Facebook v. Skky (CBM2016-00091): Pre-Institution Disclaimers and CBM Review Eligibility

Facebook, Inc. and Instagram, LLC v. Skky, LLC, CBM2016-00091, answered a question that came up repeatedly while the covered business method program was active: can a patent owner take its patent out of the program by disclaiming the claims that made it a “covered business method patent”? In Paper 12, a decision on rehearing entered September 28, 2017, an expanded five-judge panel said it can. The notice at the head of the decision states that Section II.B.2 was designated precedential on December 21, 2017.

Background

Facebook and Instagram petitioned for covered business method review of claims 1–11 of Skky’s U.S. Patent No. 9,037,502. About three months later, the day before its preliminary response, Skky filed a statutory disclaimer of claims 6 and 8–11 under 37 C.F.R. § 1.321(a). Those were the claims the petition relied on to show the patent was a CBM patent; the decision gives the example of claim 6, which recited charging a fee to the user.

The original panel treated the disclaimed claims as if they never existed, found the remaining claims did not make the patent eligible, and denied institution on that sole ground. The petitioners requested rehearing under 37 C.F.R. § 42.71 and asked for an expanded panel.

What the Board decided

Expanded panel

The Board explained that neither the statute nor the rules let parties request an expanded panel, but the Chief Judge has discretion under the Board’s standard operating procedures to expand one, including on a party’s suggestion. Because the effect of pre-institution disclaimers had arisen in multiple cases, the Chief Judge expanded the panel to give guidance.

No “time-of-filing” rule

The petitioners argued that eligibility should be fixed when the petition is filed, borrowing the rule federal courts use for jurisdiction. The Board rejected that argument for several reasons:

• The Board is an agency, not a court. Its authority comes only from statute.
• The statute speaks in the present tense. AIA § 18 allows review only of a patent that “is” a CBM patent, defined by what the patent “claims.” That points to the claims at the time of the institution decision.
• Consistency with other practice. When a reexamination certificate amends claims after a petition is filed, the Board decides institution on the amended claims, citing among others GEA Process Engineering v. Steuben Foods (see the GEA note). Rule 42.207(e) likewise bars review based on disclaimed claims.
• Disclaimed claims never existed. The Federal Circuit has consistently read 35 U.S.C. § 253(a) to mean the patent is treated as though disclaimed claims had never existed. The Board saw no basis to write a CBM-only exception into that statute.

Rembrandt did not change the analysis

The petitioners relied on Rembrandt Wireless Technologies v. Samsung (Fed. Cir. 2017), which held that a disclaimer cannot retroactively remove the marking requirement for pre-notice damages. The Board distinguished it as resting on the public’s rights under the marking statute. There is no comparable public right to institution of a CBM review, which is discretionary. Rehearing was denied.

Why it matters

The decision confirmed that a patent owner could use a statutory disclaimer before institution to remove claims from consideration, including for threshold eligibility questions. The cost is real: disclaimed claims are given up permanently. The broader principle, that the Board looks at the patent as it stands when deciding institution, remains relevant in post-grant review and inter partes review, where disclaimed claims are likewise not reviewed.

Later developments

The CBM program under AIA § 18 expired for new petitions on September 16, 2020, so the eligibility question no longer arises in new filings. The Board’s procedures for panel expansion and precedential designation have since been revised, and designations can change; readers should check the USPTO’s current list of precedential and informative decisions.

Key takeaways

• In Facebook v. Skky, CBM2016-00091, Paper 12, an expanded panel denied rehearing of a denial of CBM review.
• CBM eligibility was judged by the claims at the time of the institution decision, not at filing.
• Claims disclaimed under 35 U.S.C. § 253(a) before institution were treated as never having existed.
• Rembrandt’s marking-statute holding did not extend to CBM eligibility.
• Section II.B.2 was designated precedential in December 2017.