[00:00:57] Speaker 00:
Okay, the next case is number 15-13-36, Morse I against Facebook Incorporated.

[00:01:04] Speaker 00:
Mr. Bragler.

[00:01:06] Speaker 04:
Thank you, Your Honor.

[00:01:07] Speaker 04:
May it please the Honorable Court.

[00:01:08] Speaker 04:
On behalf of Appellant Steve Morse, I would like to focus my argument today on three issues.

[00:01:13] Speaker 04:
First, it was error to divide individual claim terms into multiple abstract ideas in the court below, and then to find them in eligible subject matter.

[00:01:24] Speaker 04:
Second, the patent solved here a computer-specific problem.

[00:01:29] Speaker 04:
They actually improved an existing technological process.

[00:01:33] Speaker 04:
And third, there was no evidence to support the fact findings that were ultimately made by the district court, and that was improper at the stage of a Rule 12C motion.

[00:01:44] Speaker 03:
Now, part of the difficulty here is neither side has addressed our decision in intellectual ventures from last July.

[00:01:51] Speaker 03:
Are you familiar with that?

[00:01:53] Speaker 03:
I am, Your Honor.

[00:01:54] Speaker 03:
Well, doesn't that require us to reject some of your arguments, for example, on the fact-finding issue?

[00:02:03] Speaker 03:
Well, Your Honor, I would say that specifically the... Don't you think you should have called that to our attention and discussed it?

[00:02:12] Speaker 04:
Your Honor, respectfully, I believe that came out after the briefs were submitted, and perhaps we should have submitted a notice of supplemental authority.

[00:02:20] Speaker 04:
I would point out that the intellectual ventures decision, we believe, highlights the problem with what the district court did in this particular case.

[00:02:28] Speaker 04:
In intellectual ventures, the court focused on two claims in two different patents.

[00:02:36] Speaker 04:
And among those claims, it found a single abstract idea in each one of those claims.

[00:02:41] Speaker 03:
Well, that's a different argument.

[00:02:42] Speaker 03:
But what it said, what the case said,

[00:02:45] Speaker 03:
was that the idea of tailoring the advertising to demographic and geographic features was an abstract idea, which you're arguing here is not, right?

[00:02:56] Speaker 04:
Well, Your Honor, we're not arguing that we don't have a claim that's merely directed to tailoring.

[00:03:03] Speaker 04:
And it wasn't actually an advertising.

[00:03:05] Speaker 04:
It is in our case.

[00:03:06] Speaker 04:
Of course, in Intellectual Ventures, it was a web presentation.

[00:03:09] Speaker 04:
We're not merely focusing on that.

[00:03:11] Speaker 04:
We have individual claims.

[00:03:13] Speaker 04:
that as part of the claim as a whole involved much more than just mere looking at demographics and tailoring the ad presentation to that.

[00:03:23] Speaker 04:
We have an entire bidding process that's part of the same claim.

[00:03:27] Speaker 01:
Right, but that's a different argument than Judge Stike was talking about.

[00:03:30] Speaker 01:
You did make the underlying argument that the trial court should have done a full factual analysis of whether tailoring ads to a particular demographic

[00:03:42] Speaker 01:
or geographic customer was something that was well known in the past.

[00:03:49] Speaker 01:
And intellectual ventures, our court has said that it is.

[00:03:54] Speaker 04:
In your honor, with respect to that limited point, I agree that there's commonality on that issue.

[00:03:59] Speaker 04:
But again, that highlights the problem with what the district court did here, because it assumed that there was an analog to the bidding process for placement of the advertisement.

[00:04:11] Speaker 04:
The bidding process was well known too, wasn't it?

[00:04:16] Speaker 04:
No, Your Honor.

[00:04:16] Speaker 04:
It's not a matter of whether it was well known.

[00:04:19] Speaker 04:
It's a matter of preemption in this case.

[00:04:21] Speaker 03:
No, but was it well known?

[00:04:23] Speaker 03:
The bidding process, I thought that the patent here itself recognized that that was well known in the prior art.

[00:04:31] Speaker 04:
So the bidding process here, the way the court analyzed it was it said that that was an abstract concept.

[00:04:38] Speaker 04:
In other words, that was a fundamental known concept, that is, bidding.

[00:04:43] Speaker 04:
And while we don't disagree that bidding in the abstract might be, the problem here is you can't take a single patent claim and dissect it into multiple abstract concepts and then attack it.

[00:04:56] Speaker 04:
At some point, any patent claim

[00:04:59] Speaker 04:
would suffer under that analysis.

[00:05:01] Speaker 04:
And that violates the direction that Alice gave to this court with respect to the caution that too broad an interpretation of the exclusionary principle would eviscerate all patent law.

[00:05:15] Speaker 04:
Because at some level, all patents are based upon combinations and rest upon and reflect laws of nature, natural phenomenon,

[00:05:26] Speaker 04:
are abstract concepts.

[00:05:27] Speaker 04:
And the problem here is that the court took two separate, very different abstract concepts and said that a single claim was directed to both.

[00:05:38] Speaker 04:
What the court didn't find, and what I think it was required to find, is that there would be preemption in the subject matter of either or both by these claims.

[00:05:49] Speaker 04:
The Supreme Court has recognized that preemption is a matter of degree.

[00:05:54] Speaker 01:
Of course, the court in Alice didn't say that all reconciliation would be preempted.

[00:06:03] Speaker 01:
I mean, it didn't go that far.

[00:06:05] Speaker 01:
It's a factor to consider, but it never said it's a requirement, did it?

[00:06:09] Speaker 04:
No.

[00:06:10] Speaker 04:
In fact, as it's articulated, it's whether there's a disproportionate risk that the judicial exception would be fully preempted.

[00:06:19] Speaker 04:
And here, there is no disproportionate risk that

[00:06:24] Speaker 04:
targeted advertising or bidding would be completely eviscerated or threatened by the combination of those two principles in one claim.

[00:06:38] Speaker 04:
Where do we stop?

[00:06:39] Speaker 04:
What is the principal reason for stopping at two?

[00:06:43] Speaker 04:
Why not 10?

[00:06:44] Speaker 04:
Why not 20 different abstract ideas within the same claim?

[00:06:49] Speaker 04:
At some level, if we allow district courts to break down claims,

[00:06:52] Speaker 04:
into any number of abstract ideas meant to claim that what's there is all abstract, no patent claim, no method claim like this will survive.

[00:07:01] Speaker 04:
What was the invention here?

[00:07:04] Speaker 04:
The invention here actually goes to a very specific customized internet advertising presentation and a method

[00:07:13] Speaker 04:
for deriving that.

[00:07:15] Speaker 04:
How is it different from what was being done before?

[00:07:17] Speaker 04:
So it's different in that it solves an existing problem that actually was not a brick and mortar problem.

[00:07:23] Speaker 04:
The existing problem was that methods of internet advertising, this is limited to that, were dependent entirely upon search results.

[00:07:34] Speaker 04:
So for example.

[00:07:35] Speaker 04:
So it introduced the notion of tailoring it to demographics.

[00:07:39] Speaker 04:
That you bring in these other factors.

[00:07:41] Speaker 04:
and then you add to that the bidding process based upon a map.

[00:07:45] Speaker 03:
But the tailoring of demographics is exactly what intellectual ventures we said is an abstract idea.

[00:07:51] Speaker 04:
But there was no bidding at all in intellectual ventures and that's a key element of the claim.

[00:07:57] Speaker 04:
This court just simply can't disregard that and the district court

[00:08:02] Speaker 04:
in kind of separating that out and dealing with it actually made, I think, an implicit fact finding that's not supported by the record.

[00:08:09] Speaker 04:
Why isn't the bidding conventional?

[00:08:12] Speaker 04:
It's not.

[00:08:13] Speaker 04:
So what the district court analogized it to was that advertisers would often pay more for certain classified ads in the newspaper.

[00:08:25] Speaker 04:
And the court said that's, in effect, bidding.

[00:08:28] Speaker 04:
But it's not.

[00:08:29] Speaker 04:
That's a factual finding that did not defer to the position of Steve Morse.

[00:08:37] Speaker 04:
All fact findings at the level of a 12C motion must be made at the light most favorable to the non-movement.

[00:08:46] Speaker 04:
And yet, the district court found that this was a notion bidding that existed as a fundamental concept.

[00:08:54] Speaker 04:
And in Bilski, the Supreme Court twice, when it identified a fundamental concept, it pointed to a specific reference.

[00:09:03] Speaker 04:
In Bilski, there were three references.

[00:09:06] Speaker 04:
In Bysate, this court did the very same thing.

[00:09:09] Speaker 04:
And that's powerful instruction to district courts that at least you should point to something to illustrate that it's a fundamental, well-known economic concept.

[00:09:22] Speaker 04:
The idea of bidding for advertisements.

[00:09:26] Speaker 04:
If I go to a store and I happen to pay more for an item, just as I would pay more for a classified ad, that doesn't mean that I'm bidding against somebody to set that ultimate price, that there's another consumer there.

[00:09:41] Speaker 04:
I'm choosing to pay more, but the choice to pay more does not necessarily invoke a bidding process.

[00:09:47] Speaker 04:
And the court just kind of finessed.

[00:09:50] Speaker 04:
that issue, and we believe that was an improper implicit fact finding that led to the error of this decision below.

[00:09:57] Speaker 04:
Because at most, when you have multiple abstract concepts, the only risk of preemption is in the intersection of those concepts.

[00:10:08] Speaker 04:
That's where the claim lies.

[00:10:10] Speaker 04:
And if that intersection is as narrow as it is in this case, then there is not a legitimate risk of preemption.

[00:10:19] Speaker 04:
And that's especially true when you have these claims that are directed to solving a technological problem.

[00:10:27] Speaker 01:
This problem of... So is your argument that anytime there's more than one abstract idea, we can't have a 101 determination?

[00:10:40] Speaker 04:
No, Your Honor.

[00:10:41] Speaker 04:
I would argue that in this case, that the combination of these two very disparate

[00:10:47] Speaker 04:
abstract concepts doesn't invoke a legitimate risk of preemption.

[00:10:53] Speaker 04:
And so the 101 analysis scales in this case, there might hypothetically be some instances where you could.

[00:11:00] Speaker 04:
Now Facebook, I would point out, they argue that this court has in fact already addressed the situation with multiple abstract claims and they cite to the content extraction opinion, but we would point out that's not really a fair reading.

[00:11:16] Speaker 04:
of content extraction.

[00:11:18] Speaker 04:
This court in content extraction found that there was a single abstract concept.

[00:11:24] Speaker 04:
It nearly identified that it had three portions to it.

[00:11:28] Speaker 01:
So what if the trial court here just defined this as a single

[00:11:31] Speaker 01:
abstract concept with a couple portions to it.

[00:11:35] Speaker 04:
Then you would find no analog to this that was a fundamental well-known concept.

[00:11:40] Speaker 04:
There was no fundamental well-known concept that combined the direct mailer that you get in your mailbox with a bidding process.

[00:11:48] Speaker 04:
There's no bidding that goes on for postal carriers to deliver a direct mail to your home.

[00:11:55] Speaker 04:
So the idea that this was something that was previously known or that this would

[00:12:00] Speaker 04:
This would preempt a well-known, fundamental, known method of commerce just doesn't equate.

[00:12:08] Speaker 04:
That's why the district court did what it did.

[00:12:11] Speaker 04:
It had to break this up into multiple abstract claims and attack them each individually.

[00:12:17] Speaker 04:
And that's what was improper.

[00:12:19] Speaker 04:
That's what this court found was improper in DDR holdings.

[00:12:23] Speaker 04:
Because not only was that a technological solution to a technological problem, as is the case here,

[00:12:30] Speaker 04:
but also the court in DDR Holdings, the district court failed to focus on and identify a single abstract concept.

[00:12:39] Speaker 04:
And we pointed out that error below and yet the court did it and that's one of the basis for our error here is that the court in focusing on multiple abstract concepts didn't focus on one and identify one.

[00:12:53] Speaker 04:
So we need to understand not only is this an abstract concept, but whether or not it's going to preempt

[00:12:59] Speaker 04:
unknown method of business.

[00:13:03] Speaker 04:
For example, as the court has found, you know, contract interpretation or intermediation or hedging.

[00:13:14] Speaker 04:
Those are fundamental concepts in intellectual ventures.

[00:13:19] Speaker 04:
Two different claims, but one was budgeting.

[00:13:22] Speaker 04:
The abstract idea there was budgeting, simple budgeting.

[00:13:25] Speaker 04:
Wasn't a combination of budgeting and bidding.

[00:13:29] Speaker 04:
And similarly, the other claim was simply analyzing information to, in other words, the court analogized it to a situation where advertising might be presented differently if it were presented at different times of day.

[00:13:50] Speaker 04:
So it was tailoring advertising or tailoring a web presentation.

[00:13:55] Speaker 04:
But there was no aspect of bidding in that at all.

[00:13:59] Speaker 04:
Nothing that was a totally separate and different idea.

[00:14:04] Speaker 04:
And here, Steve Morse came up with this idea to introduce this element, something that wasn't obvious to anyone.

[00:14:14] Speaker 04:
To introduce this new element and to add that level of bidding to the process.

[00:14:20] Speaker 03:
The demographic element.

[00:14:23] Speaker 04:
Well, the demographic element is actually

[00:14:26] Speaker 04:
separate from the bidding, but it looks at both demographics and, as was coined by Mr. Morsa, firmographics.

[00:14:36] Speaker 03:
So even though bidding's an abstract idea, even though using demographics an abstract idea, combining them makes it not an abstract idea.

[00:14:43] Speaker 04:
Well, combining them doesn't have the same risk of preemption, respectfully, Your Honor, and that's what we're looking at when we're deciding whether or not it's improperly abstract and therefore it's

[00:14:56] Speaker 04:
not eligible subject matter?

[00:14:59] Speaker 04:
Are we getting into an area where, if we allow this claim, we're going to preempt the entire class of claims?

[00:15:06] Speaker 04:
Ultimately, that's what the entire preemption analysis is designed to focus on, whether there's that undue risk.

[00:15:14] Speaker 04:
Additionally, as I mentioned, this was a

[00:15:20] Speaker 04:
This is a technological problem that didn't exist prior to 1991 and the advent of internet advertising.

[00:15:29] Speaker 04:
The idea that ads were based entirely on search terms and the response to search terms and the limitations that were necessarily present in that.

[00:15:41] Speaker 04:
The district court focused on the problem and the purpose behind the invention, but that's the wrong focus.

[00:15:49] Speaker 04:
For example, the purpose of an invention may be to increase efficiency or to lower cost, but those are inherently abstract.

[00:15:58] Speaker 04:
Increasing efficiency, lowering cost, those have been known since time immemorial as purposes, but you don't identify a purpose and then say that purpose is abstract and that therefore the claims which have specific elements are themselves abstract.

[00:16:14] Speaker 00:
Okay, let's hear from the other side and we'll take your rebuttal time.

[00:16:18] Speaker 04:
Thank you, Your Honor.

[00:16:25] Speaker 00:
Ms.

[00:16:25] Speaker 00:
Keith.

[00:16:25] Speaker 02:
Thank you very much, Your Honors.

[00:16:27] Speaker 02:
Ms.

[00:16:27] Speaker 02:
Keith representing Facebook.

[00:16:29] Speaker 02:
May it please the Court, we actually do agree wholeheartedly that in fact the intellectual ventures versus Capital One decision is squarely on point.

[00:16:39] Speaker 02:
In intellectual ventures versus Capital One, the Court dealt specifically with the notion of whether or not targeted advertising was well known and in fact something that was, I think the exact phrase that was used

[00:16:52] Speaker 02:
long prevalent in our society, long practice.

[00:16:55] Speaker 00:
Well, if it's well known, it shouldn't be a matter of abstraction, should it?

[00:16:59] Speaker 00:
It should be a matter of prior art and distinction.

[00:17:03] Speaker 02:
I think it actually is both, Your Honor, but for the purpose of today's argument, it is that it is a matter of abstraction, that here the abstraction is simply the idea of placing an ad that was targeted

[00:17:17] Speaker 02:
based on a bid.

[00:17:18] Speaker 02:
That's the abstraction here.

[00:17:19] Speaker 01:
Well, your friend on the other side has agreed that intellectual ventures sort of kill them as it relates to the question of targeted advertising generally.

[00:17:28] Speaker 01:
But he says that the bidding sets it apart, that intellectual ventures doesn't address bidding, that bidding's a different animal, and you have to combine the two together in order to see what the abstraction really is.

[00:17:44] Speaker 02:
Absolutely.

[00:17:44] Speaker 02:
And in fact, bidding itself was

[00:17:46] Speaker 02:
by the patent's own words, well-known and conventional in the field.

[00:17:52] Speaker 00:
You're saying bidding itself, but we know that the elements in combination claims often are known.

[00:17:59] Speaker 00:
Samorza argues that it's the combination that here is the distinction.

[00:18:04] Speaker 02:
That's correct.

[00:18:04] Speaker 02:
But here, there is nothing that takes it out of the realm of the abstract to simply say that you're going to use a bid to place a targeted ad.

[00:18:13] Speaker 00:
Why is that abstract?

[00:18:15] Speaker 02:
Because it's the simple notion, there is nothing anywhere in the claims or in the specification that describes how that's done.

[00:18:22] Speaker 02:
It's the simple idea of placing an ad, a targeted ad, based on bid information.

[00:18:28] Speaker 00:
Well then it's a matter of enablement or description.

[00:18:32] Speaker 00:
Is it not, rather than abstraction?

[00:18:34] Speaker 02:
No, I think it's still a matter of, there's also separately the issue of written description enablement 101, 102, those all still exist.

[00:18:42] Speaker 02:
But if you look back to the claims themselves,

[00:18:45] Speaker 02:
The claims claim nothing more than the abstract idea of placing a targeted ad based on a bid, and that's what the district court below found.

[00:18:55] Speaker 02:
As a whole, it's the simple idea of placing the targeted ad based on bid information.

[00:19:01] Speaker 02:
The specification of the patent at A40, column three, lines 44 through 60, talk about how pay for placement database search systems

[00:19:14] Speaker 02:
and adjustments of bids that are made to place ads based on search.

[00:19:19] Speaker 02:
So placing an ad based on a bid, based on other information is well known.

[00:19:25] Speaker 02:
And targeted advertising based on demographics.

[00:19:28] Speaker 00:
Why isn't that a matter of prior art?

[00:19:31] Speaker 02:
In terms of the fact that it's part of the prior art analysis to show that this is just an abstract idea that was well known and that in fact there's nothing further inventive

[00:19:42] Speaker 02:
That is exactly what Alice asks us to do.

[00:19:44] Speaker 02:
The first is, is there simply an abstract idea that's being claimed here?

[00:19:49] Speaker 02:
And here, it's the abstract idea of placing a targeted advertisement based on a bid.

[00:19:57] Speaker 02:
That's an abstract idea.

[00:19:58] Speaker 02:
It's a simple concept.

[00:20:00] Speaker 03:
There is no... We could also, I suppose, regard the bidding as a second stage of Alice, like adding a computer or the internet.

[00:20:08] Speaker 03:
It's adding a conventional...

[00:20:11] Speaker 03:
approach using bidding.

[00:20:14] Speaker 02:
You certainly could do that as well, Your Honor.

[00:20:15] Speaker 02:
In this case, nothing is given to any of these claims beyond network, processor, database, or processor electronics.

[00:20:25] Speaker 02:
In fact, the specification clearly points out at A44 and A45 that in fact any computer should be used, that there is nothing specific about the computer or the hardware that's being used here, including

[00:20:38] Speaker 02:
specific or rather generic concepts of bidding, generic concepts of ad placement.

[00:20:44] Speaker 00:
If that's accurate, the computer has to be programmed to perform these abstract steps, is it not?

[00:20:51] Speaker 02:
Computers always have to be programmed to perform any abstract steps.

[00:20:55] Speaker 02:
Exactly.

[00:20:57] Speaker 02:
For example, in content extraction.

[00:20:59] Speaker 02:
the computer had to be performed in order to read the data that was coming in in order to separate and organize it into a database.

[00:21:07] Speaker 02:
That did not remove it from the level of abstraction.

[00:21:10] Speaker 02:
Similarly, in IV, the computer had to be programmed in order to monitor what the navigation usage was, what time of day things were happening in order to determine when to place the ads.

[00:21:23] Speaker 00:
So in your view, what would have had to have been provided by

[00:21:27] Speaker 00:
this inventor to remove it from abstraction?

[00:21:31] Speaker 02:
It's a very difficult hypothetical question, but presumably had they provided, for example, something incredibly concrete like... Never mind incredibly concrete, just at what point does one move from the abstraction to whatever else is needed?

[00:21:51] Speaker 02:
For example, if a specific piece of hardware was

[00:21:56] Speaker 02:
described, defined, and claimed that performed the step.

[00:22:01] Speaker 02:
Where?

[00:22:02] Speaker 02:
Perhaps.

[00:22:03] Speaker 02:
If there was, for example, a very specific... A hardware that embodied inventive concept, you mean?

[00:22:11] Speaker 02:
Correct.

[00:22:12] Speaker 02:
It absolutely would always have to go the extra step of also including the inventive concept.

[00:22:18] Speaker 02:
Similarly, perhaps, if there had been something

[00:22:25] Speaker 02:
in the claims themselves that was dedicated to addressing a specific internet related problem.

[00:22:33] Speaker 02:
We keep hearing the idea that this is all related to an internet only problem and therefore it's DDR.

[00:22:39] Speaker 02:
But if we go back to the claims themselves, the claims themselves never say such a thing or address any specific problem from the internet that didn't exist before.

[00:22:49] Speaker 00:
You're saying this is a matter of the content of the claims?

[00:22:53] Speaker 00:
rather than the content of the specification or the constructs.

[00:22:57] Speaker 00:
So if the claims are construed in light of the specification, would that solve your problem of abstraction?

[00:23:05] Speaker 02:
No, I don't believe so, Your Honor, because the claims that the name, quote, the court, the name of the game is the claim.

[00:23:11] Speaker 02:
And you always have to look to what the claim has.

[00:23:13] Speaker 02:
I agree that claims are always interpreted in light of the specification from which they're born, but the claims themselves

[00:23:21] Speaker 02:
still have to have the elements that take it out of the realm of abstraction.

[00:23:25] Speaker 00:
If we look to the claims here... You're saying the claims are too broad.

[00:23:28] Speaker 00:
That's not a matter of Section 101.

[00:23:31] Speaker 00:
It's a matter of 112, is it not?

[00:23:33] Speaker 02:
It's not necessarily a matter.

[00:23:35] Speaker 02:
It's a part of the 101 analysis also.

[00:23:41] Speaker 02:
How broad are we going?

[00:23:43] Speaker 02:
How broad are the claims going?

[00:23:45] Speaker 02:
If the claims had been

[00:23:46] Speaker 02:
more narrow and more specific to something that itself was an inventive additional hardware piece.

[00:23:55] Speaker 02:
If that's the question your honor's asking, that by sometimes making a claim much more narrow, you may actually take it out of the realm of abstraction, I think that is a possibility.

[00:24:03] Speaker 00:
So I don't think it's necessarily- That was really what I was intending to ask.

[00:24:08] Speaker 00:
What would have had to have been included in these claims to take them out of the realm of abstraction?

[00:24:19] Speaker 02:
I am not sure what exactly would have had to have been added because I can't myself envision it right now sitting here, but I could imagine a case in which a claim like this, which said I want to target advertising based on demographics and I am going to use a specific data engine that

[00:24:48] Speaker 02:
takes information from a user in one language with a form that looks a certain way and brings it in, takes all of that information, translates it into a different language, reconstructs everything, and then

[00:25:10] Speaker 02:
uses a particularized device on the other end, which itself has specially programmed hardware to recognize that, we might be able to get there, but I just don't know.

[00:25:21] Speaker 00:
It's a matter of enablement, but we know that the rules of claim drafting are that you don't put all of the minutiae in the claims.

[00:25:28] Speaker 00:
The claims are supposed to give notice of the boundaries of what you're covering, not all of the details of implementation.

[00:25:35] Speaker 00:
They're saying that had all of those details of implementation

[00:25:39] Speaker 00:
been in the claims rather than the specification that would have solved the problem of 101?

[00:25:45] Speaker 02:
Not necessarily.

[00:25:46] Speaker 02:
I still do not know that.

[00:25:47] Speaker 03:
It's not their invention.

[00:25:49] Speaker 03:
I'm sorry?

[00:25:49] Speaker 03:
Your hypothetical is not their invention.

[00:25:52] Speaker 03:
There's no way to write this invention that they claim here in a non-abstract way, because it's abstract.

[00:25:58] Speaker 02:
I agree with that, Your Honor.

[00:25:59] Speaker 02:
And that's why I'm struggling so deeply, because I think the claims themselves would have to be rewritten so dramatically that they would no longer be the claims that are present.

[00:26:07] Speaker 03:
But it's not a question of rewriting the claims.

[00:26:09] Speaker 03:
You can't write claims for this invention that are non-abstract.

[00:26:13] Speaker 03:
I agree with your honor.

[00:26:14] Speaker 03:
What your hypothetical is doing is it's adding other inventions to it.

[00:26:18] Speaker 02:
And I believe that was, I believe that was the question I was asked was what would you have to add in order to make this out of the realm of the abstract?

[00:26:25] Speaker 00:
And that was what I was asking.

[00:26:26] Speaker 00:
I was asking a question of claim construction, not whatever Judge Dyke has interpreted my question to mean.

[00:26:34] Speaker 00:
We know that the claims ought to be construed

[00:26:37] Speaker 00:
in light of the specification.

[00:26:39] Speaker 00:
And I gather that your concern is that these claims are written so broadly that it's not feasible as a matter of claim construction to interpose enough limitations to add enough specificity to make them at least not to be considered under 101.

[00:27:03] Speaker 00:
They might not pass.

[00:27:04] Speaker 00:
when I'm three or 112 or something else.

[00:27:07] Speaker 02:
That is correct, Your Honor.

[00:27:08] Speaker 02:
That is exactly so.

[00:27:09] Speaker 02:
And if you look to the plain meaning of those claim terms, and in fact, there has been no definition proposed by the patent owner or the patentee trying to take them out of that realm.

[00:27:19] Speaker 02:
They say that there's some claim construction that might save them, but they never propose what it is.

[00:27:23] Speaker 02:
And this court has said in content extraction that if you do not explain what that proposed claim construction is,

[00:27:30] Speaker 02:
the court simply can't make one up.

[00:27:32] Speaker 02:
Here I contend there are no claims instructions that would take these claims out of the realm of the abstract.

[00:27:38] Speaker 02:
And that's why the IV case is so spot on and actually does exactly what it needs to do here.

[00:27:44] Speaker 02:
And there is nothing in step two that adds any inventive feature to these claims to take them out of the realm of the abstract.

[00:27:52] Speaker 02:
There's nothing more than basic computers, network and database

[00:27:57] Speaker 02:
all things that are recognized by the specification in Columns 2 and at A45 and A44 in Columns 12 and 9, I believe, and the other that say simply these are conventional means, conventional hardware and conventional software that's being used.

[00:28:15] Speaker 02:
So there's nothing inventive here either.

[00:28:19] Speaker 00:
Have I answered the panel's question?

[00:28:22] Speaker 00:
I very much appreciate your time.

[00:28:23] Speaker 00:
Thank you, Your Honor.

[00:28:25] Speaker 00:
Okay, Mr. Braggadone, you have your rebuttal time.

[00:28:34] Speaker 04:
Thank you, your honor.

[00:28:35] Speaker 04:
The court brought up the issue of claim construction, which is an important fact.

[00:28:38] Speaker 04:
We complained mightily about the fact that the district court did not do a claim construction and claim construction terms were proposed.

[00:28:47] Speaker 04:
In fact, in intellectual ventures, to distinguish it further, there was a claim construction.

[00:28:52] Speaker 01:
But we've repeatedly said that claim construction is not necessary in a 101.

[00:28:56] Speaker 04:
It's not necessary, but I think it goes directly to the question that Your Honor was asking, Judge Newman was asking.

[00:29:02] Speaker 04:
Is there a claim construction here that would take these claims out of the realm of the abstract?

[00:29:09] Speaker 04:
And respectfully, at the stage of a motion for judgment on the pleadings, what the district court has to find is there is no

[00:29:16] Speaker 04:
possible claim construction that would take the claims out of the realm of the abstract.

[00:29:21] Speaker 01:
Or the court could simply say, I'll adopt whatever claim construction the plaintiff wants me to give.

[00:29:28] Speaker 04:
Contrary to what Facebook told you, Facebook actually proposed themselves claim constructions for bid and bid amount that take it completely out of the realm of the abstract and into the realm of specifically the internet.

[00:29:44] Speaker 04:
For example, bid and bid amount.

[00:29:46] Speaker 04:
We've been talking about bid.

[00:29:48] Speaker 04:
A monetary amount, and this is in the record at A1134.

[00:29:54] Speaker 04:
A monetary amount that the advertiser will pay each time a user clicks on the advertiser.

[00:29:59] Speaker 03:
But that was known.

[00:30:01] Speaker 03:
That was well known in the internet at the time this patent application was filed.

[00:30:07] Speaker 04:
And again, Your Honor, respectfully, I think that confuses the idea of what was known in the prior art.

[00:30:12] Speaker 04:
This combination was not.

[00:30:13] Speaker 04:
But what was known in the prior art versus what was conventional.

[00:30:17] Speaker 04:
Something can be conventional in the internet, right?

[00:30:22] Speaker 04:
The question is, does a construction take it out of the realm of the abstract?

[00:30:27] Speaker 04:
Does it tie it down to something to where we don't have the risk of preemption?

[00:30:33] Speaker 04:
And if a claim construction would do that, then the court should adopt a claim construction if it saves a claim from being

[00:30:42] Speaker 04:
impossibly abstract.

[00:30:44] Speaker 00:
But I think, as Ms.

[00:30:45] Speaker 00:
Keefe pointed out, you can't really, in infringement litigation, rewrite your claims.

[00:30:51] Speaker 00:
Rather, they're custom.

[00:30:53] Speaker 00:
So you have a whole bunch of claims of progressively increasing detail.

[00:30:58] Speaker 00:
And if it turns out, by the time you get all the detail in the claim, there's no longer a possibility of infringement, these are issues before the district court.

[00:31:10] Speaker 00:
So certainly, there are

[00:31:12] Speaker 00:
limits to how conspicuously and in how much detail one can construe a claim in order to save it.

[00:31:19] Speaker 04:
And certainly we're not advocating some novel claim construction principles here.

[00:31:25] Speaker 04:
We believe that under Phillips' traditional application of claim construction principles, there was... So what construction of bid would have saved your claim?

[00:31:33] Speaker 04:
A monetary amount that the advertiser will pay each time a user clicks on the advertiser's advertisement.

[00:31:40] Speaker 04:
That puts it squarely within the realm of only the internet.

[00:31:44] Speaker 01:
In Alice, the Supreme Court said that the abstract idea was reconciliation of accounts.

[00:31:53] Speaker 01:
But the claims themselves were very specific about how those accounts get reconciled through the use of software and through the internet.

[00:32:01] Speaker 01:
But the Supreme Court didn't find that that was enough.

[00:32:04] Speaker 01:
I'm not sure how clicking

[00:32:06] Speaker 01:
is going to get you more than the shadow accounts and the reconciliation mechanisms would have gotten out.

[00:32:15] Speaker 04:
So a claim of that nature would not preempt.

[00:32:18] Speaker 04:
It would not preempt the entire known process of bidding, nor would it preempt the entire known commerce of targeted advertising.

[00:32:27] Speaker 01:
But preemption is not the test.

[00:32:29] Speaker 01:
If they had done a pure preemption analysis, they would have had to say that not all third party reconciliation is preempted.

[00:32:38] Speaker 04:
So I agree that the test is really whether it presents an unreasonable risk of preemption.

[00:32:46] Speaker 04:
And in that case, it's improperly abstract and not patentable subject matter.

[00:32:51] Speaker 04:
But a problem here is that the district court didn't do us any favors because it didn't engage in any claim construction.

[00:32:57] Speaker 04:
And your honor asked for an example, that's one of many.

[00:33:00] Speaker 04:
I would point out that the citations here are too numerous paragraphs and columns in the specification.

[00:33:08] Speaker 03:
The specification here.

[00:33:09] Speaker 03:
What's your best other claim construction that gets you out of abstract?

[00:33:14] Speaker 04:
Just off the top of my head, your honor, the phrase each advertisement being searchable, the claim construction was proposed was that they be

[00:33:27] Speaker 04:
they must be using internet search engine so that actually has to be performed in internet context and again but more so is always taking the position that there's your problem again and supplying the internet to this abstract concept and Alice says that's abstract well but if the claims themselves are directed only to an improvement of a technological process I see I'm past my time if I might please answer the question answer the question

[00:33:55] Speaker 04:
when you have an improvement to an existing technological process.

[00:33:59] Speaker 04:
The process here was internet search terms.

[00:34:02] Speaker 04:
And the fact that advertising and bidding on advertising was limited by search terms only.

[00:34:09] Speaker 04:
So if you can find yourself... Well, how is that different from Ultramershal?

[00:34:13] Speaker 01:
Oh, well... I mean, there was very specific language about use of the internet.

[00:34:20] Speaker 04:
I understand, but Ultramershal here was determined to be only

[00:34:25] Speaker 04:
using viewing of advertising as a currency.

[00:34:32] Speaker 04:
So what was actually found is an abstract concept in Ultramershal was offering free media in exchange for watching it as a courtesy.

[00:34:42] Speaker 01:
But that was despite the fact that there were many areas in the claims that talked about how that would occur via use of the internet.

[00:34:53] Speaker 04:
I understand that there was nothing that limited it only in that context.

[00:35:00] Speaker 04:
In fact, the court said that the danger here is that it would preempt the entire idea of this abstract idea.

[00:35:13] Speaker 04:
It wasn't merely solving an internet problem.

[00:35:16] Speaker 04:
So Ultramershal was not limited and there was nothing in the claims that was construed as being internet only.

[00:35:23] Speaker 00:
Okay, any more questions?

[00:35:26] Speaker 00:
Any more questions?

[00:35:28] Speaker 00:
Okay, thank you.

[00:35:30] Speaker 00:
Thank you both.

[00:35:31] Speaker 00:
We'll take the cap under submission.