Senate bill would expand definition of “covered business method patents” for invalidity challenge purposes

A new bill introduced in the Senate this week would expand the scope of patents whose validity may be challenged as a “Covered Business Method” patent under the America Invents Act (AIA).

Under the AIA, entities who have been charged with infringement of a covered business method (CBM) patent can challenge the patent’s validity in an additional proceeding after the 9-month post-grant review (PGR) period for other types of patents have has expired.  The AIA currently defines a CBM patent as 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.”  Parties who are sued for infringement of a CBM patent may take advantage of PGR proceedings within one year after being named in a lawsuit or otherwise charged with infringement.

The very short bill, S. 866, introduced by Senator Chuck Schumer (D-NY) on May 6, 2013, would expand the AIA’s CBM program in two ways.  First, it would eliminate the program’s sunset provision, which states that the CBM program will end after 8 years.  Second, and more broadly, it would expand the CBM definition beyond those involving financial products or services to include any “enterprise, product, or service.”  Under this definition, any patent covering “operations used in the practice, administration, or other operations of an enterprise, product or service” would be subject to challenge as a CBM patent.

The rules implementing the CBM opposition program took effect in September 2012.  Since then,  over 20 CBM challenges have been filed, and the first hearing before USPTO’s Patent Trial and Appeal Board for a CBM review occurred on April 17, 2013.

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