Denying to Institute Covered Business Method Patent Review

October 17, 2017

      On October 2, 2017, the Patent Trial and Appeal Board (PTAB) concluded in two related cases that (1) the patents are eligible for review under the transitional program for covered business method patents; but (2) there is no showing that it is more likely than not that the claims are directed to patent ineligible subject matter under 35 U.S.C. §101.  Thus, covered business method patent review was denied in both cases CBM2017-00043 (relating to U.S. Patent No. 7,529,357) and CBM2017-00044 (relating to U.S. Patent No. 8,340,260, which is a continuation of U.S. Patent No. 7,529,357). 

      Interestingly, the PTAB appears to have reached contradictory conclusions.  In particular, the PTAB concluded that each of the patented inventions is “not sufficient to constitute a technological invention exempt from covered business method patent review,” in the first part of the analysis, and concluded that each of the patented inventions indeed “recite [a] technological invention,” under the second part of the analysis.

      For reference, the below citations are from CBM2017-00043.  However, the PTAB followed the same identical analysis in both cases.

      The patents at issue are directed to “providing centralized inmate management and call processing capabilities to controlled-environment facilities, such as prisons,” and the “described techniques … address information management problems that may occur when an inmate is transferred to a different facility.”[1]

      According to §18(a)(1)(E) of the America Invents Act (AIA), the PTAB may institute a transitional review proceeding only for a covered business method patent.  According to §18(d)(1), “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 service, except that the term does not include patents for technological inventions.”

      Taking this into account, the PTAB agreed with the Petitioner “that the claims contain limitations for performing data processing or other operations that include a financial service.”[2]  The PTAB reached this conclusion, in part, due to various dependent claims reciting charging or billing of an inmate account, which according to the PTAB “is a financial service.”  The PTAB also noted that no indication was found that the claimed systems “would or should be implemented without charging or billing the inmate account,”[3] and, as such, this activity is not “incidental or complementary to other services.”[4]

      Next, in determining whether the patents are “for technological inventions,” the PTAB considered “whether 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,” as set forth in 37 C.F.R. §42.301(b).

      The PTAB concluded that “merely reciting known technologies and their use to accomplish the otherwise non-technological method does not render the challenged claims a technological invention.”[5]  The PTAB also pointed out that “a networking device,” “an inmate management system,” and “call application management system” were generically recited and “neither specific nor conventional.”[6]  The PTAB also went on to say that “the solution described by [each of the patents] is implemented through the use of known communication and data processing devices, but this is not sufficient to constitute a technological invention exempt from covered business method patent review.”[7]

      As such, the PTAB concluded that the patents are eligible for review under the transitional program for covered business method patents, and proceeded to consider the asserted grounds of ineligibility under 35 U.S.C. §101 set forth by the Petitioner.

      To this end, the Petitioner argued that the patented claims are directed to “‘centrally and remotely managing inmate information,’” and, more specifically, to organizing human activities “‘i.e., gathering information about arrestees and sharing that information with other[s].’”[8]  In response, the Patent Owner argued that this is “a gross ‘oversimplification’ that ‘fails to account for the specific requirements of the claims.’”[9]  The Patent Owner also noted that “the claims do not preempt all systems and method for ‘centrally and remotely managing inmate information’ because of the specific configurations” recited by the claims.[10]

      The PTAB disagreed that the claims are merely directed to “‘centrally and remotely managing inmate information,’” and agreed with the Patent Owner that the claims are “directed to a computer-based system that ‘provide[s] centralized or nodal inmate management and telephone call processing capabilities to controlled environment facilities and law enforcement agencies,’ ‘to monitor, control and connect telephone calls based on information in a centralized system.’”[11]

      The PTAB also agreed with the Patent Owner that the Petitioner “does not explain sufficiently ‘how any human could possible implement the claimed systems or perform the claimed method without interacting with numerous discrete features of a computer network and telephone system.’”[12]  The PTAB also concurred with the Patent Owner’s assertion that “the inventive solution used telecommunication means that combined various systems into one computer-based system using VoIP data links, call processing gateways to interface with multiple facilities, and as an external interface with a telephone carrier network to connect calls.”[13]

       In view of the above, the PTAB concluded that the Petitioner failed to “demonstrate that it is more likely than not, that the claims ‘merely apply a fundamental economic practice or mathematical equation to a general-purpose computer.’”[14]  As such, the PTAB was not persuaded that the claims are “directed merely to ‘centrally and remotely managing inmate information’ and not ‘improving the way inmate management systems or call processing systems operate.’”[15]  Rather, the PTAB agreed with the Patent Owner that the claims “are not directed to a patent-ineligible abstract idea as presented by Petitioner,” and indicated that the claims “recite the technological invention of using a computer based call management system to connect calls from telephone terminals based on inmate records in the system.”[16]

       With regard to the “significantly more” analysis, the PTAB noted that this analysis need not be performed since the Petitioner failed to demonstrate that the claims are directed to an abstract idea.


[1] CBM2017-00043 at page 4.

[2] Id. at page 10.

[3] Id.

[4] Id. at pages 10-11

[5] Id. at pages 13-14.

[6] Id. at page 13.

[7] Id.

[8] Id. at pages 17-18.

[9] Id. at page 18.

[10] Id.

[11] Id. at page 19.

[12] Id. at page 20.

[13] Id.

[14] Id.

[15] Id. at page 21.

[16] Id.