By Cheryl Beise, J.D.
The Patent Trial and Appeal Board erred in finding that the claims a patent owned by Secure Axcess LLC claiming "methods for authenticating a web page" were directed to a covered business method ("CBM") under Section 18 of the America Invent Act ("AIA"), the U.S. Court of Appeals for the Federal Circuit has held. The Board’s definition of a CBM patent under the statute was overbroad. Under the proper statutory interpretation, none of the claims at issue were directed to "a method or corresponding apparatus" that was "used in the practice of a financial product." The Board’s decision that the patent was a CBM patent was reversed, and its ruling that the asserted claims would have been obvious was vacated (Secure Axcess, LLC v. PNC Bank N.A., February 21, 2017, Plager, S.).
Secure Axcess LLC owns U.S. Patent No. 7,631,191 (’191 patent), entitled "System and Method for Authenticating a Web Page." According to the patent, the "invention relates generally to computer security, and more particularly, to systems and methods for authenticating a web page."
The Board initiated and consolidated three separate proceedings for CBM review of the ’191 patent. In its final decision, the Board held that the ’191 patent was a CBM patent under Section § 18 of the AIA, and that the "technological invention" exception did not apply. The Board further found that claims 1–32 of the ’191 patent were unpatentable because they would have been obvious under 35 U.S.C. § 103 in light of the cited prior art. Secure Axcess appealed both rulings.
The Federal Circuit first explained that the issue was not whether the particular patent at issue fell within the properly-understood scope of the statutory definition of a CBM patent, but whether the Board properly understood the scope of the statutory definition. The court concluded that, as a matter of law, the statutory definition of a CBM patent precluded the Board’s determination in this case.
Section 18 of the AIA defines a CBM 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."
"Financial product or service." Before the Board and on appeal, Secure Axcess contended that covered financial products and services were limited to financial products and services such as credit, loans, real estate transactions, securities and investment products, and similar financial products and services. The Board, however, as part of its broader discussion of what is a "financial product or service," decided that "[t]he method and apparatus claimed by the ’191 patent perform operations used in the practice, administration, or management of a financial product or service and are incidental to a financial activity."
Neither interpretation was correct, according to the court. The patent owner’s argument was too limiting. The Federal Circuit rejected a similar argument in Versata Development Group, Inc. v. SAP America, Inc., 793 F.3d 1306 (Fed. Cir. 2015). More recently, in Unwired Planet LLC v. Google, Inc., 841 F.3d at 1379– 82, the court also rejected the Board’s interpretation of a CBM patent as including one that claims activities that are financial in nature, or are incidental to or complementary to, a financial activity. Under the Board’s overly broad interpretation, contrary to the intent of Congress in enacting the provisional CBM review process, a CBM patent would not be limited to the financial services industry, but would reach a wide range of sales and similar transactional activity.
The court additionally found that the Board erred in relying on language found in the legislative history and in the PTO’s regulatory proceedings, and in taking into consideration Secure Axcess’s litigation history in suing large number of defendants in the financial services industry. A patent owner’s choice of litigation targets could be influenced by a number of considerations unrelated to its specific type of business, the court noted.
"Necessarily, the statutory definition of a CBM patent requires that the patent have a claim that contains, however phrased, a financial activity element," the court said. Based on the records, and applying the proper definition of a CBM patent, and viewed as of the earliest effective filing date, the court could not find in the ’191 patent, when the claims were properly construed in light of the written description, a single claim directed to "a method or corresponding apparatus" that was "used in the practice [etc.] of a financial product" so as to meet the definition of a CBM claim.
Dissenting opinion. In a dissenting opinion, Circuit Judge Alan D. Lourie disagreed with the majority’s opinion that the claims of the ’191 patent were not directed to a covered business method, as properly understood. Judge Lourie agreed that the Board’s "incidental to a financial activity" language was overbroad, but the Board’s decision was not based only on the forbidden language. "Examination of the ’191 patent makes clear that the invention is to be used in the management of a financial service," Judge Lourie said. Moreover, if there were any doubt of the use of the invention in financial management, it was telling that every one of the dozens of companies Secure Axcess had sued for infringement of the ’191 patent were financial institutions.
The case is No. 2016-1353.
Attorneys: Andrew J. Wright (Bruster PLLC) for Secure Axcess, LLC. Gregory H. Lantier (Wilmer Cutler Pickering Hale and Dorr LLP) for PNC Bank National Association, U.S. Bank National Association, U.S. Bancorp, Bank of the West, Ally Financial, Inc., Cadence Bank, N.A., Santander Bank, N.A., Raymond James & Associates, Inc., Trustmark National Bank, Nationwide Bank, and Commerce Bank.
Companies: Secure Axcess, LLC; PNC Bank National Association; U.S. Bank National Association; U.S. Bancorp; Bank of the West; Ally Financial, Inc.; Cadence Bank, N.A.; Santander Bank, N.A.; Raymond James & Associates, Inc.; Trustmark National Bank; Nationwide Bank; Commerce Bank
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