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Federal Circuit Rules PTAB's Definition of CBM Patent Is Too Broad

By William Vogeler, Esq. on November 30, 2016 | Last updated on March 21, 2019

Patent attorneys may be wondering where to go after a federal appeals court upended a decision involving location services on mobile devices.

In a unanimous decision, the appeals court ruled that a patent review board had overstepped its authority in denying the patent as a "covered business method." Judge Jimmie Reyna said the board used an overbroad definition that would have allowed the board to consider challenges to virtually any device that could be used in commerce. He said, in essence, that it is not a covered business method just because it could result in a sale.

"Take, for example, a patent for an apparatus for digging ditches," he wrote in the decision for Unwired Planet, LLC. "Does the sale of the dirt that results from use of the ditch digger render the patent a CBM patent? No ..."

Technology Finds a Way

Unwired Planet, LLC, which is credited with creating key technologies that connect mobile devices to the internet, had applied for a patent for software that restricts access to a wireless device's location information. The system allows wireless users to set "privacy preferences" that determine whether others are allowed to access their device's location information.

In deciding whether Google could challenge the patent as a business method, the Patent Trial and Appeals Board stated that the proper inquiry "is whether the patent claims activities that are financial in nature, incidental to a financial activity, or complementary to a financial activity." The Board determined that the patent was a covered business method (CBM) patent because the location service could involve an eventual sale of services.

The appeals court vacated the decision and remanded the case to the PTAB for reconsideration. Some patent attorneys praised the decision.

Commerce Is Not the Question

"The PTAB has long been criticized for ignoring the limiting statutory language that narrowly allows a CBM to be filed only on financial service patents," wrote Gene Quinn, attorney and editor of "All patents, at some level, relate to potential sale of a good or service."

Dennis Crouch, a professor at the University of Missouri School of Law, said the board found the challenged claims unpatentable under section 101 of the America Invents Act. So, the circuit court's opinion appears to eliminate any chance that the patent will be considered a CBM. As a result, the Section 101 decision by the PTAB "goes away."

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