In Blue Calypso, LLC, v. Groupon, Inc., the Federal Circuit concluded that the Board did not exceed its authority to conduct a CBM review of Blue Calypso’s challenged patents, and that the Board correctly applied the statutory definitions of “covered business method” and “technological invention” to the challenged claims. Nos. 2015-1396, -1397, -1398, -1399, -1401 (Fed. Cir. Mar. 1, 2016).
While the Board’s decision to institute a covered business method review is “final and nonappealable” under the AIA, the AIA does not prevent the Federal Circuit from reviewing whether a claim is eligible for CBM review. See Versata Dev. Grp., Inc. v. SAP Am., Inc. (Versata II), 793 F.3d 1306, 1318–23 (Fed. Cir. 2015); SightSound Techs., LLC v. Apple Inc., 809 F.3d 1307 (Fed. Cir. 2015). Because the Federal Circuit has jurisdiction under the AIA to review the Board’s final decisions in CBM reviews, the AIA does not prevent the Federal Circuit from reviewing the Board’s conclusion that the challenged patent claims are “covered business methods” that lack any “technological invention.” Versata II, 793 F.3d at 1323.
Noting its decisions in Versata II and SightSound, the Federal Circuit first rejected Blue Calypso’s arguments that the Board interpreted the statutory CBM definition in an overly broad way. Blue Calypso argued that its patents are not CBM patents because they relate to a method for managing and distributing advertising content, which is not a “financial product or service” that traditionally originated in the financial sector, such as banks, brokerages, holding companies, and insurance firms. The Federal Circuit rejected this argument, noting that the legislative history of the AIA suggests that the definition of CBM should be broadly interpreted, and “a financial activity” that is not directed to money management or banking nevertheless can constitute a “financial product or service” within the meaning of the statute.
Likewise, the Federal Circuit rejected Blue Calypso’s argument that the technological invention exception applies to any claims that are computer-based and contemplate hardware, software, a network, and communications devices. In so ruling, the Court relied on its decision in Versata II, in which it “rejected the argument that merely reciting the use of a computer would satisfy the technological invention exception.”
Having dispensed with Blue Calypso’s attacks on the Board’s interpretation of the statutory CBM definition, the Federal Circuit next addressed whether the Board correctly applied the definitions of “covered business method” and “technological invention” to the Blue Calypso patents. The claims at issue included a subsidy concept, as exemplified by the recitation in one of the claims of “subsidizing the qualified subscriber according to the chosen subsidy program.” The Board noted the centrality of this concept to the claims, and construed “subsidy” as “financial assistance given by one to another.” The Federal Circuit concluded that, based on this understanding of the subsidy concept, the Board’s conclusion that the challenged claims are financial in nature and subject to CBM review was not arbitrary and capricious and was supported by substantial evidence. So, too, was the Board’s conclusion that the claims recited nothing more than general computer system elements, and thus did not meet the technological innovation exception.
Practitioners should take note of the Court’s criticism of Blue Calypso’s failure to address the language of the challenged claims in its arguments. Whether seeking to establish or thwart CBM eligibility, a successful argument will center around what the claims themselves recite.
