U.S. Bancorp CBM Results in Cancellation of Retirement Capital Access Management Co.’s Patent Claims
Saturday, August 30, 2014

In 2011, U.S. Patent 6,625,582, entitled Method And System For Converting A Designated Portion of Future Social Security And Other Retirement Payments To Current Benefits, was assigned to Retirement Capital Access Management Company LLC.  Benefit Funding Systems LLC asserted the ’582 patent against U.S. Bancorp in June of 2012.  Benefit Funding Systems LLC v. U.S. Bancorp, Case No. 1:12-cv-803-LPS (D. Del. filed June 22, 2012).  In response, U.S. Bancorp filed a CBM petition requesting review of claims 1, 13, 14, 18, 30, and 31 of the ’582 patent on March 29, 2013.  U.S. Bancorp asserted that the ’582 patent qualified for CBM review under 35 U.S.C. § 324 and Sec. 18(a) of the Leahy-Smith America Invents Act, Pub. L. 112-29, 125 Stat. 284, 329 (2011), and that these claims were invalid under 35 U.S.C. § 101.

U.S. Bancorp’s CBM Petition states:

The specification states that “[t]he present invention relates generally to a system and method which provides a mechanism for a [beneficiary] of Social Security payments, or of other retirement payments, to access present value of a designated portion of its future retirement payments . . . . [W]ithout encumbering the beneficiary’s rights to its future retirement benefits.” See U.S. Bancorp Ex.1003 (‘582 patent), Col. 1:10-22.

The ‘582 patent explains that “retirement age individuals” are finding retirement benefits or the anticipated timing of those benefits “to be somewhat inadequate to meet their present and future financial needs, expectations, and objectives.” See U.S. Bancorp Ex.1003, Col. 1: 23-29. The ‘582 patent further states that such retirement benefits “have not generally been seen as an adequate source of current capital, particularly to support financing based upon future receipts” due to “the current legislated proscriptions . . . against assigning or otherwise alienating future retirement benefits.” U.S. Bancorp Ex.1003, Col. 1:35- 43. Therefore, the ‘582 patent purports to provide a financial program that allows a beneficiary to access the present value of future retirement payments while complying with U.S. laws restricting alienation of future retirement benefits. U.S. Bancorp Ex.1003, Col. 1:43-49. Curiously though, the ‘582 specification does not explain – and claims do not recite any limitations regarding – how the patented financial scheme complies with U.S. laws. Instead, each independent claim merely includes the limitation that monetary benefits are provided “without violating legislated proscriptions in the United States against alienation of future retirement funds.” See, e.g., U.S. Bancorp Ex.1003, Col. 9:8-9 (claim 1).

(CBM Petition at pp. 4-5.)

Claim 1, which is representative of the subject matter, recites:

1.  A computerized method for creating a source of funds based on present value of future retirement payments, comprising the steps of:

a. designating an account in a depository for a beneficiary to receive future retirement payments payable to said beneficiary from a source of said retirement payments for a preselected period of time;

b. designating a benefit provider for providing a monetary benefit to said beneficiary;

c. authorizing said depository to periodically disburse a predetermined portion of said retirement payments deposited in said account to said benefit provider during said preselected period of time;

d. providing said monetary benefit to said beneficiary from said benefit provider based at least in part on present value of a designated portion of said future retirement payments without encumbering said beneficiary’s right to said future retirement payments and without violating legislated proscriptions in the United States against alienation of future retirement benefits;

e. causing said future retirement payments to be deposited into said account throughout said preselected period of time;

f. causing said depository to transfer a portion of said retirement payments deposited into said account to said benefit provider during said preselected period of time; and

g. reimbursing said benefit provider from resources other than said future retirement payments if said transfer of a portion of said retirement payments from said depository to said benefit provider are curtailed prior to said end of said preselected period of time, and making said retirement payments available for the exclusive use of said beneficiary.

The CBM Petition concluded:

Importantly, none of the claim steps is limited to performance on, or by, any specific device or computer. Indeed, no device or computer is needed at all, as all of the steps can be performed by a human.

(CBM Petition at p. 9.)

The Patent Owner (Retirement Capital Access Management Co. LLC) filed a Preliminary Response on July 2, 2013, arguing that the Petitioner failed to carry its burden of showing that it is more likely than not that at least one of the challenged claims of the ’582 patent is unpatentable under § 101, at least in part because:

  • the Petitioner cannot show “that, in practice, the claims cover the abstract concept itself”; and

  • the use of a computer as part of the specialized electronic funds transfer is not merely convenient, or done for the purpose of expediting calculations.

  • Despite these arguments, the Board granted institution of CBM review on September 20, 2013.  (CBM2013-00014, Paper 12, Sep. 20, 2013.)  A Patent Owner Response dated November 20, 2013 was filed that set forth the arguments from the Preliminary Response and provided an argument that § 101 is not a proper ground upon which a covered business method review may be maintained.  (Patent Owner Retirement Capital Access Management Company LLC’s Response, Paper 19, p. 37, Nov. 20, 2013.)  A Reply was filed by the Petitioner and an Oral Hearing was held on April 1, 2014.  No depositions were taken, based on the record in PRPS.

    The Board issued a final written decision, dated Aug. 22, 2014, canceling each of the challenged claims under 35 U.S.C. § 101.  The Board dismissed Patent Owner’s assertion that CBM review cannot be premised on § 101, stating that the AIA allows for CBM reviews to include certain grounds of invalidity based on conditions for patentability, including § 101:

    As recognized by the Supreme Court, § 101 is a condition for patentability. In Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 12 (1966), the Supreme Court stated that the 1952 Patent Act “sets out the conditions of patentability in three sections,” citing 35 U.S.C. §§ 101, 102, and 103. The Supreme Court has also addressed invalidity under § 101 when it was raised as a defense to an infringement claim under § 282. See Mayo Collaboration Servs. v. Prometheus Labs, Inc., 132 S.Ct. 1289, 1293 (2012).

    (Decision at p. 9.)

    What is also notable about this proceeding is that the CBM review didn’tinclude:

  • anticipation or obviousness grounds (and the necessary submissions of prior art),

  • an assertion of indefiniteness,

  • an expert declaration to support the CBM Petition, and

  • depositions of experts by either side.

  • Indeed, at 36 pages in length, the CBM Petition is roughly half the length allotted by the Board’s rules.  Thus, a relatively short record was produced in this CBM.  However, as covered in a previous post, this is not the only Petitioner to take advantage of this approach (See a similar approach in LinkedIn Corporation v. AvMarkets, Inc., CBM2013-00025.)

     

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