939 F.3d 1301
Fed. Cir.2019Background
- The ’842 patent claims a two-step communication system: a low-power wireless transceiver from a remote device to an intermediate node, which then forwards data via an existing network (e.g., PSTN) to a central location. Claim 1 is representative; dependent claims 3 and 4 tie the device to vending machines and ATMs.
- Emerson petitioned for Covered Business Method (CBM) review, asserting §101 ineligibility (abstract idea of relaying communications) and obviousness over prior art; the PTAB instituted review based largely on claims 3 and 4.
- The PTAB applied 37 C.F.R. § 42.301(b)’s two-part “technological invention” test and found the patent not a technological invention because it failed part two (did not solve a technical problem with a technical solution); the PTAB construed “low-power transceiver” broadly (not tied to limited range).
- In the final decision the PTAB held the challenged claims patent-ineligible under §101 and obvious under §103. SIPCO appealed the claim construction and the PTAB’s CBM and patentability rulings.
- The Federal Circuit reversed the PTAB’s construction of “low-power transceiver,” holding it means a device that transmits/receives at a power level corresponding to limited transmission range; affirmed that claims 3–4 render the patent a CBM patent; reversed the PTAB’s § 42.301(b) part-two finding (the claims solve a technical problem with a technical solution), vacated the PTAB’s §101/§103 rulings, and remanded for the PTAB to apply part one of § 42.301(b).
Issues
| Issue | SIPCO's Argument | Emerson's Argument | Held |
|---|---|---|---|
| Proper construction of “low-power transceiver” | Means a transceiver that transmits/receives signals having a limited transmission range (intrinsic spec ties low power to proximity). | Plain meaning: a transceiver that consumes less power; power need not equal limited range; expert testimony shows range depends on many factors. | Reversed PTAB: construed to mean a device that transmits and receives signals at a power level corresponding to limited transmission range. |
| Whether the patent is a CBM patent under AIA §18(d)(1) (financial product/service) | Patent is not primarily financial; mere association with ATM/vending is insufficient. | Claims 3–4 recite devices used in the practice/administration/management of financial services (ATM/vending communicating financial data). | Affirmed PTAB: claims 3–4 use the invention in financial-product/service operations, so patent can be a CBM patent. |
| Whether the patent is a “technological invention” under 37 C.F.R. §42.301(b) part two (solves a technical problem by a technical solution) | The invention provides a technical solution (two-step communication + short-range low-power link addressing interference, interception, contention). | Even if technical problems exist, the solution uses conventional components and is not a technology-based solution; more like automation using generic hardware. | Reversed PTAB: the claims present a technical problem and a technology-based solution (two-step scheme plus limited-range transceiver), so part two is satisfied. |
| Effect of SIPCO’s post-institution disclaimer of claims 3–4 | Post-institution disclaimer cancels the claims; PTAB should treat the patent as if claims 3–4 never existed. | CBM eligibility is determined based on the claims as they existed at institution; post-institution disclaimer does not retroactively change institution decision. | PTAB’s reliance on claims 3–4 at institution was permissible; Court rejected SIPCO’s argument and treated CBM eligibility as assessed at institution. |
Key Cases Cited
- Versata Dev. Group, Inc. v. SAP Am., Inc., 793 F.3d 1306 (Fed. Cir. 2015) (interpreting “technological invention” and explaining that general-purpose computers performing uninventive steps do not make an invention technological)
- Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208 (2014) (framework for §101 patent-eligibility of abstract ideas)
- Bascom Global Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016) (software/network arrangement can be an inventive, technology-based solution even when components are conventional)
- Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (claim construction principles: claims read in light of the specification but not importing limitations from embodiments)
- Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015) (deference to factual findings underlying claim construction)
- Trading Techs. Int’l, Inc. v. IBG LLC, 921 F.3d 1084 (Fed. Cir. 2019) (patent claims directed to financial trading GUIs did not provide a technical solution to a technical problem)
- SightSound Techs., LLC v. Apple Inc., 809 F.3d 1307 (Fed. Cir. 2015) (standard of review for Board determinations about CBM eligibility)