On January 21, 2014, the Patent Trial and Appeal Board issued its second Final Written Decision in a Covered Business Method (CBM) Proceeding under the America Invents Act. CBM Proceedings allow for the review of a business method patent on any ground of patentability, and fill a gap between Inter-Partes Review (IPR) which only allows for review based obviousness or novelty, and Post-Grant Review (PGR), which is applicable only to patents issued based on applications filed on or after March 15, 2013, though it allows for review on any ground of patentability.

In this proceeding, CRS Advanced Technologies alleged that certain claims of U.S. Patent No. 6,675,151 were invalid as patent ineligible subject matter under 35 U.S.C. § 101. Broadly, the patent covers systems and methods for placing temporary workers in open positions. The PTAB granted review of all of the challenged claims and held a hearing in August, 2013. The Final Written Decision invalidated all six challenged claims as “directed to abstract, and, therefore, unpatentable, methods for substitute fulfillment.” This is the second time in as many decisions in which the PTAB invalidated business methods claims.

Broadly, the claims are directed toward a method of using a computer to find temporary workers. Claim three, specifically, provides:

3. A method for performing substitute fulfillment for a plurality of different organizations comprising:

receiving absentee information representing an absent worker via at least one communication link;

generating and posting a list of one or more positions of one or more absent workers that need to be filled by one or more substitute workers on a website;

receiving a response by a substitute worker selecting a posted position on the website via an Internet communication link; and

securing via the Internet communication link the substitute worker who selected the posted position to fill in for the absent worker.

The PTAB conducted a lengthy review of the case law surrounding patentability, including recent Supreme Court and Federal Circuit cases. CRS argued that the claims merely cover abstract ideas, and are not patentable. Specifically, CRS argued that because the claims recite only a generic computing device and do not alter any physical object, they fail the machine or transformation test.

Frontline countered that the claims recite a novel way of performing “substitute fulfillment,” and that the use of technology is integral to the way in which the invention performs that task. Frontline also argued that the efficiency gained from posting the information on a website, was a major benefit of the claimed invention.

The PTAB disagreed, and held that taken as a whole, the patent and claims were directed toward “concepts for taking the preexisting process of substitute fulfillment and implementing it in a networked computing environment.” Adding elements, such as “a website” and “an Internet communication link” did not rise to the level of specialized hardware that can make a claim patentable under SiRF Tech., Inc. v. Int’l Trade Commission, in which claims reciting a GPS receiver were held valid because the GPS receiver was “a significant part in permitt[ing] the claimed method to be performed, rather than function[ing] solely as an obvious mechanism for permitting a solution to be achieved more quickly.”

Another interesting aspect of this decision is that the Board generally adopted the plain and ordinary meaning of the claim terms, rejecting both some of CRS and Frontline’s proposed constructions. The ruling is also significant because the PTAB invalidated claims that were previously upheld in a reexamation. However, Section 101 is not a ground that can be raised in a reexamination.

The Board has yet to issue a Final Written Determination in which the claims of a challenged business method patent were found valid. Though the number of Determinations is limited to only three so far, the CBM proceedings appear to be a potent tool in challenging business method patents based not only on prior art grounds but also on patent eligibility grounds under Section 101.  A combination of factors may have influenced these invalidity Determinations: the potential PTAB’s tendency to grant petitions where it believes the patents are invalid, the parties settling after the petition is instituted in cases where the patent owner has a strong case of patentability, or simply the low number (only three) Final Written Determinations at this time. The next few decisions from the PTAB will likely be closely watched to see if any business method claims survive the PTAB’s review.