`
`_________________________________
`
`
`PATENT OWNER SIGNATURE SYSTEMS, LLC’S
`REQUEST FOR DIRECTOR REHEARING
`OF THE PTAB JUDGMENT IN
`CBM2018-00035
`
`_________________________________
`
`
`AMERICAN EXPRESS COMPANY AND
`AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.,
`
`Petitioners
`
`v.
`
`SIGNATURE SYSTEMS, LLC
`
`Patent Owner
`
`_________________________________
`
`
`Case CBM2018-00035
`
`U.S. Patent No. 8,423,402 C1
`
`_________________________________
`
`
`ON REMAND FROM THE UNITED STATES COURT OF APPEALS
`FOR THE FEDERAL CIRCUIT
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`
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`SGR/26226579.2
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`REQUEST FOR DIRECTOR REHEARING
`OF THE PTAB JUDGMENT IN CBM2018-00035
`Patent No.: 8,423,402 C1
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`
`TABLE OF CONTENTS
`
`PROCEDURAL BACKGROUND ................................................................. 1
`I.
`PATENT ELIGIBILITY AND THE ‘402 PATENT ...................................... 2
`II.
`III. CONSTITUTIONAL CHALLENGES ........................................................... 8
`A. Review By A “Director” ....................................................................... 9
`B. Insufficient Review By The Director .................................................... 9
`C. Director Review Cannot Retroactively Bestow Legitimacy ................. 9
`D. The Decision to Institute CBM2018-00035 ........................................ 10
`E. Improper Financial Interests ................................................................ 11
`F. Timing ................................................................................................. 11
`G. All Other Constitutional Grounds ....................................................... 12
`IV. REVIEW OF THE MERITS .........................................................................12
`A. The PTAB Relied Unfairly On Expert Testimony .............................. 12
`B. The PTAB Relied Too Heavily On Prior Unrelated Cases ................. 14
`C. The PTAB Misapplied The Eligibility Step 2A(i) .............................. 18
`D. The PTAB Misapplied The Eligibility Step 2A(ii) ............................. 21
`i.
`Proper Standards for Patent-Eligibility Analysis ......................21
`ii.
`Practical Application by Improvement to a Technical Field ....23
`iii.
`Practical Application By Absence of Monopolization .............24
`iv.
`Example 42 is Informative ........................................................26
`E. The PTAB Misapplied The Eligibility Test Step 2B – Inventive
`Concept ................................................................................................ 27
`F. The PTAB Opinions Relied On In The Judgment Are
`Distinguishable .................................................................................... 29
`G. The Challenged Claims Are Definite .................................................. 32
`ii
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`REQUEST FOR DIRECTOR REHEARING
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`CONCLUSION ..............................................................................................33
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`
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`V.
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`iii
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`REQUEST FOR DIRECTOR REHEARING
`OF THE PTAB JUDGMENT IN CBM2018-00035
`Patent No.: 8,423,402 C1
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`
`TABLE OF AUTHORITIES
`
`CASES
`Alice Corp. v. CLS Bank Int’l,
`573 U.S. 208 (2014) ............................................................................................... 4
`Avia Group Int’l, Inc. v. L.A. Gear Cal., Inc.,
`853 F.2d 1557 (Fed. Cir. 1988) ............................................................................14
`Berkheimer v. HP Inc.,
`881 F.3d 1360 (Fed. Cir. 2018) ............................................................................12
`BRCA1- & BRCA2-Based Hereditary Cancer Test Patent Litig. v. Ambry Genetics
`Corp.,
`774 F.3d 755 (Fed. Cir. 2014) ..............................................................................13
`E-Numerate Solutions, Inc. v. United States,
`149 Fed. Cl. 563 (2020) .......................................................................................... 2
`Genband US LLC v. Metaswitch Networks Corp.,
`Case No. 2:14-cv-33-JRG-RSP, 2016 WL 122969 (E.D. Tex. Jan. 9, 2016) ......13
`In re Ferguson,
`558 F.3d 1359 (Fed. Cir. 2009) .............................................................................. 2
`Loyalty Conversion Sys. Corp. v. Am. Airlines, Inc.,
`66 F. Supp. 3d 829 (E.D. Tex. 2014) ................................................ 15, 16, 17, 18
`Markman v. Westview Instruments, Inc.,
`52 F.3d 967 (Fed. Cir. 1995) ................................................................................14
`Novartis AG v. Noven Pharmaceuticals Inc.,
`853 F.3d 1289 (Fed. Cir. 2017) ............................................................................15
`Oestereich v. Selective Serv. Sys. Local bd. No. 11,
`393 U.S. 233 (1968) ............................................................................................... 8
`Riggin v. Off. of Senate Fair Emp. Pracs.,
`61 F.3d 1563 (Fed. Cir. 1995) ................................................................................ 8
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`iv
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`REQUEST FOR DIRECTOR REHEARING
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`Signature Systems, LLC v. American Express Co.,
`1:15-cv-20063-RNS, 2018 WL 6963904 (S. D. Fla. May 9, 2018) ....................... 4
`State Street Bank & Trust Co. v. Signature Financial Group Inc.,
`149 F.3d 1368 (Fed. Cir. 1998) ..........................................................................2, 3
`United States v. Arthrex, Inc.,
`594 U.S. ____, 141 S. Ct. 1970 (2021) ........................................................ passim
`
`STATUTES
`35 U.S.C. § 101 ................................................................................................ passim
`35 U.S.C. § 112 ........................................................................................... 32, 33, 34
`
`REGULATIONS
`37 C.F.R. § 42.300(c) ...............................................................................................11
`37 C.F.R. § 42.62 .....................................................................................................12
`
`BOARD DECISIONS
`Delta Airlines, Inc. et al. v. Loyalty Conversion Sys. Corp.,
`Case CBM2014-00096, Institution Decision (P.T.A.B. Sept. 29, 2014) .............19
`Ex Parte Black,
`No. 2017-010832 (P.T.A.B. Jan. 28, 2019) .................................................. 30, 31
`Ex Parte Kim,
`No. 2017-010412 (P.T.A.B. Jan. 31, 2019) .................................................. 31, 32
`Ex Parte Lyons,
`No. 2018-002356 (P.T.A.B. Mar. 20, 2019) ................................................. 31, 32
`Ex Parte Morgenstern,
`No. 2018-000480 (P.T.A.B. Feb. 4, 2019) ...........................................................30
`
`
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`v
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`REQUEST FOR DIRECTOR REHEARING
`OF THE PTAB JUDGMENT IN CBM2018-00035
`Patent No.: 8,423,402 C1
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`PROCEDURAL BACKGROUND
`
`I.
`
`This Request follows the Supreme Court’s decision in United States v.
`
`Arthrex, Inc., 594 U.S. ____, 141 S. Ct. 1970 (2021), in which Administrative
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`Patent Judges (“APJs”) sitting by designation on the Patent Trial and Appeal Board
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`(“PTAB”) were found to be unconstitutionally appointed. To remedy the situation,
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`the Supreme Court converted unconstitutionally appointed “principal officers” to
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`constitutionally appointed “inferior officers,” by giving a party dissatisfied with a
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`PTAB decision the right to request rehearing by the Director.
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`Signature Systems, Inc. (“Signature”) seeks Director review and rehearing of
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`the PTAB’s Judgment in CBM2018-00035, American Express Company and
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`American Express Travel Related Services Company, Inc. v. Signature Systems,
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`Inc. The Judgment, which issued on October 30, 2019, invalidated claims 1, 2, 5,
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`6, 9, 10, 13 and 14 of U.S. Patent No. 8,423,402 (“the ‘402 patent”) under 35
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`U.S.C. § 101. On January 3, 2020, Signature appealed the Judgment to the U.S.
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`Court of Appeals for the Federal Circuit. Signature Systems, Inc. v. American
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`Express Company, Fed. Cir. Case Docket No. 2020-1319.
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`The Director intervened in Signature’s appeal, and petitioned the Supreme
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`Court for Certiorari, to prevent Signature and several other similarly situated
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`REQUEST FOR DIRECTOR REHEARING
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`parties from asserting the appointments clause constitutional defense.1 After
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`Arthrex was decided, the Supreme Court granted the Director’s Petition and
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`ordered Signature’s PTAB decision vacated and remanded back to the Federal
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`Circuit “for further consideration in light of United States v. Arthrex, Inc.” Then,
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`on September 16, 2021, the Federal Circuit remanded Signature’s case back to the
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`Patent and Trademark Office (“PTO”) so Signature would have “the opportunity to
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`request Director rehearing of the final written decision.”
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`This Request follows the Federal Circuit’s instruction, and seeks to overturn
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`the PTAB’s Judgment in CBM2018-00035.
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`II.
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`PATENT ELIGIBILITY AND THE ‘402 PATENT
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`The ‘402 patent was allowed on April 16, 2013, well after the Federal
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`Circuit’s decision in State Street Bank & Trust Co. v. Signature Financial Group
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`Inc., 149 F.3d 1368 (Fed. Cir. 1998), where it held that computer-implemented
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`business methods are eligible for patent protection under 35 U.S.C. § 101. It is still
`
`the law that business method patents are patentable.2
`
`
`1
`Andrei Iancu, Undersecretary of Commerce for Intellectual Property & Dir.,
`USPTO v. Eugene H. Luoma, et al., Supreme Court Docket No. 20-74.
`2
`The most recent court to cite State Street refers to the case as “abrogated.” E-
`Numerate Solutions, Inc. v. United States, 149 Fed. Cl. 563, 570 n. 2 (2020). However, In re
`Ferguson, 558 F.3d 1359 (Fed. Cir. 2009) supports the proposition that State Street retains
`someprecedential value. In a concurring opinion, Judge Newman stated, “My colleagues err in
`asserting that the ‘machine-or-transformation’ test is that of the Supreme Court. . . And in their
`purported ‘clarification’ of the Bilski decision, my colleagues suggest that Bilski overturned not
`2
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`REQUEST FOR DIRECTOR REHEARING
`OF THE PTAB JUDGMENT IN CBM2018-00035
`Patent No.: 8,423,402 C1
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`Following the State Street Bank decision, the PTO adopted a policy of
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`giving special scrutiny to patent applications claiming business methods, while
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`encouraging the filing of such applications. Among other things, the PTO set up a
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`special examination class for business methods and structures, Class 705, titled
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`“Data Processing: Financial, Business Practice, Management, or Cost/Price
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`Determination.” The PTO defined Class 705 as follows:
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`This is the generic class for apparatus and corresponding methods for
`performing data processing operations, in which there is a significant
`change in the data or for performing calculation operations wherein
`the apparatus or method is uniquely designed for or utilized in the
`practice, administration, or management of an enterprise, or in the
`processing of financial data.
`
`This class also provides for apparatus and corresponding methods for
`performing data processing or calculating operations in which a
`charge for goods or services is determined…The arrangements in this
`class are generally used for problems relating to administration of an
`organization, commodities or financial transactions.
`
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`https://www.uspto.gov/web/offices/ac/ido/oeip/taf/def/705.htm.
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`As a public policy, the PTO acknowledged the importance of internet related
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`inventions, and encouraged cooperation between applicants and the Office, in
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`devising improvements to the examination process:
`
`
`only State Street Bank but also other precedent including that based on the Freeman–Walter–
`Abele test, the ‘technological arts’ test, and the ‘physical steps’ test.” 558 F.3d at 1367. The
`majority responded, “Contrary to the concurrence's assertion, we do not contend that this court
`has overturned State Street . . .”). Id. at n. 3.
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`REQUEST FOR DIRECTOR REHEARING
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`Patent No.: 8,423,402 C1
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`Electronic commerce is an extremely significant component of
`today’s technology-driven economy While less than one percent of
`the 290,000 applications filed with the USPTO last year related to
`computer-implemented business methods in Class 705, computer-
`implemented business method patents play an important role in this
`growing industry. In an effort to enhance the quality of the
`examination of business method patent applications, the USPTO is
`interested in working together with the software, Internet, and
`electronic commerce industry to identify ways to improve current
`business operations and solve business methods-related issues,
`including access to software-related prior art.
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`
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`Fed. Reg. June 22, 2000 (Vol. 65, No. 121). The ‘402 patent was examined in
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`Class 705, with all the appropriate special attention. The patent was granted on
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`April 16, 2013 after undergoing a rigorous examination which included “a new
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`second-level review of all allowed applications.” Id.
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`On January 9, 2015, Signature filed a patent infringement suit against
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`American Express Company and American Express Travel Related Services
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`Company (collectively, “Amex”), asserting infringement of the ‘402 patent.3
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`Shortly after filing, Signature filed a Request for Supplemental Examination
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`(“RSE”) of the ‘402 patent.4 The RSE sought to have the PTO consider the ‘402
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`claims in light of Alice Corp. v. CLS Bank Int’l, 573 U.S. 208 (2014).
`
`
`3
`Signature Systems, LLC v. American Express Co., 1:15-cv-20063-RNS, 2018 WL
`6963904 (S. D. Fla. May 9, 2018).
`4
`Control No. 96/000,096, filed March 12, 2015
`4
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`REQUEST FOR DIRECTOR REHEARING
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`After Signature filed its RSE, and without answering the patent infringement
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`complaint, Amex filed a Petition for Covered Business Method Patent Review
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`(“CBM”), designated CBM2015-00153, seeking invalidation of the ‘402 claims.
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`CBM2015-00153 raised two primary issues: first, that the ‘402 patent claims were
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`invalid under 35 U.S.C § 101, and second, that the claims were invalid in view of
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`certain prior art. In light of the pending PTO actions, the district court stayed the
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`infringement action until the RSE and CBM2015-00153 were concluded.
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`The examiner handling the RSE initially rejected the ‘402 claims under 35
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`U.S.C. § 101. In response, Signature filed an amendment, with arguments, that
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`resulted in allowance of the amended ‘402 claims. In allowing the amended
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`claims, the patent examiner described in a “Statement of Reasons for Patentability
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`and/or Confirmation” why the amended claims of the ‘402 patent were patent
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`eligible:
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`The claims were previously rejected under 35 U.S.C. § 101
`because the claimed invention was directed to a judicial exception
`(i.e., a law of nature, a natural phenomenon, or an abstract idea)
`without significantly more (Non-Final Office Action mailed May 22,
`2015, “Non-Final). In particular, based on the broadest reasonable
`interpretation, the claims were found to be “directed to an abstract
`idea inasmuch as earning, exchanging and redeeming rewards points
`for goods or services is considered “using advertising as an exchange
`or currency,” which the courts have determined to be an example of
`an abstract idea (79 FR 74622).” (Non-Final at 4) However, the June
`Claim Amendments remove the claim language that enabled the
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`broadest reasonable interpretation to include “using advertising as an
`exchange or currency.”
`
`to a
`invention remains generally related
`The claimed
`fundamental economic practice in that it tracks earned reward points
`associated with credit card purchases (a concept related to commerce,
`July 2015 Update: Interim Eligibilty Guidance Quick Reference Sheet
`at 2), or an idea ‘of itself’ in that reward points could arguably be
`calculated by a human using pen and paper (Id). Yet when looking at
`the additional limitations as an ordered combination, the invention
`as a whole amounts to significantly more than the fundamental
`economic practice or the idea of itself. (Emphasis Added) The
`claimed
`invention addresses
`the Internet-centric challenge of
`electronic bartering that allows users to trade and redeem reward
`points over the Internet for products or services other than those
`typically offered by the point sponsor. (‘402 at 1:24-31) This is
`addressed by a reward exchange computer exchanging a quantity of
`reward points of a first type from a reward account on a reward server
`computer into reward points of a second type for adding to a reward
`exchange account on the reward exchange computer…These are
`meaningful limitations that add more than generally linking the use
`of the abstract idea to the Internet, because they solve an Internet-
`centric problem with a claimed solution that is necessarily rooted in
`computer technology. These limitations, when taken as an ordered
`combination, provide unconventional steps
`that confine
`the
`abstractc idea to a particular useful application that improve how
`different types of reward points are electronically converted and
`redeemed. Therefore, claims 1, 2, 5, 6, 9, 10, 13 and 14 recite patent
`eligible subject matter. (Emphasis Added)
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`In addition to finding the amended claims patent eligible, the examiner also
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`confirmed that the amended claims were allowable over the prior art offered by
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`Amex. An Ex Parte Reexamination Certificate for the ‘402 patent issued on
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`REQUEST FOR DIRECTOR REHEARING
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`November 24, 2015. CBM2015-00153 was dismissed as moot since the CBM was
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`based on claims that no longer existed.
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`With both the CBM and RSE completed, the district court reopened the case
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`against Amex. Signature filed an amended complaint to assert the amended ‘402
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`claims. Without answering the amended complaint, Amex filed a second CBM on
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`April 23, 2018, designated CBM2018-00035, attacking the amended claims of the
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`‘402 patent, with essentially the same arguments as in the first CBM. The district
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`court, once again, stayed the federal court case pending the outcome of CBM2018-
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`00035.
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`On October 30, 2019, a panel of three APJs issued a Judgment that claims 1,
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`2, 5, 6, 9, 10, 13 and 14 (“the Challenged Claims”) of the ʻ402 Patent were invalid
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`for failing to claim patent eligible subject matter. As noted above, Signature
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`appealed the Federal Circuit, the appeal was stayed pending the Arthrex decision,
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`and following the Arthrex decision, the Federal Circuit sent CBM2018-00035 back
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`to the PTO for review by the Director.
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`In summary, the ‘402 patent claims have gone through a series of four
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`different reviews for patent eligibility. The first was during initial prosecution of
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`the ‘402 patent application by an examiner well acquainted with the special
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`scrutiny afforded business method patent applications. The second was during
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`prosecution of RSE Control No. 96/000,096, filed March 12, 2015. The claims
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`were examined, rejected, amended and allowed as patent eligible. The third was
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`prompted by Amex’s CBM2015-00153, which was dismissed as moot because the
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`attacked claims had been amended in the RSE. However, prior art submitted with
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`CBM2015-00153 was disclosed in the RSE and the claims were allowed over the
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`prior art. The fourth review is the Judgment resulting from CBM2018-00035,
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`which is now under review by the Director. The Judgment contradicts two prior
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`PTO actions where the same issue (patent eligibility) was decided in the opposite
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`direction.
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`III. CONSTITUTIONAL CHALLENGES
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`Signature states
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`the following constitutional challenges, which are
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`necessarily decided by the U.S. Court of Appeals for the Federal Circuit. Under
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`Supreme Court and circuit precedent, agencies such as the PTO do not have
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`authority to declare a statute unconstitutional. Oestereich v. Selective Serv. Sys.
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`Local bd. No. 11, 393 U.S. 233, 242 (1968); Riggin v. Off. of Senate Fair Emp.
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`Pracs., 61 F.3d 1563, 1569 (Fed. Cir. 1995) (noting the “general rule that
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`administrative agencies do not have jurisdiction to decide the constitutionality of
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`congressional enactments”).
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`A. Review By A “Director”
`Signature’s appeal must be decided by a Director appointed by the President
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`and confirmed by the Senate. An “acting” director does not have the statutory
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`authority to act on this Request.
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`Insufficient Review By The Director
`
`B.
`In Arthrex, the Supreme Court made a controversial remedy whereby,
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`providing the Director with review authority over APJ panel decisions, somehow
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`transformed APJs from principal officers to inferior officers. In order to give
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`meaning to the remedy, the review must be real, thorough and detailed. A “rubber
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`stamp” review is would make a mockery of the Supreme Court’s edict. Therefore,
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`the Director must allow new briefing and new argument, to reflect that the
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`Director’s review is in essence a new appellate procedure, just like an ex parte or
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`inter partes appeal to the PTAB. These briefs are for the Director, acting as an
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`appellate body. There can be no other way to ensure that the Director’s review
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`was meaningful.
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`Insufficient review means that the APJs remain unconstitutionally appointed.
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`C. Director Review Cannot Retroactively Bestow Legitimacy
`Assuming that the Director’s review is sufficient, thus converting APJ status
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`from principal to inferior officers, such conversion cannot be retroactive to the
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`time when CBM2018-00035 was decided. CBM2018-00035 was decided on
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`October 30, 2019. Arthrex was decided on June 21, 2021. The APJs that decided
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`CBM2018-00035 were unconstitutionally appointed when they issued their
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`Judgment, and subsequent remedial change of status cannot undo their illegitimate
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`act, no more than a quack who performs surgery cannot avoid the crime of
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`practicing medicine without a license if he subsequently obtains a medical degree.
`
`No law suit can be decided by a court that lacks personal jurisdiction or
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`subject matter jurisdiction.
`
` Logically then, a judge who lacks “judicial
`
`jurisdiction,” which is to say, a judge who is not a properly appointed judge at the
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`time he rules cannot issue a legitimate decision. Lacking legitimacy at the time of
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`decision makes an APJ’s decision a nullity which cannot be fixed with ex post
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`facto remedies.
`
`D. The Decision to Institute CBM2018-00035
`Arthrex gave the Director the authority to review final Judgments rendered
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`by panels of APJs at the PTAB. In CBM2018-0035, the decision to institute the
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`CBM was handled by a panel of APJs, even though the statute requires that the
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`decision to institute must be made by the Director. Regardless of the
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`constitutionality of APJs, the duty of the Director to institute post grant reviews,
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`including CBMs, cannot be delegated. It was at least a violation of due process for
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`the Director to delegate the decision to institute CBM2018-00035 to a panel of
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`APJs.
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`Improper Financial Interests
`
`E.
`APJs who sit in panels at the PTAB have an improper financial interest in
`
`instituting post grant reviews because they generate fees to fund the agency and
`
`ensure future job stability. APJs also receive bonuses and better performance
`
`reviews based on the number of post grant reviews they process. These fee and
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`performance reviews bias APJs in favor of initiating post grant reviews.
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`Likewise, it is a violation of due process for the PTO to charge fees for post
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`grant reviews, for the purpose of using those fees to fund the PTO. By granting
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`post grant reviews, the PTO is establishing its own supply and demand of patent hit
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`squads. A fee is collected on the inbound request for post grant review, and the
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`more that are granted, the more the “market” will respond and file more requests.
`
`Timing
`
`F.
`CBM2018-00035 was filed on April 23, 2018, and decided on October 30,
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`2019. The America Invents Act (“AIA”) established that a CBM must be
`
`completed within twelve (12) months, unless extended by six (6) months. 37
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`C.F.R. § 42.300(c).
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`CBM2018-00035 took one week longer than the maximum of 18 months,
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`and no six-month extension was ever applied for or granted. Moreover, since the
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`APJs of the PTAB were not constitutionally appointed at the time of the decision,
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`the CBM took 38 months from the time it was filed until the time the APJs were
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`legitimized with the Arthrex decision.
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`G. All Other Constitutional Grounds
`The above noted grounds are illustrative. Others may be raised should at the
`
`appropriate forum (the Federal Circuit) in the event that the Director does not
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`review and reverse the PTAB’s October 30, 2019 decision.
`
`IV. REVIEW OF THE MERITS
`A. The PTAB Relied Unfairly On Expert Testimony
`Proceedings before the PTAB must adhere to the Federal Rules of Evidence.
`
`37 C.F.R. § 42.62. With the filing of CBM2018-00035, Amex submitted a 150
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`page declaration of Sandeep Chatterjee, an expert in computer science. However,
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`patent eligibility under 35 U.S.C. § 101 is a question of law, with the possibility of
`
`some underlying factual determination. Berkheimer v. HP Inc., 881 F.3d 1360
`
`(Fed. Cir. 2018). Throughout his declaration, Dr. Chatterjee opines on whether the
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`‘402 patent claims are patent eligible, but he provides no testimony about what is
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`12
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`SGR/26226579.2
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`
`
`REQUEST FOR DIRECTOR REHEARING
`OF THE PTAB JUDGMENT IN CBM2018-00035
`Patent No.: 8,423,402 C1
`
`known or in common usage in the business of rewards programs. His expertise lies
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`in computer science, and not in the manner in which awards programs are set up.
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`The PTAB judges gave too much credence to testimony of an expert who
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`basically usurped the Board’s obligation to decide the ultimate legal issue. The
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`100-page Decision practically mirrors the 150 page declaration of Dr. Chatterjee.
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`Moreover, the Decision directly contradicts the examiner’s analysis in the RSE,
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`Control No. 96/000,096, filed March 12, 2015, quoted at length above. No amount
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`of expert testimony can be used to undermine the examiner’s analysis in the RSE.
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`In Genband US LLC v. Metaswitch Networks Corp., Case No. 2:14-cv-33-
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`JRG-RSP, 2016 WL 122969 (E.D. Tex. Jan. 9, 2016), the defendants filed a
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`motion to strike plaintiff’s expert opinions that the patents in suit claim patent-
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`eligible subject matter under 35 U.S.C. § 101. In analyzing the motion to strike,
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`the district court noted that “[t]he ultimate question of patent eligibility under §
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`101 is an issue of law. BRCA1- & BRCA2-Based Hereditary Cancer Test Patent
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`Litig. v. Ambry Genetics Corp., 774 F.3d 755, 759 (Fed. Cir. 2014). Accordingly,
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`the issue of subject matter eligibility under § 101 will not be tried to the jury in this
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`case” – meaning that the issue was for the court to decide, not the expert.
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`The district court further explained that the court “is responsible for deciding
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`disputed questions of law, and the Federal Circuit has consistently disfavored
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`13
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`SGR/26226579.2
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`
`
`REQUEST FOR DIRECTOR REHEARING
`OF THE PTAB JUDGMENT IN CBM2018-00035
`Patent No.: 8,423,402 C1
`
`
`reliance on expert testimony as the basis for legal conclusions. Cf. Markman v.
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`Westview Instruments, Inc., 52 F.3d 967, 991 n. 4 (Fed. Cir. 1995) (“[a] patent law
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`expert’s opinion on the ultimate legal conclusion is neither required nor indeed
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`‘evidence’ at all”) (citations omitted); Avia Group Int’l, Inc. v. L.A. Gear Cal.,
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`Inc., 853 F.2d 1557, 1564 (Fed. Cir. 1988) (“an expert’s opinion on the legal
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`conclusion of obviousness is neither necessary nor controlling”).
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`Given the closeness by which the PTAB’s Judgment tracked Dr. Chatterjee’s
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`declaration, the PTAB improperly allowed the expert to do their job. On
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`underlying factual determinations, the expert report includes no credible testimony
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`about the history of rewards programs, let alone how rewards have been handled in
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`the past. An expertise in computer science does not render one an expert in all
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`business uses of a computer.
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`The PTAB Relied Too Heavily On Prior Unrelated Cases
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`B.
` In addition to Dr. Chatterjee’s declaration, Amex sought to create prejudice
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`against the ‘402 patent claims by (1) citing a RSE filed by Signature for a different
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`patent which had an adverse ruling, and (2) citing a decision in a district court
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`where a patent for a rewards program was found, preliminarily, to be unpatentable.
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`Amex, prejudicially and incorrectly, stated that the Signature patent and a patent
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`asserted against American Airlines were “nearly identical.” Amex suggested that
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`14
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`SGR/26226579.2
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`
`
`REQUEST FOR DIRECTOR REHEARING
`OF THE PTAB JUDGMENT IN CBM2018-00035
`Patent No.: 8,423,402 C1
`
`the Board should look to Loyalty Conversion Sys. Corp. v. Am. Airlines, Inc., 66 F.
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`Supp. 3d 829 (E.D. Tex. 2014). CBM2018-00035 Paper 29, pp. 1-2. The intent was
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`to say that the issue in Signature’s case was decided by the court in Loyalty
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`Conversion as thought it was binding precedent.
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`The PTO’s official interpretation of “binding precedent” as set forth by the
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`U.S. Supreme Court and the Federal Circuit:
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`This guidance does not constitute substantive rulemaking and does not
`have the force and effect of law. The guidance sets out agency policy
`with respect to the USPTO’s interpretation of the subject matter
`eligibility requirements of 35 U.S.C. 101 in view of decisions by the
`Supreme Court and the Federal Circuit.
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`CBM2018-00035, Exhibit 2016, p. 51 (emphasis added). Accordingly, “[a]ll
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`USPTO personnel are, as a matter of internal agency management, expected to
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`follow the guidance.” Id.
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`While the Guidance may have been promulgated by the USPTO in accord
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`with binding judicial precedent, the Loyalty Conversion case cited by Amex is a
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`district court decision and is therefore not binding precedent. See Novartis AG v.
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`Noven Pharmaceuticals Inc., 853 F.3d 1289, 1294 (Fed. Cir. 2017) (PTAB may
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`properly reach a different conclusion than a district court, even on the same
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`evidence). Therefore, Petitioners’ contention that Patent Owner seeks to avoid
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`binding precedent is entire misplaced. Instead, Amex sought to create prejudice
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`15
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`SGR/26226579.2
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`
`
`REQUEST FOR DIRECTOR REHEARING
`OF THE PTAB JUDGMENT IN CBM2018-00035
`Patent No.: 8,423,402 C1
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`against the ‘402 patent by misleading the PTAB into believing the issue had been
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`decided previously.
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`Putting aside the fact that Loyalty Conversion is not binding authority on this
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`Board, the Guidance itself recognizes it would be improper to summarily conclude
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`that just because the claims at issue in Loyalty Conversion or in Signature’s other
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`RSE involve similar subject matter and were deemed ineligible, the Challenged
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`Claims of the ’402 Patent should likewise be deemed ineligible. Indeed, finding
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`subject matter in one patent to be abstract is not determinative as to whether
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`similar subject matter in another patent, claimed somewhat differently or supported
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`by a different disclosure, is also directed to an abstract idea:
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`For example, claims in one application cou