By Dennis Crouch
Senator Chuck Schumer has proposed a short bill entitled the "Patent Quality Improvement Act of 2013." S. 866. The purpose of the bill is to expand the scope of the transitional covered business method review. First, the S. 866 would eliminate the sunset provision of the bill making it permanent rather than transitional in nature. Second, the bill would expand the scope of covered business methods by eliminating the "financial product or service" limitation. This expansion should be seen as the next step toward expanding post-grant review to cover all patents throughout their lifespan.
Background: The American Invents Act created several new mechanisms for challenging patents through the Patent Trial and Appeal Board (PTAB). One of the most powerful of these is the new post-grant review (PGR) proceeding that allows patent challenges on any validity ground, including issues arising from 35 U.S.C. §§ 101, 102, 103 or 112.. However PGR is only available for first-to-file patents (i.e., patents relating to applications filed since March 16, 2013) and a PGR request must be filed within nine-months of the patent issuance. In addition to PGR, the AIA provides a special provision to allow expanded challenges of certain business method patents covered by the statutory definition. As with PGR, the covered business method review allows challenges for any validity ground. Although covered business method reviews are not limited by the timing requirement the statute does provide a set of important limitations.
Under the AIA:
- Covered business methods are limited to those used in delivering "a financial product or service" and not be for a "technological invention." The PTO rules provide that a "technological invention" is one that "recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution."
- The Petitioner must either have been sued by the patentee or have Article III declaratory judgment standing in order to file the petition.
- The transitional provisions are set to sunset after eight years.
The Patent Quality Improvement Act would expand the scope of Covered Business Methods in two manners: (1) by eliminating the sunset provision and (2) by eliminating limitation that covered business methods be directed toward a "financial product or service." The new definition would read as follows:
IN GENERAL- For purposes of this section, the term 'covered business method patent' means 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 an enterprise, product, or service, except that the term does not include patents for technological inventions.
If bill passes, the PTO would then have the opportunity to provide its definitions for the terms used here. At its broadest, the provision would make-available business-method reviews for new any patent that includes at least one claim that itself does not include a "technological invention." If that is the purpose, we should wholly rewrite the provision to make it clear and straightforward: "IN GENERAL – For purposes of this section, the term 'covered business method patent' means a patent that includes a claim that is not directed to a technical invention."
The Current USPTO Fees for filing a covered business method review is $30,000. However, since these claims are all associated with actual disputes that fee does not likely represent the most significant barrier to filing. In the nine-months since CBM reviews became available, petitions have filed a total of 25 reviews against a total of 18 patents.