`Trials@uspto.gov
`571-272-7822
`
`
`
`Paper 13
`Entered: January 23, 2019
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`
`DTN, LLC,
`Petitioner,
`
`v.
`
`FARMS TECHNOLOGY, LLC,
`Patent Owner.
`____________
`
`Case IPR2018-01412
`Patent 7,991,685 B2
`
`____________
`
`
`
`Before SCOTT C. WEIDENFELLER, Vice Chief Administrative Patent
`Judge, GEORGE R. HOSKINS, and FRANCES L. IPPOLITO,
`Administrative Patent Judges.
`
`HOSKINS, Administrative Patent Judge.
`
`
`
`DECISION
`Institution of Inter Partes Review
`35 U.S.C. § 314
`
`
`
`
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`IPR2018-01412
`Patent 7,991,685 B2
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`I.
`
`INTRODUCTION
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`DTN, LLC (“Petitioner”) has filed a Petition (Paper 1, “Pet.”)
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`pursuant to 35 U.S.C. §§ 311–319 to institute an inter partes review of
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`claims 1–14 of U.S. Patent No. 7,991,685 B2 (“the ’685 patent”). Farms
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`Technology, LLC (“Patent Owner”) has filed a Preliminary Response
`
`(Paper 8, “Prelim. Resp.”). Applying the standard set forth in 35 U.S.C.
`
`§ 314(a), which requires demonstration of a reasonable likelihood that
`
`Petitioner would prevail with respect to at least one challenged claim, we
`
`institute, on behalf of the Director (37 C.F.R. § 42.4(a)), an inter partes
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`review to determine whether Petitioner demonstrates by a preponderance of
`
`the evidence that claims 1–14 of the ’685 patent are unpatentable.
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`II. BACKGROUND
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`A.
`
`Real Parties in Interest and Related Proceedings
`
`Petitioner identifies itself as the real party in interest for this
`
`proceeding. Pet. 1; Paper 6, 1. Patent Owner identifies itself as the real
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`party in interest for this proceeding. Paper 4, 1; Paper 7, 1; Paper 12, 1.
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`The parties identify one U.S. District Court litigation as related to this
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`proceeding. Pet. 1; Paper 6, 1; Paper 7, 1; Paper 12, 1.
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`Petitioner additionally identifies another inter partes review
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`proceeding, IPR2018-01525 challenging U.S. Patent No. 7,742,979 B2, as
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`related to the present proceeding. Paper 6, 1.
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`B.
`
`The ’685 Patent
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`The ’685 patent discloses methods and systems for automatically
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`completing the sale of a commodity, such as an agricultural commodity.
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`Patent 7,991,685 B2
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`Ex. 1001, Abstract, 1:19–21, 2:39–60. Figure 3 of the ’685 patent is
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`reproduced below:
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`Figure 3 is an outline of the ’685 patent’s preferred system architecture. Id.
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`at 3:7–8. Potential buyers and sellers of the commodity use respective buyer
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`and seller interfaces 200 and 300 to interact with central station 100 over a
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`computer network such as the Internet. Id. at 4:50–56, 5:14–16, 11:15–27.
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`Central station 100 effectuates commodity transactions between buyers and
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`sellers, as follows.
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`A potential buyer provides bid data for the commodity, including the
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`buyer’s “basis” for the commodity. Id. at 3:16–31, 4:62–67, 13:15–18; see
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`also id. at 2:21–31, 2:57–60, 7:17–22 (discussing a buyer’s basis). Central
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`station 100 automatically and continually calculates the buyer’s bid price in
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`real-time, by subtracting the buyer’s basis from a real-time exchange rate
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`quote for the commodity, provided, for example, by the Chicago Board of
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`Trade. Id. at 2:1–6, 2:27–30, 3:32–42, 4:60–67. The potential buyer
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`additionally provides hedge transaction data. Id. at 4:56–5:2.
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`A potential seller provides sell data for the commodity, including the
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`seller’s net sell price and freight costs for delivering the commodity to
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`various locations. Id. at 3:54–60, 5:3–4, 7:46–54, 13:19–23, 14:9–21.
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`Central station 100 automatically calculates the seller’s sell price for a
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`particular buyer, by adding the seller’s net sell price to the seller’s freight
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`cost for delivering the commodity to the buyer’s specified location. Id. at
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`7:46–54, 14:9–21.
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`Central station 100 monitors the bid data and the sell data to identify a
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`conformance between such data for a particular seller and a particular buyer.
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`Id. at 3:61–63, 5:5–7. A determined conformance may require one or more
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`bid and sell parameters to be matched, including commodity price,
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`commodity type, commodity quality, and commodity color. Id. at 3:64–67,
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`5:5–7. When central station 100 detects a conformance, it: (a) automatically
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`alerts the buyer and the seller, and discontinues the buyer’s bid (id. at 4:1–4,
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`5:7–10); and (b) automatically uses the buyer’s hedge transaction data to
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`initiate a hedging transaction on behalf of the buyer (id. at 3:45–53, 4:5–12,
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`5:7–13).
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`C.
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`The Challenged Claims
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`The ’685 patent contains fourteen claims, all of which are challenged
`
`here. Claim 1, the sole independent claim, recites:
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`1. A commodity purchasing system, comprising:
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`a data storage device;
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`a processor connected to the data storage device;
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`a buyer interface, recorded on the data storage device,
`comprising a set of pictures, text or voice statements that
`provide instructions and protocols that will cause a buyer-
`operated computer to display to a buyer sell data received
`from a plurality of sellers, and to receive from the buyer
`hedge transaction data and bid data, said hedge transaction
`data including a hedge commodity, and said bid data
`including a basis for a desired commodity;
`
`a network connection to a commodity exchange that
`periodically receives a real-time exchange rate quote for the
`hedge commodity;
`
`a bid generating program, comprising computer-readable
`instructions to cause the processor to periodically update the
`bid data for said buyer so that the bid data includes an
`updated bid price for the desired commodity, wherein said
`bid generating program calculates said updated bid price by
`subtracting the basis from the real-time exchange rate quote;
`
`a plurality of seller interfaces, recorded on the data storage
`device, comprising a set of pictures, text or voice statements
`that provide instructions and protocols that will cause a
`respective plurality of seller-operated computers to display
`to the plurality of sellers, respectively, the bid data received
`from the buyer, and to receive the sell data from the plurality
`of sellers, said sell data including, for each seller, a net sell
`price for the desired commodity and a transaction cost
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`associated with selling the desired commodity to the buyer,
`wherein said transaction cost is based on a cost each seller
`will incur or avoid in connection with delivering the desired
`commodity at a time and a location specified by said each
`buyer;
`
`an offer generating program, comprising computer-readable
`instructions that cause the processor to periodically update
`the sell data for each seller in the plurality of sellers so that
`the sell data for each seller includes a specific offer for the
`buyer, the specific offer including a specific sell price for the
`buyer, wherein said offer generating program calculates the
`specific sell price by adding the transaction cost associated
`with said buyer to the net sell price; and
`
`that periodically
`a conformance monitoring program
`compares the bid data for the buyer to each specific offer for
`said buyer, and sends an alert to a particular seller in the
`plurality of sellers and the buyer if a conformance is detected
`between the bid data for said buyer and the particular seller’s
`specific offer for said buyer;
`
`wherein, the processor, operating under control of the
`conformance monitoring program, detects the conformance
`when
`
`(i) the updated bid price in the bid data for the buyer
`matches the specific sell price in the particular seller’s
`specific offer for the buyer,
`
`(ii) a quality specification in the bid data for said buyer
`matches a quality attribute in the particular seller’s
`specific offer for the buyer,
`
`(iii) a type specification in the bid data for said buyer
`matches a type attribute in the particular seller’s specific
`offer for the buyer, and
`
`(iv) a color specification in the bid data for said buyer
`matches a color attribute in the particular seller’s specific
`offer for the buyer.
`
`Ex. 1001, 17:58–18:53 (line breaks added to final limitation).
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`D.
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`Asserted Ground of Unpatentability
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`Petitioner presents one challenge to claims 1–14, asserting the claims
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`are unpatentable under 35 U.S.C. § 103(a), as having been obvious over
`
`Reding (Ex. 1004, U.S. Patent App. Pub. No. 2002/0046127 A1, pub.
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`Apr. 18, 2002) and Adam (Ex. 1005, U.S. Patent App. Pub.
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`No. 2002/0069156 A1, pub. June 6, 2002). See Pet. 2.
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`III. ANALYSIS
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`A.
`
`Claim Construction
`
`In this proceeding, when construing the claims of the ’685 patent, we
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`use the broadest reasonable construction in light of the ’685 patent
`
`specification. See 37 C.F.R. § 42.100(b) (2016)1; Cuozzo Speed Techs., LLC
`
`v. Lee, 136 S. Ct. 2131, 2144–46 (2016) (upholding the broadest reasonable
`
`construction standard); Office Patent Trial Practice Guide, 77 Fed. Reg.
`
`48,756, 48,764 (Aug. 14, 2012).
`
`Petitioner proposes the claim terms appearing in the “Definitions”
`
`section of the ’685 patent should be construed as so defined. Pet. 11 (citing
`
`Ex. 1001, 11:15–13:29). Petitioner additionally proposes a construction for
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`the “net sell price” term in claim 1. Id. at 11–12.
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`The Preliminary Response does not respond to Petitioner’s proposals,
`
`or otherwise propose any specific claim constructions.
`
`
`1 A recent amendment to this rule does not apply here, because the Petition
`was filed before November 13, 2018. See “Changes to the Claim
`Construction Standard for Interpreting Claims in Trial Proceedings Before
`the Patent Trial and Appeal Board,” 83 Fed. Reg. 51340, 51340 (“DATES”).
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`We determine no explicit constructions of any claim terms are needed
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`to resolve the issues presented, at this preliminary stage, by the arguments
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`and evidence of record. See Nidec Motor Corp. v. Zhongshan Broad Ocean
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`Motor Co. Ltd., 868 F.3d 1013, 1017 (Fed. Cir. 2017) (per curiam) (claim
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`terms need to be construed “only to the extent necessary to resolve the
`
`controversy”) (quoting Vivid Techs., Inc. v. Am. Sci. & Eng’g, Inc., 200 F.3d
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`795, 803 (Fed. Cir. 1999)).
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`B. Obviousness over Reding and Adam
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`Petitioner asserts claims 1–14 of the ’685 patent are unpatentable
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`under 35 U.S.C. § 103(a) as having been obvious over Reding and Adam.
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`Pet. 12–57. Patent Owner disputes the substantive bases of Petitioner’s case
`
`for obviousness. Prelim. Resp. 37–43. Patent Owner also asserts we should
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`exercise our discretion to deny institution under 35 U.S.C. § 325(d). Prelim.
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`Resp. 16–37.
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`We have reviewed the arguments and evidence of record. Given the
`
`evidence of record, Petitioner has demonstrated a reasonable likelihood of
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`prevailing on its assertions as to claim 1, and we, therefore, institute review
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`of claims 1–14 as having been obvious over Reding and Adam. Further, we
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`decline to exercise our discretion under § 325(d) to deny institution.
`
`1.
`
`Law of Obviousness
`
`A patent claim is unpatentable under 35 U.S.C. § 103 if the
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`differences between the claimed subject matter and the prior art are such that
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`the subject matter, as a whole, would have been obvious at the time the
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`invention was made to a person having ordinary skill in the art to which said
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`subject matter pertains. KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 406
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`(2007). The question of obviousness is resolved on the basis of underlying
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`factual determinations including: (1) the scope and content of the prior art;
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`(2) any differences between the claimed subject matter and the prior art;
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`(3) the level of ordinary skill in the art; and (4) objective evidence of
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`nonobviousness, if made available in the record. See Graham v. John Deere
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`Co., 383 U.S. 1, 17–18 (1966).
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`2.
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`Level of Ordinary Skill in the Art
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`Petitioner contends a person having ordinary skill in the art pertaining
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`to the ’685 patent “would have at least a bachelor’s degree in agricultural
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`business marketing or a related discipline, and a year or less of actual
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`experience related to trading of agricultural commodities.” Pet. 13;
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`Ex. 1002 ¶ 39. “Alternatively,” such a person “might not even have a
`
`bachelor’s degree but would need at least a year to two years of experience
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`trading in agricultural commodities.” Pet. 13; Ex. 1002 ¶ 39. This person
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`further “would be required to have only a generalized, basic understanding
`
`of computer hardware and its interaction with software (e.g., that computer
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`processors perform instructions encoded into software programs), and would
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`collaborate with others having specialized skills with regard to software
`
`programming.” Pet. 13; Ex. 1002 ¶ 40.
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`The Preliminary Response does not take a position as to the level of
`
`ordinary skill in the art.
`
`We determine on the current record that the level of ordinary skill
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`proposed by Petitioner is consistent with the ’685 patent and the asserted
`
`prior art. We adopt that level in deciding whether to institute trial.
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`3.
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`Reding Disclosure
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`Reding discloses a system and method for automated commodities
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`transactions, including an automatic hedging function, to occur within limits
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`defined by the participants. Ex. 1004, Title, ¶ 2. Figure 4 of Reding is
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`reproduced below:
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`Figure 4 is a schematic diagram of Reding’s system. Id. ¶ 25. Net
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`market 45 effectuates commodity transactions between buyers and sellers, as
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`
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`follows.
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`Producer 15 has a quantity of the commodity available for sale. Id.
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`¶¶ 5, 26.
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`Elevator operator 20 may buy the commodity from producer 15. Id.
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`¶¶ 5, 27. Central commodities exchange 25, such as the Chicago Board of
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`Trade, provides a trading price for the commodity. Id. ¶¶ 6, 27. Operator 20
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`may calculate an offer price for purchasing the commodity from
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`producer 15, called the operator’s “flat price,” by subtracting the operator’s
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`basis from the CBOT trading price. Id. ¶¶ 6–8, 13, 27.2
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`Operator 20 purchases the commodity in order to sell it to another
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`buyer at “a very narrow margin,” which “translates into a high degree of
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`risk” of CBOT trading price fluctuations between the time operator 20
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`agrees to purchase the commodity and the time operator 20 sells the
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`commodity. Id. ¶ 9. “To manage that risk, the elevator operator . . . will
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`place a hedge order” on a futures market for the commodity, at the time
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`operator 20 agrees to purchase the commodity from producer 15. Id. ¶¶ 10–
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`12, 27.
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`Reding indicates that it had been known for the interactions between
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`various producers and operators, and the operators’ concomitant securing of
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`a hedge order on a futures market, to be performed via telephone
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`communication. Id. ¶ 13. That known process was “slow and tedious,” and
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`“at times . . . completely incapable of functioning.” Id. ¶¶ 14, 29–31, 33. To
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`improve the process, Reding’s net market 45 “provide[s] an automated
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`service . . . facilitating the completion of commodities transactions.” Id.
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`¶¶ 15–16, 34–36.
`
`
`2 Paragraph 8 states the operator “adds” a basis to the CBOT trading price,
`but then provides an example in which the basis is subtracted from the
`CBOT trading price. The latter makes more sense in context. See Ex. 1004
`¶¶ 6–8, 13, 27.
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`11
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`Accordingly, each operator 20 provides the operator’s basis for the
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`commodity to net market 45, and net market 45 communicates with
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`commodities exchange 25 on a real-time basis to determine each operator’s
`
`flat price for the commodity, for display to all of the producers. Id. ¶¶ 18,
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`34, 40–46 (Fig. 3 steps 200–240). Each operator 20 may, additionally,
`
`authorize net market 45 to conduct certain automatic hedging transactions on
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`behalf of the operator. Id. ¶ 48.
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`Each producer 15 provides “certain data about producer 15 sufficient
`
`to allow Net Market 45 to conduct transactions between producer 15 and a
`
`given elevator operator 20.” Id. ¶ 49. Each producer 15 may view the
`
`various commodity bids posted by the various operators. Id. ¶ 50. Each
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`producer 15 may transmit an offer to sell the commodity, and if “the
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`producer’s 15 offer is within the parameters established by elevator
`
`operator 20 the system recognizes that a transaction can be facilitated and a
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`contract could be generated.” Id. Upon such recognition, net market 45
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`automatically attempts to obtain a hedging futures contract on behalf of
`
`operator 20. Id. ¶¶ 51–53 (Fig. 3 steps 290–330). If the hedging contract is
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`obtained successfully, net market 45 automatically generates a contract
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`between producer 15 and operator 20 for the sale and purchase of the
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`commodity. Id. ¶¶ 17, 51, 53 (Fig. 3 step 340).
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`4.
`
`Adam Disclosure
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`Adam discloses an automated electronic trading platform for
`
`agricultural commodities. Ex. 1005, Title, ¶ 2. Figure 4 of Adam is
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`reproduced below:
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`Figure 4 illustrates a trading screen generated by central server 12 for
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`display on terminal devices 10 utilized by potential buyers and potential
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`sellers of agricultural commodities. Id. at Fig. 1, ¶¶ 19, 25, 28, 43. Sellers
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`submit ask orders, and buyers submit bid orders, both of which are reflected
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`on the trading screen of Figure 4. Id. ¶¶ 31, 34, 45–46, 53–54. Central
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`server 12 may automatically review the various ask orders and bid orders
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`“against a set of established criteria and, once the criteria are met . . .
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`automatically place a purchase order.” Id. ¶¶ 78, 85. “The set criteria might
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`be any one of a number of different purchase or sales criteria such as price
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`[and] quantity.” Id. ¶ 85.
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`5.
`
`Claim 1
`
`Petitioner provides detailed arguments and evidence, including the
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`Declaration of Dr. Andrew Malcolm McKenzie (Ex. 1002), in support of
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`contending that claim 1 would have been obvious over Reding and Adam.
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`Pet. 22–39, 45–54. Petitioner provides two alternative theories of
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`obviousness — a first theory based on modifying Reding in view of Adam,
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`and a second theory based on modifying Adam in view of Reding — both of
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`which in Petitioner’s view lead to the subject matter recited in claim 1.
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`Pet. 45–54. We discuss Petitioner’s case for obviousness and Patent
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`Owner’s substantive rebuttals, as presently presented, organized by the order
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`of limitations as they appear in claim 1. We then consider our discretion to
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`deny institution under 35 U.S.C. § 325(d).
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`a)
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`“A commodity purchasing system, comprising: a data storage device
`[and] a processor connected to the data storage device”
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`Petitioner contends Reding’s net market 45 and Adam’s central
`
`server 12 both comprise a data storage device and a processor to effectuate
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`automated purchasing of agricultural commodities. Pet. 22–24 (citing
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`Ex. 1004 ¶¶ 34, 40, Fig. 4; Ex. 1005 ¶¶ 2, 30, 33, Fig. 1; Ex. 1002 ¶¶ 92–
`
`94). The Preliminary Response does not dispute these contentions, which
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`we determine are sufficiently supported by the evidence presently in the
`
`record to justify institution of trial.
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`b)
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`“a buyer interface . . . to display to a buyer sell data received from a
`plurality of sellers”
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`Petitioner contends Reding discloses a buyer interface as a webpage
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`that net market 45 causes to be displayed on computers used by Reding’s
`
`buyers (e.g., elevator operator 20). Pet. 25 (citing Ex. 1004 ¶ 40; Ex. 1002
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`¶¶ 99–100). “However, Reding does not explicitly state that its interface is
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`used by the buyer to cause sell data from a plurality of sellers (e.g., a list of
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`seller ask prices) to be displayed in the interface.” Id. Petitioner contends
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`Adam discloses a buyer interface as a webpage that central server 12 causes
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`to be displayed on computers used by Adam’s buyers, including a plurality
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`of sellers’ offers. Id. at 24–25 (citing Ex. 1005 ¶¶ 25, 34, 43–45, 53,
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`Figs. 1 & 4; Ex. 1002 ¶ 98).
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`Petitioner contends it would have been obvious to modify Reding’s
`
`system, in light of Adam, so that Reding’s buyer interface would display sell
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`data received from a plurality of sellers. Pet. 47–49, 50. In Petitioner’s
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`view, this would have been done for the purpose of “providing even greater
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`automation of routine processes.” Id. at 47–49 (citing Ex. 1004 ¶ 15;
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`Ex. 1005 ¶ 9; Ex. 1002 ¶¶ 164–166, 170).
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`In the Preliminary Response, Patent Owner does not dispute that
`
`Adam discloses a plurality of sellers’ offers. Patent Owner contends
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`Petitioner and its witness Dr. McKenzie provide improperly conclusory
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`reasons for the proposed modification of Reding in view of Adam, and do
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`not cite any evidence in support of obviousness. Prelim. Resp. 39, 42–43.
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`Based on the present preliminary record, we disagree.
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`We determine that, based on the present record, Petitioner has
`
`provided a sufficiently persuasive reason for modifying Reding’s buyer
`
`interface to display sell data received from a plurality of sellers. See, e.g.,
`
`KSR v. Teleflex, 550 U.S. at 418 (“Often, it will be necessary . . . to
`
`determine whether there was an apparent reason to combine the known
`
`elements in the fashion claimed . . . .”) (emphasis added) (citing In re Kahn,
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`441 F.3d 977, 988 (Fed. Cir. 2006)). In particular, the evidence of record
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`supports Petitioner’s contention that this would advantageously provide even
`
`greater automation of routine processes. See Pet. 47–49; Ex. 1004 ¶ 15;
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`Ex. 1005 ¶ 9; Ex. 1002 ¶¶ 164–165, 170–171. However, we note the parties
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`will have opportunities to further develop the record during trial, including
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`the opportunity to cross-examine declarants and submit additional briefing
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`regarding disputed issues.
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`c)
`
`“a buyer interface . . . to receive from the buyer hedge transaction
`data and bid data, said hedge transaction data including a hedge
`commodity, and said bid data including a basis for a desired commodity”
`-- and --
`“a network connection to a commodity exchange that periodically receives a
`real-time exchange rate quote for the hedge commodity”
`-- and --
`“a bid generating program . . . to periodically update the bid data for said
`buyer so that the bid data includes an updated bid price for the desired
`commodity . . . by subtracting the basis from the real-time exchange rate
`quote”
`
`Petitioner contends Reding’s buyer enters hedge transaction data into
`
`the buyer interface, including a hedge commodity. Pet. 25 (citing Ex. 1004
`
`¶¶ 41, 48, 51–52, Fig. 3; Ex. 1002 ¶ 102). Petitioner contends Reding’s
`
`buyer also enters bid data into the buyer interface, including the buyer’s
`
`basis. Id. at 25–26 (citing Ex. 1004 ¶¶ 41–42; Ex. 1002 ¶ 105). Petitioner
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`asserts Reding’s net market 45 periodically receives a real-time exchange
`
`rate quote for the hedge commodity from commodities exchange 25, and
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`updates the buyer’s bid data by subtracting the buyer’s basis from the
`
`real-time exchange rate quote. Id. at 26–28 (citing Ex. 1004 ¶¶ 34, 40, 43,
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`46, Fig. 3; Ex. 1002 ¶¶ 107, 110). The Preliminary Response does not
`
`dispute these contentions, which we determine are sufficiently supported by
`
`the evidence presently in the record to justify institution of trial.
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`Alternatively, Petitioner asserts that these limitations are disclosed by
`
`Adam in combination with Reding. In this separate challenge, Petitioner
`
`acknowledges “Adam does not explicitly teach a buyer hedging the buy of a
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`purchase commodity through the sale of a futures contract.” Id. at 26, 27,
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`47. According to Petitioner, it would have been obvious to modify Adam’s
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`system, in light of Reding, so that Adam’s buyer interface would receive
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`hedge transaction data. Id. at 47–48, 50–51. In Petitioner’s view, this would
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`have been done because “hedging the purchase order protects buyers from
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`the risk of loss due to changes in price,” and Adam’s buyers would find
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`“automatic hedging to be an attractive feature because it would save them
`
`the slow and tedious manual process of procuring a futures contract for each
`
`purchase contract.” Id. at 47–48 (citing Ex. 1004 ¶ 15; Ex. 1005 ¶ 9;
`
`Ex. 1002 ¶¶ 163–164, 172–173).
`
`Petitioner contends Adam also does not disclose entering the buyer’s
`
`basis into the buyer interface. Id. at 26, 27–28. According to Petitioner, it
`
`would have been obvious to modify Adam’s system, in light of Reding, so
`
`that Adam’s buyer interface would receive the buyer’s basis and central
`
`server 12 would automatically update the buyer’s bid data based on a
`
`real-time exchange rate quote for the hedge commodity from a commodities
`
`exchange. Id. at 47–49, 50–51. In Petitioner’s view, this would have been
`
`done for the purpose of “providing even greater automation of routine
`
`processes.” Id. (citing Ex. 1004 ¶ 15; Ex. 1005 ¶ 9; Ex. 1002 ¶¶ 164–166,
`
`172–173).
`
`Patent Owner contends Petitioner and its witness Dr. McKenzie
`
`provide improperly conclusory reasons for the proposed modification of
`
`Adam in view of Reding, and do not cite any evidence in support of
`
`17
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`IPR2018-01412
`Patent 7,991,685 B2
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`obviousness. Prelim. Resp. 39, 42–43.3 Based on the present preliminary
`
`record, we disagree.
`
`We determine that, based on the present record, Petitioner has
`
`provided a sufficiently persuasive reason for modifying Adam’s commodity
`
`trading system to receive hedge transaction data so that central server 12
`
`may automatically obtain a hedging order for the buyer. In particular, the
`
`evidence of record supports Petitioner’s contention that this would
`
`advantageously protect buyers from the risk of loss due to changes in price,
`
`and provide even greater automation of routine processes. See Pet. 47–48,
`
`50–51; Ex. 1004 ¶ 15; Ex. 1005 ¶ 9; Ex. 1002 ¶¶ 162–165, 172–173.
`
`Petitioner has also provided a sufficiently persuasive reason for
`
`modifying Adam’s commodity trading system to receive the buyer’s basis so
`
`that central server 12 may automatically update the buyer’s bid data based
`
`on real-time exchange rate quotes from a commodities exchange. In
`
`particular, the evidence of record supports Petitioner’s contention that this
`
`would advantageously provide even greater automation of routine processes.
`
`See Pet. 47–49, 50–51; Ex. 1004 ¶ 15; Ex. 1005 ¶ 9; Ex. 1002 ¶¶ 162–165,
`
`172–173. However, we note the parties will have opportunities to further
`
`develop the record, including the opportunity to cross-examine declarants
`
`and submit additional briefing regarding disputed issues.
`
`
`3 Patent Owner also contends that “Dr. McKenzie’s testimony—even if
`considered—cannot supply claim limitations that are missing in the prior
`art.” Prelim. Resp. 41. While that is true, Patent Owner provides no
`argument or evidence in support of this contention; it merely provides a
`block quotation from the August 2018 Update to the Office Patent Trial
`Practice Guide. Id. at 41–42. Absent more, we cannot credit this
`contention.
`
`18
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`IPR2018-01412
`Patent 7,991,685 B2
`
`
`d)
`
`“a plurality of seller interfaces . . . to display to the plurality of
`sellers, respectively, the bid data received from the buyer”
`
`Petitioner contends Reding’s net market 45 works with a plurality of
`
`sellers such as producer 15 having interfaces with net market 45, and
`
`multiple buyers such as operator 20 having interfaces with net market 45.
`
`Pet. 29 (citing Ex. 1004 ¶ 34, Fig. 2; Ex. 1002 ¶ 115). Petitioner contends
`
`Reding’s seller interfaces display bid data received by net market 45 from
`
`the various buyers. Id. (citing Ex. 1004 ¶¶ 18, 40, 50; Ex. 1002 ¶ 115).
`
`Petitioner also contends Adam’s Figure 4 illustrates a seller interface,
`
`which is presented to a plurality of sellers, and displays bid data received
`
`from various buyers. Id. at 29–30 (citing Ex. 1005 ¶¶ 25, 34, 43–45, 53, 58;
`
`Ex. 1002 ¶¶ 117–119).
`
`The Preliminary Response does not dispute these contentions, which
`
`we determine are sufficiently supported by the evidence presently in the
`
`record indicated above as being cited by Petitioner to justify institution of
`
`trial.
`
`e)
`“a plurality of seller interfaces . . . to receive the sell data from the
`plurality of sellers, said sell data including, for each seller, a net sell price
`for the desired commodity and a transaction cost associated with selling the
`desired commodity to the buyer . . . based on a cost each seller will incur or
`avoid in connection with delivering the desired commodity at a time and a
`location specified by said each buyer”
`
`Petitioner contends Reding “implicitly discloses” each seller (e.g.,
`
`producer 15) provides sell data to net market 45 including a net sell price
`
`and a transaction cost based on delivering the commodity at a time and
`
`location specified by a buyer. Pet. 30–32 (citing Ex. 1004 ¶¶ 19, 26, 33, 41,
`
`45, 55; Ex. 1002 ¶¶ 120–124). In support, Petitioner cites Reding’s
`
`19
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`
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`IPR2018-01412
`Patent 7,991,685 B2
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`disclosure that each buyer (e.g., operator 10) provides a basis to net
`
`market 45, including “the anticipated costs associated with marketing and
`
`transporting the product” to be incurred by the buyer. Pet. 31–32 (emphasis
`
`added); Ex. 1004 ¶¶ 41, 45; Ex. 1002 ¶ 121. Further, Reding discloses that
`
`net market 45 uses the buyer’s basis to calculate the buyer’s flat price, by
`
`subtracting the basis from real-time pricing data obtained from a
`
`commodities exchange. Pet. 31–32; Ex. 1004 ¶ 45; Ex. 1002 ¶ 121.
`
`Petitioner, finally, cites the following disclosure in Reding:
`
`The present invention is a system that facilitates the
`interaction between producers, intermediaries and a commodities
`exchange. . . . The system has been described as giving certain
`automated functionality in the representation of the buyer of a
`commodity or other product. This function can be provided for
`both the buyer and the seller or either one individually.
`
`Ex. 1004 ¶ 55; Pet. 31; Ex. 1002 ¶¶ 120, 122–123. In Petitioner’s view,
`
`based on these combined disclosures of Reding: “Transposing Reding’s
`
`system from buyer/operator to seller/producer, as specifically contemplated
`
`in Reding, a POSITA would understand Reding to fundamentally teach that
`
`a party [including a seller] would factor in its own freight costs into any
`
`particular bid or offer.” Pet. 32; Ex. 1002 ¶ 122. In other words:
`
`[I]f Reding were revised as [Reding] instructs to offer the same
`functionality for sellers as explicitly disclosed for buyers, it
`would require the seller to enter its transportation costs for each
`offer, and would add those costs to any other costs and profit
`margin (i.e., the net sell price) to create a flat sell price.
`
`Pet. 32–33 (emphasis added); Ex. 1002 ¶ 123.
`
`20
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`IPR2018-01412
`Patent 7,991,685 B2
`
`
`Patent Owner interprets Petitioner’s foregoing “implicit” disclosure
`
`analysis to rely on an inherent disclosure in Reding.4 Prelim. Resp. 38–39,
`
`40–41. Patent Owner then asserts Petitioner’s analysis and Dr. McKenzie’s
`
`testimony fail to meet the “high standard” of an inherent disclosure, which
`
`requires establishing that the limitation at issue is “necessarily” and not just
`
`probably present in Reding. Id.
`
`Based on the present preliminary record, we disagree with Patent
`
`Owner’s reading that Petitioner’s “implicit” disclosure analysis on pages 31
`
`through 33 of the Petition relies on an inherent disclosure in Reding of the
`
`claimed subject matter at issue. The Petition, in other sections, clearly
`
`articulates an inherent disclosure analysis. See Pet. 27 (Reding’s described
`
`“functionality would be understood as necessarily the result of a software
`
`program acting via the processor”), 29–30 (Adam’s seller “interface is
`
`necessarily stored on the data storage device of server 12”), 35 (it “is
`
`necessary” for Reding’s net market 45 to have a “program” to function as
`
`described ), 36 (“[a] POSITA would understand that [Adam’s] server 12
`
`inherently has a monitoring program . . .”), 45 (“[i]t is inherent that the
`
`conformance monitoring program would
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