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IP Alert: Federal Circuit Affirms CBM Jurisdiction and Patent Ineligibility of Invention for "Improving the Trader"

May 10, 2019

On April 30, in Trading Technologies Int’l, Inc. v. IBG LLC, Interactive Brokers LLC, the Federal Circuit issued a decision clarifying the scope of covered business method (CBM) review proceedings. Holding that the challenged patents do not meet the criteria for the technological invention exception to the CBM review criteria, the court affirmed the Patent Trial and Appeal Board (PTAB) holding that a patent owned by Trading Technologies met the criteria for CBM review and also held that the challenged claims are patent ineligible under 35 U.S.C. § 101.

The challenged patent relates to a graphical user interface for electronic trading, which was the subject of a petition for CBM review filed by IBG and a related entity, Interactive Brokers.

To be eligible for CBM review, the patent must be a “CBM patent.” This is defined in section 18(d)(1) of the America Invents Act 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” (emphasis added). The only issue of CBM eligibility that Trading Technologies contested is whether its patents were for technological inventions. Under the relevant USPTO regulation, when evaluating whether a patent is for a technological invention, the PTAB must evaluate two questions: (1) whether the claimed subject matter as a whole recites a technological feature that is novel and nonobvious over the prior art and (2) whether it solves a technical problem using a technical solution.

The Federal Circuit declined to consider whether the first question should apply, refusing to decide whether its recent holding in Versata Development Group, Inc. set aside the novelty and nonobviousness language of the regulation. Instead, the court reasoned that regardless of whether the first prong should apply, the claims do not solve a technical problem using a technical solution under the second consideration. Trading Technologies argued that the claims addressed problems related to aspects such as speed, efficiency, usability, intuitiveness, and visualization. The Federal Circuit, agreeing with the PTAB, explained that although the patents solve the problem of displaying trading information “in an easy to see and interpret graphical format,” this makes the trader faster and more efficient—not the computer. The court explained they did not need to review the PTAB’s analysis under the first consideration since they agreed with the PTAB on the second consideration.

Next, the Federal Circuit reviewed the PTAB’s conclusions regarding patent eligibility, applying the Supreme Court’s two-step framework by first evaluating whether the claims are directed to a patent-ineligible concept and, second, if so, determining whether the additional elements transform the nature of the claim into a patent-eligible application.

Focusing on the first step, the court evaluated differences between the claimed invention and the admitted prior art disclosed by the patent. The court concluded that the only difference between prior art Figure 2 and the claims is that the claimed graphical display includes P&L values instead of the prior art price values. According to the court, calculating P&L values from price is nothing more than an abstract idea—thus, a patent-ineligible concept. The court discounted Trading Technologies’ arguments to the contrary, noting that “arranging information along an axis does not improve the functioning of the computer, make it operate more efficiently, or solve any technological problem.”

Under the second step, the court likewise concluded that the application of the P&L calculation to a trading screen could not supply an inventive concept, and therefore affirmed the PTAB’s holding that the challenged claims are patent ineligible.

This case emphasizes the intertwined relationship between CBM eligibility and patent eligibility and perhaps expands CBM eligibility by broadening the interpretation of “technological invention.”

For more information on this ruling, please contact Fitch Even partner Thomas F. Lebens, author of this alert.

Fitch Even law clerk Zachary Van Engen contributed to this alert.


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