SIPCO, LLC v. Emerson Electric Co.
Docket No. 2018-1635 (CBM2016-00095)
O’MALLEY, REYNA, CHEN
September 25, 2019
Update (11/17/20): FC panel explained that SCOTUS’ 2020 Thryv decision “makes clear that the threshold determination that SIPCO’s ‘842 patent qualifies for CBM review is a decision that is non-appealable under 35 U.S.C. 324(e)” and affirmed the Board’s unpatentability decision without reaching the Board’s decision of patent ineligibility (section 101) decision. (Decision: http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/18-1635.OPINION.11-17-2020_1686726.pdf)
Brief Summary: PTAB determination of CBM eligibility reversed since, e.g., “SIPCO’s claims combine certain communication elements in a particular way to address a specific technical problem” (not a CBM case under the “technological invention” exception). Summary: SIPCO appealed the PTAB’s covered business method (CBM) review final written decision (FWD) regarding US 8,908,842. The FC panel opinion explained that a patent does not qualify for CBM review if “the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution” (the “technological invention” exception (AIA § 18(d); 37 CFR § 42.301(b); FN4: “the AIA does not define what is or is not a technological invention”). Emerson requested CBM review “on, inter alia, §§ 101 and 103 grounds,”, arguing “that the challenged claims were directed to the patent-ineligible abstract idea of ‘establishing a communication route between two points to relay information’” and unpatentable over a US patent (“Tymes”). The PTAB found that the ‘842 patent “recited apparatuses ‘used in the practice, administration, or management of a financial product or service’ under § 18(d)(1)” (“the features of claim 1, as incorporated in dependent claims 3 and 4” that refer to an ATM or vending machine), and “contained no technical solution to a technical problem”, based in part on its construction of the claim element “low power transreceiver configured to wirelessly transmit a signal” (Versata, FC 2015 (“general computer system components” not a technological feature)). After institution, SIPCO filed a statutory disclaimer of claims 3 and 4 (§ 253) and argued that those claims could not “form the basis” of finding the ‘842 patent a CBM patent (Guinn, FC 1996 (“treated as though the disclaimed claims never existed”)), but the PTAB disagreed since institution is based on “what the patent claims at the time of the institution decision”. The PTAB also agreed with Emerson’s patent-ineligiblity and obviousness arguments. The FC panel disagreed with the PTAB’s construction of “low power” as not correlated with a “limited transmission range”, finding instead that “a skilled artisan would understand” from the ‘842 specification that “low power” corresponds to “limited transmission range” (Phillips, FC 2005). The FC panel first explained that the PTAB’s conclusion of CBM eligibility was “not arbitrary and capricious” (SightSound, FC 2015; Apple, FC 2016 (“only one claim must meet the requirements”)). However, it also found that the PTAB “misread and mischaracterized the features of claim 1 in its analysis of dependent claims 3 and 4”, “did not appreciate that the claims provide a technical solution to a technical problem” (“how to extend the reach of an existing communication system from a central location to a remote, unconnected device” using the “low power, i.e., limited transmission range”; “SIPCO’s claimed invention does not simply use ‘well understood,’ off-the-shelf wireless technology for its intended purpose of communicating information” (unlike Champerlain, FC 2019 (see FN3)), and therefore found its ruling to be arbitrary and capricious. The FC panel explained that even if the ‘842 patent uses conventional components as argued by Emerson, this case is similar to Bascom (FC 2016) (e.g., “SIPCO’s claims combine certain communication elements in a particular way to address a specific technical problem”). The FC panel therefore remanded the case to the PTAB. Judge Reyna’s dissent argued that the PTAB’s claim construction should have been afforded deference.