The Software IP Report

How Expansive Is the Definition of “Covered Business Method Patent?” (Part 2)

Last week I wrote about institution of a Covered Business Method (CBM) patent post-grant review that seemed to stretch the bounds of the definition of “covered business method.” Here is a case denying a petition to institute CBM proceedings, illustrating boundaries of eligibility for CBM review.  In Servicenow, Inc. v. BMC Software, Inc., Case CBM2015-00107 (Patent 7,062,683) (PTAB Sept. 11, 2015), the Patent Trial and Appeal Board (PTAB) denied CBM review for a patent directed “to a method of using fault models to analyze error conditions in an enterprise computing system.”

The Petitioner’s argument that the ’683 patent is a “covered business method” patent was that “the claimed invention is directed at a technique for managing a financial product or service—in particular, diagnosing and identifying error conditions associated with a bank’s automatic teller machines (ATMs).”  Focusing on independent claim 79, directed to a “fault analysis method,” the Petitioner offered an explanation of how, the omission of language relating to financial services notwithstanding, the claim would be practiced in the context of ATMs.

The PTAB was not persuaded.  Noting that “the statutory test for whether a patent is a covered business method patent focuses on the claims,” the PTAB looked to the language of the claims.  All claim recitations were directed to “methods or devices for fault analysis.”  The claims recited no “steps [that] involve a financial activity,” and “no claim limitation is tied specifically to a financial product or service.”  Despite explaining “how claim 79 encompasses the ATM embodiment described in the Specification, Petitioner does not identify any limitation of claim 79 [or any other claim] that is specific to ATMs or any other financial product or service.”

Next, having emphasized the importance of the claim language, and the failure of the claims to recited a financial product or service, the PTAB turned to a detailed reading of the Specification, which “describe[d] the invention as a technique of general utility for enterprises.”  The first half of the “Detailed Description” was a “step-by-step discussion of the method,” following which “the Detailed Description applies the method to an exemplary enterprise of ATMs coupled to a bank.”  However, the Specification “repeatedly emphasizes” that the disclosure relating to ATMs was “simply an illustration of how the method of Figure 1 is applied.”  Moreover, the Specification disclosed “applications outside of computer networks,” including in mechanical systems.

Rather than attributing any significance to the choice of the ATM example, the “Specification indicates that the invention is a technique of general utility for quickly diagnosing problems in complex enterprises.”  The PTAB noted a number of prior cases where it had “denied institution of covered business method patent review for patents claiming methods of general utility, notwithstanding the presence of some exemplary disclosure in the Specification of finance-related activity.”  This was a “closer case” because the ATM example was discussed so extensively.  However, “the absence of any finance-related limitation in the claims is the primary driver of” the decision decision to deny a CBM review.  Weighed against the Specification’s repeated statement that the ATM example was simply an illustration, and the failure to “suggest that the invention is particularly suited to ATM networks or any other financial product or service,” the PTAB was not persuaded that “the patent claims a method used in the practice, administration, or management of a financial product or service.”  (Emphasis in original.)