CBM Review: A Postmortem

03 September 2020 PTAB Trial Insights Blog
Author(s): Randy J. Pummill

Covered business method (CBM) review is scheduled to end on September 15 this year.Part of the Leahy-Smith American Invents Act, CBM review was envisioned as a transitional tool for accused infringers to challenge weak patents—a shield against so-called patent trolls.  CBM review had several advantages over other tools available under the AIA, such as inter partes review (IPR), and early CBM review filings were robust, numbering over a hundred each year from 2013 to 2015.  But with only 8 CBM filings in 2019,it is apparent that something killed interest in the process well before its mandated termination date.  With the end of the program just around the corner, now is a good time to review what went wrong with CBM review.  

Certainly many factors have led to the drastic decline in CBM review filings, but the greatest contributor may well be the lack of clarity around which patents qualify for CBM review.  By statute, CBM review was limited to patents that related to a “covered business method,” with an exception for patents relating to “technological inventions.”The statute defines a covered business method patent as: 

“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.”4

Based on this language, most practitioners assumed that the statute would be interpreted narrowly, limiting the types of patents that could be challenged to those directly touching on financial or banking transactions.  However, cases like Versata suggested that the PTAB and the CAFC would interpret the statutory language more broadly.In Versata, the patent in question related to a pricing scheme based on the identity of the buyer.The patent owner argued that the patent did not fall under the definition of a business method patent per 42.301(a) and encouraged the PTAB to limit CBM review to patents used by the financial services industry.The PTAB rejected this argument, instead favoring a broad interpretation of what constituted a “financial product or service” and requiring only an indirect connection to monetary matters.The board held that even though the patent at issue was not directly tied to the financial services industry, it fell within the scope of CBM review due to the financial nature of the claims.Even more encouragingly for proponents of CBM review, the PTAB’s decision in Versata was affirmed by the CAFC on appeal.10

The popularity of CBM review increased after the Versata decision, with over 200 CBM review petitions filed in 2015.11  But the popularity was short-lived.  As a constant stream of cases was decided by the PTAB and CAFC, inconsistencies as to which patents qualified for CBM review began to accumulate.  The PTAB often stretched the definition in surprising ways, permitting review of patents that had only tenuous ties to financial products or services.  In Returned Mail v. USPS, the PTAB instituted CBM review of a patent on using barcodes to forward mail with the thin justification that the patent’s specification discussed credit card companies as potential users of the patented technology, a broad interpretation of the statute that was later upheld by the CAFC.12  The issue was further complicated by the fact that the CAFC didn’t always agree with the PTAB’s interpretation.  For example, in Unwired Planet v. Google, the PTAB held a patent for restricting access to the location information of a wireless device was subject to CBM review because it could potentially be used in the eventual sale of services, an interpretation that was later overturned by the CAFC.13

Similarly, what qualified for the technological invention exception was also unclear.  The statute left the task of defining a technological invention to the USPTO.  In response, the USPTO developed a two-prong test:  1) the claimed subject matter must be a novel “technological feature” and 2) the invention must solve “a technical problem using a technical solution.”14  The CAFC was critical of the USPTO rule.  In Versata, the court said “In short, neither the statute’s punt to the USPTO nor the agency’s lateral of the ball offer anything very useful in understanding the meaning of the term ‘technological invention.'”15  

Under the court’s interpretation of the rule, a patent must satisfy both prongs of the test in order to qualify for the technological invention exception.16  Over time, however, a division within the CAFC became apparent as some panels only focused on the second prong of the test.17  This “intra-circuit split” ultimately led to a petition for certiorari asking the Supreme Court to clarify the application of the test, but the cert petition was denied.18  The Court may have been right to deny review—after all, it arguably would have been a poor use of judicial resources to clarify the rules of a process that would soon be terminated—but the lack of clarity leaves many patent owners and would-be challengers without a clear understanding of the risks involved in pursuing CBM review.  As a result, many are unwilling to spend the resources to file a CBM review when the risks that the challenged patent would be found to be not eligible for CBM review are too great.  

These decisions, and others like them, have eroded the confidence of would-be patent challengers, and as a result, the number of CBM review applications has dwindled.  As the process wraps up this year, it is unlikely to be missed by many.


1 37 CFR § 42.300(d) (2018).  Petitions filed before the cut-off date will not be affected.
2 Patent Trial and Appeal Board Statistics, USPTO, https://www.uspto.gov/patents-application-process/patent-trial-and-appeal-board/statistics/aia-trial-statistics-archive.
3 37 CFR § 42.301(a) (2018).
4 Id.
5 SAP Am., Inc. v. Versata Dev. Grp., Inc., No. CBM2012-00001, Paper No. 70 (P.T.A.B. June 11, 2013).
6 Id. 
7 Id.
8 Id.
9 Id.
10 Versata Development Group, Inc. v. SAP America, Inc., 793 F.3d 1306 (Fed. Cir. 2015).
11 Patent Trial and Appeal Board Statistics, USPTO, https://www.uspto.gov/patents-application-process/patent-trial-and-appeal-board/statistics/aia-trial-statistics-archive.
12 2015 Pat. App. LEXIS 12853 (P.T.A.B. October 15, 2015) (upheld in Return Mail, Inc. v. United States Postal Serv., 868 F.3d 1350 (Fed. Cir. 2017)).
13 2015 Pat. App. LEXIS 3477 (Bd. Pat. Interferences April 6, 2015) (overturned in Unwired Planet, LLC., v. Google Inc., 841 F.3d 1376 (Fed. Cir. 2016)).
14  37 C.F.R. § 42.301(b).
15 Versata, 793 F.3d at 1326.
16 See Apple v. Ameranth, 842 F.3d 1229, 1240 (Fed. Cir. 2016).
17 Compare Trading Technologies International, Inc. v. IBG LLC, Interactive Brokers, LLC, (Fed. Cir. April 19, 2019) and SIPCO, LLC v. Emerson Electric Co. (Fed. Cir. 2019).
18 Petition for Writ of Certiorari, IBG LLC, et al., Petitioners v. Trading Technologies International, Inc., Respondent, 140 S. Ct. 278 (Oct. 7, 2019) (No. 19-120).  

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