HP Inc. v. Big Baboon, Inc. (PTAB 2016) - Business Method Patent Not Invalid under 35 U.S.C. § 101

by McDonnell Boehnen Hulbert & Berghoff LLP
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HP Inc. and SAP America, Inc. filed a Petition seeking a covered business method (CBM) patent review of claims 15 and 20–34 of U.S. Patent No. 6,343,275 owned by Big Baboon, Inc.  The PTAB, however, determined that the Petitioner failed to establish that it is more likely than not that at least one of the challenged claims is unpatentable, and thus, the CBM review was denied.

It was argued that the claims were unpatentable under 35 U.S.C. § 101 as being directed to an abstract economic concept, but even though the PTAB found that the '275 patent was a business method patent, in a rare instance, the CBM review was denied.

The '275 patent is directed to a software system that enables business-to-business Web commerce and "automates to the greatest degree possible, in a unified and synergistic fashion and using best proven business practices, the various aspects of running a successful and profitable business."  The patent states that Web business and business automation are both greatly facilitated using a computing model based on a single integrated database management system ("DBMS").  The effect of such integration on the business cycle is profound, allowing the sale of virtually anything in a transactional context (goods, services, insurance, subscriptions, etc.) to be drastically streamlined.  In particular, the Specification discloses that the automated business process may be imagined as a kind of information assembly line in which each worker in turn builds upon the information base established by preceding workers.

The DBMS stores files belonging to different business domains, e.g., a products domain, a payments domain, a financial performance domain, and a personnel domain.  The '275 patent is very large having 392 sheets of Figures and being 415 pages in total.  The Figures are largely screen shots of the various web interfaces provided to access the DBMS.

The claims of the '275 patent were amended in a reexamination certificate, U.S. Patent No. 6,343,275 C1, issued on August 19, 2015, in which claims 1-14 and 16-19 were canceled, claim 15 was confirmed, and new claims 20-34 were added.

Of the challenged claims, claim 15 is representative and reproduced below:

15.  A method comprising the steps of:
    providing an end-to-end, business-to-business, e-commerce business automation software for automation business functions across multiple business domains;
    identifying multiple modules of the software; and
    via Web administration, producing a software configuration in which selected ones of the modules are enabled or disabled;
    wherein the software producing a workscope/workflow structured display of complex database records each comprising multiple lines of text and pertaining to both a first party to a business transaction and a second party to the business transaction, the structured display constituting an integrated decision-making environment for a particular business function.

CBM Patent

A "covered business method patent" is one 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, except that the term does not include patents for technological inventions."  AIA § 18(d)(1); 37 C.F.R. § 42.301(a).

The PTAB found that claim 15 of the '275 patent expressly recites finance-related activities, namely providing "an end-to-end, business-to-business, e-commerce automation software" for "multiple business domains" and "pertaining to both a first party to a business transaction and a second party to a business transaction."  Given the express finance-related language of the claims, the PTAB found a sufficient showing that at least one challenged claim satisfies the "financial product or service" requirement of Section 18.

Further, because claim 15 does not solve a technical problem using a technical solution, the "technological inventions" exception was not found to apply here.  As a result, the PTAB easily found that the '275 patent was eligible for CBM patent review.

Asserted Ground of Unpatentability under 35 U.S.C. § 101

The Petitioner asserted that the challenged claims of the '275 patent are unpatentable under 35 U.S.C. § 101 as being "directed to the abstract economic concept of gathering information from across a business and using the information to make decisions."  The Petitioner gave a hypothetical in which "when deciding whether to create a new product, a business must consult with its engineering department about design and manufacturing capabilities, its human resources department about staffing requirements, and its sales department about marketing and sales prospects."  Similarly, Petitioner argued that "a decision to purchase a new piece of equipment would require information from the purchasing department (why the equipment is needed) and the accounting department (whether there is money in the budget for the purchase)."

The PTAB, however, found that claim 15 was absent any "gathering" steps, and Petitioner did not explain sufficiently how the limitations of claim 15 are directed to the concept of "gathering" information.

The PTAB further scolded the Petitioner's analysis for not addressing sufficiently the specific language of claim 15 and explaining why claim 15 is in fact directed to the alleged abstract idea.

As a result, the PTAB simply found that the Petitioner failed to establish the first step of the Mayo framework; i.e., to identify sufficiently an abstract idea to which claim 15 is directed.  Moreover, the PTAB itself was not about to decide whether claim 15 is directed to a different abstract idea, and only determined that Petitioner did not show sufficiently that claim 15 is directed to the alleged abstract idea that Petitioner proposed.

Thus, the PTAB concluded that the Petitioner failed to establish that claim 15 and 20-34 are more likely than not directed to patent ineligible subject matter under 35 U.S.C. § 101.

The Petitioner made additional arguments alleging that the challenged claims were also obvious under 35 U.S.C. § 103 based on prior art, but these too were not persuasive for similar reasoning (i.e., the Petitioner failed to identify specific documentary evidence indicating that the claim elements would have been obvious to a person of ordinary skill in the art at the time of the '275 patent).

While the specific Petition here failed, the claim at issue here will likely face additional § 101 challenges in the future.  Simply reciting "providing" automation software and producing a software configuration in which selected ones of modules are enabled or disabled, is quite broad and abstract, to say the least.  Further, "producing a workscope/workflow structured display of complex database records each comprising multiple lines of text" is quite generic.

It's important to note that estoppel under CBM review extends only to grounds actually asserted, and not to grounds that reasonably could have been asserted.  Also, here, the PTAB was specific in the decision denying institution of CBM review indicating that the Petition simply failed to provide a sufficient basis.  Thus, as we have seen in the past (e.g., Motorola Mobility, LLC v. Intellectual Ventures I, LLC (CBM2015-00004)), petitioners are free to file a second petition with new, updated, modified arguments in an attempt to persuade the PTAB in their favor.

Before Administrative Patent Judges Justin T. Arbes, Trenton A. Ward, and Robert J. Weinschenk
Decision by Administrative Patent Judge Trenton A. Ward

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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