The Patent Trial and Appeal Board (“the Board”) recently held that Customedia Technologies, LLC (“Customedia”) could not moot the CBM proceeding with a post-institution disclaimer of the claims found to recite a financial activity element. Dish Network Corp. v. Customedia Techs., LLC, CBM2017-00023, Paper 48 at 23 (P.T.A.B. June 11, 2018).

A patent is considered a covered business method patent if it “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.”  AIA § 18(d)(1); 37 C.F.R. § 42.301(a) (same). The Federal Circuit has rejected the standard that claims need only be “activities ‘incidental to’ or ‘complementary to’ a financial activity.”  Unwired Planet, LLC v. Google Inc., 841 F.3d 1376, 1382 (Fed. Cir. 2016), cert. denied, No. 17-357, 2018 WL 1994803 (U.S. Apr. 30, 2018); see also Blue Calypso, LLC v. Groupon, Inc., 815 F.3d 1331, 1340-41 (Fed. Cir. 2016) (determining that patent was within “the statutory definition of CBM patent” where the claims recited “an express financial component in the form of a subsidy, or financial inducement, that encourages consumers to participate in the distribution of advertisements”).

“CBM patent review eligibility is determined based on the claims of the challenged patent as they exist at the time of the decision whether to institute.”  Facebook, Inc. v. Skky, LLC, CBM2016-00091, Paper 12 at 11 (PTAB Sept. 28, 2017) (precedential) (emphasis added).  Patent owners have successfully avoided CBM review by disclaiming claims that recite a financial product or service prior to an institution decision.  See, e.g., Commvault Systems, Inc. v. Realtime Data LLC, CBM2017-00061, Paper 10 at 6-9 (P.T.A.B. Jan. 18, 2018).  However, the Board has made clear that disclaimers made after an institution decision will not affect the Board’s jurisdiction.  See, e.g., Emerson Electric Co. v. SIPCO, LLC, CBM2016-00095, Paper 39 at 8 (P.T.A.B. Jan. 16, 2018) (“[T]he belated post-institution disclaimer of claims [reciting a financial activity element] does not affect our CBM patent review eligibility determination.”).

Here, Customedia disclaimed the dependent claims found in the institution decision as reciting financial activity elements.  Customedia argued that, regardless of whether or not the disclaimed claims met the financial product or service prong, they could not form the basis for CBM review because the claims must be treated as never having existed.  The Board rejected Customedia’s argument, stating that “[d]isclaimed claims are not considered in determining whether a patent is eligible for CBM patent review if a patent owner timely files a statutory disclaimer before institution.”  Dish Network Corp., CBM2017-00023, Paper 48 at 21 (emphasis added).  Accordingly, the Board held that Customedia’s untimely disclaimer did not deprive the Board of jurisdiction, and it went on to find that all of the challenged claims were unpatentable.

An important lesson for Patent Owners is to analyze potential claims that can be disclaimed that may form the basis for CBM jurisdiction, and if warranted file such disclaimers, before an institution decision.  As the Board has made clear, post-institution disclaimers of all financial claims are not sufficient to deprive the Board of jurisdiction or terminate the proceedings.