Secure Axcess, LLC v. Pnc Bank National Association
859 F.3d 998
| Fed. Cir. | 2017Background
- The case concerns whether a patent qualifies as a "covered business method" (CBM) under AIA § 18(d)(1): 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."
- Secure Axcess's U.S. Patent No. 7,631,191 was reviewed by the PTAB as a CBM; the Federal Circuit panel held the patent was not a CBM because no claim, properly construed, included a financial-use element.
- Multiple banks and financial institutions sought rehearing en banc; the petitions for rehearing and rehearing en banc were denied. Mandate issued June 13, 2017.
- The principal legal dispute is statutory interpretation: does the verb "claims" modify both (a) "method or corresponding apparatus" and (b) "used in the practice... of a financial product or service," such that the financial-use must be reflected in at least one claim? Or may CBM status rest on actual use, specification embodiments, or litigation targets?
- Concurring judges (Taranto et al.) endorsed the panel’s claim-focused reading as textually sound, consistent with precedent and PTAB practice, and preferable to an expansive "used-in-fact" approach that would capture ubiquitous technologies.
- Dissenting judges (Lourie joined by others) argued the statute and legislative intent support treating patents as CBMs when the patent (including its specification and litigation history) shows use in financial services even if claims lack an explicit financial element; they also raised concerns about tactical claim disclaimers and the importance of CBM review as distinct from IPR/PGR.
Issues
| Issue | Plaintiff's Argument (Secure Axcess) | Defendant's Argument (Banks / PTAB / amici) | Held |
|---|---|---|---|
| Statutory scope: whether the word "claims" reaches the "used in the practice... of a financial product or service" phrase | The patent claims need not expressly recite a financial-use element; specification and practical use can establish CBM status | "Claims" must encompass the financial-use phrase — at least one claim, properly construed, must reflect the financial-use | Court (majority/concurring panels) held "claims" modifies both parts: a financial-use must be reflected in at least one claim (explicitly or inherently) to qualify as CBM |
| Role of specification and litigation history in CBM eligibility | Specification disclosures and suing financial institutions show the invention is used in financial services and should support CBM eligibility | Reliance on non-claim embodiments or post-issuance litigation is improper; focus must be on claim construction, not speculation about uses | Court rejected using specification/lawsuits alone to confer CBM status; claims (as construed) control eligibility |
| Breadth / policy concern: "used-in-fact" reading would sweep ordinary technology into CBM | CBM should be construed broadly to capture poor business-method patents; narrow reading frustrates Congressional intent | "Used-in-fact" reading would create implausibly broad and indeterminate jurisdiction (e.g., computers, glass, HVAC used in banks) | Court preferred a claim-focused rule to avoid overbroad, indeterminate reach; left policy adjustments to Congress |
| Appealability of institution decision under AIA §18 / §324(e) (procedural) | Institution questions about CBM status are reviewable to ensure correct application | Some judges argued institution determinations are nonappealable under the PTAB appeal bar | Panel majority proceeded on merits; separate dissent (DyK) argued Versata was wrongly decided and §324(e) bars review (inviting Cuozzo-related analysis) |
Key Cases Cited
- Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754 (2011) (example of resolving grammatical ambiguity by requiring a verb’s implicit element to apply to both parts of a predicate)
- Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016) (Supreme Court on the PTAB institution appeal bar and limits on judicial review)
- Unwired Planet, LLC v. Google Inc., 841 F.3d 1376 (Fed. Cir. 2016) (CBM interpretation precedent: Board may not add "incidental to" language; focus on claims)
- Blue Calypso, LLC v. Groupon, Inc., 815 F.3d 1331 (Fed. Cir. 2016) (affirming focus on claim language; financial elements in claim support CBM eligibility)
- Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306 (Fed. Cir. 2015) (broad reading of CBM scope beyond traditional banking and discussion on appealability of CBM determinations)
- SightSound Techs., LLC v. Apple Inc., 809 F.3d 1307 (Fed. Cir. 2015) (CBM eligibility where claims involve financial transactions)
- Hertz Corp. v. Friend, 559 U.S. 77 (2010) (jurisdictional clarity and administrative simplicity principles cited regarding indeterminate standards)