`
`
`
`571-272-7822
`
`
`CBM2014-00028, Paper 51; CBM2014-00029, Paper 37;
`CBM2014-00030, Paper No. 31; CBM2014-00033,
`Paper 46
`
`
`
`March 25, 2015
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`BANK OF AMERICA, N.A., PNC FINANCIAL
`SERVICES GROUP, INC., and PNC BANK, N.A.,
`Petitioners,
`
`v.
`
`INTELLECTUAL VENTURES I, LLC,
`and INTELLECTUAL VENTURES II, LLC,
`Patent Owner.
`____________
`
`Cases CBM2014-00028, CBM2014-00029,
`CBM2014-00030, CBM2014-00033
`Patent Nos. 8,083,137, 7,664,701, 7,603,382, 7,260,587
`____________
`
`Held: March 2, 2015
`____________
`
`Before THOMAS L. GIANNETTI, HYUN J. JUNG and GREGG I
`ANDERSON, Administrative Patent Judges.
`
`
`The above-entitled matter came on for hearing on Monday, March 2, 2015,
`commencing at 10:10 a.m., at the U.S. Patent and Trademark Office, 600
`Dulany Street, Alexandria, Virginia.
`
`
`
`
`
`
`
`
`Cases CBM2014-00028, CBM2014-00029, CBM2014-00030,
`CBM2014-00033; Patent Nos. 8,083,137, 7,664,701, 7,603,382, 7,260,587
`
`
`
`
`APPEARANCES:
`
`ON BEHALF OF THE PETITIONER:
`
`
`DONALD R. STEINBERG, ESQUIRE
`
`
`GREGORY H. LANTIER, ESQUIRE
`
`
`MONICA GREWAL, ESQUIRE
`
`
`Wilmer, Cutler, Pickering, Hale & Dorr, LLP
`
`
`60 State Street
`
`
`Boston, Massachusetts 02109
`
`
`ON BEHALF OF THE PATENT OWNER:
`
`HENRY A. PETRI, Jr., ESQUIRE
`
`JAMES MURPHY, ESQUIRE
`
`Novak, Druce, Connolly, Bove & Quigg, LLP
`
`1875 I Street, N.W.
`
`Eleventh Floor
`
`Washington, D.C. 20006
`and
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`JOHN R. KING, ESQUIRE
`TED M. CANNON, ESQUIRE
`Knobbe, Martens, Olson & Bear, LLP
`2040 Main Street
`Fourteenth Floor
`Irvine, California 92614
`
`
`
`
`
` 2
`
`
`
`Cases CBM2014-00028, CBM2014-00029, CBM2014-00030,
`CBM2014-00033; Patent Nos. 8,083,137, 7,664,701, 7,603,382, 7,260,587
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`P R O C E E D I N G S
`
`- - - - -
`
`JUDGE GIANNETTI: Good morning everyone. We are here for
`
`a final hearing in four covered business method patent reviews for CBM
`
`reviews. CBM2014-00028, 2014-00029 and 2014-00030, Bank of America,
`
`PNC Financial Services and PNC Bank versus Intellectual Ventures I, and
`
`the fourth CBM, 2014-00033, Bank of America versus Intellectual Ventures
`
`II.
`
`The panel today is myself, Judge Giannetti. To my right is Judge
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`Jung and appearing remotely, participating remotely from Denver is Judge
`
`11
`
`Anderson on the screen to my left.
`
`12
`
`Let me begin by thanking the parties for their cooperation. This
`
`13
`
`hearing was postponed from last Monday. We had a weather shutdown here
`
`14
`
`in the USPTO. I appreciate the cooperation of parties in rescheduling the
`
`15
`
`hearing to today.
`
`16
`
`Let me get appearances of counsel. Who is appearing today for the
`
`17
`
`petitioner?
`
`18
`
`MR. STEINBERG: For the petitioner, I'm Donald Steinberg.
`
`19
`
`With me to my right is Greg Lantier, who is admitted pro hac vice, and
`
`20
`
`Monica Grewal as well.
`
`21
`
`22
`
`JUDGE GIANNETTI: Welcome, counsel. Who will be making
`
`the presentation today, Mr. Steinberg?
`
`
`
`
` 3
`
`
`
`Cases CBM2014-00028, CBM2014-00029, CBM2014-00030,
`CBM2014-00033; Patent Nos. 8,083,137, 7,664,701, 7,603,382, 7,260,587
`
`
`MR. STEINBERG: I will be presenting as to the 0028, 0030 and
`
`0033 proceedings, and Mr. Lantier as to the 0029.
`
`JUDGE GIANNETTI: And who is appearing for the patent owner
`
`today?
`
`MR. PETRI: Good morning, Your Honor. My name is Henry
`
`Petri on behalf of the patent owner and with me here today is my partner,
`
`James Murphy. And I will be speaking with respect to the 00029 and 00030
`
`proceedings.
`
`MR. KING: Good morning, Your Honor. I'm John King. I'll be
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`representing the patent owner and with me will be Ted Cannon.
`
`11
`
`JUDGE GIANNETTI: You'll have to speak up, Mr. King. In fact,
`
`12
`
`everybody will have to keep their voices up. We have Judge Anderson
`
`13
`
`appearing remotely. Make sure we try to keep close to the microphones. So
`
`14
`
`go ahead, Mr. King.
`
`15
`
`MR. KING: And with me is Ted Cannon and we'll be presenting
`
`16
`
`0028 and 0033.
`
`17
`
`JUDGE GIANNETTI: And we have Mr. Coulman on the
`
`18
`
`telephone line; is that correct?
`
`19
`
`20
`
`MR. COULMAN: Yes, I'm here. Thank you.
`
`JUDGE GIANNETTI: All right. So we have appearances. Let
`
`21
`
`me just make a comment about exhibits. We've received demonstratives
`
`22
`
`from both sides. The procedure that the panel has discussed and the
`
`23
`
`procedure that we are going to follow is that the demonstratives will not be
`
`24
`
`entered in the record unless otherwise ordered, but you can use them as aids
`
`25
`
`to your arguments here today. But I want to remind you that the official
`
`
`
`
`
` 4
`
`
`
`Cases CBM2014-00028, CBM2014-00029, CBM2014-00030,
`CBM2014-00033; Patent Nos. 8,083,137, 7,664,701, 7,603,382, 7,260,587
`
`record of the proceeding will be the transcript and not the exhibits.
`
`Understood, counsel?
`
`MR. STEINBERG: Yes.
`
`JUDGE GIANNETTI: We have one hour per side. The petitioner
`
`may reserve time for rebuttal to rebut arguments that are made by the patent
`
`owner. You can either reserve time now or at the end of your presentation.
`
`One other thing, if you do refer to your demonstrative presentation,
`
`please make sure to identify the page number so that Judge Anderson can
`
`follow along. He does not have access to the screen that you are seeing here
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`in the hearing room. So you'll have to identify the page numbers that you
`
`11
`
`are referring to in your presentation.
`
`12
`
`And just one other reminder. Please stay close to the microphone
`
`13
`
`so that we have the ability to hear you both here in the hearing room and
`
`14
`
`remotely with Judge Anderson.
`
`15
`
`Let me set the timer and then, Mr. Steinberg, you can proceed
`
`16
`
`when you are ready.
`
`17
`
`18
`
`MR. STEINBERG: Thank you.
`
`JUDGE GIANNETTI: Just give me a second here. We'll just use
`
`19
`
`the clock on the wall. Why don't you proceed. It's 10:16. Do you want to
`
`20
`
`reserve time now, Mr. Steinberg, or at the end?
`
`21
`
`MR. STEINBERG: The intent is to reserve about 15 minutes at
`
`22
`
`the end for rebuttal. We'll see how this plays out.
`
`23
`
`JUDGE GIANNETTI: I'll try to give you a warning when you get
`
`24
`
`close to that.
`
`25
`
`MR. STEINBERG: Thank you, very much.
`
`
`
`
`
` 5
`
`
`
`Cases CBM2014-00028, CBM2014-00029, CBM2014-00030,
`CBM2014-00033; Patent Nos. 8,083,137, 7,664,701, 7,603,382, 7,260,587
`
`
`JUDGE GIANNETTI: So you may proceed when you are ready.
`
`MR. STEINBERG: Thank you. So we are going to go through the
`
`four patents in numerical order. So I'll start with the '137 patent. And
`
`jumping just to slide 2, a little outline of what we intend to cover. First a
`
`quick overview of the '137 patent and then we'll go through the Alice test,
`
`first that the claims are directed to an abstract idea and, second, the claims
`
`recite only generic computer components performing conventional
`
`functions. So no inventive concept. We're going to generally hold points
`
`about whether the Board properly instituted CBM review unless there are
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`questions for rebuttal.
`
`11
`
`So if we can jump to slide 4, please, the '137 patent, as you can
`
`12
`
`see, is titled Administration of Financial Accounts as two independent
`
`13
`
`system claims with some means plus function limitations and two
`
`14
`
`independent method claims.
`
`15
`
`The specification of the patent, as we show on slide 5, explains that
`
`16
`
`the patent allows consumer users to establish self-imposed limits on the
`
`17
`
`user's spending or borrowing such that when the limit is reached, the
`
`18
`
`consuming user is notified. And these spending limits are informational.
`
`19
`
`They do not impact the user's ability actually to complete a transaction.
`
`20
`
`As we'll discuss, the patent merely computerizes what can be done
`
`21
`
`manually or mentally or by hand. It discloses no new technology to
`
`22
`
`implement the basic idea of budgeting by categories of spending. In fact, the
`
`23
`
`patent emphasizes, as we show in the last bullet on slide 5, that it is not tied
`
`24
`
`to any specific technology.
`
`
`
`
`
` 6
`
`
`
`Cases CBM2014-00028, CBM2014-00029, CBM2014-00030,
`CBM2014-00033; Patent Nos. 8,083,137, 7,664,701, 7,603,382, 7,260,587
`
`
`On slide 6 we show that the patent discusses that a user establishes
`
`a preset spending limit in a particular category. And on slide 7, we have the
`
`paragraph where the patent also discusses tracking transactions against the
`
`preset spending limit.
`
`But these are just two basic steps of budgeting. The patent does
`
`not describe any particular way to use technology to establish spending
`
`limits or track transactions.
`
`Now, Alice establishes a two-part test, as we're all very familiar.
`
`We have it on slide 8, but I think we can just jump right into the test. On
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`slide 10, we'll jump to step 1 of the Alice test. The Board adopted the
`
`11
`
`following as the abstract idea in the institution decision, storing information
`
`12
`
`about a user's preferences for a credit limit and presenting, that is the
`
`13
`
`notifying the user of the credit limit when providing the user a transaction
`
`14
`
`summary based on categories.
`
`15
`
`So we want to look to start with on claim 1, and it has two means
`
`16
`
`limitations. The corresponding structure for the means for storing, the first
`
`17
`
`one, is identified by the Board as a central processor programmed to perform
`
`18
`
`the algorithm steps of Figures 3A and 3B working in conjunction with a
`
`19
`
`database and a profile.
`
`20
`
`But the relevant steps from the algorithm from Figures 3A and B
`
`21
`
`do no more than restate the claim language. They provide no additional
`
`22
`
`meaningful structure and don't keep the claim from being directed to just the
`
`23
`
`abstract idea.
`
`24
`
`So we want to look at this a little bit more closely. If we move to
`
`25
`
`slide 12, storing a profile, the first part of the function is simply store in
`
`
`
`
`
` 7
`
`
`
`Cases CBM2014-00028, CBM2014-00029, CBM2014-00030,
`CBM2014-00033; Patent Nos. 8,083,137, 7,664,701, 7,603,382, 7,260,587
`
`database, as we see in step 20 from the figure. And if we move to slide 13,
`
`which shows the rest of the first function, it's really identified in the figures
`
`as set categories and limits for main user at step 307 and possibly also it's
`
`some part of established new user profile or edit profile.
`
`But the point is there are no details here beyond the function itself
`
`such as how the function is actually performed. And even if we look at the
`
`"wherein" clause at the end of the limitation, that's really subsumed within
`
`step 307's setting of limits.
`
`If we look at the second limitation of claim 1 on slide 14, the
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`corresponding structures is similar to what we have for the first limitation.
`
`11
`
`The means for presenting structure is a central processor programmed to
`
`12
`
`perform the algorithm steps of Figures 3A and B; and 4, working in
`
`13
`
`conjunction with the database and a profile.
`
`14
`
`But as for the first limitation, the relevant steps from the algorithm
`
`15
`
`from the figures really do little more than restate the claim language and,
`
`16
`
`therefore, do not keep the claim from being directed to an abstract idea.
`
`17
`
`Similar to what we just did with the prior slide, slides 15 and 16
`
`18
`
`show it here. So in the interest of time, I'm going to skip over those but it's
`
`19
`
`really the same point and it is in our petition. The other independent claims
`
`20
`
`as well, as we addressed in our petition, add no more detail. So I'm not
`
`21
`
`going to discuss those unless there are questions.
`
`22
`
`Now, if we move on to slide 17, the patent owner argues that we
`
`23
`
`are attempting to expand the abstract ideas exception to encompass a new
`
`24
`
`type of claim. But the categories, as we say in our reply, of abstract idea
`
`25
`
`identified in Alice are illustrative. They are not exhaustive. This was taken
`
`
`
`
`
` 8
`
`
`
`Cases CBM2014-00028, CBM2014-00029, CBM2014-00030,
`CBM2014-00033; Patent Nos. 8,083,137, 7,664,701, 7,603,382, 7,260,587
`
`right from Alice. As we talked about in the Dell case, the Board has already
`
`found that the categories are exemplary and not exhaustive.
`
`And we had no obligation to use the particular categories identified
`
`in Alice in our petition, which seems to be what the patent owner has
`
`argued. But even if we were to look at the particular types of abstract ideas
`
`specifically discussed in Alice, patent owner is still wrong about whether
`
`they are just an abstract idea.
`
`If we move on to slide 18, Alice identified as a category of abstract
`
`idea a method of organizing human activity. And the abstract idea from the
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`'137 patent claims is, in fact, a method of organizing human activity. The
`
`11
`
`patent owner emphasized in their response the patent's budgeting by
`
`12
`
`categories, but this is just a fundamental economic practice. Budgeting by
`
`13
`
`categories of spending, not surprisingly, has been performed by hand for
`
`14
`
`decades.
`
`15
`
`So I want to move on to the second step from Alice, the lack of an
`
`16
`
`inventive step. I already talked about claim 1 and there isn't really anything
`
`17
`
`more in claim 1. So I want to address some of the other claim elements.
`
`18
`
`The patent owner's expert, as we show on slide 20, admitted that databases
`
`19
`
`were known. He admitted, as we show on slide 21, communication medium
`
`20
`
`was known. If we look in slide 22, we can see that the patent itself describes
`
`21
`
`the receiving device in terms of known structures which, as we know, cannot
`
`22
`
`provide an inventive concept.
`
`23
`
`The patent owner's expert also admitted, as we have on slide 23,
`
`24
`
`that creating user-selected categories and preset limits were functions that
`
`25
`
`can be done by a person. No technology is required to do that. And their
`
`
`
`
`
` 9
`
`
`
`Cases CBM2014-00028, CBM2014-00029, CBM2014-00030,
`CBM2014-00033; Patent Nos. 8,083,137, 7,664,701, 7,603,382, 7,260,587
`
`expert admitted, as we show on slide 24, that a person can also determine
`
`transaction summary data in their head. As we discussed in the petition, the
`
`dependent claims do not add anything beyond routine ways of collecting and
`
`organizing transactions and significant post-solution activity, things like
`
`that, sometimes particular technological environments such as the Internet or
`
`e-mail, all things that the Board and the Federal Circuit have said are not
`
`enough. Throughout the claims there's no particular machine or
`
`transformation that would render the patented claims patent-eligible.
`
`So how does the patent owner respond to all this? They argue, if
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`we could move to slide 25, that the recited profile key to a user identity is a
`
`11
`
`structural limitation that renders the claim somehow patent-eligible.
`
`12
`
`But this provides no inventive concept. Their expert could not
`
`13
`
`identify any place where the specification discusses the keying of the
`
`14
`
`database. And in fact, neither the claims nor the specification provide any
`
`15
`
`detail on how the keying is accomplished. Moreover, if we look to the next
`
`16
`
`slide, 26, keying a profile to a user identity was known, as we discussed in
`
`17
`
`our reply.
`
`18
`
`Finally, if you could jump to slide 32, please, just want to note that
`
`19
`
`two district courts have already found the '137 claims invalid under
`
`20
`
`Section 101.
`
`21
`
`I'm going to switch it over to Mr. Lantier to address the '701
`
`22
`
`patent.
`
`23
`
`JUDGE GIANNETTI: Before you do, I would like you to finish
`
`24
`
`that thought. What do you think the impact is of these two district court
`
`25
`
`decisions?
`
`
`
`
`
` 10
`
`
`
`Cases CBM2014-00028, CBM2014-00029, CBM2014-00030,
`CBM2014-00033; Patent Nos. 8,083,137, 7,664,701, 7,603,382, 7,260,587
`
`
`MR. STEINBERG: I think they are informative. Obviously, you
`
`are not bound by them, but they have addressed the same points. They have
`
`looked at it and said it's just an abstract idea with no inventive concept. And
`
`I think it is fairly informative to see how two other courts have already
`
`looked at the same issues.
`
`Now, they looked at -- didn't necessarily look at all the claims. So
`
`there is a difference between what the Board is going to do with its decision
`
`and what the district courts have done.
`
`JUDGE GIANNETTI: Are those decisions on appeal right now?
`
`MR. STEINBERG: That's my understanding, yes.
`
`JUDGE GIANNETTI: What is the status?
`
`MR. STEINBERG: I believe they are in briefing.
`
`JUDGE GIANNETTI: They are being briefed?
`
`MR. STEINBERG: Yes.
`
`JUDGE GIANNETTI: What is the impact, if any, of the Federal
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`Circuit's DDR decision on this patent?
`
`17
`
`MR. STEINBERG: I don't think the DDR case is particularly
`
`18
`
`relevant to this case. We'll talk about it more when we get to the '382 patent.
`
`19
`
`20
`
`JUDGE GIANNETTI: Why not?
`
`MR. STEINBERG: Because I think the DDR specifically
`
`21
`
`emphasizes that the claims in that case described a specific way how to
`
`22
`
`implement the invention, and there is simply no way or how to implement
`
`23
`
`the invention that's described in the claims or even really the specification of
`
`24
`
`the '137 patent. Therefore, the DDR analysis, which really found detailed
`
`
`
`
`
` 11
`
`
`
`Cases CBM2014-00028, CBM2014-00029, CBM2014-00030,
`CBM2014-00033; Patent Nos. 8,083,137, 7,664,701, 7,603,382, 7,260,587
`
`claims, doesn't really apply here. If anything, I think it shows what it takes
`
`to make a claim patent-eligible, and that is simply not in the '137 patent.
`
`JUDGE GIANNETTI: Thank you, Mr. Steinberg.
`
`MR. STEINBERG: Thank you.
`
`MR. LANTIER: Thank you, Your Honors. Good morning. I'm
`
`Greg Lantier and will be presenting on behalf of petitioners in the 29
`
`proceeding. This is the proceeding that concerns the '701 substitute billing
`
`data patent.
`
`Slide 2 of the slide presentation sets forth an outline of what I
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`would like to cover over about the next ten minutes. After providing a brief
`
`11
`
`overview of the '701 patent I'll address the client construction issue that was
`
`12
`
`raised by the patent owner in its patent owner response, but I hope to spend
`
`13
`
`the majority of the time discussing why the claims in the '701 patent are
`
`14
`
`unpatentable under Alice regardless of whether the word "client" is
`
`15
`
`understood in the way that the patent owner advocates and the way that we
`
`16
`
`advocate.
`
`17
`
`As Mr. Steinberg noted, I don't plan to address separately whether
`
`18
`
`the Board had the authority to institute this proceeding on the basis of
`
`19
`
`Section 101 unless there are specific questions.
`
`20
`
`Slide 5 shows the abstract of the '701 patent. And that abstract
`
`21
`
`states that the '701 patent describes a method and apparatus for shielding a
`
`22
`
`user's private billing data such as credit card information or other billing
`
`23
`
`arrangements but distributing different billing data to businesses during
`
`24
`
`commerce therewith.
`
`
`
`
`
` 12
`
`
`
`Cases CBM2014-00028, CBM2014-00029, CBM2014-00030,
`CBM2014-00033; Patent Nos. 8,083,137, 7,664,701, 7,603,382, 7,260,587
`
`
`And the problem the '701 patent aims to solve is that credit card
`
`and other personal account information is vulnerable to theft from merchants
`
`who keep that information on file. That's a problem that existed prior to the
`
`existence of the Internet and it's a problem that still exists today.
`
`Moving to slide 6, the solution that the '701 patent proposes is the
`
`use of a concept -- is the concept of using something called substitute billing
`
`data. And substitute billing data is akin to an alias that allows a purchaser to
`
`make a purchase from a merchant without disclosing his or her actual credit
`
`card or other account information. That way even if the merchant's files or
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`computer systems are later compromised, the purchaser's actual credit card
`
`11
`
`number of is safe. The patent states that the substitute billing data is owned
`
`12
`
`or controlled by something called a billing service.
`
`13
`
`Turning to slide 7, the billing service is an intermediary. It's, in
`
`14
`
`effect, a middleman that provides the consumer with substitute billing data
`
`15
`
`to use with a specific business. As the patent states at column 3, lines 8 to
`
`16
`
`11, in one embodiment the billing service facilitates commercial transactions
`
`17
`
`by generating substitute billing data that the Client 100 can use when
`
`18
`
`engaging in commercial transactions with Businesses 102.
`
`19
`
`Turning then to a representative claim which we've displayed on
`
`20
`
`slide 8, this is claim 1 of the patent, claim 1 describes a method for a user to
`
`21
`
`provide substitute billing data in lieu of personal billing data by way of an
`
`22
`
`electronic device, and it contains four steps. The first step is that the device
`
`23
`
`requests distinct substitute billing data for use to make purchases from two
`
`24
`
`distinct businesses.
`
`
`
`
`
` 13
`
`
`
`Cases CBM2014-00028, CBM2014-00029, CBM2014-00030,
`CBM2014-00033; Patent Nos. 8,083,137, 7,664,701, 7,603,382, 7,260,587
`
`
`The second step is that a billing service provide substitute billing
`
`data to the user for use with those two businesses. And the third and fourth
`
`steps are that the user uses the electronic device to make a purchase from
`
`each of the two different businesses.
`
`There is nothing else in this claim. It does not specify how the
`
`electronic device identifies the first or second businesses. It doesn't specify
`
`how the billing service generates the substitute billing data. And it doesn't
`
`specify how the billing service associates the substitute billing data with
`
`each of the two distinct businesses.
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`That brings us to the two disputed issues and those are shown on
`
`11
`
`slide 9. The first is whether the term "client" means only a computing
`
`12
`
`device or encompasses something broader that would also include a user of
`
`13
`
`that device. And the second issue is whether the claims describe
`
`14
`
`patent-eligible subject matter under Alice.
`
`15
`
`I will pause here to note that this Board is not the first adjudicator
`
`16
`
`to reach this issue. There is one Court that has decided the issue of whether
`
`17
`
`the patented claims in the '701 are valid or invalid under Section 101, and
`
`18
`
`that was the decision in Delaware in December finding all claims invalid.
`
`19
`
`If we could turn to slide 11, I will briefly address the client issue,
`
`20
`
`but I would like to note that I am only addressing this issue because it's the
`
`21
`
`only argument effectively that the patent owner raised. In our view, whether
`
`22
`
`or not the term "client" is limited to a computing device doesn't impact the
`
`23
`
`Alice analysis. Of course in Alice the parties stipulated that all claims
`
`24
`
`required the use of a computer.
`
`
`
`
`
` 14
`
`
`
`Cases CBM2014-00028, CBM2014-00029, CBM2014-00030,
`CBM2014-00033; Patent Nos. 8,083,137, 7,664,701, 7,603,382, 7,260,587
`
`
`Turning then to slide 11, after the Board instituted this proceeding,
`
`the patent owner asserted that the Board fundamentally misunderstood the
`
`'701 patent because it failed to grasp that the word "client" is strictly limited
`
`to a client computing device.
`
`Now, that is incorrect for a couple of reasons. The first is, as an
`
`initial matter, the word "client" is not a claim term and the Board need not
`
`and should not engage in the exercise of construing that.
`
`But if we turn to slide 13, in the event that the Board does reach
`
`the issue of what the word "client" means in the '701 patent specification,
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`that specification cannot fairly be read as limiting a client strictly to a
`
`11
`
`computer device. For example, at column 4, lines 47 to 49, the client has
`
`12
`
`interests. In column 5, lines 52 to 55, the client has an intent. At column 6,
`
`13
`
`lines 18 to 21, the client owns a bank account. And beginning at column 6,
`
`14
`
`line 62, the client receives and reviews a paper billing statement. All of
`
`15
`
`these attributes are distinctly human and not something that one would
`
`16
`
`ordinarily expect a computer could do.
`
`17
`
`Moving then to slide 16, consistent with the disclosures of the '701
`
`18
`
`patent specification, computer science professor Greg Morrisett offered
`
`19
`
`testimony that "client" was often used in the art to refer to at least a human
`
`20
`
`user of a device and the patent owner never even challenged Dr. Morrisett's
`
`21
`
`opinions in a deposition.
`
`22
`
`In summary, especially under the broadest reasonable construction
`
`23
`
`standard, the term "client" in the '701 specification encompasses a human
`
`24
`
`user.
`
`
`
`
`
` 15
`
`
`
`Cases CBM2014-00028, CBM2014-00029, CBM2014-00030,
`CBM2014-00033; Patent Nos. 8,083,137, 7,664,701, 7,603,382, 7,260,587
`
`
`Unless there are questions on that client issue, I will then turn to
`
`the Alice analysis, the second issue presented, and we'll begin that on slide
`
`22.
`
`I'm going to jump right into the steps of Alice. Under step 1 of
`
`Alice, the claims of the '701 patent are directed to an abstract idea, and that's
`
`true whether or not the word "client" is a human or strictly a computing
`
`device. That abstract idea is protecting personal billing data through the use
`
`of substitute billing data which is provided by an intermediary called the
`
`billing service.
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`Turning to slide 24, this is exactly the type of abstract concept that
`
`11
`
`the Board found abstract in Fidelity, that the Federal Circuit found abstract
`
`12
`
`in buySAFE and that the Supreme Court found abstract in Alice.
`
`13
`
`In Alice, for example, the claims were directed to mediated
`
`14
`
`settlement performed using computers. The claims described the creation
`
`15
`
`and use of shadow accounts by an intermediary that facilitated that
`
`16
`
`computerized settlement transaction. In the '701 patent, the abstract concept
`
`17
`
`is a different abstract concept. It's not the same abstract concept but it's of
`
`18
`
`the same type. It involves a business arrangement that's facilitated by
`
`19
`
`computers.
`
`20
`
`Here the patent claims to have improved the security of online
`
`21
`
`shopping through the use of an entirely non-technological innovation, and
`
`22
`
`that is the use of substitute account numbers supplied by a third-party billing
`
`23
`
`service. This is again precisely the type of abstract concept that is not
`
`24
`
`eligible for patenting.
`
`
`
`
`
` 16
`
`
`
`Cases CBM2014-00028, CBM2014-00029, CBM2014-00030,
`CBM2014-00033; Patent Nos. 8,083,137, 7,664,701, 7,603,382, 7,260,587
`
`
`Turning then to slide 29 and step 2 of the Alice analysis, there is
`
`nothing in the remainder of the claims but the use of conventional computer
`
`network components performing ordinary tasks. And this is once against
`
`true whether the term "client" is a computing device or not. Neither the
`
`specification nor the claims provide any implementation level detail for the
`
`aspects of the claims that the patent owner now argues are relevant for the
`
`Alice analysis. They don't specify how substitute billing data is generated.
`
`They don't specify how substitute billing data is associated with a business.
`
`Turning to slide 30, what the limitations of the '701 patent do recite
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`are well-known conventional computing components performing
`
`11
`
`well-known tasks such as the use of electronic devices to communicate over
`
`12
`
`a network.
`
`13
`
`Now, in its arguments, the patent owner has failed to identify a
`
`14
`
`single claim limitation in any of the claims that it can reasonably contend
`
`15
`
`reflect a technologically unconventional use of computers or the Internet.
`
`16
`
`Instead, the patent owner's arguments are all directed to contentions that the
`
`17
`
`limitations reflect unconditional business relationships between a purchaser,
`
`18
`
`a merchant and this third-party billing service performed over the Internet in
`
`19
`
`the context of online shopping.
`
`20
`
`As held in Alice and in numerous other cases, the addition of such
`
`21
`
`conventional computing components performing conventional tasks is
`
`22
`
`insufficient to meet step 2.
`
`23
`
`Turning to slide 31, then, in conclusion, as, Judge Robinson has
`
`24
`
`already held, the '701 patent claims fail both steps of the Alice analysis and
`
`25
`
`are therefore invalid. That's the conclusion of the presentation as to this
`
`
`
`
`
` 17
`
`
`
`Cases CBM2014-00028, CBM2014-00029, CBM2014-00030,
`CBM2014-00033; Patent Nos. 8,083,137, 7,664,701, 7,603,382, 7,260,587
`
`case. And I would like to thank the Board for its time and attention to this
`
`patent. Mr. Steinberg will address the following two cases.
`
`JUDGE GIANNETTI: Mr. Lantier, before you sit down, I want to
`
`ask you the same question that I asked your colleague. What effect, if any,
`
`does DDR have on this patent -- the patentability of this claim?
`
`MR. LANTIER: The short answer, Your Honor, is I don't think
`
`the DDR in its facts is very relevant at all to the '701 claims. They are
`
`fundamentally different. DDR involved claims that the Federal Circuit
`
`described as altering the way in which the Internet worked.
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`Here there's no contention. Their expert has acknowledged, the
`
`11
`
`patent acknowledges, the briefing acknowledges that the way in which the
`
`12
`
`'701 claims function does not impact the ordinary operation of a consumer
`
`13
`
`transaction over the Internet except that it introduces this substitution of -- of
`
`14
`
`a substitute account number for another. There's no claim, as there was in
`
`15
`
`DDR, that somehow the way in which the Internet operates is now
`
`16
`
`technologically changed because of the patent.
`
`17
`
`I think the DDR does help illustrate why the '701 claims are
`
`18
`
`directed to unpatentable subject matter and that is because the DDR claims
`
`19
`
`demonstrate that if you have a technological invention that is directed to
`
`20
`
`improving the technology itself, improving the way in which a computer
`
`21
`
`functions or the way in which the Internet operates technologically, that
`
`22
`
`remains patent-eligible subject matter. But what you cannot do under
`
`23
`
`Section 101 is patent an abstract concept, a way of organizing human
`
`24
`
`activity. And that's exactly what was held in Alice.
`
`
`
`
`
` 18
`
`
`
`Cases CBM2014-00028, CBM2014-00029, CBM2014-00030,
`CBM2014-00033; Patent Nos. 8,083,137, 7,664,701, 7,603,382, 7,260,587
`
`
`I would like to correct one small statement that was made earlier
`
`and this is just a factual statement about the status of the appeal of the other
`
`two cases. Mr. Steinberg was correct that the Capital One case is on appeal.
`
`The briefing is, in fact, concluded and they are awaiting oral argument being
`
`set in that case. The M&T Bank case has not yet been appealed.
`
`JUDGE GIANNETTI: Has not been appealed?
`
`MR. LANTIER: Has not yet been appealed. There's not a final
`
`order in that case yet, Your Honor.
`
`JUDGE GIANNETTI: Thank you. Mr. Steinberg?
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`MR. STEINBERG: Thank you. So I'll move on to the '382 patent.
`
`11
`
`As with the other patents, if we move on to slide 2, we provide an overview
`
`12
`
`of the '382 patent and then go through the Alice test. Both the abstract idea
`
`13
`
`and that the claims lack an inventive concept and then address some of the
`
`14
`
`patent owner's arguments. For example, I think as we'll show, they have
`
`15
`
`read the standard too narrowly and contrary to precedent.
`
`16
`
`So we move on, please, to slide 4. The '382 patent was filed in
`
`17
`
`November of 2004 claiming priority to a provisional fr