[00:00:00] Speaker 03: Good morning, Your Honors. [00:00:01] Speaker 03: May it please the Court. [00:00:02] Speaker 03: I'm John Harding, representing the appellant in this case, Andrew Ian Douglas. [00:00:08] Speaker 03: I'd also like to introduce to my immediate right is Joseph Milstein, who is co-counsel and also was the counsel for Mr. Douglas in connection with the proceedings before the PTO and the PTAB. [00:00:20] Speaker 03: And next to Mr. Milstein is Mr. Douglas. [00:00:24] Speaker 03: I think it's important at the outset to make sure that the Court understands this invention. [00:00:30] Speaker 03: and to give you a very real world example. [00:00:33] Speaker 03: During this invention that Mr. Douglas created and filed way back in the year 2000, during the time we're having this conversation, it would permit any one of you to actually obtain a final binding insurance policy for your home that you could hold in your hand and that is effective immediately [00:00:59] Speaker 03: and you would accomplish that in a single session interacting directly with the insurance company in a single session via the computer. [00:01:09] Speaker 04: The government raises Alice. [00:01:11] Speaker 04: How do you deal with that? [00:01:12] Speaker 03: Yes. [00:01:13] Speaker 03: I'd be happy to deal with that in several ways because we think, in fact, Alice is helpful to our position. [00:01:22] Speaker 03: First, I'd like to note that certainly there was no finding by the board in the proceedings [00:01:29] Speaker 03: that the subject matter of Mr. Douglas' patent application was not a patentable concept under Section 101. [00:01:40] Speaker 03: The Alice case starts with the proposition that you are dealing with an abstract proposition or abstract concept that is not patentable. [00:01:51] Speaker 03: It's not eligible for a patent. [00:01:54] Speaker 02: And you would agree, I would assume, that the idea of obtaining insurance is not a patentable concept. [00:01:59] Speaker 03: Yes, I would. [00:02:00] Speaker 02: And that is not... And so your invention adds obtaining insurance through a computer. [00:02:06] Speaker 02: Isn't that explicitly, I mean, exactly what Alice said is... No, it's not at all. [00:02:11] Speaker 03: I mean, let me just continue with Alice. [00:02:14] Speaker 03: Alice makes it clear that if you've got simply an abstract concept and you say, do it on a computer, that doesn't get you anywhere. [00:02:23] Speaker 03: So if your invention is E equals MC squared, [00:02:27] Speaker 03: And you then say, do that on a computer, that gets you nowhere. [00:02:32] Speaker 03: The concept here is actually delivering a tangible product. [00:02:38] Speaker 03: It is not an abstract concept. [00:02:42] Speaker 02: Well, I mean, that seems quibbling. [00:02:44] Speaker 02: If I go into an insurance office and the agent is authorized to issue a policy on the spot, I go in, they issue me my policy, I walk out. [00:02:57] Speaker 02: Are you saying that's a patentable concept? [00:02:59] Speaker 02: Because the insurance policy is issued on the spot? [00:03:02] Speaker 03: No, we are not. [00:03:03] Speaker 03: We are saying... So issuing it on the spot on a computer is patentable. [00:03:08] Speaker 03: First of all, if you go to an agent, you are not dealing with the insurance company by definition. [00:03:13] Speaker 02: Well, so I go to the insurance company. [00:03:15] Speaker 03: It doesn't exist in the real world. [00:03:18] Speaker 02: Well, let's assume it does. [00:03:21] Speaker 02: I mean, it might. [00:03:23] Speaker 02: I mean, is that a patentable? [00:03:27] Speaker 02: Well, it doesn't matter. [00:03:28] Speaker 02: I'm asking you a hypothetical. [00:03:29] Speaker 02: Is that a patentable concept? [00:03:31] Speaker 02: If I walk into my insurance office and say, I want an insurance policy for my house, and they say, what kind of coverage you want? [00:03:38] Speaker 02: I sign it all, I give them my credit card, and they say, here's your policy. [00:03:41] Speaker 02: Is that a patentable concept? [00:03:43] Speaker 03: That's not defining a process. [00:03:44] Speaker 03: And what I want to make clear is, [00:03:46] Speaker 03: We are not claiming... No, you didn't answer my question. [00:03:49] Speaker 02: Is that, doing it in person, a patentable concept? [00:03:52] Speaker 03: Is the concept of going in person and filling out an application? [00:03:55] Speaker 02: And getting the insurance policy? [00:03:56] Speaker 02: No. [00:03:57] Speaker 02: So the notion of getting an insurance policy on the spot is not patentable? [00:04:03] Speaker 03: That I would agree with. [00:04:06] Speaker 02: But your idea then of getting the insurance policy on the spot through the computer is patentable? [00:04:11] Speaker 03: It's not through the computer. [00:04:13] Speaker 03: What's critical here is that you are, that is, a process developed to have a direct interaction with an insurer in a single session in real time. [00:04:24] Speaker 03: Yes, is it done via a computer? [00:04:26] Speaker 03: Is that the means by which information is transmitted? [00:04:30] Speaker 03: And if you look at claims 39 and 40, which are the heart of the claims, is that you do it, yes, using a computerized tool, but you are in direct communication [00:04:41] Speaker 03: with the insurer, the insurer makes a decision and if in fact it's approved. [00:04:47] Speaker 02: I thought you just said that if I did it in person and the insurer made an immediate decision and gave me a policy. [00:04:52] Speaker 03: If you walk out with a policy, I don't think that would be a patentable, that's not a process. [00:05:00] Speaker 03: Sure it is. [00:05:01] Speaker 02: I mean I can write a patent that says this is a patent for getting an insurance policy. [00:05:06] Speaker 02: One, go to the insurance office. [00:05:08] Speaker 02: Two, talk to the insurance agent. [00:05:10] Speaker 02: Three, give them money. [00:05:12] Speaker 02: Four, get the signed insurance policy. [00:05:15] Speaker 02: That's a process. [00:05:16] Speaker 02: It doesn't sound like a patentable process, but it's a process. [00:05:19] Speaker 02: Your patent seems to have all those steps done through a computer. [00:05:26] Speaker 03: It uses a computer-mediated session as the technology to accomplish the result. [00:05:30] Speaker 03: Absolutely. [00:05:32] Speaker 03: There's no question about that. [00:05:34] Speaker 03: But to get back to your question on Alice, Alice makes it clear and reiterates [00:05:39] Speaker 03: in numerous occasions that if you have an abstract concept and we don't agree that getting a tangible policy, which if you did it right now while we're talking and at the conclusion of this hearing, you in your inbox had a policy of insurance and then one hour later, your house burns down, you're covered. [00:06:03] Speaker 03: That didn't exist. [00:06:05] Speaker 03: anywhere in the real world before this concept. [00:06:09] Speaker 01: You've spoken several times about getting something tangible. [00:06:13] Speaker 01: Yes. [00:06:13] Speaker 01: A, what do you mean? [00:06:14] Speaker 01: I mean, A... I got to finish my question. [00:06:17] Speaker 01: I'm sorry, Your Honor. [00:06:18] Speaker 01: That's why I started with A. A, what do you mean? [00:06:21] Speaker 01: And B, where is that requirement in the claims? [00:06:26] Speaker 03: Okay. [00:06:26] Speaker 03: First of all, it's physical because you're going to get not a [00:06:31] Speaker 03: what the other prior that was referred to cites, some indefinite commitment or representation that in the future you might get a policy, you get your full complete policy of insurance at the time. [00:06:48] Speaker 01: So that's your A card. [00:06:48] Speaker 01: I honestly don't know if this makes any difference, but if what you got was an acknowledgement, a sentence, [00:06:56] Speaker 01: sent to you, and let's assume the electronic representation is tangible. [00:07:00] Speaker 01: You have a sentence that says, we State Farm hereby formally execute the policy of insurance to cover whatever it is. [00:07:15] Speaker 01: The 30 page actual policy with 120 clauses in it will follow. [00:07:25] Speaker 01: Is that, is the one sentence acknowledgement what you mean by a tangible policy in hand? [00:07:32] Speaker 03: No, I mean the 30 page document with all the terms and conditions. [00:07:37] Speaker 01: So assuming that's what you, that's what they have committed themselves to, but your patent doesn't cover the situation where the only thing you get during the interaction is the formal contractual agreement [00:07:55] Speaker 01: whose content is to be supplied to you later? [00:07:59] Speaker 03: Well, if it's formal, I mean, the way it's phrased... The word you want in binding, a binder. [00:08:04] Speaker 03: Yes. [00:08:05] Speaker 03: A binder in the insurance world is completely different. [00:08:09] Speaker 03: A binder is a representation that in the future you are covered, not that you are covered at this exact moment in time, have in effect immediately now a full and complete [00:08:25] Speaker 03: policy of insurance. [00:08:26] Speaker 01: I certainly over the years have had lots of experience where I call my insurance agent and say, I need a policy on this. [00:08:35] Speaker 01: And at the end of the conversation, he says, you're covered. [00:08:39] Speaker 01: I say, as of when? [00:08:40] Speaker 01: He says, as of now. [00:08:41] Speaker 01: And 10 days later, I get something in the mail. [00:08:44] Speaker 01: Right. [00:08:45] Speaker 03: I mean, I think ours is permissive. [00:08:48] Speaker 01: How does that situation, taking out the computer part of it, [00:08:53] Speaker 01: fit with your claims? [00:08:55] Speaker 03: Well, I think our claim, in the way it's phrased, is that at the end of the communication session, you have a communication that comprises a policy of insurance. [00:09:09] Speaker 03: So, to me, that is the distinction. [00:09:11] Speaker 03: It's the communication itself. [00:09:14] Speaker 03: If I represent first. [00:09:18] Speaker 03: I beg your pardon? [00:09:19] Speaker 03: If this all assumes that the applicant... No, no. [00:09:21] Speaker 04: When a judge is talking, you don't talk. [00:09:24] Speaker 04: You listen, okay? [00:09:27] Speaker 04: If I represent an insured who obtained the statement, I represent Judge Toronto. [00:09:37] Speaker 04: He called his agent. [00:09:39] Speaker 04: The agency said, you're covered from now. [00:09:42] Speaker 04: Is not the insurance company bound by that agent as of that moment? [00:09:49] Speaker 04: I think that sort of couch on insurance law, volume one. [00:09:53] Speaker 03: Well, it depends on who, when you use agent, there are agents who are deemed to be agents for the policy holder and ones that are deemed to be agents of the insurance company. [00:10:06] Speaker 03: And there's actually a lot of case law if it's an independent agent, what the scope of their authority is. [00:10:15] Speaker 02: But certainly if an agent... But assuming they have authority to bind the insurance company, that verbal commitment [00:10:23] Speaker 02: on the phone that you're covered and you qualify as of immediately is sufficient to buy in the insurance company and you're covered and you have a policy, right? [00:10:37] Speaker 03: Well, you would have coverage. [00:10:39] Speaker 03: Yeah. [00:10:39] Speaker 03: Yeah. [00:10:39] Speaker 03: I would assume that. [00:10:40] Speaker 02: And you have a policy, you may not have it in hand, but you've agreed to certain terms. [00:10:47] Speaker 02: You've agreed to certain coverage. [00:10:49] Speaker 03: That could be, I mean, it's hard for me to answer. [00:10:52] Speaker 02: Well, I mean, how could you otherwise have coverage if you haven't talked about what terms you want on the phone? [00:11:00] Speaker 03: So here's the question. [00:11:03] Speaker 02: OK. [00:11:03] Speaker 02: It seems to me that you are trying to distinguish that from your invention. [00:11:08] Speaker 02: But I'm not sure that your invention goes further and says not only do you get a commitment immediately effective to insurance coverage, [00:11:18] Speaker 02: But you get the full insurance policy with all the clauses and all the boilerplate and stuff like that. [00:11:23] Speaker 02: Is that what your position is? [00:11:24] Speaker 03: Yes. [00:11:25] Speaker 02: Well, where in the claims does that say it? [00:11:27] Speaker 02: Because I don't see it. [00:11:28] Speaker 03: It's in 39 and 40. [00:11:29] Speaker 03: It says the communication. [00:11:31] Speaker 02: So it's not in 19. [00:11:33] Speaker 02: It's not in any of the claims prior to 39 or 40. [00:11:35] Speaker 03: Correct. [00:11:36] Speaker 03: It's 39. [00:11:37] Speaker 02: So if that's the patent bill part, then you're 19 and all those claims before that don't include that. [00:11:44] Speaker 03: They don't include that. [00:11:45] Speaker 02: So they're probably obvious. [00:11:47] Speaker 02: I don't agree with that, but to the extent that there was any difference in the language and in our brief... Well, if we read the prior art as at least allowing the computer-based services to provide a commitment to give coverage immediately, those claims are covered. [00:12:03] Speaker 03: I don't agree. [00:12:05] Speaker 02: If that's the reading of the prior art, however... I know, we don't agree with that reading of the prior art, but if you do. [00:12:11] Speaker 02: So what we're talking about is you think, I guess in sub-clause E of... [00:12:17] Speaker 02: um, 39 that that last part is what distinguishes it because you actually get a written document as opposed to just an oral commitment that you're covered and here are the terms. [00:12:30] Speaker 03: Yes, your honor. [00:12:31] Speaker 03: And directly because you're interacting directly with the insurer, you're not using directly with the insurer and all this other stuff too. [00:12:40] Speaker 02: And all of our hypotheticals [00:12:42] Speaker 02: you're interacting directly with somebody that can buy the insurer. [00:12:46] Speaker 02: Are you saying it makes a difference that you're interacting with the insurer or you're interacting with an agent for an insurer that can buy them? [00:12:52] Speaker 03: Yes, because... Why? [00:12:54] Speaker 03: Because an agent... I don't think an agent could look at your application and without communicating with the insurance company just issue a policy. [00:13:05] Speaker 03: They do it all the time. [00:13:07] Speaker 04: You've got less than two minutes left. [00:13:09] Speaker 04: Do you want to reserve it or keep going? [00:13:11] Speaker 03: I will, unless you have any other specific questions at this time, the one thing I do want to point out is that the government's case on this is based on the insure reference and certainly a very significant issue that we've raised is the fact that apart from the fact that we think the insure references don't apply here because they're dealing with a system for getting quote [00:13:37] Speaker 03: getting preliminary information they are not for issuing a policy, but even if you accept the government's position on that, we then submitted timely rebuttal evidence that made it crystal clear that any reference in Intuit to providing any kind of commitment, binder, anything else for a policy was not in real time, was not to be effective at the time of the session, and the government simply ignored [00:14:07] Speaker 03: that rebuttal evidence in contravention of the Peasecki case, in contravention of their own manual for patent examination procedures. [00:14:17] Speaker 03: We brought it to their attention and we've cited in our brief the multiple times where we call this specific information to their attention and under the case law and under their own procedures, they were obligated to throw out the old decision to start over and to consider it. [00:14:35] Speaker 03: And they never once even mention it, mention that they gave any consideration to it, much less follow the procedure that they were obligated to do. [00:14:49] Speaker 00: Thank you. [00:14:52] Speaker 00: May it please the court. [00:14:55] Speaker 00: I'm happy to start wherever the court would desire. [00:14:57] Speaker 02: Could you address that part of claim 39 where it talks about actually providing [00:15:03] Speaker 02: the language, because that seems to me the only thing that isn't pretty clearly covered by the prior art. [00:15:09] Speaker 00: That's correct, Your Honor. [00:15:10] Speaker 00: So in claim 39 and claim 40, the argument that is made by Mr. Douglas is that the policy is delivered and it's live immediately. [00:15:22] Speaker 00: And that's the distinction from the prior art. [00:15:25] Speaker 00: But in the claim language, the only thing that says is that it delivers a policy. [00:15:29] Speaker 00: And other portions of their brief, they argue that. [00:15:32] Speaker 00: policies can be effective at other times. [00:15:35] Speaker 00: These are confessions that they've made. [00:15:36] Speaker 00: The policy does not necessarily need to be live immediately. [00:15:41] Speaker 00: And so certainly we believe that those, our position is that those claims, 3940, do not require the delivery of a policy that is active immediately. [00:15:51] Speaker 00: And so the distinction that they've raised just doesn't apply to those claims. [00:15:54] Speaker 00: And that's different, just as we were discussing earlier, different from the remainder of the claims, which only requires a communication, doesn't actually [00:16:02] Speaker 00: require the delivery of a policy. [00:16:04] Speaker 00: So we don't think that the distinction that they're making for either of those sets of claims actually applies to the claim language. [00:16:12] Speaker 00: So the claim language in this case is quite broad. [00:16:15] Speaker 00: And because of the breadth, it does sweep in the prior art, which includes the insurer market system. [00:16:22] Speaker 00: And I think the insurer market system is actually quite close to what they're claiming. [00:16:27] Speaker 00: It seems to have all the elements that are required. [00:16:30] Speaker 00: It sells insurance over the internet. [00:16:33] Speaker 00: The customer comes onto the site, gets real-time quotes, and then fills out credit card information. [00:16:39] Speaker 00: And it appears at the end, including information for a binder payment. [00:16:44] Speaker 00: And then at the end of the session, they have at least purchased some sort of coverage. [00:16:51] Speaker 00: And that seems to render obvious claims 39 and 40. [00:16:56] Speaker 00: So that's our position in this case. [00:16:58] Speaker 02: So you put the 101 section in our brief. [00:17:01] Speaker 02: Do you have any authority that we could actually rely on 101 as a ground to affirm? [00:17:06] Speaker 02: It seems like, you know, in an appeal from the PTAB that we can only affirm based upon the grounds raised in the administrative decision. [00:17:14] Speaker 00: So to address that, let me just take a step back and say that we put that section in there for two reasons. [00:17:21] Speaker 00: One is that there is some authority for the courtless Komiski case. [00:17:24] Speaker 00: There is some authority for the court getting at a 101 issue [00:17:28] Speaker 00: that was not raised on the appeal. [00:17:30] Speaker 00: And so we have in the past experienced interest from judges in cases where it may be particularly clear that the invention falls outside the scope of what is allowed by 101. [00:17:42] Speaker 00: And so we put that in there perhaps selfishly for our own self-preservation. [00:17:48] Speaker 00: The second reason why we put in there is because we like to notify the applicant of a problem that we think may [00:17:56] Speaker 00: even if they prevail. [00:17:58] Speaker 00: And we think our 103 and 112 paragraph 1 rejections are sound. [00:18:03] Speaker 00: Even if they prevail on those rejections, there's a substantial problem with the claims. [00:18:09] Speaker 00: And reading the written description of the application, there may be a substantial problem with any claims that emerge from this application. [00:18:18] Speaker 00: And so we put that in there just to give a little notice of a problem that we see going forward with this application. [00:18:26] Speaker 00: Those are the two reasons. [00:18:27] Speaker 00: And as I said, we believe the 103 rejection is quite good in this case. [00:18:32] Speaker 00: And we believe the written description rejection is also quite good because there's nothing in the application that discusses the delivery of an immediately active policy or a communication that the policy is immediately active. [00:18:48] Speaker 00: And so as a result, you can't narrow your claim to avoid what is very good prior art. [00:18:55] Speaker 00: That's our position for the 112. [00:18:57] Speaker 00: Just a few quick points. [00:19:01] Speaker 00: There's an argument that this is not analogous art. [00:19:04] Speaker 00: It's hard to imagine a more analogous piece of art. [00:19:07] Speaker 00: It is selling insurance on the internet. [00:19:09] Speaker 00: The claim is to selling insurance on the internet. [00:19:12] Speaker 00: The difference, whatever the difference may be, or whatever difference Mr. Douglas may perceive there is in the entity selling, that does not make this not analogous art under this court's law. [00:19:23] Speaker 00: And then I wanted to just make [00:19:25] Speaker 00: I wanted to make one other point, which is that there is some confusion, I think, here between anticipation and obviousness. [00:19:37] Speaker 00: The reason why not every element is in the one reference is because it's an obviousness rejection. [00:19:43] Speaker 00: If every element was in there, it would be an anticipation rejection. [00:19:47] Speaker 00: But as I said, I think it's a very strong 103 rejection. [00:19:50] Speaker 00: If there are no further questions, I'm happy to yield back the time. [00:20:00] Speaker 03: We'd just like to make a couple of points on rebuttal. [00:20:03] Speaker 03: Talk fast. [00:20:06] Speaker 03: They're going to be very fast. [00:20:07] Speaker 03: One, on the insure reference, the rebuttal evidence is clear. [00:20:13] Speaker 03: The statement we rely on says that if you do that process, the earliest you can have coverage is 1201 AM on the next business day. [00:20:24] Speaker 03: So if you did it today, you'd get your coverage bound in any form. [00:20:30] Speaker 03: on Monday, if Monday's a holiday, Tuesday. [00:20:33] Speaker 03: That is not in real time, and that was the heart of the rebuttal evidence that was never considered, which is dispositive, that what we're talking about and what our process is, is a real-time transaction, effective immediately. [00:20:48] Speaker 03: And then just secondly on Alice, the PTO, in fact, promulgated regulations in the CFR, [00:20:57] Speaker 03: on December 16th of last year, which exactly say, interpreting ALIS, that a patent would cover a transaction between, excuse me, that if you're talking about making a useful new improvement to something that might otherwise be considered abstract, that that is how the PTO itself defines ALIS [00:21:23] Speaker 03: and its limitations and that adding a specific limitation...