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The Arguments Against Covered Business Method Review

By William Peacock, Esq. on January 31, 2014 | Last updated on March 21, 2019

Stupid, dated, and vague patents can be a nightmare for innovating companies. Just ask Google and Mark Cuban. And patent trolling, using these questionable patents, seems to be more popular than ever.

That's why the White House has repeatedly called for reform, including in this week's State of the Union address. That's why the House passed the Innovation Act last year. And that's why the Senate is currently considering their own version of the bill, which has one thing that the House's version doesn't: Covered Business Method (CBM) Review.

It's a good idea, in theory. Any company that is being accused of infringement can pause the litigation and attack the merits of the patent itself in an invalidation proceeding at the United States Patent and Trademark Office. So why are a handful of software companies so vehemently opposed to the idea?

Two Letters, Similar Points

Back in September, a group of "innovative companies" sent a letter to congressional leaders urging them to strip CBM from the Innovation Act. The letter, and other lobbying efforts, worked in the House of Representatives, where CBM was not part of the version of the bill that passed.

The Senate, however, has remained firm on the issue. This morning, a second letter [PDF] (with much of the same content) was sent to two leading senators, again pleading for CBM to be removed from the Innovation Act.

What's The Problem?

CBM was intended to be a "temporary measure to review a very narrow class of financial-services-related patents ..."

The letter argues about Congress's original intent, and calls the present system a "delicate balance that was struck with other new post grant review programs." Tech Dirt disagrees, and argues that the original program from the America Invents Act was intended to be a pilot program, one that has proved to be quite successful.

No matter what the original intent was, the question now is this: will CBM make our system more efficient and reduce abuse by patent trolls?

AIA already has an "Inter Partes Review (IPR) process which is available to all patents ..."

IPR has also proven to be quite popular and successful, but as we've previously noted, its use is limited to issues of novelty and obviousness based on patents, printed publications, and prior art. CBM has a much wider application and puts infringement litigation on hold while the USPTO evaluates the patent. IPR's success as an alternative to litigation actually provides more justification in favor of CBM, not the other way around.

CBM gives infringers "a new procedural loophole to delay enforcement."

This is actually a legitimate concern. An infringing party can put a hold on litigation and attack the patent via CBM. This delays any remedies a holder of a valid patent may have, and gives the infringer more time to gain market share, damage the patent holder, etc. CBM's success, therefore, will hinge on how quickly the USPTO can churn through the complaints.

CBM: Yay or Nay? Join the discussion on Facebook at FindLaw for Legal Professionals.

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