Trials@uspto.gov
`571.272.7822
`
`Paper No. 7
`Filed: November 23, 2016
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`FACEBOOK, INC. and INSTAGRAM, LLC,
`Petitioner,
`v.
`SKKY, LLC,
`Patent Owner.
`
`Case CBM2016-00091
`Patent 9,037,502 B2
`
`
`
`
`
`
`
`
`
`Before JUSTIN T. ARBES, GLENN J. PERRY, and
`KEVIN W. CHERRY, Administrative Patent Judges.
`
`PERRY, Administrative Patent Judge.
`
`
`
`DECISION
`Denying Institution of Covered Business Method Patent Review
`37 C.F.R. § 42.208
`
`
`
`
`
`571.272.7822
`
`Paper No. 7
`Filed: November 23, 2016
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`FACEBOOK, INC. and INSTAGRAM, LLC,
`Petitioner,
`v.
`SKKY, LLC,
`Patent Owner.
`
`Case CBM2016-00091
`Patent 9,037,502 B2
`
`
`
`
`
`
`
`
`
`Before JUSTIN T. ARBES, GLENN J. PERRY, and
`KEVIN W. CHERRY, Administrative Patent Judges.
`
`PERRY, Administrative Patent Judge.
`
`
`
`DECISION
`Denying Institution of Covered Business Method Patent Review
`37 C.F.R. § 42.208
`
`
`
`
`
`
`CBM2016-00091
`Patent 9,037,502 B2
`
`I. INTRODUCTION
`
`This is a preliminary proceeding to decide whether to institute covered
`business method patent review of U.S. Patent No. 9,037,502 B2 (Ex. 1001,
`“the ’502 patent” or “the challenged patent”) under Section 18 of the Leahy-
`Smith America Invents Act, Pub. L. No. 112–29, 125 Stat. 284, 329 (2011)
`(“AIA”). For reasons stated below, the Petition is denied and we do not
`institute review.
`
`A. Procedural Posture
`Petitioners, Facebook, Inc. and Instagram LLC, filed a Petition (Paper
`1, “Pet.”) requesting covered business method patent review of claims 1–11
`of the ’502 patent under Section 18 of the AIA. Patent Owner, Skky LLC,
`filed a Preliminary Response. Paper 6 (“Prelim. Resp.”). With its
`Preliminary Response, Patent Owner provided evidence (Ex. 2001) that it
`filed with the Office a statutory disclaimer of claims 6 and 8–11 of the ’502
`patent pursuant to 37 C.F.R. § 1.321(a). Prelim. Resp. 4. Accordingly, no
`covered business method patent review will be instituted for claims 6 and
`8–11. See 37 C.F.R. § 42.207(e).
`At Petitioner’s request, we held a conference call on November 2,
`2016. During that conference call, Petitioner argued that we should not
`disregard the disclaimed claims when making a determination as to whether
`the ’502 patent qualifies as a covered business method patent. Case law
`cited to us during the conference call are mentioned below. We have
`jurisdiction under 35 U.S.C. § 324(a).
`Section 18(a)(1) of the AIA provides that a covered business method
`patent review “shall be regarded as, and shall employ the standards and
`procedures of, a post-grant review” with certain exceptions. The exceptions
`
`2
`
`
`
`CBM2016-00091
`Patent 9,037,502 B2
`
`are not relevant here. The standard for instituting a covered business method
`review is set forth in 35 U.S.C. § 324(a), which provides as follows:
`THRESHOLD.—The Director may not authorize a post-grant
`review to be instituted unless the Director determines that the
`information presented in the petition filed under section 321,
`if such information is not rebutted, would demonstrate that it
`is more likely than not that at least 1 of the claims challenged
`in the petition is unpatentable.
`
`Upon consideration of the Petition and its supporting evidence, as
`well as Patent Owner’s Preliminary Response and evidence filed therewith
`including the disclaimer, we determine that the ’502 patent is not a covered
`business method patent. We therefore deny the Petition.
`
`B. Related Matters
`Petitioner indicates that the ’502 patent is the subject of the following
`litigation: Skky, LLC v. Facebook, Inc., No. 16:CV-00094 (D. Minn.), filed
`on January 15, 2016. As of the date of this Petition, no claim construction
`proceedings have occurred. Additionally, according to Petitioner, an inter
`partes review (IPR) was instituted for U.S. Patent No. 7,548,875 B2, the
`parent to the ’502 patent. See MindGeek, s.a.r.l. v. Skky, Inc., IPR2014-
`01236. The PTAB issued a Final Decision on January 29, 2016 finding all
`challenged claims to be unpatentable. See Ex. 1022.
`
`C. The ’502 Patent (Ex. 1001)
`The ’502 patent issued on May 19, 2015 from an application filed
`Feb. 4, 2009. Claim 1 of the ’502 patent is reproduced below:
`
`3
`
`
`
`CBM2016-00091
`Patent 9,037,502 B2
`
`1. A method for wirelessly delivering one or more digital audio
`and/or visual files from one or more servers to one or more
`cell phones comprising:
`storing a library of compressed digital audio and/or visual files
`on one or more servers;
`providing to a cell phone a representation of at least a portion of
`the library of compressed digital audio and/or visual files;
`receiving a request from the cell phone for at least one of the
`compressed digital audio and/or visual files stored on the
`one or more servers,
`providing the one or more requested compressed digital audio
`and/or visual files to the cell phone and
`wherein the cell phone comprises a receiver and one or more
`processors including a digital signal processor and is
`configured for receiving and processing files transmitted
`by orthogonal frequency-division multiplex modulation;
`tracking the selection of the requested compressed digital audio
`and/or visual files.
`Ex. 1001, 33:2–22.
`
`
`D. The Alleged Grounds of Unpatentability
`Petitioner asserts the following grounds of unpatentability.
`
`
`Claims
`1–11
`1–11
`
`Ground
`§ 101
`§ 112
`
`Prior Art
`Not Applicable
`Not Applicable
`(“regards” clause, written description)
`
`
`Petitioner relies on the Declaration testimony of William H.
`
`Beckmann, Ph.D. (Ex. 1002).
`
`4
`
`
`
`CBM2016-00091
`Patent 9,037,502 B2
`
`II. ANALYSIS
`
`A. Grounds for Standing
`Section 18 of the AIA created a transitional program, limited to
`persons or their real parties-in-interest or privies that have been sued or
`charged with infringement of a “covered business method patent.” AIA
`§§ 18(a)(1)(B), 18(d)(1); see 37 C.F.R. § 42.302.
`Petitioner represents that it has been sued for infringement of the ’502
`patent in Skky, LLC v. Facebook, Inc., No. 16:CV-00094 (D. Minn.), filed on
`January 15, 2016. Patent Owner does not dispute that Petitioner has been
`sued for infringement of the ’502 patent. See Paper 5, 2.
`
`B. Covered Business Method Patent
`A “covered business method patent” is “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.”1 AIA § 18(d)(1); 37 C.F.R. § 42.301(a). The
`Federal Circuit has recently held that the Board’s reliance on whether the
`patent claims activities “incidental to” or “complementary to” a financial
`activity as the legal standard to determine whether a patent is a CBM patent
`was not in accordance with law. Unwired Planet, LLC v. Google Inc., No.
`2015-1812, -- F.3d --, 2016 WL 6832978, at *5 (Fed. Cir. Nov. 21, 2016).
`
`
`1 We refer to that part of the statutory definition of covered business method
`patent, up to the clause beginning with the word “except,” as the “financial
`product or service requirement,” and the clause commencing with the word
`“except” as the “technological invention exception.”
`
`5
`
`
`
`CBM2016-00091
`Patent 9,037,502 B2
`
`A patent is eligible for review if it has at least one claim directed to a
`covered business method. Transitional Program for Covered Business
`Method Patents—Definitions of Covered Business Method Patent and
`Technological Invention; Final Rule, 77 Fed. Reg. 48,734, 48,736 (Response
`to Comment 8).
`With regard to the meaning of “financial product or service” in the
`scope of what constitutes a covered business method patent, the United
`States Court of Appeals for the Federal Circuit determined:
`We agree with the USPTO that, as a matter of statutory
`construction, the definition of “covered business method patent”
`is not limited to products and services of only the financial
`industry, or to patents owned by or directly affecting the
`activities of financial institutions such as banks and brokerage
`houses. The plain text of the statutory definition contained in
`§ 18(d)(1)—“performing . . . operations used in the practice,
`administration, or management of a financial product or
`service”—on its face covers a wide range of finance-related
`activities. The statutory definition makes no reference to
`financial institutions as such, and does not limit itself only to
`those institutions.
`Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306, 1325 (Fed. Cir.
`2015) (emphasis added), cert. denied, 136 S. Ct. 2510 (2016); see also Blue
`Calypso, LLC v. Groupon, Inc., 815 F.3d 1331, 1340–41 (Fed. Cir. 2016)
`(citing previous Board cases that “properly focuse[d] on the claim language
`at issue and, finding nothing explicitly or inherently financial in the
`construed claim language, decline[d] to institute CBM review,” and finding
`the challenged patent CBM eligible because the claims recited “an express
`financial component”). Indeed, the scope of what constitutes a covered
`business method patent is broad. See SAP Am., Inc. v. Versata Dev. Grp.,
`Inc., Case CBM2012-00001, slip op. at 23 (PTAB Jan. 9, 2013) (Paper 36)
`
`6
`
`
`
`CBM2016-00091
`Patent 9,037,502 B2
`
`(“The term financial is an adjective that simply means relating to monetary
`matters.”).
`For reasons explained below, on the record before us, we conclude
`that the ’502 patent is not a “covered business method patent.”
`
`C. Patent Owner’s Disclaimer of Claims 6 and 8–11
`The majority of Petitioner’s briefing is devoted to arguing that claims
`6 and 8–11 are financial in nature and thus subject the ’502 patent to CBM
`review. Patent Owner provides evidence, filed with its Preliminary
`Response, that claims 6 and 8–11 of the ’502 patent are disclaimed. Prelim.
`Resp. 6 (citing Ex. 2001). Patent Owner argues that for the purpose of
`determining whether or not to institute a CBM proceeding, disclaimed
`claims are treated “as never having existed.” Id. (citing Great West Cas. Co.
`v. Intellectual Ventures II LLC, Case CBM2015-00171, slip op. at 7 (PTAB
`Feb. 9, 2016) (Paper 10)). According to Patent Owner, Petitioner’s
`arguments regarding claims 6 and 8–11 are irrelevant to the Board’s
`determination. Only Petitioner’s arguments regarding claim 1 remain.
`Further, Patent Owner argues, because Petitioner makes no argument that
`dependent claims 2–5 and 7 serve as a basis for the ’502 patent being a
`covered business method patent, they also are irrelevant to our institution
`analysis. Prelim. Resp. 6.
`At Petitioner’s request, we held a conference call on November 2,
`2016 regarding Patent Owner’s disclaimer. During that conference call,
`Petitioner and Patent Owner brought to our attention various non-
`precedential decisions made by other panels of the Board that have dealt
`with disclaimed claims as they relate to alleged CBM eligibility.
`
`7
`
`
`
`CBM2016-00091
`Patent 9,037,502 B2
`
`
`
`D. Analysis
`Although previous non-precedential decisions of the Board do not
`bind this panel, several Board panels confronted with the issue of alleged
`CBM eligibility on the basis of disclaimed claims reached the conclusion
`that the disclaimed claims should be disregarded. See, e.g., CoreLogic, Inc.
`v. Boundary Solutions, Inc., Case CBM2016-00016, slip op. at 6−7 (PTAB
`May 24, 2016) (Paper 9) (“[T]he disclaimed claims should not be consulted
`when determining whether the patent is a covered business method patent.”);
`AT&T Mobility LLC v. Intellectual Ventures II LLC, Case CBM2015-00185,
`slip op. at 10 (PTAB May 4, 2016) (Paper 10) (“[W]e will not consider the
`now-statutorily disclaimed claims in our determination.”); Great West
`Casualty Co. v. Intellectual Ventures II LLC, Case CBM2015-00171, slip
`op. at 7 (PTAB Feb. 9, 2016) (Paper 10) (“[F]or the purposes of whether or
`not to institute a covered business method patent review, we treat [the
`disclaimed claims] as never having existed.”); Google Inc. v. SimpleAir,
`Inc., Case CBM2015-00019, slip op. at 14–15 (PTAB May 19, 2014) (Paper
`11) (“[W]e treat the [challenged] patent as though [the disclaimed claim]
`never existed.”).
`On the other hand, other non-binding decisions have held that a
`disclaimed dependent claim that includes finance-related subject matter may
`be considered for purposes of CBM eligibility when assessing the scope of
`the claimed subject matter in the parent (non-disclaimed) independent claim.
`See, e.g., J.P. Morgan Chase & Co. v. Intellectual Ventures II LLC, Case
`CBM2014-00157, slip op. at 2–3 (PTAB Feb. 18, 2015) (Paper 11)
`(“[S]tanding for covered business method patent review remains at least
`
`8
`
`
`
`CBM2016-00091
`Patent 9,037,502 B2
`
`because disclaimer of claim 12 does not change the scope of independent
`claim 1, from which it depends.”).
`We are aware of additional non-precedential decisions by panels that
`have dealt with this issue. In CBM2015-00019, the panel treated the
`disclaimed claim as if it never existed and based its Petition denial on non-
`disclaimed claims. See Google Inc. v. SimpleAir, Inc. Case CBM2015-
`00019 (PTAB May 19, 2015) (Paper 11). In CBM2015-00098, the panel
`looked to the specification along with the claim set and noted that Patent
`Owner had sued financial institutions. See Am. Express Co. v. Maxim
`Integrated Prods., Inc., Case CBM2015-00098 (PTAB Sept. 22, 2015)
`(Paper 17). In CBM2016-00062, Patent Owner disclaimed claim 4 after the
`Petition had been filed. The panel denied the Petition based on a lack of
`financial activity recited in the remaining claims. See Google Inc. v.
`Locationet Sys. Ltd., Case CBM2016-00062 (PTAB Oct. 25, 2016)
`(Paper 7).
`This panel treats the disclaimed claims as if they never existed,
`consistent with the majority of cases cited above dealing with the issue and
`Federal Circuit case law. See Vectra Fitness, Inc. v. TWNK Corp., 162 F.3d
`1379, 1383 (Fed. Cir. 1998) (“This court has interpreted the term
`‘considered as part of the original patent’ in section 253 to mean that the
`patent is treated as though the disclaimed claims never existed.”); Guinn v.
`Kopf, 96 F.3d 1419, 1422 (Fed. Cir. 1996) (“A statutory disclaimer under
`35 U.S.C. § 253 has the effect of canceling the claims from the patent and
`the patent is viewed as though the disclaimed claims had never existed in the
`patent.”); see also Genetics Inst., LLC v. Novartis Vaccines & Diagnostics,
`Inc., 655 F.3d 1291, 1299 (Fed. Cir. 2011) (holding that the Board’s
`
`9
`
`
`
`CBM2016-00091
`Patent 9,037,502 B2
`
`interference jurisdiction under 35 U.S.C. § 291 required “the existence of an
`interference, and a claim that ‘never existed’ [due to a statutory disclaimer]
`cannot form the basis for an interference”). Thus, Petitioner’s arguments
`regarding claims 6 and 8–11 are not considered. We proceed to analyze
`Petitioner’s arguments regarding claim 1.
`Claim 1 describes a method for wirelessly delivering one or more
`digital audio and/or visual files from one or more servers to one or more cell
`phones. The particular improvement claimed is the use of orthogonal
`frequency-division multiplex (OFDM) modulation to encode the bits of
`audio and video files for wireless transmission. The claimed scheme is
`illustrated in Figure 5 of the ’502 patent, reproduced below.
`
`10
`
`
`
`CBM2016-00091
`Patent 9,037,502 B2
`
`Figure 5 is a flow chart illustrating a data transmission method.
`
`With reference to Figure 5, the Specification explains a data
`transmission method 500 for transferring data through the phone line and
`receiver, based on a voice mode connection (versus sending the file over a
`
`
`
`11
`
`
`
`CBM2016-00091
`Patent 9,037,502 B2
`
`data channel using data protocols) and dual-tone multi-frequency (DTMF)2
`signal interpretation. Data representing a file to be transferred is scrambled
`(502) and then mapped (504) to complex symbols. Frequency symbols are
`converted (506) to time samples using a Fast Fourier Transform (FFT).
`After addition of a cyclic prefix, the data is transmitted to a receiver which
`then decodes the modulated symbols by a reverse process to recover the
`transmitted audio or video file. Ex. 1001, 16:43–52. Thus, as we
`understand it, the data file can be transferred using multi-tone signals
`available on a conventional land line.
`Petitioner argues that the final limitation of claim 1—“tracking the
`selection of the requested compressed digital audio and/or visual files”—
`renders the ’502 patent CBM eligible even though it does not explicitly
`recite financial products or services. Pet. 6 (emphasis omitted). According
`to Petitioner, the final limitation of claim 1 provides an “ability to track user
`selections in order to facilitate payment of royalties.” Id. at 5.
`Petitioner argues that the Specification explains that the claimed
`tracking step shown above has a financial purpose of “providing performing
`rights organizations or songwriters’ organizations with an accurate method
`for determining royalty payments to writers and performers of music.” Id.
`at. 6 (citing Ex. 1001, 3:33–35, 6:54–59). Petitioner notes that the
`Specification does not disclose any other purpose for the claimed “tracking”
`other than determining royalty payments. Id.
`
`
`2 DTMF tones are the tones you hear on a conventional land-line telephone
`when you press its number keys. Each key causes the sounding of a
`complex tone composed of multiple frequencies.
`
`12
`
`
`
`CBM2016-00091
`Patent 9,037,502 B2
`
`Patent Owner argues that the ’502 patent does not claim 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, and thus does not qualify for CBM review. Prelim. Resp. 1. Patent
`Owner argues that although Petitioner attempts to rely on portions of the
`Specification for support, the Petition does not tie those disclosures to the
`claims. Id. at 11. By relying on the Specification, and ignoring the
`disclosure of the claims themselves, Petitioner at best establishes that the
`claimed methods could be used to generate revenue in a number of ways,
`even though the language of the claims does not require any exchange of
`money or other financially-related step. Id.
`According to Patent Owner, Petitioner does not point to claim
`language that requires any exchange of money or other financial
`relationship. Id. Patent Owner argues that although the “tracking” in claim
`1 could feasibly be used to determine a royalty, one theoretical use is not
`enough to justify institution of CBM review. Id. According to Patent
`Owner, “tracking” is a term of general applicability, and could be applied in
`a number of contexts. Id. The ’502 patent’s Specification indicates that the
`tracking function can accomplish tasks not related to finances, including
`“allowing a record to be kept as to which music files have been downloaded
`and stored on the electronic device.” Ex. 1001, 6:59–61. The Specification
`also is clear that the invention encompasses “non[-]copyright registered
`personal recordings (e.g., personal sound recordings, family photos, home
`movies, etc.),” the transmission and delivery of which do not have a
`financial purpose. Id. at 1:66–2:1. It is not sufficient for CBM eligibility
`that the Specification also indicates that, “in addition” to these applications,
`
`13
`
`
`
`CBM2016-00091
`Patent 9,037,502 B2
`
`the tracking feature also may be used in the calculation of a royalty fee.
`Prelim. Resp. 12.
`We find Patent Owner’s argument to be persuasive. “Tracking” file
`selection is a thin reed on which to rely for the conclusion that claim 1
`claims a method for performing data processing or other operations used in
`the practice, administration, or management of a financial product or service,
`particularly in view of possible technical as well as non-financial reasons
`why files are to be tracked, as explained above. See, e.g., Unwired Planet,
`2016 WL 6832978, at *5 (“[I]t cannot be the case that a patent covering a
`method and corresponding apparatuses becomes a CBM patent because its
`practice could involve a potential sale of a good or service. All patents, at
`some level, relate to potential sale of a good or service.”). Other panels of
`the Board have found patents not to meet the definition of “covered business
`method patent” in similar circumstances involving context-neutral
`terminology that lacks any language relating to a financial product or
`service. See, e.g., Google Inc. v. SimpleAir, Inc. Case CBM2015-00019, slip
`op. at 10–13 (PTAB May 19, 2015) (Paper 11). Given the disclaimer of
`claims 6 and 8–11, we conclude that claim 1 does not provide a sufficient
`basis to invoke CBM eligibility. We do not reach the technological
`invention exception inquiry or the challenges under 35 U.S.C. §§ 101 and
`112.
`
`Petitioner has failed to meet its burden of showing that the ’502 patent
`is eligible for the transitional covered business method patent review
`program.
`
`
`
`
`
`14
`
`
`
`CBM2016-00091
`Patent 9,037,502 B2
`
`III. ORDER
`
`In consideration of the foregoing, it is hereby
`ORDERED that pursuant to 35 U.S.C. § 324(a), a covered business
`method patent review is not instituted as to any claim of the ’502 patent.
`
`
`
`15
`
`Petitioner:
`
`Heidi Keefe
`hkeefe@cooley.com
`
`Andrew Mace
`amace@cooley.com
`
`
`
`Patent Owner:
`
`Ryan Schultz
`rschultz@robinskaplan.com
`
`Andrew Kabat
`akabat@robinskaplan.com
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