Is the PTAB Second Choice for Your Alice Case?
Given the increased willingness of courts to dismiss Alice cases on the pleadings, petitioners may be inclined to withhold 101 grounds from CBM petitions. This is despite the fact that patent claims that qualify for a CBM challenge are often times equally susceptible to a patent eligibility challenge. That is, claims deemed CBM-eligible must satisfy a two-part test that overlaps in material respects with the Alice framework. Still, the ability to reserve the 101 issue for the court while simultaneously pursuing a CBM seems an attractive, defense strategy.
While early CBMs satisfied the first half of the analysis by pointing to an aspect of the underlying disclosure that embraced some aspect of financial activity, the current trend is to require the claim itself to focus on a financial practice. Of course, step 1 of Alice is not concerned with a field of use, but instead on the more general concept of an abstract idea. That said, many financial methods will qualify as abstract ideas under step 1 of Alice. When CBM petitions are denied at this stage, the impact on a later Alice determination is minimal given the contextual focus. It is the second half of the CBM analysis, if reached, that presents the greatest risk under 101.
The failure of the second half CBM analysis has been cited by at least one court in denying an Alice motion.
In Sophos Incorporated v. RPost Holdings, Inc. et al, 1-13-cv-12856 (MAD June 3, 2016, Order) (Casper, J.) Here, the court denied judgment on the pleadings that the electronic message delivery claims encompassed unpatentable subject matter because the claims did not lack an inventive concept. In other words, the second step of Alice was not satisfied. In its decision, the court noted that earlier CBM challenges were denied for failing the “technological innovation” analysis in support of the determination.
In this regard, the Court noted (here):
That the Patent Trial and Appeal Board (“PTAB”) denied petitions to institute covered business method patent reviews of the ’389 and ’913 patents tends to support this conclusion. . . .[C]overed business method patent reviews cannot be conducted on patents for technological inventions, and the PTAB denied review because the petitioners could not meet this showing.
(internal citations omitted)
Given the 101 analysis is a pure legal determination in many cases, the PTAB’s lower standard of evidence is less of a driver for CBM filers. Going forward, given the ability to file a CBM at any time, it may be that 101 (at least in those courts that will allow early motions) will be raised first in the district court, prior to any CBM filing.
This case was brought to my attention by the great Docket Navigator.