Trying to figure out “intent” when a law’s language is ambiguous may be an exercise in futility. Still, the U.S. Court of Appeals for the Federal Circuit didn’t take the easy way out and let one U.S. senator’s comments, made during debate on the America Invents Act of 2011, stand for Congress’s intent in passing the law.
Specifically, Sen. Charles Schumer (D-N.Y.) didn’t have a monopoly on defining “covered business method” patents on activities related to financial services or products, the court said Nov. 21 in Unwired Planet v. Google.
At the PTAB, the scope of which patents can be considered CBM patents is crucial because the only way to challenge the eligibility of a patent that’s been issued for nine months or more is under a CBM review. The more popular inter partes review only allows patents to be challenged as obvious or not novel when compared with prior art.
In Unwired Planet, the Federal Circuit ruled that the PTAB’s CBM definition was incorrect and too broad. It vacated the PTAB’s decision and remanded the case to see if the challenged patent fits the statutory definition of a CBM.
Schumer initiated the law’s CBM provisions, which ultimately became AIA Section 18, selling it to fellow Senate Judiciary Committee members by decrying “the scourge of business method patents currently plaguing the financial sector.”
But his other statements before the full Senate suggested a more expansive definition of a CBM, such as that “the fact that a patent is being used by a company that is not a financial services company does not disqualify the patent from section 18 review.”
There is no PTAB-wide standard on the scope of the CBM definition. Different PTAB panels reach different conclusions.
In Unwired Planet v. Google, the PTAB panel quoted Schumer to justify calling Unwired Planet LLC’s patent on wireless location applications a CBM. Why? Because a retailer in Topeka might try to sell a T-shirt to a mobile phone user walking by the store. Because, relying on Schumer’s words, the PTAB panel found the subject matter in one of the patent’s claims to be “incidental or complementary to the financial activity of service or product sales.”
But, the Federal Circuit said, “a single floor comment during the Senate debate over the AIA” isn’t legislative history. Sen. Jon Kyl (R-Ariz.) said at about the same time that CBMs cover “products or services that are particular to or characteristic of financial institutions.” And Schumer called Section 18 the “Schumer-Kyl amendment on business method patents.”
In fact, Sen. Patrick Leahy (D-Vt.) – whose name is on the legislation – argued that the provision specifically excluded “technologies common in business environments across sectors and that have no particular relation to the financial services sector, such as computers, communications networks, and business software.”
We’ll undoubtedly see a petition for Supreme Court review in the case because Google Inc., the alleged infringer, lost at the Federal Circuit. The company has two petitions before the high court now, and it had two last year. It doesn’t lose easily.
But unless the court reverses, CBMs will be narrowly defined. Because, as the Federal Circuit said, Congress’s intent was not the same as Schumer’s.
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