
is set to expire in a little over three years. AIA §
18(a)(3). The program has consistently been small in scale,
unlike the permanent program for inter partes reviews (IPR),
35 U.S.C. §§ 311-319, and the issue presented in
this case has arisen only rarely. Although the statute grants
relevant rulemaking authority to the Director of the Patent
and Trademark Office (PTO), AIA § 18(a)(1), the legal
issue comes to this court unaccompanied by any regulation
except one that, regarding this issue, merely incorporates
the statutory language. 37 C.F.R. § 42.301(a). On the
question thus presented, the panel opinion in this case
adopts a resolution that soundly resolves an ambiguity in the
statutory language and is consistent with every one of our
precedents and with a number of Patent Trial and Appeal Board
decisions dating to when the program began. In these
circumstances, further review of the CBM issue here would be
a poor use of judicial resources. Should an extension of the
CBM program in some form be deemed desirable, congressional
redrafting is a better process through which to address the
issues raised by the statute's current
statutory language defines the essential gateway
qualification for entry into the CBM program: a CBM patent is
one "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 . . . ." AIA §
18(d)(1) (emphasis added). That language makes one thing
unambiguously clear and leaves a familiar ambiguity as to a
second textual issue.
clear prescription is that what counts is what the patent
claims-which, as the panel explained, is a matter of
proper claim construction, in which the specification plays a
large role (the roster of litigation defendants does not). In
this case, there is not even a contention that any claim,
properly construed, incorporates any requirement based on the
specification's mention of banks or any reference to
"use in the practice, administration, or management of
a financial product or service." AIA § 18(d)(1). It
is undisputed that the claims in this case all apply to
certain computer access technologies, whether or not they are
used in the practice, administration, or management of a
financial product or service.
second textual issue, addressing the words that follow
"claims" in section 18(d)(1), is whether the verb
"claims" applies to both the "method
or corresponding apparatus" language and the
"used in the practice, administration, or management of
a financial product or service" language or, instead,
applies just to the "method or corresponding
apparatus" language. This is a common type of ambiguity
where a verbal phrase precedes a predicate that expressly or
implicitly has two parts. Cf. Global-Tech Appliances,
Inc. v. SEB S.A., 563 U.S. 754, 760-61, 766 (2011)
(recognizing ambiguity as to whether, in the phrase
"induces infringement, " the implicit knowledge
requirement in "induce" applies not just to the act
that infringes but also to its infringing character;
resolving the ambiguity by requiring knowledge of both). The
panel resolved the ambiguity by reading "claims" as
reaching both parts of the predicate (much as
Global-Tech did for its similar ambiguity): the
latter portion ("used in . . .") as well as the
former ("method or corresponding apparatus . . .")
must be referenced among what is claimed, explicitly or
implicitly, in at least one claim of the patent.
resolution is not just a textually familiar one; it is in
accord with all of our court's precedents. Even before
Unwired Planet, LLC v. Google Inc., 841 F.3d 995
(Fed. Cir. 2016), we read section 18(d)(1) in this way. In
Blue Calypso, LLC v. Groupon, Inc., 815 F.3d 1331
(Fed. Cir. 2016), we explained that "§ 18(d)(1)
directs us to examine the claims when deciding
whether a patent is a CBM patent." Id. at 1340.
And in approving the standard applied by the Board in a
number of decisions that had rejected CBM status, we
said: "each of these cases properly focuses on the
claim language at issue and, finding nothing
explicitly or inherently financial in the construed claim
language, declines to institute CBM review."
Id. (emphases added). The panel opinion in the
present case reflects the same interpretation.
our precedents also accord with this interpretation on their
facts. Each of our cases finding a petition proper under the
CBM program has involved a reference to a financial element
(shorthand for the statutory "used in . . ."
phrase) in at least one claim. In Blue Calypso, the
language of claim 1 of the patent at issue-"subsidizing
the qualified subscriber according to the chosen subsidy
program, " id. at 1339 (quoting U.S. Patent No.
7, 664, 516, col. 7, lines 39-40)-established that "the
claims of the Blue Calypso Patents are directed to methods in
which advertisers financially induce
'subscribers' to assist their advertising efforts,
" id. at 1340. Financial claim elements were
present, too, in SightSound Technologies, LLC v. Apple
Inc., 809 F.3d 1307, 1311, 1315-16 (Fed. Cir. 2015)
(claiming methods for "selling the desired digital video
or digital audio signals to [a party] for a fee through
telecommunications lines"), and Versata Development
Group, Inc. v. SAP America, Inc., 793 F.3d 1306,
1311-13, 1327 (Fed. Cir. 2015) (claiming product grouping and
same is true of DataTreasury's Ballard patents, U.S.
Patent Nos. 5, 910, 988 and 6, 032, 137, which helped prompt
enactment of the CBM program. See DataTreas-ury Corp. v.
Fid. Nat'l Info. Servs., Inc., 669 F.App'x 572,
573 (Fed. Cir. 2016) (affirming the Board's rejection of
challenged claims of the '988 and '137 patents in CBM
proceedings), cert. denied, 137 S.Ct. 1338 (2017).
Each of the two Ballard patents contains at least one claim
directed to "the practice, administration, or management
of a financial product or service." For example: In the
'137 patent, every independent claim (thus every claim)
contains a requirement regarding "transactions from
checks." '137 patent, claims 1, 26, 42, 43. In the
'988 patent, claims 3-8, 28, 45, 50, 87, 92, 96, 101, and
113 refer to "electronic transactions from credit cards,
smart cards[, ] and debit cards"; claims 51, 55, 64, 70,
75-77, and 102- 109 refer to credit cards, debit cards,
credit-card transactions or statements, or bank statements;
and more generally, every independent claim (thus every
claim) contains a requirement regarding "receipts"
(and some also refer to "transactions"), '988
patent, claims 1, 16, 42, 46, 84, 88, 93, 97, 102, 106, 110,
114, 118, 121. Those patents plainly are CBM patents under
the panel ruling in the present case. Nothing similar
appears, expressly or by construction, in the claims of the
patent at issue here.
panel's reading of the statute accords as well with
several Board decisions, dating back to the launching of the
CBM program, that rejected CBM status for similar reasons.
See Fairchild Semiconductor Corp. v. In-Depth Test
LLC, CBM2015-00060, 2015 WL 4652717, at *5-6 (P.T.A.B.
Aug. 3, 2015) (rejecting CBM status for semiconductor
devices, despite ubiquitous use in the financial system,
because the "statutory language . . . requires us to
focus on the challenged claims rather than speculate on
possible uses of products recited in the claims");
Par Pharm., Inc. v. Jazz Pharm., Inc.,
CBM2014-00149, -00150, -00151, -00153, 2015 WL 216987, at
*5-6 (P.T.A.B. Jan. 13, 2015) (rejecting CBM status because
"our focus is firmly on the claims" and petitioner
had not "analyze[d] the claim language, in detail and in
context, to explain how the claim language recites method
steps involving the movement of money or extension of credit
in exchange for a product or service"); PNC Fin.
Servs. Grp., Inc. v. Intellectual Ventures I LLC,
CBM2014-00032, 2014 WL 2174767, at *6 (P.T.A.B. May 22, 2014)
(rejecting CBM status of computer file-security patent,
despite suit against financial institutions, because
"the focus is on the claims").
panel's reading of the statutory language, and all of the
just-cited authorities, reflect the common-sense,
circumscribed scope of what Congress said it was
target-ing-certain "business method
patents." In contrast, the alternative resolution of the
statutory ambiguity- excluding the "used in . . ."
qualifier from what must be "claimed" (explicitly
or implicitly)-would produce a meaning not plausibly
attributed to Congress.
that resolution of the ambiguity, the language would refer to
any claim to any "method or corresponding
apparatus for performing data processing or
other operations, " AIA § 18(d)(1) (emphases
added)-a phrase of vast scope-as long as that method or
apparatus is, in fact, "used in the practice,
administration, or management of a financial product or
service" by someone somewhere, id., even when
no claim of the patent at issue refers explicitly or
implicitly to such a use. Even if we restricted our focus to
the financial industry, such a "used in fact"
resolution of the textual ambiguity would reach patents
claiming computers, networks, phone apps, HVAC, glass (in
offices and on computer screens), and far more: they are all
in fact used in carrying out the transactions that
characterize banking. That is an implausible understanding of
what Congress meant by "business method, "
especially, as the panel noted, in light of the restrictions
Congress imposed on the other new programs for PTO
reconsideration of issued patents, notably, the IPR
fact, the breadth of a "used in fact" resolution of
the textual ambiguity is even greater than that. This court
has read section 18(d)(1)'s "used in . . ."
language very broadly, to go well beyond the financial
industry- seemingly to include, for example, any
money-transfer activity in normal selling, no matter what
product is sold, be it pharmaceuticals, medical devices, or
anything else. Versata, 793 F.3d at 1325
("[T]he 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."); see SightSound,
809 F.3d at 1315-16. That broad concept of "the
practice, administration, or management of a financial
product or service, " accepted by the panel in this
case, makes the consequences of the "used in fact"
resolution of the statutory ambiguity even more implausibly
dissent, Judge Lourie has advanced a different statutory
interpretation in an effort to avoid the unreasonable breadth
of a "used in fact" reading of the text. That
alternative focuses on aspects of the specification not even
contended to limit claim scope and the list of defendants
sued under the patent. In my view, there are at least two
important problems with that focus.
the relied-on considerations do not have a sound grounding in
the statutory text. Section 18(d)(1) defines a qualifying
patent by what it "claims, " as determined by claim
construction, not mere non-limiting embodiments in the
specification and not who has been sued first. Moreover, if
the "use in the practice, administration, or
management of a financial product or service" need not
be reflected in the "claims, " what is left, as a
textual alternative, is only that such use in fact occur. It
should not matter how that fact (which often will be
indisputable, as with goods sold or computers or glass, etc.)
is proved, whether through the specification's
non-limiting (merely exemplary) identification of uses or the
patentee's infringement complaints or any other evidence.
the dissent's effort to confine the scope of the CBM
program to the intended "business method patents"
boundary is also intrinsically indeterminate to an
unacceptable degree. What record of lawsuits should count?
What happens when more suits are brought? What mention of
banking or other particular applications in the specification
should count-short of having a claim-narrowing effect?
Indeterminacy in the standard for deciding Board
jurisdiction, it seems to me, should be avoided for much the
same reasons as those the Supreme Court has recited in
rejecting indeterminate standards for court
jurisdiction. See Bolivarian Republic of Venezuela
v. Helmerich & Payne Int'l Drilling Co., 137
S.Ct. 1312, 1321 (2017) (for "a jurisdictional matter,
" "clarity is particularly important") (citing
Hertz Corp. v. Friend, 559 U.S. 77, 94-95
least those reasons, I believe, the panel's resolution of
the statutory issue is sound, on its own terms and compared
to the alternatives, and comports with all of our precedent.
It also avoids the implausible-breadth and indeterminacy
problems of the alternatives. And this case does not present
other issues about coverage of a patent by AIA §
Congress chooses to consider extending or revising the CBM
program, it might of course conclude that a different
definition of the scope of a CBM program is preferable. It is
free to do so, and to address the relevant practical, policy,
and textual issues in pursuing its aims. In the meantime,
investment of further judicial resources to struggle with the
issues as an interpretive matter is not worthwhile for this
sunsetting, comparatively little-used program.
particular issue presented has arisen only rare-ly-which
would not be true if Board panels had commonly been finding
CBM status with no express or implicit claim reference to a
"use in the practice, administration, or management of
a financial product or service." Where the issue arises
in the next three years or so, the panel decision here
clarifies matters. And where a patent does not qualify for
CBM review, other remedies are available, including the IPR
program for anticipation and obviousness challenges of the
sort presented here, reexamination on similar grounds, and
the traditional remedy of litigation in the district courts.
As to litigation, it is worth noting that, for many
patent-eligibility challenges under 35 U.S.C. § 101 of
the sort often presented in CBM reviews (though not in this
case), recent experience makes clear that relatively fast
adjudications are now often available in court.
O'Malley, Circuit Judge, concurring in the denial of
rehearing en banc.
concur in the court's order denying rehearing en banc in
this matter. I do so for the reasons articulated by Judge
Plager in his opinion concurring in the denial of panel
Circuit Judge, concurring in the denial of rehearing en banc.
with the analysis expressed in Judge Plager's opinion
concurring in the denial of panel rehearing. For the reasons
stated in Judge Plager's opinion, I concur ...