PTAB Proceedings · AIA § 18 · Sunset 2020

Covered Business Method Review

The AIA’s transitional proceeding for challenging business method patents — including on § 101 grounds — at the PTAB. The program sunset in September 2020. What it was, how it differed from IPR and PGR, and what replaced it.

⚠ CBM review expired September 16, 2020. No new petitions are accepted. This page explains the program for historical reference and for pending proceedings. For current options, see IPR, PGR, and district court § 101 motions.

What CBM Was

A targeted tool for business-method patent defendants

Definition of a covered business method patent

AIA § 18(d)(1) defined a CBM patent as '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.' The definition excluded patents for 'technological inventions' — patents whose claimed subject matter as a whole recited a novel and unobvious technological feature (PTAB interpreted this narrowly). Most software patents with a financial application qualified as CBM patents. Pure technology patents without a financial nexus did not.

Standing requirement

Unlike IPR and PGR (which any person can file), CBM review required the petitioner to have been sued for infringement or to have received a written threat of infringement. This 'charged with infringement' requirement meant CBM was a defendant's tool — not available for preemptive challenges. The standing requirement had to be met at the time of petition filing.

The § 101 advantage

CBM's most important feature was that it allowed § 101 (Alice/Mayo subject matter eligibility) challenges. IPR, by contrast, is limited to §§ 102/103 prior art. This made CBM the weapon of choice for financial-services and fintech defendants facing business-method patent assertions in the years after Alice (2014). Many CBM petitions challenged patents on § 101 grounds that could not have been challenged through IPR.

Transitional program with built-in sunset

Congress designed CBM as a transitional program to address the perceived problem of low-quality business method patents that had issued before Alice — patents that should never have issued under the correct § 101 standard. AIA § 18(a)(3) provided that the program would expire 8 years after enactment (September 16, 2012). The sunset date was September 16, 2020. No new CBM petitions could be filed after that date. CBM proceedings initiated before the sunset continued to completion.

Comparison

CBM vs. IPR vs. PGR

Aspect	CBM (sunset)	IPR (active)	PGR (active)
Grounds	All invalidity grounds: § 101 (subject matter eligibility), § 102, § 103, § 112, and § 282 defenses	Only §§ 102 and 103 based on patents and printed publications	All invalidity grounds (§§ 101, 102, 103, 112) — but only within 9 months of grant
Who can file	Only a person who has been sued for, or charged with, infringing the patent	Any person (except the patent owner) who has not already been sued and lost	Any person who is not the patent owner
Timing	Anytime after grant; no 9-month PGR window restriction	After the 9-month PGR window, or after termination of PGR	Within 9 months of patent grant
Patent eligibility	Patent must be a 'covered business method patent' — a patent for a method or apparatus used in the practice, administration, or management of a financial product or service	All patents eligible	All patents eligible
Threshold	'More likely than not' that at least one challenged claim is unpatentable	'Reasonable likelihood' that the petitioner would prevail on at least one challenged claim	'More likely than not' that at least one challenged claim is unpatentable
Status	SUNSET — no new petitions accepted after September 16, 2020	Active	Active

Current Alternatives

What defendants use now that CBM is gone

Inter Partes Review (IPR)

Still available for §§ 102/103 prior art challenges. Must be filed within one year of service of a complaint. Covers all patent types. The primary post-grant validity challenge mechanism for operating companies facing infringement suits.

Post-Grant Review (PGR)

Available for the first 9 months after a patent's grant date. Covers all invalidity grounds including § 101. For recently granted patents, PGR is the functional successor to CBM for § 101 challenges.

District court § 101 motion

A Rule 12(b)(6) motion to dismiss or Rule 12(c) motion for judgment on the pleadings based on § 101 patent ineligibility. Courts regularly grant these at the pleading stage for software and business-method patents. No standing requirements, no PTAB fees, and a favorable ruling ends the case entirely.

Ex parte reexamination

A party (including an anonymous third party) can request reexamination of any patent based on prior art (§§ 102/103). Unlike IPR, there is no estoppel against later district court invalidity arguments, no standing requirement, and no one-year timing constraint. Slower than IPR but useful for prior art challenges where estoppel risk is a concern.

FAQ

Frequently asked questions

What was Covered Business Method (CBM) review?

Covered Business Method (CBM) review was a post-grant PTAB proceeding created by Section 18 of the America Invents Act (AIA), enacted September 16, 2012. CBM allowed a person charged with infringement of a covered business method patent to petition the PTAB to review the patent's validity on any invalidity ground — including § 101 subject matter eligibility (the Alice/Mayo test), §§ 102/103 prior art, and § 112 written description/enablement. A 'covered business method patent' was defined as one that claimed a method or apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, with an exception for patents on pure technological inventions. CBM review was a transitional program designed to sunset 8 years after enactment — it expired on September 16, 2020, and no new CBM petitions have been accepted since. CBM was created in response to the perception that the USPTO had issued many low-quality business method patents in the 1990s and 2000s (the State Street Bank era) that should not have been granted under a proper § 101 analysis. Alice v. CLS Bank (S.Ct. 2014) largely solved this problem going forward, and by 2020, CBM had served its purpose of cleaning up the existing stock of questionable business method patents.

What replaced CBM review after its 2020 sunset?

CBM expired in September 2020, and there is no direct statutory replacement. However, several mechanisms provide similar or overlapping functionality: (1) Post-Grant Review (PGR) — available for the first 9 months after a patent issues, covering all invalidity grounds including § 101. For newly issued business method patents, PGR is the functional equivalent of CBM. The key difference: PGR must be filed within 9 months of grant, while CBM had no such timing restriction. (2) Inter Partes Review (IPR) — covers §§ 102/103 prior art but NOT § 101. The most widely used post-grant challenge mechanism. Must be filed within one year of service of an infringement complaint. (3) District court § 101 motions — Rule 12(b)(6) motions to dismiss for § 101 ineligibility can be filed in litigation, often at the pleading stage before expensive claim construction or discovery. Courts have granted many such motions for financial-services and business-method patents. (4) Ex parte reexamination — covers §§ 102/103 prior art; no standing requirement; can be filed anonymously; no one-year timing bar. For patents that issued before the 9-month PGR window and that do not face a pending IPR, ex parte reexamination combined with a district court § 101 motion is now the primary hybrid strategy for defending against business method patent assertions.

What is a 'covered business method patent' under AIA § 18?

AIA § 18(d)(1) defined a covered business method (CBM) patent as '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.' PTAB applied a two-prong test: First, does the patent claim a method or apparatus used in the practice, administration, or management of a financial product or service? The PTAB interpreted 'financial product or service' broadly — including e-commerce, online advertising, digital payments, data processing for credit decisions, and many software-implemented business processes. Second, is the patent a 'technological invention' (and therefore excluded)? The USPTO defined this narrowly as patents whose claimed subject matter recites a novel and unobvious technological feature AND solves a technical problem using a technical solution. Most patents asserting a financial application of a known algorithm did NOT qualify as technological inventions and were thus CBM patents. In practice, PTAB found that nearly any software patent with a financial nexus qualified as a CBM patent, and rarely found the technological invention exclusion to apply. This broad scope made CBM attractive for defendants facing fintech and financial-services patent assertions.