Secure Axcess, LLC v. PNC Bank National Association (Fed. Cir. 2017)

McDonnell Boehnen Hulbert & Berghoff LLP

In an appeal of a Covered Business Method (CBM) patent review, the Federal Circuit overturned a decision by the U.S. Patent and Trademark Office's Patent Trial and Appeal Board that U.S. Patent No. 7,631,191 is a CBM patent, and vacated the Board's determination that the claims were unpatentable as obvious in view of the cited prior art.  This is another decision by the Federal Circuit reining in the scope of what constitutes a CBM patent, and hopefully, preventing future Board panels from using the CBM too liberally.

The Patent-at-Issue

Secure Axcess owns the '191 patent entitled "System and Method for Authenticating a Web Page."  According to the patent, the invention relates generally to computer security, and more particularly, to systems and methods for authenticating a web page.  Claims 1 and 17 are illustrative:

1.  A method comprising:
    transforming, at an authentication host computer, received data by inserting an authenticity key to create formatted data; and
    returning, from the authentication host computer, the formatted data to enable the authenticity key to be retrieved from the formatted data and to locate a preferences file,
    wherein an authenticity stamp is retrieved from the preferences file.

17.  An authentication system comprising:
    an authentication processor configured to insert an authenticity key into formatted data to enable authentication of the authenticity key to verify a source of the formatted data and to retrieve an authenticity stamp from a preferences file.

The '191 patent, in discussing the invention, explains that an Internet user might be misled to the wrong website without proper authentication.  To illustrate the problem, the '191 patent uses vs. www.b[l] (with an 'l' instead of an 'i').  Also, despite typically referring to Internet "users," the patent occasionally refers to "customers," and "consumers".  The written description further explains that "[t]he web server can be any site, for example a commercial web site, such as a merchant site, a government site, an educational site, etc."  Thus, it is clear that many examples and applications of use of the invention described in the '191 patent include authentication of data for use in financial activities.

Procedural History--Board

The Board reasoned that because the '191 patent is directed to solving problems related to providing a web site to customers of financial institutions, the '191 patent covers the ancillary activity related to a financial product or service of Web site management and functionality and so, according to the legislative history of the AIA, the method and apparatus of the '191 patent perform operations used in the administration of a financial product or service.

The Board also observed that the patent owner's allegations of infringement by approximately fifty financial institutions was a factor weighing toward the conclusion that the '191 patent claims a method or apparatus that at least is incidental to a financial activity, even if other types of companies also practice the claimed invention.

Federal Circuit's Response

Congress defined a "covered business method patent" as 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 Federal Circuit found that the statutory definition by its terms makes what a patent "claims" determinative of the threshold requirement for coming within the defined class.  But since a claim in a patent does not live in isolation from the rest of the patent, the written description bears importantly on the proper construction of the claims.  Thus, the Federal Circuit determined that the statute requires that it is the claims, in the traditional patent law sense, properly understood in light of the written description, that identifies a CBM patent.

The Federal Circuit further analyzed the "financial product or service" prong of the CBM definition, and found that the statutory definition of a CBM patent requires that the patent have a claim that contains, however phrased, a financial activity element.  The claim need only require one of a "wide range of finance-related activities," examples of which can be found in the cases which the Federal Circuit has held to be within the CBM provision, but it must be in the claim.

The fact that the patent owner has allegations of infringement by approximately fifty financial institutions, or the patent owner's choice of litigation targets, is not a determinative factor and could be influenced by a number of considerations, such as the volume of a particular target's perceived infringement; the financial condition of the target; which targets are most likely to be willing to settle rather than bear the cost of litigating; available and friendly venues; and so on.  Those choices do not necessarily define a patent as a CBM patent, nor even necessarily illuminate an understanding of the invention as claimed.

Just because an invention could be used by various institutions that include a financial institution, among others, does not mean a patent on the invention qualifies under the proper definition of a CBM patent.

The Federal Circuit thus determined that the Board erred in deciding this case as a CBM under its overly-broad statutory definition, and the Board's other determinations, including claim constructions as they bear on obviousness and the obviousness determination itself, were vacated.


Judge Lourie authored a dissent, providing the opinion that the claims of the '191 patent are surely claims to 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.

Judge Lourie stated that the '191 patent makes clear that the invention is to be used in the management of a financial service.  However, there was no evidence provided that the invention "must" be used in the management of a financial service, and the claims were drafted to include broader applications.

Judge Lourie went on to use the fact that Secure Axcess has sued 50 banking institutions as evidence of what they believe their invention is "used" for.

Judge Lourie argued that if a method claim otherwise satisfies the requirements of 35 U.S.C. § 112, it need not recite an ultimate use, and the written description of the '191 patent tells us that the invention is to be used for financial management.

Judge Lourie opined that the majority escaped the clear purport of the invention by ranging into a discussion of the meaning of claims in patent law, and ignored the statutory language "used in the practice."  Again, Judge Lourie argued that the claims need not recite usage, and the written description provides that for us.

Judge Lourie concluded by saying that common sense is not precluded from use in interpreting statutes and claims, and suffice it to say that the relation of this invention to the financial world is one of substantial identity compared with an incidentally-used invention like a lightbulb or ditch-digging.

Absent from the dissent's analysis, however, is anything in the claim itself that can be considered a financial activity.  Following the dissent's analysis would require importing limitations of "use" into the claim in instances where the claim was drafted more broadly.  Thus, it appears the majority has a more sound analysis in place, and when the claim language is clear on its face and drafted to include uses not limited to financial activities, the patent should not be considered eligible for CBM patent review.

Secure Axcess, LLC v. PNC Bank National Association (Fed. Cir. 2017)
Panel: Circuit Judges Lourie, Plager, and Taranto
Opinion by Circuit Judge Plager; dissenting opinion by Circuit Judge Lourie

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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