Takeaway: In proving patent-ineligibility of claim under 35 U.S.C. § 101 in a covered business method review proceeding, the petitioner’s burden of proof is under the “preponderance of the evidence” standard, rather than the “clear and convincing evidence” standard.

In its Final Written Decision, the Board ordered that claims 1-6 and 8-23 of the ’944 patent were held unpatentable. It was the Board’s position that Petitioner had proven by a preponderance of the evidence that claims 1–6 and 8–23 of the ’944 patent were not patent-eligible under 35 U.S.C. § 101.

The ’944 patent relates to the controlled disposition of selected capital assets through the use of computer-implemented methods and other computer-related technology. Petitioner had sought covered business method patent review of claims 1-6 and 8-23 of the ’944 patent, at least some of which were directed to subject matter including “[a] method for verifiably controlling the disposition of an asset” (independent claim 1).  In addition to claim 1, the other independent challenged claims were claims 2, 15, and 16.

Petitioner had argued that the challenged claims of the ’944 patent did not comply with 35 U.S.C. § 101. Patent Owner disagreed, asserting that the challenged claims are directed to patent-eligible subject matter because they contain “significant, meaningful limitations” and “do not preempt the abstract idea of handling a customer’s physical item in such a way that the customer can verify that its handling instructions were followed.”

The Board proceeded in accordance with the controlling court decisions Bilski, Mayo, andAlice in order to resolve this dispute.  Consistent with these cases, Alice in particular, the Board followed the two step test in which it first set out to determine whether the claims are directed to any patent-ineligible concept, and if so, then set out to determine whether there are additional elements that transform the nature of the claim into a patent-eligible application.

As for step one of the two-step test, namely determining whether the claims are directed to any patent-ineligible concept, Petitioner asserted that “the claims are directed to the purely abstract idea of handling a customer’s physical item in such a way that the customer can verify that its handling instructions were followed.” The Board, in reply, concluded that with respect to independent claims 1, 2, 15, and 16, “the idea of handling a customer’s asset in such a way that the customer can verify that its handling instructions were followed is unpatentably abstract.”

The Board, proceeding under step two of the two-step test, then considered whether the challenged claims “add any inventive concept to the abstract idea of handling a customer’s physical item in such a way that the customer can verify that its handling instructions were followed.” The Board agreed with Petitioner on this point, finding that it was not “persuaded that the elements of each of claims 1–6 and 8–23, considered individually or as an ordered combination, transform the nature of the claim into patent-eligible subject matter.”

Dell Inc. v. Disposition Services LLC, CBM2013-00040 
Paper 15: Final Written Decision
Patent: 5,424,944
Dated: January 9, 2015 
Before: Sally C. Medley, Kevin F. Turner, and Matthew R. Clements 
Written by: Clements
Related Proceeding: Disposition Services LLC v. Dell Inc., Civil Action No. 12:13-cv-00282-JRG