Avoiding CBM Proceedings Through Statutory Disclaimers: A Case-Study and a Look to the Future

Like a lizard shedding its tail to avoid capture, patent owners continue to escape Covered Business Method (CBM) proceedings by disclaiming claims clearly directed to financial products or services.  Despite growing tension and divided views on this issue within the Patent Trial and Appeal Board (PTAB), patent owners have used this strategy to insulate more general claims that still cover those same financial products or services. 

For example, in Plaid Technologies, Inc. v. Yodlee, Inc., the PTAB analyzed a patent owned by Yodlee to determine if it qualified as a “covered business method patent,” which would make it eligible for the heightened scrutiny of a CBM proceeding. A CBM patent is 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….” The patent in question is directed to techniques for organizing information for delivery to various devices, with some (but not all) embodiments involving applications to financial transactions. In addition, Yodlee asserted its patent was infringed by financial products of Plaid Technologies.

In its attempt to establish that Yodlee’s patent is a CBM patent, Plaid pointed to four dependent claims that explicitly recited terms clearly related to a financial product or service. Yodlee, however, disclaimed each of those dependent claims, leading the PTAB majority to analyze the patent “as though the disclaimed claims never existed.” As a result, the majority concluded, those disclaimed claims “cannot provide the basis” for CBM eligibility. On this point, the majority referred to several non-precedential decisions that reached this same conclusion and disagreed with other non-precedential decisions that reached the opposite conclusion, indicating that this issue is far from settled among PTAB judges.

Turning to the remaining claims, the majority agreed that the independent claims necessarily include the features recited in the now-disclaimed dependent claims, but concluded that this “does not necessarily mean that the claim, as a whole, is limited to that finance-related activity.” Noting that the PTAB is directed to “focus on the claim language at issue,” the majority determined that the independent claims are “claims of general utility with no explicit or inherent finance-related terminology or limitations” and therefore did not qualify that patent as a CBM patent.

The majority rejected other arguments by Plaid such as Plaid’s arguments emphasizing the financial aspects and applications of the invention discussed in the patent and the fact that Yodlee had asserted that patent against Plaid’s financial products in litigation. On these issues, the majority stated that “claims of general utility are not converted into finance-related claims merely because the Specification of the challenged patent or the litigation positions of the Patent Owner suggest that the scope of the claims is broad enough to encompass some finance-related activities.” In other words, the majority focused in on the literal language of the claims themselves, as opposed to a more general reading of the specification or the purpose of the invention as a whole.

The dissent, though agreeing completely with the majority’s treatment of the “appropriate facts and law relevant to this issue,” disagreed with the non-precedential opinions on which the majority relied, and would have followed the set of non-precedential opinions going the other way. The dissenting judge emphasized the role of the claims and the specification and warned against the “procedural gamesmanship that our reviewing court has disfavored in other contexts.” The dissent would also have given weight to how the patent was asserted in litigation, quoting the famous line “A patent may not, like a ‘nose of wax,’ be twisted one way to avoid anticipation and another to find infringement.”

In sum, this case highlights the tension and discord within the PTAB on this important issue. Several panels have come to different conclusions on this issue, resulting in a variety of non-binding decisions. As a result, the viability of this disclaiming strategy to avoid CBM review may turn in part on the composition of the particular panel. In the coming months, the practice of disclaiming finance-related claims to avoid CBM proceedings may be an important issue for the PTAB to consider for a precedential opinion or for the Federal Circuit to decide on appeal.