Patent Docs

IPO Annual Meeting

August 6, 2016

The Intellectual Property Owners Association (IPO) will be holding its 44th Annual Meeting on September 11-13, 2016 in New York, NY. Among the presentations being offered at the annual meeting are:

• The U.S. Courts' Influence on Patent Law — Case Law Update
• Protection of Trade Secrets and Cybersecurity
• Are Patents Under Attack Using Competition Laws?
• AI — Created Intellectual Property: Issues and Future Directions
• Using IP Portfolio Metrics to Demonstrate Value and Alignment to Internal Business Clients
• Function Claiming in the United States: Evolving Law and Best Practice
• Patent Litigation Trends — The Effects of PTAB Proceedings, Rules Amendments, and U.S. Supreme Court Decisions
• Corporate Patent Portfolio Strategies in Europe
• IPRs, CBMs, and the PTAB: Where Have We Been and Where Are We Going?
• Global Perspective on Patent Eligibility
• Ethics

In addition, Congressman Hakeem Jeffries, 8th District of New York, will present a keynote address on September 13, and European Patent Office President Benoît Battistelli will present a keynote address on September 13.

A program for the meeting, including an agenda, descriptions of the scheduled sessions, and list of speakers, can be obtained here.

The registration fee for the meeting is $500 (government/academic), $995 (IPO members), or $1,475 (non-members). Those interested in registering for the meeting can do so here.
Hudson Institute Report Refutes UN Panel Stance on Impact of Patents on Access to Medicines

August 4, 2016

By Donald Zuhn –-

In June, the Hudson Institute released a research report that analyzes several positions taken by the United Nations (UN) High Level Panel on Access to Medicines (HLP) on the impact of patents on global access to medicines. The report, entitled "The Patent Truth About Health, Innovation and Access," focuses on several assertions of the HLP, which was launched in 2015 by UN Secretary-General Ban Ki-moon with the goal of reviewing and assessing proposals and recommending solutions for "remedying the policy incoherence between the justifiable rights of inventors, international human rights law, trade rules and public health in the context of health technologies." In particular, the Hudson Institute report addresses the following premises of the HLP:

1. Millions of poor people in low- and middle-income countries have been denied access to ARVs and other medicines;

2. Patents are the main cause of higher costs of medicines for poor people in low- and middle-income countries;

3. The intellectual property system, including patents and voluntary licenses, limits research and disadvantages local producers in low- and middle- income countries.

The report concludes that "[t]hese basic assumptions . . . are not supported by global health research."

Before addressing each of the HLP's premises, the report first discusses the role of intellectual property in the global economy, stating that "intellectual property (IP) is a fundamental driver of human progress, fueling innovation, creative thinking and economic growth," and adding that "[t]he security of private intellectual property rights for inventors and investors is fundamentally important to a public good: the sharing and flow of information and ideas, which in turn generate new inventions and innovations that drive technological advancements, economic development and economic growth." Asserting that "the inventors of tomorrow's life-changing products face challenges in protecting their IP rights," the report describes three such challenges: the costs for developing new technologies (particularly in the pharmaceutical industry, where the report notes that the research and development of new pharmaceuticals requires an average of ten years and billions of dollars); the time, effort, and cost required to secure a patent; and the protection of intellectual property rights both within and across borders (the report notes that approximately 95% of the world's population, or potential customer base, lives outside the U.S.). In discussing a fourth challenge, the report states that:

[I]ntellectual property rights have been, and continue to be, under systematic assault. The intentional erosion of IP rights occurs passively, by failure to police piracy and counterfeiting, and actively, through advocacy against IP protections in trade agreements and multilateral bodies by NGOs, activist groups and many governments seeking to challenge the legal and moral underpinnings of intellectual property rights. Paradoxically, the transfers of high technology and advanced medicine these groups seek to promote are undermined as the incentives for innovation and information sharing are also undermined with weakened IP protections.

Turning to the HLP's premises, the report begins by pointing out that a study in the American Economic Review (Cockburn et al., "Patents and the Global Diffusion of New Drugs," American Economic Review 106(1): 136-64 (2016)) has shown that "strengthening IP has resulted in better access to medicines in developing countries" (emphasis in original). The report includes a table (shown below) that provides evidence of "the extraordinary progress that has been made against death and disease in poor countries."

The report also notes that "[c]ommunicable diseases are no longer the major cause of death in developing countries since people are living long enough to develop non-communicable diseases like cancer, cardiovascular disease, and stroke," pointing out that the World Health Organization (WHO) determined in 2012 that "the top two causes of death in lower middle income countries were ischemic heart disease and stroke, the same as high-income countries." With respect to the HLP's first premise, the report concludes that if the HLP "had looked at the track record of affordable life-saving medicines and technologies available to the developing world, they would have seen that the most important problems impeding access to medicines and better health for poor people are not patents and prices."

Moving on to the HLP's second premise, the report cites an article by Attaran and Gillespie-White ("Do Patents for Antiretroviral Drugs Constrain Access to AIDS Treatment in Africa," JAMA 286(15): 1886-92 (2001)), which examined the patent status of fifteen drugs for treating HIV in 53 African countries and found that patents were not a barrier to HIV treatment. The report notes that a follow-up paper from 2004 (Attaran, "How Do Patents and Economic Policies Affect Access to Essential Medicines in Developing Countries," Health Affairs 23(3): 155-66 (2004)) concluded that "[p]atents are an infrequent determinant of access to essential medicines." According to the report, the authors of the 2001 paper determined that poverty, weak healthcare systems, taxes, and poor supply systems had more of an impact on access to medicines in developing countries than patents.

Examining the prices of patented and non-patented (or "copy") ARV (antiretroviral) drugs that were available for treating HIV in 2004, the report notes that only one of thirteen drugs was significantly higher-priced than its copy, and that other than this outlier, "the copy drugs were even more expensive than the patented [drugs]." The report also notes that while patient coverage nearly tripled from 2010 to 2014 in the world's largest AIDS treatment program (the President's Emergency Plan for AIDS Relief (PEPFAR)), overall treatment prices for patients significantly decreased. With respect to the HLP's second premise, the report concludes that "[h]ad the HLP considered the most important factors behind access to medicines and had it properly consulted with UN member states, their panel might have pursued more meaningful solutions than eliminating the intellectual property system."

As for the HLP's third premise, the report argues that the HLP's assertion "blatantly ignores the lifesaving drugs and vaccines that have dramatically reduced infant mortality and increased life expectancy in low-income countries." The report contends that "nowhere is the importance of innovation and drug development for the poor more clear than in the case of HIV/AIDS over the last 35 years," stating that:

In the history of therapeutic medicine, there has not been a comparable period during which so much innovation resulted in so many new products—which principally benefited the poor in markets far away from those of the manufacturers. In the United States, between 600,000 and 900,000 people were living with HIV in 1989, while approximately 5-10 million people were living with HIV around the world, most in lower income countries. In just over ten years, the number of people living with HIV around the world had grown to approximately 37 million while the number in the United States was just under one million people.

Declaring that "the current intellectual property system has not denied millions of poor people access to ARVs and other medicines," and that "[p]atents have not been a cause of high cost drugs for the poor, or led to limited drug research, or disadvantaged local producers," the report concludes that "[o]n the contrary, . . . the intellectual property system has encouraged innovation that has saved millions of lives by providing the poor with access to lifesaving therapies" (emphasis in original). According to the report, the main barriers to access to medicines in developing countries are "not patents and prices," but rather are "lack of good governance, poor physical infrastructure and distribution systems, a shortage of healthcare facilities and providers, insufficient public health spending, corruption, taxes and tariffs on medicines, and the lack of policies that promote economic growth and incentives for individuals and businesses to develop new technologies so their countries can grow and prosper." Although the report concedes that "improvements can still be made in global health policy to increase access to medicines and better healthcare," the report argues that "the achievements to date have been remarkable."
PwC Report: 2017 Will Be Year of Equilibrium for Medical Costs

August 2, 2016

By Donald Zuhn –-

A report issued by PwC's Health Research Institute (HRI) in June projects next year's medical cost trend (i.e., the projected percentage increase in the cost to treat patients) to be 6.5%, which is level to the medical cost trend for 2016 and comparable to the medical cost trend for the past three years. According to the report, entitled "Medical Cost Trend: Behind the Numbers 2017," the projected increase in the medical cost trend for 2017 will be due to increases in access to care, particularly primary and behavioral health services, and not to increases in drug spending.

With respect to drug costs, the report notes that by employing more aggressive strategies with drug makers, pharmacy benefit managers (PBMs) will help keep overall drug cost trends in check in 2017, and that "political and public pressure will tamp down the largest drug cost increases." In addition, the report points out that "[m]any of the new prescription drugs that are coming on market are not arriving alone but at close to the same time as competitors' drugs," and that such competition will help to keep drug prices down. The report also indicates that specialty drug costs, which outpace traditional drug spending, are not expected to grow as fast as in previous years.

Of significance to the pharmaceutical and life sciences industry, the report states that "[d]rug spending is still a relatively small portion of overall health spending and, as such, concerns of ever-increasing cost growth from new cures may trigger false alarms." More specifically, the report indicates that approximately half of all medical costs come from hospital spending, about 30% comes from physicians, and 17% from prescription drugs. The report notes that:

It is important to understand the weight of these components to put health spending in context. Prescription drug spending is a prime example since individual drug costs can be high enough to garner national media attention but, as a whole, are a relatively small portion of total health spending: a 10% jump in the growth in prescription drug spending would increase the overall medical cost trend by about 1.7%, for instance.

In explaining what the projections mean for various sectors of the health care industry, the report suggests that for the pharmaceutical and life sciences sector, "[t]he need for innovative, cost effective medicines continues to rise as regulators, payers, healthcare providers and patients demand greater value for money." The report also states, however, that "[t]he reputation of the pharmaceutical industry has been weakened as a result of the high-profile pricing strategies of some manufacturers during the past few years."

The full report can be obtained here.
Electric Power Group, LLC v. Alstom S.A. (Fed. Cir. 2016)

August 1, 2016

By Michael Borella —

Patent owner Electric Power Group asserted U.S. Patent Nos. 7,233,843, 8,060,259, and 8,401,710 against Alstom S.A. and various other parties in the Central District of California. The District Court granted Alstom's motion for summary judgment that the asserted claims were ineligible under 35 U.S.C. § 101. Electric Power Group appealed to the Federal Circuit.

Claim 12 of the '710 patent was deemed representative. It recites:

12. A method of detecting events on an interconnected electric power grid in real time over a wide area and automatically analyzing the events on the interconnected electric power grid, the method comprising:
    receiving a plurality of data streams, each of the data streams comprising sub-second, time stamped synchronized phasor measurements wherein the measurements in each stream are collected in real time at geographically distinct points over the wide area of the interconnected electric power grid, the wide area comprising at least two elements from among control areas, transmission companies, utilities, regional reliability coordinators, and reliability jurisdictions;
    receiving data from other power system data sources, the other power system data sources comprising at least one of transmission maps, power plant locations, EMS/SCADA systems;
    receiving data from a plurality of non-grid data sources;
    detecting and analyzing events in real-time from the plurality of data streams from the wide area based on at least one of limits, sensitivities and rates of change for one or more measurements from the data streams and dynamic stability metrics derived from analysis of the measurements from the data streams including at least one of frequency instability, voltages, power flows, phase angles, damping, and oscillation modes, derived from the phasor measurements and the other power system data sources in which the metrics are indicative of events, grid stress, and/or grid instability, over the wide area;
    displaying the event analysis results and diagnoses of events and associated ones of the metrics from different categories of data and the derived metrics in visuals, tables, charts, or combinations thereof, the data comprising at least one of monitoring data, tracking data, historical data, prediction data, and summary data;
    displaying concurrent visualization of measurements from the data streams and the dynamic stability metrics directed to the wide area of the interconnected electric power grid;
    accumulating and updating the measurements from the data streams and the dynamic stability metrics, grid data, and non-grid data in real time as to wide area and local area portions of the interconnected electric power grid; and
    deriving a composite indicator of reliability that is an indicator of power grid vulnerability and is derived from a combination of one or more real time measurements or computations of measurements from the data streams and the dynamic stability metrics covering the wide area as well as non-power grid data received from the non-grid data source.

Though lengthy, this claim is broader than it initially appears due to its use of the disjunctive at several points. The Court described the claimed invention as "performing real-time performance monitoring of an electric power grid by collecting data from multiple data sources, analyzing the data, and displaying the results."

Patent-eligibility is determined by whether claims at issue meet the eligibility requirements set forth by the Supreme Court's two prong test in Alice Corp. v. CLS Bank Int'l. First, one must determine whether a claim is directed to a judicially-excluded law of nature, a natural phenomenon, or an abstract idea. If so, then one must further determine whether any element, or combination of elements, in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exception. Notably, generic computer implementation of an otherwise abstract process does not qualify as "significantly more."

The District Court determined that the claims were directed to the abstract idea of "monitoring and analyzing data from disparate sources," then concluded that they lacked any further significant limitations.

In providing its opinion, the Federal Circuit reflected on the two-prong test, noting that "we have described the first-stage inquiry as looking at the 'focus' of the claims, their 'character as a whole,' and the second-stage inquiry (where reached) as looking more precisely at what the claim elements add—specifically, whether . . . they identify an 'inventive concept' in the application of the ineligible matter."

Nonetheless, the Court rapidly found the claims to be abstract. Particularly, the Court characterized the claims to be focused on "collecting information, analyzing it, and displaying certain results of the collection and analysis." For each of these three steps, the Court cited to recent precedent that found similar aspects to be abstract. The Court further determined that there was nothing non-abstract in the combination thereof.

Comparing this case to Enfish, LLC v. Microsoft Corp., which involved eligible claims, the Court distinguished between "computer-functionality improvements and . . . uses of existing computers as tools in aid of [abstract] processes." (We briefly discussed this distinction between tool creation and tool use in our review of Open Parking, LLC v. Parkme, Inc.) The Court admitted that relying on this notion for the § 101 analysis of software inventions "may present line-drawing challenges because of the programmable nature of ordinary existing computers."

Turning to the second prong of Alice, the Court found that the claims limited the scope of the invention to "the particular technological environment of power-grid monitoring" which was insufficient to transform them into a non-abstract application. In a rather amusing aside, the Court noted that the claimed invention did not "invoke any assertedly inventive programming." How the Court came to this conclusion is a mystery — the steps of a software claim can be implemented in a virtually unlimited number of ways. And as anyone who has programmed for a living would know, even the most mundane-seeming applications can be innovatively (or non-innovatively) programmed.

Ultimately, the Court seemed to reject the eligibility of these claims based on their broad functional language — in other words, the Court took issue with the claims defining a fuzzy, aspirational goal rather than a concrete series of steps to achieve a more specific outcome. The Court distinguished between "ends sought and particular means of achieving them, between desired results (functions) and particular ways of achieving (performing) them." Quoting the District Court, the panel opined "there is a critical difference between patenting a particular concrete solution to a problem and attempting to patent the abstract idea of a solution to the problem in general." As a result, the claims were ruled invalid under § 101.

The more one thinks about this decision the more that it seems as if the Court is using § 101 as a proxy for §§ 103 and 112. If the claims are too broad or indefinite, then these parts of the statute should be used to knock them down. But right now, § 101 is the proverbial big hammer, and claims like those of Electric Power Group apparently (to the Federal Circuit at least) resemble a nail.

Electric Power Group, LLC v. Alstom S.A. (Fed. Cir. 2016)
Panel: Circuit Judges Taranto, Bryson, and Stoll
Opinion by Circuit Judge Taranto
USPTO News Briefs

July 31, 2016

By Donald Zuhn —

PTAB Introduces New Patent Review Processing System

In a post on the USPTO's "Director's Forum" blog, the Chief Judge for the Patent Trial and Appeal Board (PTAB), David P. Ruschke, announced that the PTAB was transitioning from the Patent Review Processing System (PRPS) e-filing system to the Patent Trial and Appeal Board End to End (PTAB E2E) system. The new system, which is accessed via a web browser — the Chief Judge indicating that Chrome was the preferred browser — allows petitioners and patent owners to provide metadata and upload pdf documents, and also provides an interface to the USPTO's Next Generation financial system (FPNG) for paying fees. The Chief Judge also noted that the new features of the PTAB E2E system include:

• full text document search
• metadata search
• additional search filters
• a dashboard that includes the most recent document upload activity and status of filed cases
• an improved docket
• easier navigation of AIA review papers and exhibits
• filter search on the docket

The first three features will be available to all external users, and the last three features will be available to external users using a login email address.

The PTAB E2E system will initially be used for Inter Partes Reviews (IPR), Covered Business Method Reviews (CBM), and Post Grant Reviews (PGR), with Derivations (DER) to be migrated to the system later this year. Links to the PTAB E2E system, a user manual, FAQs, and a quick reference guide can be found at the PTAB webpage. The PTAB is also asking customers to provide feedback regarding the new system; comments can be sent to PTABE2EADMIN@uspto.gov.

USPTO Promotes AIR

In a video posted on YouTube last month, the U.S. Patent and Trademark provides a brief introduction to the USPTO's Automated Interview Request (AIR) tool and encourages customers to schedule Examiner Interviews (including video interviews) using the tool. We previously reported on AIR here. The video also informs customers about the Office's interview specialists, who are subject matter experts in interview practices and policies.

USPTO Updates Certificate of Mailing Form

Earlier this month, the U.S. Patent and Trademark Office announced that an updated version of the "Certificate of Mailing under 37 CFR 1.8" form was now available on the Office's Patents Forms webpage. The updated PTO/SB/92 form, entitled "Certificate of Mailing or Transmission under 37 CFR 1.8," can be used as a certificate of mailing, certificate of facsimile transmission, or certificate of EFS-Web transmission. As a result of the introduction of the new form, the Office has retired the Certificate of Transmission under 37 CFR 1.8 form (i.e., PTO/SB/97).
Conference & CLE Calendar

July 31, 2016

August 4, 2016 – "Challenging Patents in IPR: Strategies for Filing Petitions — Determining Whether and When to File, Filing Multiple Petitions on the Same Patent, Constructing Claims" (Strafford) – 1:00 to 2:30 pm (EDT)

August 4-5, 2016 - Advanced Patent Law Seminar (Chisum Patent Academy) – Seattle, WA

August 8-9, 2016 - Advanced Patent Law Seminar (Chisum Patent Academy) – Seattle, WA

August 9, 2016 - European biotech patent law update (D Young & Co) – 4:00 am, 7:00 am, and 12:00 pm (ET)

August 9, 2016 - Patent Quality Chat webinar series — Post-Prosecution Pilot (P3) Program (The U.S. Patent and Trademark Office) – 12:00 to 1:00 pm (ET)

August 10, 2016 – "Section 101 – The Way Ahead — software" (Intellectual Property Owners Association) – 2:00 to 3:00 pm (ET)

August 11, 2016 – "Section 101 – The Way Ahead — life science" (Intellectual Property Owners Association) – 2:00 to 3:00 pm (ET)

August 11, 2016 – "Patent Prosecution in the Post-Alice Era" (Juristat) – 1:00 to 2:00 pm (ET)

August 17, 2016 – "Navigating Patent Eligibility: Leveraging New USPTO Guidance and the Enfish and TLI Communications Decisions" (Strafford) – 1:00 to 2:30 pm (EDT)

August 18-19, 2016 - Advanced Patent Prosecution Workshop 2016: Claim Drafting & Amendment Writing (Practising Law Institute) – San Francisco, CA

August 25, 2016 – "The Next Wave of Data Privacy: What the GDPR, Privacy Shield and Brexit Mean for U.S. Intellectual Property Litigation" (McDonnell Boehnen Hulbert & Berghoff LLP) – 10:00 am to 11:15 am (CT)

September 14-15, 2016 - Advanced Patent Prosecution Workshop 2016: Claim Drafting & Amendment Writing (Practising Law Institute) – Chicago, IL

***Patent Docs is a media partner of this conference or CLE
IPO Webinars on Section 101

July 30, 2016

The Intellectual Property Owners Association (IPO) will offer two one-hour webinars entitled "Section 101 – The Way Ahead". The first webinar, concerning the impact of § 101 on the software industry, is being offered on August 10, 2016 from 2:00 to 3:00 pm (ET). Stephen Durant of Schwegman, Lundberg & Woessner, P.A.; Michelle Macartney of Intellectual Ventures, LLC; and Amir Penn, Brinks Gilson & Lione will discuss several recent useful ex parte PTAB decisions that overturned examiners' Section 101 rejections. The second webinar, concerning the impact of § 101 on the life science industry, is being offered on August 11, 2016 from 2:00 to 3:00 pm (ET). Deborah Martin of Pfizer Inc.; Christopher Jeffers of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.; and Warren Woessner of Schwegman, Lundberg & Woessner, P.A. will discuss both therapeutics and diagnostics.

The registration fee for each webinar is $135 (government and academic rates are available upon request). Those interested in registering for the webinar can do so here.
USPTO Patent Quality Chat Webinar Series

July 30, 2016

The U.S. Patent and Trademark Office will be offering the next webinar in its Patent Quality Chat webinar series on August 9, 2016 from 12:00 to 1:00 pm (ET). The latest webinar, which will focus on the Office's new Post-Prosecution Pilot (P3) Program, will be hosted by Tariq Hafiz, Director of Technology Center 2600, and Jerry Lorengo, Director of Technology Center 1600.

Instructions for viewing the webinar can be found here.

Additional information regarding the Patent Quality Chat webinar series can be found on the USPTO's Patent Quality Chat webpage.
Webinar on Patent Prosecution Post-Alice

July 30, 2016

Juristat will offer a one-hour webinar entitled "Patent Prosecution in the Post-Alice Era" on August 11, 2016 from 1:00 to 2:00 pm (ET). The webinar will guide participants through the new realities of patent prosecution in light of the Supreme Court's 2014 decision in Alice Corp. v. CLS Bank, and review the following subjects:

• How to draft claims in such a way as to avoid Alice-heavy art units;
• The best way to respond to Alice rejections; and
• When to appeal a final rejection and how to win those appeals.

Those interested in registering for the webinar can do so here.
Life Technologies Corporation v. Unisone Strategic IP, Inc. (PTAB 2016)

July 28, 2016

By Joseph Herndon —

Life Technologies Corp. filed a petition requesting covered business method (CBM) patent review of a number of claims of U.S. Patent No. 6,996,538. The PTAB determined that the claims are unpatentable under 35 U.S.C. § 101 as being directed to non-statutory subject matter. Ultimately, the PTAB found that the claims were simply directed to software for inventory management that recited nothing more than fundamental business and economic practices of inventory management that have long been performed manually in our system of commerce.

The '538 patent describes electronic inventory tracking by a third party, for example, via the Internet. The specification states that the present invention improves upon the prior art by shifting the burden of inventory tracking onto a third party; this concept is referred to as vendor managed inventory, or VMI. When a third party provides VMI services for multiple companies, it gains significant buying power which it can use to negotiate better deals, improve supplier responsiveness, and streamline the buying process when additional inventory is deemed necessary.

The '538 patent describes that VMI works by tracking inventory and automatically contacting suppliers, manufacturers, or distributors when additional supplies are needed. While purchasing is a large part of inventory maintenance, the invention of the '538 patent purports to facilitate other transactions, such as allowing customers to resell products or equipment to other businesses, or other communication between customers.

Of the challenged claims, claim 67 is illustrative and is reproduced below (as allowed in ex parte Reexamination Control No. 90/013,050).

67. A method for inventory management, comprising:
    (a) collecting and storing, on one or more databases having client software, at least the following data:
        (1) customer inventory information, the customer inventory information including a number of items at a customer,
        (2) inventory and cost information for a plurality of manufacturers, suppliers, or distributors, the inventory information for the plurality of manufacturers, suppliers, or distributors including: a product identifier and a number of items in manufacturer, supplier or distributor inventory, and
        (3) inventory restocking parameters provided by said customer;
    (b) evaluating via at least one computer said customer inventory information and inventory or cost information for a plurality of manufacturers, suppliers, or distributors in light of said restocking parameters provided by said customer;
    (c) ordering manufacturer, supplier, or distributor inventory which best fulfills said inventory restocking parameters provided by said customer;
    (d) tracking inventory items in said databases for (1) the number of items at said customer and (2) the number of items at said manufacturer, supplier, or distributor, as inventory items are added to, restocked to, or removed from said inventories;
    (e) updating said data on said one or more databases, using information obtained in said inventory tracking, through at least one software interface to said databases; and
    (f) providing access via client software to information in said one or more databases to each said customer, manufacturer, supplier, or distributor,
    wherein said client software allows one or more customers, manufacturers, suppliers, or distributors to be classified into groups, and where permissions or roles are assigned to such groups.

Covered Business Method Patent

A "covered business method patent" is 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." AIA § 18(d)(1); 37 C.F.R. § 42.301(a). A patent need have only one claim directed to a covered business method to be eligible for review.

The Petitioner asserted that the challenged claims are directed to "methods and computer systems for activities that are financial in nature, i.e., inventory management to support product sales, including customer interfaces and data management related thereto, as well as tracking and storing cost information related to those products." The Petitioner also pointed to the USPTO's classification of the '538 patent in Class 705, defined as "Data Processing: Financial, Business Practice, Management, or Cost/Price Determination."

However, the Patent Owner argued that patent classification of the '538 patent is misplaced because none of the claims are directed to a financial transaction. The Patent Owner argued that the patent itself distinguishes between the act of ordering inventory, which is claimed, and payment for inventory, which is not. According to the Patent Owner, because the challenged claims deal with inventory tracking and ordering, not payment, they do not recite a covered business method as defined by the AIA.

But, the PTAB stated that the patent claims must only be broad enough to cover a financial product or service in order to be considered for CBM review, and this covers activities that are financial in nature, incidental to a financial activity, or complementary to a financial activity.

The PTAB found that subject matter recited in the challenged claims is at least incidental to a financial activity. The PTAB highlighted some claim language supporting this conclusion, such as "collecting and storing, on one or more databases . . . inventory and cost information" and "inventory restocking parameters provided by said customer," and "ordering . . . inventory which best fulfills said inventory restocking parameters provided by said customer." The terms "cost information" and providing a customer access to that information amounts to a financial service, according to the PTAB.

The technological features of claim 67 include "one or more databases," "client software," and "at least one computer." Thus, the PTAB found that claim 67 does not recite a technological feature that is novel or unobvious over the prior art, and also does not recite any technical solution that solves a technical problem. As a result, the technological exception did not apply and the '538 patent was determined to be eligible for CBM review.

Challenge under 35 U.S.C. § 101

The claims of the '538 patent were challenged under 35 U.S.C. § 101 as being directed to patent-ineligible subject matter.

As for step 1 of the § 101 patentable subject matter determination, the Petitioner asserted that all of the challenged claims recite an abstract idea because they are directed to the fundamental business and economic practice of inventory management, a "fundamental economic practice long prevalent in our system of commerce" under Alice. The PTAB easily agreed.

In defense, the Patent Owner argued that each of the claims recites some form of "ordering," which provides a tangible, real-world impact achieved by the claimed computer technology. But, the Petitioner was able to sufficiently establish that ordering inventory that best fulfills said inventory restocking parameters provided by a customer, as recited in claim 67, for example, was a basic, already well-known aspect of inventory management and corresponds to an action that can be done manually (e.g., by making a telephone call), without benefit of a computer. Also, other features of claim 67 are directed to well-known processes that could be performed manually, or by using already commercially available computer products.

As for step 2 of the § 101 patentable subject matter determination, i.e., whether limitations of the challenged claims individually and as an ordered combination provide additional elements that transform the nature of the claim into a patent-eligible application, the PTAB found that components recited in the claims (databases, software, and computer) were well-known at the time of filing and were found to be routine, conventional activities to implement a method of collecting, storing, and analyzing information or data.

For this determination, the PTAB noted that the specification itself states that the "Inventory System 130" may include software already commercially available to the public, and that "Web Server 220 and Database Server 230" include commercially available software.

In defense of a purported "inventive concept", the Patent Owner argued that the claims describe a specific improvement over existing approaches to electronic VMI by providing "specially programmed computer systems that combine technology in novel ways to address technical inadequacies in existing systems." The alleged novelty was for "dynamically" analyzing information to provide improved, automated decision-making in a multi-seller environment.

But, the PTAB found that the claims do not address problems particular to the use of databases, software, and computers, but rather are directed to the general concept of inventory management.

The PTAB referenced recent decisions by the Federal Circuit including Bascom Global Internet Servs., Enfish, and DDR Holdings, and stated that the "Enfish claims, understood in light of their specific limitations, were unambiguously directed to an improvement in computer capabilities". In comparison, the '538 patent claims are not directed to an improvement of the technical equipment itself, i.e., the recited databases and software. Rather, the PTAB found that any inventive concept comes from knowing what data and information to place, analyze, use, and manipulate on those databases and software, and such concepts fail to improve an existing technological process. As a result, the PTAB found that the claims failed step 2 of the § 101 patentable subject matter determination, and were found to be unpatentable.

Before Administrative Patent Judges Jacqueline Wright Bonilla, Hyun J. Jung, and Neil T. Powell
Final Written Decision by Administrative Patent Judge Bonilla

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