Patent Eligibility and Obviousness in a Covered Business Method Patent Review

The limits of patent eligibility continue to be a major hurtle for patent owners whose patents are subject to Covered Business Method Patent Review (CBM) at the USPTO’s Patent Trial and Appeal Board (PTAB). In IBG LLC v. Trading Tech. Int. Inc., Case CMB2016-00090 (PTAB December 7, 2017) the PTAB issued a Final Written Decision holding that US Patent 7,725,382 was not directed to patent eligible subject matter under 35 U.S.C. §101. In addition to the §101 holding, the PTAB held that the Petitioner failed to meet their burden to show that the ‘382 Patent was obvious over certain prior art under 35 U.S.C. §103.

Representative claim 1 of the ‘382 Patent recites:

1. A method of canceling an order entered for a commodity at an electronic exchange, the method comprising:

receiving data relating to the commodity from the electronic exchange, the data comprising an inside market with a current highest bid price and a current lowest ask price currently available for the commodity;

setting a trade order parameter;

dynamically displaying by a computing device a first indicator at a first area corresponding to a first price level along a static price axis, the first indicator being associated with the current highest bid price for the commodity;

dynamically displaying by the computing device a second indicator at a second area corresponding to a second price level along the static price axis, the second indicator being associated with the current lowest ask price for the commodity;

updating the dynamic display of the first and second indicators such that at least one of the first and second indicators is moved relative to the static price axis to a different area corresponding to a different price level along the static price axis in response to the receipt of new data representing a new inside market;

displaying by the computing device an order entry region comprising a plurality of areas, each area corresponding to a price level along the static price axis and each area being selectable by a user input device so as to receive a command to send an order message based on the trade order parameter and the price level that corresponds with the selected area to the electronic exchange;

displaying by the computing device an entered order indicator at a location corresponding to a particular price level along the static price axis, the entered order indicator being associated with an order entered at the electronic exchange at the particular price level; and

receiving a single action command that selects the location associated with the entered order indicator so as to cancel the order at the electronic exchange.

In analyzing claim 1 for patent eligible subject matter, the PTAB found that the limitations of the ‘382 Patent, like those in Apple, Inc. v. Ameranth, Inc., 842 F.3d 1229 (Fed. Cir. 2016) and Affinity Labs of Texas v. DirectTV, LLC, 838 F.3d 1253 (Fed. Cir. 2016), fail to specify how the computer implements the method steps, e.g., the claims were not directed to a particular way of programming software, but instead merely claimed resulting systems. To put it another way, the claims were not directed to a specific improvement in the way computers operate.

Further, the PTAB distinguished the ‘382 Patent from the patents in DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014), Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016), and McRO, Inc. v. Bandai Namco Games America Inc., 837 F.3d. 1299 (Fed. Cir. 2016), all of which had claims directed to technical solutions to problems rooted in computer technology. In contrast, the PTAB determined that the claim limitations of the ‘328 Patent are directed to a fundamental economic and business activity, could be performed in the human mind or with the aid of pen-and-paper with little difficulty, and merely used a generic graphical user interface.

In analyzing claim 1 for obviousness, the PTAB noted that the burden to show such invalidly in a CBM proceeding is on the Petitioner and that the PTAB may not adopt its own arguments. Petitioner argued that it would have been obvious to arrive at the claimed combination by modifying one piece of prior art with another. The PTAB rejected this argument as providing insufficient explanation as to why it would be obvious to modify the one piece of prior art with the other to arrive at the claimed combination.

Lessons for Practice

Whether claim limitations encompass a technical solution to a technical problem is a recurring theme for determining patent eligibility of a software based claim. In practice, developing a sound understanding and explanation of such technical problem and solution at the drafting stage of an application, and developing arguments based on a technical problem and solution for filed applications and issued patents, can provide the best odds of overcoming the patentable subject matter hurdle. Additionally, it is noteworthy that a challenge based on obviousness of a patent should not only address the whether the claim limitations were present in the prior art, but also why it would have been obvious to combine/modify the art to arrive at the claimed combination. Conversely, when arguing against obviousness of a claim, consider discussing why it would not be obvious to combine/modify the art, including an indication that the initial burden has not been satisfied.

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