Takeaway: A claim may be novel but still lack subject matter eligibility.

In its Decision, the Board instituted a covered business method patent review for claims 1–7, 11, 12, 14–22, 25, 26, 28–35, 39, 40, and 42 of U.S. Patent No. 6,397,224. The ’224 patent relates to providing increased confidentiality of information through the use of systems and methods for anonymously linking data records in a database.

Petitioner contended that all challenged claims are unpatentable under 35 U.S.C. § 101 and unpatentable under 35 U.S.C. § 103 over the combination of Pommerening and Arellano as well as over the combination of Johansson and Arellano.

The Board began by considering the level of ordinary skill in the art, stating that“[f]actors that may be considered in determining the level of ordinary skill in the art include, but are not limited to, the types of problems encountered in the art, the sophistication of the technology, and educational level of active workers in the field.” Petitioner contended that “one of ordinary skill in the art would have familiarity with encryption and database systems” and “would have had a master’s degree in computer science, or equivalent work experience and two years’ experience in the implementation of secure database systems.” The Board considered the cited prior art as “representative of the level of ordinary skill in the art.” However, the cited prior art references “do not recite specific computer programming and/or engineering problems encountered but instead discuss the problems in terms of classification tasks and the adequacy of encryption procedures. . ., and creating standards for collecting personal identification information as well as assigning a common sequential identification number to all linked records for a person.” Petitioner’s expert, consistent with the prior art, testified that “the types of problems encountered include how to secure data from re-identification (encryption) and how to match records belonging to a common source” and that “the education level for these problems would have been a master’s degree in computer science or equivalent work experience implementing secure database systems.” Accordingly, on the record before it, the Board concluded that “one of ordinary skill in the art had master’s degree in computer science, or equivalent work experience and two years’ experience in the implementation of secure database systems.”

The Board then turned to claim construction. Petitioner identified three terms for claim construction (encoded identity reference, anonymization code, and module), “seek[ing] to interpret the claims by providing further clarification as to the meaning of the terms.” Patent Owner did not “propose distinct constructions of the identified terms.” The Board concluded that “[t]he identified claim terms are given their ordinary and customary meaning, as would be understood by one with ordinary skill in the art, and need not be construed explicitly at this time for purposes of this Decision’s patentability analysis.”

Next, the Board addressed whether Petitioner has standing to seek a covered business method review of the ’224 patent. The AIA provides that “[a] person may not file a petition for a transitional proceeding . . . unless the person or the person’s real party in interest or privy has been sued for infringement of the patent or has been charged with infringement under that patent.” AIA § 18(a)(1)(B). Petitioner represented that it had been sued for infringement of the ’224 patent in litigation, and Patent Owner did not dispute that representation. The Board therefore concluded that Petitioner had been sued for infringement for purposes of AIA § 18(a)(1)(B).

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). Petitioner contended that “the ’224 patent claims systems and methods that expressly cover financial transaction records.” In response, Patent Owner contended that “the ’224 patent has no particular relation to the financial services industry, and does not ‘particularly target’ the financial sector.” The Board, however, held that “AIA § 18(d)(1) does not require that the claimed invention particularly target the financial industry” and also determined that “the claimed system and method recite activities used in a financial product or service as it is directed to a financial activity, namely anonymizing financial transaction records, e.g., credit card records.” The Board then addressed whether the ’224 patent is for a “technological invention,” considering ”whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution.” The Board determined that “[t]he technology required by the claims . . . is conventional” and that “claim 1 lacks a novel and unobvious technological feature.” In reaching this conclusion, the Board credited the testimony of Petitioner’s expert that “the encoding of the first and second identity references may be conducted using well known hashing schemes. . . .” and “the concept of indexing and linking records together was well known in the art and does not represent a technological feature.” The Board also determined that Claim 1 does not solve a technical problem using a technical solution. In particular it found that “[l]ack of standard identifiers is not a technical problem, nor is a need to assign a common identification number to a particular individual” and that “properly classifying data and employing adequate encryption procedures are not technical solutions in the context of the ’224 patent.” The Board also rejected Patent Owner’s apparent argument that the claims were not unpatentable under § 101 because they are “distinguishable from the prior art,” stating that a claim “may be novel but still lack subject matter eligibility.” Ultimately, the Board concluded that “claim 1 of the ’224 patent is not a technological invention under § 18(d)(1)” and Petitioner has standing to file a CBM review of the ‘224 patent.

Turning to the merits of the Petition, the Board first considered whether the challenged claims are directed to ineligible subject matter and therefore unpatentable under 35 U.S.C. § 101. Applying the framework set forth in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014) and Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012), the Board examines whether the challenged claims are directed to a patent-ineligible concept (laws of nature, natural phenomena, and abstract ideas ) and then considers “the elements of each claim both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into a patent-eligible application.”

The Board was persuaded that the steps in claim 1 (which it selected as representative of the challenged claims) “describe an abstract idea of making personal identifiers secret (encoding/encrypting) and indexing the secret (indexing/linking).” The Board also concluded that “the challenged claims recite systems and methods for encoding personal identification information and linking that information using a computer, and do no more than merely recite the use of computer technology for one of its most basic functions, handling potentially large datasets that would be labor intensive and tedious if conducted using pen and paper.” Thus, the Board concluded that Petitioner has demonstrated that it is more likely than not that claims 1–7, 11, 12, 14–22, 25, 26, 28–35, 39, 40, and 42 are unpatentable under 35 U.S.C. § 101 as directed to non-statutory subject matter.

Next, the Board considered whether the challenged claims are obvious over the combination of Pommerening and Arellano. Petitioner argued that “Pommerening describes encoding subsets of healthcare identity elements and generating an anonymous (pseudonym) identifier for linking records” and “Arrelano teaches the use of data subsets and algorithms for linking healthcare records.” It further argued that “the challenged claims represent known elements (encoding identity information and indexing/linking records) for their known purpose (privacy of data, ability to locate all records pertaining to an individual) to achieve a predictable result (ensure that data records are kept private while at the same time correctly associated with an individual). Patent Owner argued that Pommerening’s encryption process “cannot compensate for slight variations in identification data.” The Board, however, found that Arellano “teaches one skilled in the art to employ a combination of algorithms using data records having different identifiers to match (link) the disparate records” and that “the challenged claims do not require a specific level of accuracy in linking disparate records.” The Board similarly was not persuaded by Patent Owner’s other arguments concerning the teachings of the references. Accordingly, the Board concluded, based on the record presented, that “one skilled in the art would have combined the teachings of Pommerening and Arellano to arrive at the challenged claims as the claims represent known elements, combined for their known purpose to achieve a predictable result, matching identity records associated with an individual while maintaining privacy.” Patent Owner also argued that Petitioner “failed to address the features recited” in the dependent claims, but the Board disagreed.

Finally, the Board also considered whether the challenged claims are obvious over the combination of Johnson and Arellano, concluding that Petitioner “demonstrated that it is more likely than not that the challenged claims are obvious over the combined teachings of Johansson and Arellano.”

Therefore the Board instituted trial with respect to all challenged claims on the ground of 35 U.S.C. §101 as being directed to non-statutory subject matter and on the obviousness grounds discussed above.

Symphony Health Solutions Corp. v. IMS Health Incorporated, CBM2015-00070
Paper 8: Decision on Institution of Covered Business Method Patent Review
Dated: August 19, 2015
Patent: 6,397,224
Before: Michael P. Tierney, Hyun J. Jung, and J. John Lee W
ritten by: Tierney
Related Proceedings: IMS Health Incorporated v. Symphony Health Solutions Corporation, Civil Action No. 13-2071-GMS (D. Del.)