Federal Circuit: standard computer components do not transform covered business method into a “technological invention”

A recent Federal Circuit decision boosts a broad definition for the term “covered business method” as used in the context of the America Invents Act (AIA). As a result, a wider variety of patents may be subject to review in certain challenger-friendly administrative proceedings before the U.S. Patent and Trademark Office.

Under the AIA, entities charged with infringement of a covered business method (CBM) patent can challenge the patent’s validity. Accused infringers of a CBM patent may take advantage of these proceedings within one year after being named in a lawsuit or otherwise being charged with infringement. CBM proceedings have certain procedural advantages for challenger, and the Patent Trial and Appeals Board has canceled well over 75% of patent claims challenged in CBM proceedings to date.

CBM review is limited to patents “that claim[] 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”.  The AIA also states that the term CBM patent “does not include patents for technological inventions.” The AIA did not define the term “technological inventions” but instead left the task of defining that term to the USPTO. USPTO regulations explain that a patent is directed to a technological invention if “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.”

The “technological inventions” exception was the issue in the recent case, Blue Calypso v. Groupon, Inc. In the case, the court said that the presence of a general purpose computer in the claims does not necessarily yield a technological invention. The patent required  “a system comprising a network, a source communication device, a destination communication device and an intermediary connected to the network,” but the court found these elements to be “nothing more than general computer system components used to carry out the claimed process of incentivizing consumers to forward advertisement campaigns to their peers’ destination communication device[s].” Thus, the court found no “technological aspect in the claims that rises above the general and conventional.”

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