The U.S. Patent and Trademark Office (USPTO) may have given banks, financial institutions, and retailers more access to a powerful new tool to fight weak patents.

A recent Patent Trial and Appeals Board (PTAB) decision suggests that the USPTO is leaning toward a broad understanding of when a patent is eligible for “covered business method patent” review (CBM Review). The PTAB’s decision in Volusion, Inc. v. Versata Software, Inc., suggests that CBM Review may be available in a fairly large number of cases. The decision may be particularly relevant for financial institutions and retailers.

CBM Review is part of a relatively new suite of tools Congress created to allow accused infringers to challenge the validity of patents in the patent office, rather than in federal court. The new Inter Partes Review (IPR) is by far the most widely used challenge. While IPR is a welcome method, it has its limits. A party seeking IPR is limited to challenging a patent based on arguments that the invention already existed (lack of "novelty") or was obvious in view of patents or printed publications. IPR also bars a party from re-litigating not just the issues actually raised in the IPR, but also any issues that could have been raised in the IPR.

In contrast, CBM Review allows an accused infringer to challenge validity on almost any ground available in district court litigation. CBM Review also limits the estoppel risk that is present in IPRs, as parties are only barred from re-litigating the issues actually raised in the proceeding. Despite these attractive features, CBM Review has not been nearly as popular as IPR, likely because the standard suggests that CBM Review only applies to a very small subset of patents. Volusion suggests that the scope may be broader than many practitioners originally thought.

In theory, most patents are not eligible for CBM Review. The procedure is only available when both of the following criteria are met:  

  • At least one claim of the asserted patent covers “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.”  
  • The patent is not for a “technological invention.”

Volusion appears to be the first CBM Review instituted based on a claim that does not expressly recite a business transaction of some sort. The PTAB instituted the review based on a claim covering a representation of data in a database. The claim language does not recite a financial product or service, so the panel based its decision to institute review on language in the patent stating that the “present invention” could apply to a wide range of industries, including “financial services.” The opinion then points to the patent’s description of catalogs and states that the “invention has application in the field of e-commerce.”

The panel reasoned that the claim “encompasses arranging items for display to a user associated with any product or service, such as financial services. In other words, the steps are not limited in application to any particular product or service” (emphasis added). The panel also concluded that “[a] person of ordinary skill in the art would have understood that the items that can be displayed to a user may be associated with financial services.”

Volusion suggests that the test of whether a particular patent is subject to the covered business method review focuses not on whether the claims recite a financial product or service, but on whether, based on language in either the claims or merely the patent's specification, one of ordinary skill in the art would understand the claims to cover a financial product or service. If this decision reflects the USPTO’s direction in this area, CBM Review may be applicable to a broad range of patents. For companies that face accusations that they infringe patents that relate to technology underlying basic business practices, this decision should be welcome news.

Ballard Spahr’s Intellectual Property Department has a national patent litigation practice. Ballard attorneys are experienced in patent litigation in courts across the nation and post-grant reviews before the USPTO. With 14 Ph.D.s, one Pharm.D., and 12 master’s degrees, our Department comprises trial lawyers, scientists, and engineers with specialized knowledge in a variety of scientific and technical fields. For more information, please contact Robert R. Baron, Jr., at 215.864.8335 or, or Richard W. Miller at 678.420.9340 or

Copyright © 2013 by Ballard Spahr LLP.
(No claim to original U.S. government material.)


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