Key CBM Revision Unpopular with Bar Assoc’s

One of the more intriguing mechanisms of the America Invents Act (AIA) is the Transitional Program for Covered Business Method (CBM) Patents. To date, these speciailized post grant patent challenges have been pursued in relatively limited numbers as compared to the more generic Inter Partes Review (IPR) proceedings. The reason for the disparity between CBM and IPR filing rates is quite simple — IPR is available for any technology not just “business method patents.” Yet, the CBM proceding is far superior to IPR in many strategic respects.

Recognizing the potential of CBM filings to have a greater impact on the patent litigation landscape, Congress is actively considering alterations to the existing statutory framework that would encourage greater use of this powerful AIA mechanism. tle=”More…” src=”” alt=”” />The proposal with the most momentum comes from Senator Schumer (D-NY) as Senate Bill S.866 or the “Patent Quality Improvement Act.” This bill was introduced some months back to amend Sec. 18 of the AIA, which pertains to CBM standing. The Bill proposes to remove the language “a financial product or” from the standing definition. In its place, the bill proposes “an enterprise, product, or.” The change would effectively make clear that any e-commerce patent, even if not related to finances per se, is subject to a CBM challenge. A carbon copy of this bill has been proposed in the House, leading many to belive that this initiative is poised to become law very quickly….but not if major bar associations have their way.

It seems that several bar associations take issue with the potential expansion of CBM jurisdiction as proposed in the Schumer Bill, perhaps favoring the watered down CBM modifications as embodied in the Goodlatte draft. In the Goodlatte “discussion draft” proposed by Congressman Goodlatte (R-Va). The primary modification of the CBM statute is codification of the decision made in SAP America, Inc. v. Versata Dev. Group, Inc., CBM2012–00001, Paper 36 (January 9, 2013). That is to say, Goodlatte proposes a similar clarification that a patent need not have a financial services component to qualify for CBM treatment, but omits the expansion to “enterprise products” as proposed by Schumer.

With the GAO report noting that most troll asserttions are in the software/computer implemented technology area (i.e., enterprise products), it is hard to imagine the bar associations being on the winning end of this fight.