A covered business method (CBM) patent “does not include patents for technological inventions.” AIA § 18(d)(1). The United States Patent and Trademark Office (USPTO) promulgated a regulation that defines “a technological invention” as one in which (1) “the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art” and (2) “solves a technical problem using a technical solution.” 37 C.F.R. § 42.301(b). Both prongs have to be satisfied in order for an invention to be deemed a technological invention.

The first Federal Circuit case to address this regulation was Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306, 1326-27 (Fed. Cir. 2015), which clarified that ultimate questions of novelty and nonobviousness should not be a part of the threshold question of CBM jurisdiction.

First, the requirement that a technological invention should be novel and nonobvious over the prior art could be said to be rather obvious, and not novel. This is because in order to be eligible for patenting in the first place, any invention must be novel (35 U.S.C. § 102) and nonobvious (35 U.S.C. § 103); presumably the invention under review, since it has already been covered by an issued patent, was earlier determined by the USPTO to be novel and nonobvious. At this early stage of the process, when the USPTO is first determining whether the patent at issue is even a CBM, there would seem to be little cause to determine what will be one of the ultimate questions if review is granted – did the USPTO err in the first instance when it originally determined that the invention was novel and nonobvious?

Id. It set aside the “novel and unobvious” language, stating that “we are left with a definition of a ‘technological invention’ as essentially one having a [1] ‘technological’ feature that [2] solves a ‘technical’ problem using a ‘technical’ solution.” Id.

Just recently, on September 25, the Federal Circuit addressed both prongs of the technological invention test in Sipco, LLC v. Emerson Electric Co., 2019 WL 4656205 (Fed. Cir. Sept. 25, 2019). In Sipco, the Federal Circuit reversed a finding by the Patent Trial and Appeal Board (Board) that the invention did not solve a technical problem with a technical solution. However, because the Board did not address the first prong of the definition, the Federal Circuit remanded the case so the Board could make a determination of whether the first prong was satisfied. The patent challenger argued that remand was not necessary because “the Board already analyzed whether the ’842 was obvious under § 103.” Id. at 21. The Sipco court acknowledged that Versata “previously questioned whether it makes sense to interpret the first part of § 42.301(b) – which references the word obvious – as coextensive with § 103” but “decline[d] to assume this is how the Board would apply § 42.301(b) in this case.” Id. As a result, the Sipco court remanded the case with instructions to the Board to “explain what part one of the regulation means and then apply it as so explicated.” Id. at 21-22. Thus, will prong one of the technological invention test be clarified in the future, and will that clarification include some aspect of obviousness? Stay tuned.