Twilio, Inc. v. Telesign Corp. (PTAB 2017)

McDonnell Boehnen Hulbert & Berghoff LLP

No CBM Review for On-Line Registration Patent Having Financial Applications and Uses

Twilio Inc. filed a Petition requesting covered business method patent review of claims 1–18 of U.S. Patent No. 9,300,792.  The Board decided that no covered business method patent review would be instituted because the '792 patent is not a CBM patent based on the recent Federal Circuit's Unwired decision.  The Board strictly applied the CBM definition to the claims of the '792 patent, and since the claims are absent any financially related terms, this was not deemed to be a CBM patent.

The '792 Patent

The '792 patent pertains to "on-line or web-site registration," and describes processes for (1) verifying an on-line registration by a telephone connection separate from the on-line connection between the web-site and potential registrant, and (2) notifying registrants of predetermined events using information obtained during the registration process.  According to the '792 patent, there was a need in the art for a way to accurately verify an individual's identity during registration because potential registrants often register with untraceable or false e-mail addresses and phone numbers.  Similarly, there was a need to prevent fraud by subsequently notifying the registered individual when certain events occur and potentially seeking the individual's authorization.

The registration process begins with a user filling out an on-line registration form accessed through a website (i.e., a first communication connection).  For example, the registrant or consumer could be an individual attempting to access a web-site and set up an account with a financial institution.  The user provides certain information requested in the form, such as his or her telephone number.  The website then sends a Short Message Service (SMS) message to the user's telephone (i.e., a second communication connection) containing a verification code.  The user enters the verification code in the website form and, if there is a match and the information provided shows that the user is who he or she purports to be, the user is verified and may login.

After registration, notification events are established by the user or business utilizing the system or by a third party.  A notification event may comprise, for example, a news event, or a request to access or alter the registrant's account.  When a previously established notification event occurs, the user is notified via the telephone number provided during registration.  For example, the system may send an SMS message or voice message to the user's telephone containing a verification code.  The user then enters the verification code into a website form, allowing the user to verify his or her identity, provide confirmation of receipt of the information and, where necessary, authorization for the event to occur, such as access to the account, etc.

Claim 1 of the '792 patent recites:

1.  A verification and notification method implemented by a computing system, the method comprising:
    receiving, from a user, information via a computing interface presented to the user as a result of an attempt by the user to access a service, the received information including a telephone number associated with the user;
    verifying the telephone number by:
        establishing a short message service (SMS) connection with the user using the received telephone number;
        communicating a verification code to the user through the SMS connection;
        receiving, via the computing interface, a submitted verification code that is entered by the user; and
        verifying the telephone number if the submitted verification code is the same as the communicated verification code;
    completing a registration of the user based on the received information and verified telephone number, wherein the completed registration enables the user to access the service;
    maintaining a record of one or more notification events associated with actions that require acknowledgement by the user;
    upon receiving an indication of an occurrence of an established notification event, transmitting a message addressed to the verified telephone number indicating the occurrence of the notification event; and
    receiving, from the user, an acknowledgement of an action associated with the established notification event.

CBM Decision

A "covered business method patent" is "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, except that the term does not include patents for technological inventions."  AIA § 18(d)(1).

CBM patents are limited to those with claims that are directed to methods and apparatuses of particular types and with particular uses in the practice, administration, or management of a financial product or service.

Claims 5 and 14 of the '792 Patent recite that "the notification event is associated with activity related to a financial account associated with the user."  Claims 7 and 16 recite "charging a fee to the user based at least in part on the user being notified of the occurrence of the established notification event."  Petitioner points to these limitations as supporting its contention that the '792 patent is a covered business method patent.  Patent Owner, however, statutorily disclaimed claims 5, 7, 14, and 16, pursuant to 35 U.S.C. § 253(a) and 37 C.F.R. § 1.321(a).  Thus, the Board treated the '792 patent as though these claims never existed.

With respect to claim 1, the Board determined that the question is whether the '792 patent "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."  AIA § 18(d)(1).

Petitioner pointed to the recitation in claims 1 and 10 of a "service" and "notification event," arguing that a "primary embodiment" in the Specification of the '792 patent is a financial fraud detection system with notification events linked to financial activity.  However, the Board determined that, as used in the claims, "service" and "notification event" are generic, context-neutral terms, without any express or implicit connection to financial products or services.  The Board also found no other language in claim 1 relating to financial products or services.

Although the Specification of the '792 patent describes various embodiments pertaining to finance-related services and notification events, such embodiments are characterized as merely "examples," and do not indicate that the disclosed system is limited, or even directed primarily, to just finance-related activities.  In fact, the Specification indicates just the opposite, and states "[t]here are also instances which are not financially based in which notification could benefit both the consumer as well as the business."

The Specification provides multiple examples of services and notification events outside the financial context, such as providing access to information on a secure website and notifying the user of sports scores, airline flight changes, etc.

The Board rebutted Petitioner's attempts to import the finance-related embodiments described in the Specification to show that the primary purpose of the '792 patent is financially related, and instead stated that the focus is on what the '792 patent claims.

Thus, the Board did not find Petitioner's arguments persuasive given the generic claim language and broad disclosure in the Specification.  Also, the Board disagreed that the primary purpose of the '792 patent relates to finance.  The '792 patent describes a need in the art for a more secure way to verify a registrant's identity during online registration and notify the registrant of designated events because individuals often register with untraceable or false e-mail addresses and phone numbers, which can compromise the intended purpose of the registration, create a breach of security and constitute fraud on the web-site owners.

Thus, the Board found that the Petitioner had not established that the '792 patent claims a method or apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service.  Therefore, the '792 patent did not qualify as a "covered business method patent" under § 18(d)(1) of the AIA, and no CBM patent review was instituted.

A nice decision by the Board to apply the recent Unwired decision by the Federal Circuit, and be strict in application of the claim language as the primary factor for determining whether the patent qualifies as a CBM patent.

Before Administrative Patent Judges Sally C. Medley, Michael W. Kim, and Justin T. Arbes
Decision by Administrative Patent Judge Arbes

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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