from the United States Patent and Trademark Office, Patent
Trial and Appeal Board in No. CBM2016-00095.
R. Barney, Finnegan, Henderson, Farabow, Garrett &
Dunner, LLP, Washington, DC, argued for appellant. Also
represented by Kelly Lu; Gregory J. Gonsalves, Gonsalves Law
Firm, Falls Church, VA.
Douglas Hallward-Driemeier, Ropes & Gray LLP, Washington,
DC, argued for appellee. Also represented by James Richard
Batchelder, James Lawrence Davis, Jr., East Palo Alto, CA.
O'Malley, Reyna, and Chen, Circuit Judges.
LLC (SIPCO) appeals a final written decision of the Patent
Trial and Appeal Board (Board) in a covered business method
(CBM) review of its U.S. Patent No. 8, 908, 842 ('842
patent). After instituting CBM review, the Board found claims
1, 7, 9, 16, and 17 of the '842 patent ineligible for
patent protection under 35 U.S.C. § 101 and unpatentable
for obviousness under 35 U.S.C. § 103. SIPCO appeals
these findings, as well as the Board's determination that
the '842 patent was subject to CBM review.
determining that the '842 patent qualifies for CBM
review, the Board found that the patent is not excluded from
review under the statutory "technological
invention" exception. See America Invents Act
(AIA) § 18(d). Under 37 C.F.R. § 42.301(b), the
Board must consider "whether the claimed subject matter
as a whole recites a technological feature that is novel and
unobvious over the prior art; and solves a technical problem
using a technical solution." Applying just the second
part of this regulatory standard, the Board here found that
the patent contained no technical solution to a technical
reverse the Board's claim construction of "low power
transceiver" and its finding that the '842 patent
does not satisfy the second part of the regulation defining
"technological invention." § 42.301(b).
Because the Board did not address the applicability of §
42.301(b)'s first part, we vacate and remand for
consideration consistent with this opinion.
'842 patent, based on a provisional application filed in
1997, explains that there are a variety of circumstances in
which it is desirable to communicate information from a
previously unconnected, remote device to a central location.
'842 patent at col. 1, ll. 43–45. Rather than set
up a direct communication link from the remote device to the
central location, however, the invention of the '842
patent sets up a two-step communication path through a set of
intermediate nodes that takes advantage of the nodes'
already-provided communications link (e.g., a
public-switched telephone network (PSTN)) to the central
location. Id. at claim 1. The claimed invention
completes the communication path by having the remote device
communicate wirelessly to an intermediate node. For example,
a user may wish to replace the bank and credit cards he or
she carries with a remote transmitting unit, similar to an
automobile remote key, that has one or more buttons each
associated with a bank or credit card. Id. at col.
5, ll. 9–64. When the user depresses the button, the
remote transmitter transmits the user's banking card
account and PIN information to, for example, the ATM.
Id. at col. 5, ll. 43–61. The ATM then
transmits the information over, for example, a PSTN to the
central location for verification. Id. at col. 7,
implementing this two-step system, the inventors recognized
problems that arose. Id. at col. 5, l. 67 –
col. 6, l. 11. For example, contention between two or more
remote devices communicating at the same time caused more
distantly located users to circumvent closer users.
Id. at col. 6, ll. 4–7. In addition, an
interloper could unlawfully intercept the electromagnetic
signals carrying sensitive data. Id. at col. 6, ll.
7–11. To alleviate these problems, the '842 patent
recites the use of a low-power remote transmitter,
which the specification explains would require the user to be
in "close proximity, " "e.g., several feet,
" in order for the user to be able to use it.
Id. at col. 5, l. 67 – col. 6, l. 11.
parties do not dispute the Board's treatment of claim 1
as representative. Claim 1 recites the following:
1. A device for communicating information, the device
a low-power transceiver configured to wirelessly transmit a
signal comprising instruction data for delivery to a network
of addressable devices;
an interface circuit for communicating with a central
a controller coupled to the interface circuit and to the
low-power transceiver, the controller configured to establish
a communication link between at least one device in the
network of addressable devices and the central location using
an address included in the signal, the communication link
comprising one or more devices in the network of addressable,
the controller further configured to receive one or more
signals via the low-power transceiver and communicate
information contained within the signals to the central
Id. at claim 1. Dependent claims 3 and 4 are
particularly relevant to this appeal:
3. The device of claim 2, wherein the remote device is a
[sic] associated with a vending machine.
4. The device of claim 2, wherein the remote device is
associated with an Automated Teller Machine (ATM).
Id. at claims 3, 4.
Board's Institution Decision
2016, Emerson Electric Co. (Emerson) filed a petition
requesting CBM review of the '842 patent on, inter
alia, §§ 101 and 103 grounds. Emerson argued
that the challenged claims were directed to the
patent-ineligible abstract idea of "establishing a
communication route between two points to relay
information." J.A. 215. According to Emerson,
"[t]his concept has been practiced for centuries in
applications such as the Postal Service, Pony Express, and
telegraph, where a route is established to relay mail or
other communications from one point to another."
Id. Emerson also argued that the '842 patent was
unpatentable for obviousness over U.S. Patent No. 5, 157, 687
(Tymes). J.A. 261.
Board instituted on both grounds. J.A. 432. In its
institution decision, the Board analyzed whether the '842
patent qualified as a "covered business method
patent" under AIA § 18(d)(1), which defines the
term 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." The Board
determined that claim 3-associating the device with a vending
machine- and claim 4-associating the device with an
ATM-recited apparatuses "used in the practice,
administration, or management of a financial product or
service" under § 18(d)(1). J.A. 387–89.
Board then determined that the patent was not drawn to a
"technological invention." The Board applied its
regulation 37 C.F.R. § 42.301(b), which provides a
two-part test for determining whether a patent is for a
"technological invention": "whether the
claimed subject matter as a whole recites a technological
feature that is novel and un-obvious over the prior art; and
solves a technical problem using a technical solution."
The Board explained that both parts of the regulation must be
satisfied in order to exempt the patent from CBM review. J.A.
390. Because the Board concluded that the patent did not
provide a technical solution to a technical problem and
therefore did not meet part two, the Board did not analyze
part one. J.A. 390–92.
the Patent Office's 2012 Office Patent Trial Practice
Guide, the Board focused on the features of claim 1, as
incorporated in dependent claims 3 and 4, and determined that
they are no more than generic and known hardware elements and
routine computer functions. J.A. 390– 91. The Board
found that "[t]he only wireless transmission required by
claims 3 and 4 is a signal from a low-power transceiver,
" which the Board noted was well-known in the art at the
time of the invention. J.A. 391. The Board stated that the
problem being solved by the '842 patent was the financial
problem of reducing the cost of having to dispatch service
personnel to fix these machines frequently, rather than a
technical problem. J.A. 392. Ultimately finding that the
features from claim 1 were not drawn to a technical solution
to a technical problem and, therefore, not drawn to a
"technological invention, " the Board determined
that the '842 patent was subject to CBM review. J.A.
Board construed, among other terms, "low-power
transceiver." J.A. 396–99. Emerson did not provide
a construction in its petition; SIPCO proposed a construction
that specified that the transceiver "transmits and
receives signals having a limited transmission range."
J.A. 397. SIPCO supported its proposed construction with
citations to the patent and an exhibit showing that the FCC
discusses "low-power" transceivers in a manner that
limits their range to "a few meters." J.A.
397–98. The Board disagreed with SIPCO's proposed
construction, finding that the term "low-power" as
used in claim 1 did not necessarily require that the device
transmit and receive signals only within a "limited
transmission range." J.A. 398.
Board also declined to limit the term based on the discussion
of low-power transmitters found in columns five and six of
the specification, because that discussion related to
"extremely low-power transmitters" rather
than "low-power transceiver[s]." J.A. 398–99.
The Board dismissed the FCC document cited by SIPCO because
the sentence discussing low-power transmitters described the
distance between people and consumer products, not the
low-power transmitters' transmission range. J.A. 399
(quoting J.A. 2791 ("At any time of day, most people are
within a few meters of consumer products that use low-power,
non-licensed transmitters.")). The Board ultimately
agreed that the construction should "encompass" a
device that "transmits and receives signals having a
limited transmission range" but declined to limit its
construction to that phrase. Id.
Board's Final Written Decision
Board's final written decision reiterated its analysis
with respect to whether the '842 patent was subject to
CBM review. J.A. 6–20. The Board also explained that
after institution, SIPCO filed a statutory disclaimer of
claims 3 and 4 under 35 U.S.C. § 253 and argued that the
disclaimed claims "cannot form the basis for a ruling
that the '842 patent is a [CBM] patent, " as the
'842 patent should be "treated as though the
disclaimed claims never existed, " citing language found
in Guinn v. Kopf, 96 F.3d 1419, 1422 (Fed. Cir.
1996) ("A statutory disclaimer under 35 U.S.C. §
253 has the effect of canceling the claims from the patent
and the patent is viewed as though the disclaimed claims had
never existed in the patent."). The Board disagreed with
SIPCO, finding that the "belated post-institution
disclaimer of claims 3 and 4" did not affect its
conclusion that the '842 patent is subject to CBM review.
J.A. 8. The Board cited a precedential Board CBM decision in
which it had previously explained that "CBM patent
review eligibility is determined based on the claims of the
challenged patent as they exist at the time of the
decision whether to institute." Id.
(citing Facebook, Inc. v. Skky, LLC, Case
CBM2016-00091, slip op. 11 (P.T.A.B. Sept. 28, 2017) (Paper
2) (precedential)) (emphasis added by the Board). The Board
also pointed out that AIA §§ 18(a)(1)(E) and
18(d)(1) use the present tenses of words
"institute" and "claims, " implying that
a patent is subject to CBM review based on what the patent
claims at the time of the institution decision, not
some later time after institution. J.A. 8–9. The Board
noted that it would not have considered claims 3 and 4 if
SIPCO had timely filed a disclaimer before institution and
observed that Emerson would still have had the ability to
file for inter partes review of the '842 patent
before the one-year statutory bar of 35 U.S.C. § 315(b)
had SIPCO done so. J.A. 10.
respect to the technological invention exception, the Board
cited the statement in Versata Development Group, Inc. v.
SAP America, Inc., 793 F.3d 1306, 1327 (Fed. Cir. 2015)
that "the presence of a general purpose computer to
facilitate operations through uninventive steps does not
change the fundamental character of an invention" to
support its conclusion that "[a] claim does not include
a technological feature if its elements are nothing more than
general computer system components used to carry out the
claimed process." J.A. 17 (internal quotation marks
omitted). The Board then reiterated its determination that
the features of claim 1 as incorporated in dependent claims 3
and 4 "recite no more than generic and known hardware
elements and routine computer functions, " and that the
problem being solved, which the Board characterized as
"[a]utomating service requests of vending machines and
ATMs, " was a financial, not technological, problem.
Board maintained its "low-power transceiver"
construction, concluding that SIPCO was conflating
"power" with "transmission range." J.A.
23. The Board also credited Emerson's expert's
testimony that a change in power does not necessarily result
in a change in transmission range, because the range depends
on numerous ...