Year One of the Transitional Program for CBM Patents: Petitions and Promise

Since coming into force on September 16, 2012, the Transitional Program for Covered Business Method (“CBM”) Patents under section 18 of the AIA has seen steady growth. Fifty-three petitions have been filed in the program’s first year of operation (see inset below). Liberty Mutual leads with 10 petitions—other major players including Groupon (5), Apple (4), Fidelity (4), and SAP (3).

The Board has taken action in 18 petitions (see inset below), granting 12, denying 3, and dismissing 3, following joint motions after settlement of related district court litigation. Novelty and obviousness dominate the grounds for review, with a handful of granted petitions seeking review under either 35 U.S.C. §§ 101 or 112. The Board has issued only one final written decision, however many more can be confidently expected given the one-year statutory deadline for concluding a CBM. See 35 U.S.C. § 326(a)(11).

The Board has taken pains to address the jurisdictional scope of CBM proceedings, which may only be instituted against “covered business method patents.” See AIA §18; 37 C.F.R. § 42.301. In its decision instituting the first ever CBM proceeding, the Board concluded that CBMs include “patents claiming activities that are financial in nature, incidental to a financial activity, or complementary to a financial activity.” This admittedly broad interpretation is currently being challenged under the Administrative Procedure Act in the Eastern District of Virginia.

Board decisions have also construed the scope of “technological inventions,” which the AIA explicitly shields from CBM proceedings. The Board’s interpretation of 37 C.F.R. § 42.301(b), requires patent owners seeking cover of the exception to show that the claimed invention includes “[a] ‘technological feature’ that is novel and unobvious,” and which also “solves a technical problem using a technical solution.”

Finally, this first year of CBM proceedings has seen developments in the standard for obtaining district court stays, filing strategies addressing the strict 80-page word limit for petitions, protective orders, and the availability of CBM proceedings for declaratory judgment plaintiffs. And certainly with the number of cases awaiting Board action, the coming year promises to elucidate whether CBM proceedings will be a robust forum for resolving patent disputes.