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Intellectual Property: Transitional Program for Covered Business Method Patents

The Leahy-Smith America Invents Act (“AIA”) establishes a new transitional post-grant review proceeding for covered business method patents. The program allows a petitioner who has been sued for infringement of, or charged with infringement under, a patent meeting the statutory definition of a covered business method to challenge the validity of the patent before the U.S. Patent and Trademark Office. The review process is designed to provide a more efficient and streamlined alternative to litigation to determine the validity of the covered business method patent. In particular, the review must result in a final determination within one year after institution of the proceeding, with a six-month extension available for good cause. The program and associated rules apply to petitions filed between September 16, 2012 and September 16, 2020.

A covered business method patent is defined in §18(d)(1) of the AIA 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 determination as to whether a patent covers a technological invention is made on a case-by-case basis based on whether the claimed subject matter as a whole recites a technological feature and solves a technical problem using a technical solution. The definition creates some uncertainty as to the scope of the patented inventions for which this proceeding is available. A patent meeting the statutory definition may be challenged at any time during the patent’s term, except during the nine-month period following the grant of a patent or the issuance of a reissue patent, during which time a petition would satisfy the requirements for traditional post-grant review.

The petition for review must demonstrate that the patent is a covered business method patent available for review and that the petitioner meets certain eligibility requirements. The eligibility requirements include that the petitioner has been sued for infringement of the patent or that a real and actual controversy regarding the petitioner’s infringement exists. The petition must further identify each claim being challenged, the specific ground(s) on which each claim is challenged, and how each claim is to be construed, among other requirements.

The proceeding is to be conducted as a trial before the Patent Trial and Appeal Board (the “Board”) and is subject to the rules provided in the policies, practices and definitions common to all trial proceedings before the Board. External evidence supporting a petition, including expert testimony, is admissible. The review process also generally adopts the proposed procedures and fees applicable to the traditional post-grant review process. In particular, the proposed fee for filing a petition requesting review of a covered business method patent is at least $30,000 depending on the number of challenged claims.

The relatively long time period of availability as compared to traditional post-grant review, combined with the relatively short time to final decision as compared to district court litigation, may make transitional post-grant review proceedings an attractive approach for invalidating eligible business method patents in some cases.

LeClairRyan’s Intellectual Property and Technology attorneys are prepared to help evaluate whether utilizing the transitional proceedings for covered business method patents is an appropriate way to respond to a charge of infringement by a patent owner and, if so, to prepare the post-grant review request.