Earlier this month, the Federal Circuit Court of Appeals vacated an earlier decision handed down by the U.S. Patent Trial and Appeal Board (“PTAB”).  The PTAB had previously decided that a covered business method (CBM Review) proceeding was required to be instituted in the Apple v. ContentGuard Holdings case. On appeal, the Federal Circuit disagreed.  The judges held that the PTAB had decided the case using the incorrect legal standard for deciding whether or not CBM review was necessary in this instance.  Using the precedent set by the Federal Circuit in Unwired Planet v. Google, the Federal Circuit held that the standard used to decide whether CBM review should be instituted was not properly applied in this case.

In the case at hand, ContentGuard has argued that, in 2013, Apple violated a patent that ContentGuard has owned since 2010.  In 2014, ContentGuard filed a similar patent suit against Google regarding the same patent, U.S. Patent No. 7774280.

ContentGuard’s patent, U.S. Patent No. 7774280, covers a computer-implemented method used to transfer rights associated with items from a rights supplier to a rights consumer. The method determines whether the rights should be transferred by analyzing whether the rights consumer meets specifications set by a digital meta-right that is enforced by a repository. If the method determines that the rights consumer is indeed entitled to the right, the method will then transfer the specified right.  Such a transfer results in the creation of a sophisticated digital rights management (“DRM”) system that allows content creators tighter control over transactions and transfers between third parties downstream that receive content from separate distributors.

In response to ContentGuard’s suits, Apple had filed six petitions challenging the validity of ContentGuard’s patent.  Four of the petitions call for inter partes review (“IPR”) of the patent while two of the petitions request CBM review.  Google later joined Apple as a co-petitioner on one of the requests for CBM review.

In 2016, the PTAB issued a decision that held that the claims challenged by Apple and Google were unpatentable in itself.  In their final decision, however, they granted a motion that allowed ContentGuard to amend claims which ultimately allowed the substitution of the unpatentable claims, thus giving ContentGuard the ability to cross-appeal the PTAB holding that the patent was even subject to CBM review.

Once the appeal reached the Federal Circuit, the Federal Circuit held that the PTAB had decided whether CBM review was proper using the wrong standard.  The Federal Circuit held that the PTAB’s decision to base their holding on whether the patent claim activities were “incidental to” a financial activity to determine whether the patent was eligible for CBM review was improper.  Instead, the Federal Circuit held that the claimed invention could be used in ways that did not even require financial transactions, and as such, the Federal Circuit remanded the case to the PTAB to decide whether the patent qualifies for CBM review under the Unwired Planet standard which does not rely on the “incidental to” standard.

As such, it would behoove patent counsel and clients alike to follow the case as it is remanded down to the PTAB to see whether or not the challenged patents will find a different holding fate under the Unwired Planet standard.

For more information on this topic, please visit our Patent Litigation service page, which is part of our IP & Business Litigation practice.

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Klemchuk LLP is an Intellectual Property (IP), Technology, Internet, and Business law firm.  We offer comprehensive legal services including litigation and enforcement of all forms of IP as well as registration and licensing of patents, trademarks, trade dress, and copyrights.  The firm also provides a wide range of technology, Internet, e-commerce, and business services including business planning, formation, and financing, mergers and acquisitions, business litigation, data privacy, and domain name dispute resolution.  Additional information about the IP law firm and its IP law attorneys may be found at www.klemchuk.com.

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