En Banc Denial of CBM Issue Raises Appeal Bar Debate

Focus of CBM Standing Analysis: Claim Language

Yesterday, the Federal Circuit denied en banc review in Secure Axcess LLC v. PNC Bank National Assoc., et al.  The rehearing request sought a full court review of America Invents Act (AIA) Sec. 18's definition of a "business method patent." This same issue was denied en banc review in April of this year in Google v. Unwired Planet. As in that decision, the dissents from denial raised the appeal bar debate now awaiting decision in WiFi One.

In Secure Axcess (here) the majority asserted that the claim based analysis of Unwired Planet was sound statutory construction and provided a manageable resolution to the issue.  The dissent focused on the "used in practice" component of Sec. 18(d)(1) to argue that the context of the infringement assertion, such as banking defendants was more in the spirit of the legislation. The majority explained the unmanageability of this "used in fact test:

[T]he dissent’s effort to confine the scope of the CBM program to the intended “business method patents” boundary is also intrinsically indeterminate to an unacceptable
degree. What record of lawsuits should count? What happens when more suits are brought? What mention of banking or other particular applications in the specification should count—short of having a claim narrowing effect?

Of perhaps greater interest was some of the dissenting commentary on appeal bar issues.  Judges Dyk, joined by judges Wallach and Hughes explained:

In my view, Versata wrongly held that the appeal bar does not apply to the question of whether the Board correctly determined that a patent is CBM-eligible because it involves a “financial product or service.” Such reviews are inconsistent with the statute as interpreted in Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016), which held that the appeal bar in Section 314(d), identical to the appeal bar here, precludes review.
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Because the “Director may institute a [CBM] proceeding only for a patent that is a covered business method patent,” AIA § 18(a)(1)(E) (emphasis added), determining what is a CBM is not only “closely tied” to the institution decision, but is expressly part of the institution decision itself. Indeed, it would be difficult to see how the CBM review program, as a five-part statute—where the requirement for institution is discussed in Section (a) and the definition for what is a CBM is discussed in Section (d)—can be read as separating the institution decision from the definition of what is a covered business method patent. The two are not just “closely tied,” but are inextricably intertwined.

My post-Cuozzo read was the same as to this point. The Cuozzo language appears to suggest a different outcome for Versata.

The Federal Circuit continues to struggle with the Cuozzo "shenanigans" guidance as to when the 314(d) appeal bar may be excused.

The problem with the "shenanigans" guidepost is that it is more a characterization of a degree of conduct as opposed to specific acts or classification that the Federal Circuit can apply in practice. The lone example given in Cuozzo is the PTAB moving forward on a 112 ground in an IPR; we can all agree that would be an arbitrary and unreasonable departure from the governing statutes/rules. But, in terms of classification guidance, where does that example fall, really?  Jurisdictional?...acting outside statutory limits?  It cannot be the latter as a violation of 312(a)(3) was barred from appeal in Cuozzo.

WiFi One will take another shot at this issue in the months ahead. Given the mixed perspectives in Secure Axcess, and likely WiFi One, I suspect the Supreme Court will see another round of PTAB shenanigans headed its way.

Scott A. McKeown is an author of the Patents Post Grant.