[00:00:00] Speaker 03:
That was awesome.

[00:00:36] Speaker 03:
Help me with your name.

[00:00:38] Speaker 04:
Orson.

[00:00:39] Speaker 04:
Good morning, Your Honors.

[00:00:40] Speaker 04:
Matt Orson for American Needle.

[00:00:44] Speaker 04:
I'd like to take the court back in time to 1999, when dot com was a sexy word, the dot com bubble had yet to burst, and Robert Kronenberger,

[00:01:05] Speaker 04:
The president of American Needle was struggling with a challenge.

[00:01:12] Speaker 04:
He had selling customized caps, headwear.

[00:01:21] Speaker 02:
He created a... The patent doesn't claim displaying in 3D, right?

[00:01:28] Speaker 04:
It claims displaying online a three-dimensional shape, Your Honor.

[00:01:38] Speaker 02:
Where in the patent does it state the display is a 3D model of a cat?

[00:01:54] Speaker 04:
Column 4, line 35, and I'm quoting, a method for facilitating sale

[00:02:07] Speaker 04:
to a potential customer of an object over a computer network, said object having a predetermined three-dimensional shape, end quote.

[00:02:21] Speaker 04:
Yeah.

[00:02:22] Speaker 04:
Are you going to answer my question?

[00:02:27] Speaker 04:
That is the answer to your honor's question.

[00:02:30] Speaker ?:
OK.

[00:02:33] Speaker 04:
And so back in time, 1999, Robert Kronenberger struggled with this challenge.

[00:02:42] Speaker 00:
How do I?

[00:02:42] Speaker 00:
Counsel, let me ask you a question.

[00:02:46] Speaker 00:
You're saying that the 980 patent, and I'm quoting here, is that it's directed to a groundbreaking method of electronic commerce.

[00:02:55] Speaker 00:
Correct.

[00:02:55] Speaker 00:
It sounds like your introductory paragraphs are sitting us up, that groundbreaking and electronic commerce

[00:03:02] Speaker 00:
And it's directed to a concrete process that transforms data into bits of merchandise that you can touch, feel, and wear to your exact taste.

[00:03:13] Speaker 00:
It sounds to me you're almost claiming the internet.

[00:03:18] Speaker 04:
No, Your Honor.

[00:03:20] Speaker 04:
And our argument really echoes the PTO's findings on this, distinguishing over cost

[00:03:32] Speaker 04:
which is a reference asserted against this patent in examination that facilitated sales online in two-dimensional format.

[00:03:48] Speaker 04:
And so the claim here, Your Honors, is facilitating sales of three-dimensional objects and creating the experience for the user

[00:04:01] Speaker 04:
in computer networks of viewing the three-dimensional shape of the object.

[00:04:11] Speaker 03:
Where does that say that?

[00:04:12] Speaker 03:
You pointed us to the first phrase in response to Judge Wallach's comment.

[00:04:16] Speaker 03:
We're in the claim.

[00:04:17] Speaker 03:
Which limitation is about viewing the object?

[00:04:20] Speaker 03:
Is it the fourth?

[00:04:23] Speaker 04:
You really have to stay within the claim language itself all throughout.

[00:04:29] Speaker 04:
Now, I read the preamble, which is limiting.

[00:04:33] Speaker 04:
It's limiting to a computer network.

[00:04:36] Speaker 04:
It's limiting to a three-dimensional shape.

[00:04:40] Speaker 04:
The PTO determined that this patent was allowable over cost and based on that limitation.

[00:04:49] Speaker 04:
And so those two points have to be considered throughout reading the claim.

[00:04:55] Speaker 04:
And I'm happy to take your honors through the claim language.

[00:04:59] Speaker 04:
The limiting aspect of the preamble, quote, three-dimensional shape.

[00:05:05] Speaker 00:
Well, I'm having the difficulty just getting past the preamble, which you say is limiting.

[00:05:13] Speaker 00:
Yes.

[00:05:13] Speaker 00:
And you say it's limiting to a computer network.

[00:05:16] Speaker 00:
I mean, that's the internet.

[00:05:19] Speaker 00:
You say the preamble of the claims limit this to computers.

[00:05:26] Speaker 00:
And then you go on with objects having three-dimensional shapes.

[00:05:32] Speaker 00:
And it seems to me that there's an awful lot of objects on the internet and on computers that have three-dimensional shapes.

[00:05:43] Speaker 00:
And the difference is that yours are baseball caps.

[00:05:47] Speaker 04:
Respectfully, Your Honor, that's why we have to transport back in time.

[00:05:54] Speaker 00:
And the PTO... Let's transport back to the claims.

[00:05:59] Speaker 00:
OK.

[00:06:00] Speaker 00:
That's fair.

[00:06:01] Speaker 04:
All right.

[00:06:04] Speaker 04:
And that's fair.

[00:06:05] Speaker 04:
And this claim, claim one, representative, was allowed over costum, an e-commerce method

[00:06:16] Speaker 04:
to sell denim jeans customized online.

[00:06:22] Speaker 04:
The PTO determined that this form of e-commerce was novel, not obvious.

[00:06:30] Speaker 03:
I understand your answer.

[00:06:31] Speaker 03:
I'm hearing your answer, but I'm not sure how it's probative or responsive to what Dredna said.

[00:06:36] Speaker 03:
I mean, every time we get a 101 case, by definition, the patent is already issued by the Patent Office.

[00:06:42] Speaker 03:
So the Patent Office, at least, concluded

[00:06:44] Speaker 03:
that it was non-obvious.

[00:06:46] Speaker 03:
So you might want to keep telling us that and going back to what the Patent Office concluded.

[00:06:51] Speaker 03:
But I would suggest that you might want to focus on the claims and on what we're dealing with here, which is the abstract idea issue.

[00:06:59] Speaker 04:
OK.

[00:07:01] Speaker 04:
And my response would be to then look at this claim with respect to DDR holdings, for example.

[00:07:13] Speaker 04:
DDR Holdings upheld as valid under 101, a patent claim with generic computing elements, as we have here.

[00:07:25] Speaker 04:
And the gist of the court's question so far is that there's some skepticism about the generic nature of these components.

[00:07:37] Speaker 04:
And DDR Holdings holds that if

[00:07:43] Speaker 04:
You take generic computing elements and on computer networks solve a problem arising on computer networks.

[00:07:57] Speaker 04:
You clear step two of the Mayo analysis.

[00:08:02] Speaker 04:
And that's exactly what we have here.

[00:08:04] Speaker 03:
I think your take away from DDR is a little bit more sweeping than I would say it.

[00:08:09] Speaker 03:
Because if you look at cases, then, that doesn't map on to a number of cases that we've had where we've said DOPAPs must are under 101 that reference a computer network and are dealing with something that you're only dealing with on the computer, right?

[00:08:23] Speaker 03:
I mean, aren't there cases that go the other way that would dispel the proposition for which you cite DDR?

[00:08:30] Speaker 04:
No, Your Honor.

[00:08:32] Speaker 04:
And I think BASCOM.

[00:08:34] Speaker 04:
affirms the principle that I'm advancing here.

[00:08:38] Speaker 03:
What about internet patents?

[00:08:40] Speaker 03:
Isn't there a case that's cited repeatedly in the brief?

[00:08:45] Speaker 03:
The internet patents case, active network.

[00:08:47] Speaker 04:
And I think that that decision is based on factual determination that you're dealing with a long-standing commercial problem not arising on computer networks.

[00:09:02] Speaker 04:
And so we fit within the ability to use generic computing components to fit together in an ordered combination a solution arising on computer networks.

[00:09:16] Speaker 04:
Internet patents, other cases that ABLE counsel cites all stand for the proposition that based on evidence, the court held this is a longstanding commercial practice

[00:09:32] Speaker 04:
that you just say do on a computer.

[00:09:34] Speaker 04:
That's not what we have here.

[00:09:36] Speaker 04:
Let me ask you a little housekeeping question.

[00:09:40] Speaker 02:
Yes.

[00:09:40] Speaker 02:
In your Roman numeral section two, starting at page 18 of your blue brief, you make a well-pled facts argument.

[00:09:52] Speaker 02:
Tell me which facts, specific facts, you've alleged that the court explicitly says it's not construing in your favor.

[00:10:01] Speaker 02:
Because I couldn't find it anywhere.

[00:10:03] Speaker 04:
OK.

[00:10:05] Speaker 04:
One, that the claim is directed to computer networks.

[00:10:14] Speaker 02:
OK.

[00:10:15] Speaker 02:
I'm not talking about ultimate conclusions.

[00:10:17] Speaker 02:
I'm asking you about facts.

[00:10:22] Speaker 04:
I would have the same response, Your Honor.

[00:10:26] Speaker 04:
The claim language was ignored in this case.

[00:10:30] Speaker 04:
Rule 12, of course, says construe facts in the plaintiff's favor.

[00:10:37] Speaker 04:
We have a finding, a factual finding, at the outstart of this case, that this method has been done for thousands of years.

[00:10:48] Speaker 04:
Not true.

[00:10:49] Speaker 04:
The Paten Office didn't find that.

[00:10:52] Speaker 04:
Our claim language says something quite different.

[00:10:56] Speaker 04:
And I'll quote it again, said object

[00:10:58] Speaker 04:
having a predetermined, I'm sorry, a method for facilitating sale to a potential customer of an object over a computer network, end quote, the district court held as a factual matter, as a matter of law, that this has been going on for thousands of years.

[00:11:21] Speaker 00:
Maybe not thousands of years, but you're describing electronic commerce.

[00:11:27] Speaker 00:
You're claiming electronic commerce.

[00:11:30] Speaker 00:
I mean, you're standing here arguing that this is your claim.

[00:11:34] Speaker 04:
We are claiming a method of electronic commerce.

[00:11:40] Speaker 04:
No question about it.

[00:11:41] Speaker 00:
No, you're claiming facilitating a cell over a computer.

[00:11:46] Speaker 04:
A three-dimensional app?

[00:11:47] Speaker 04:
Yes, the shape of a three-dimensional app.

[00:11:49] Speaker 02:
Most things sold over the computer, not everything.

[00:11:52] Speaker 02:
Intellectual property, for example.

[00:11:54] Speaker 02:
Most things sold over the computer are three-dimensional, are they not?

[00:11:58] Speaker 04:
Yes, but these questions are not the standard.

[00:12:04] Speaker 04:
We claim a transformational process.

[00:12:08] Speaker 04:
That's what we're before the court arguing.

[00:12:13] Speaker 04:
They're ably, for example.

[00:12:19] Speaker 04:
Defendant does not reference that in their briefs.

[00:12:24] Speaker 04:
But we fit squarely within this court's teaching in the Bilsky opinion on an information age transformation process.

[00:12:37] Speaker 04:
And the Abilie decision holding that x-ray data manipulated and transformed into images of bones and tissue is an information

[00:12:52] Speaker 04:
information age transformation process.

[00:12:56] Speaker 04:
We fit right within that decision.

[00:13:00] Speaker 03:
I'm into my time.

[00:13:01] Speaker 03:
What's the 1982 decision by the court of our court?

[00:13:06] Speaker 04:
A 1982 decision by your predecessor court that has been cited in not only the Bilsky opinion, which the Supreme Court lauded, in reversing

[00:13:22] Speaker 04:
as the machine and transformation test as being the only test.

[00:13:26] Speaker 04:
But lauded that opinion, signed on by eight judges of this court, the teachings of that opinion laud Attlee as an information age transformation process.

[00:13:40] Speaker 04:
And that's exactly what this claim is.

[00:13:44] Speaker 03:
We're into your rebuttal.

[00:13:45] Speaker 03:
Why don't we save it and let's make the other side.

[00:13:47] Speaker 03:
Thank you.

[00:14:04] Speaker 01:
Good morning, and may it please the court.

[00:14:07] Speaker 01:
As a baseball fan who grew up just outside the city of Chicago in this historic week, I think it's fair to acknowledge what American Needle as a company brought to baseball fans.

[00:14:16] Speaker 01:
And I think it's fair to acknowledge the historic perspective that council was addressing.

[00:14:21] Speaker 01:
Their briefs go even further back than 1999 to 1948 when they first offered to fans a baseball cap that was replicating the team caps that were worn.

[00:14:33] Speaker 01:
It's that historic perspective that actually leads to affirmance in this case, because that confirms that what they've tried to claim here is nothing more than automating a long-standing commercial practice.

[00:14:47] Speaker 01:
And in addition to the admissions that I think we just saw.

[00:14:49] Speaker 02:
Standing out a catalog with a picture of the front, picture of the side, picture of the top, three dimensions on a flat page.

[00:14:59] Speaker 01:
Precisely, Your Honor.

[00:15:00] Speaker 01:
And all that the claims add to that are generic computer components that are used in their conventional way.

[00:15:07] Speaker 01:
And as this Court and the Supreme Court have said any number of times, that does not amount to patent-eligible subject matter.

[00:15:14] Speaker 01:
I want to point to just a couple of additional admissions that I think further support this conclusion.

[00:15:20] Speaker 01:
And those are found at page 6 of the reply brief.

[00:15:23] Speaker 01:
Where here, they're discussing that

[00:15:26] Speaker 01:
offering various three-dimensional objects for sale with various design elements, merchandisers have obviously done for hundreds of years.

[00:15:37] Speaker 01:
On the next page, they then say, there's nothing wrong with the potential customer involved in the 980 patented method, picking and choosing among the design elements and viewing how the chosen elements look on the surface of the three-dimensional object.

[00:15:52] Speaker 01:
Again, these are American Needle's words, an act performed by humans down through the ages.

[00:15:59] Speaker 01:
There is nothing wrong with these mental steps.

[00:16:02] Speaker 01:
That's at page seven of the reply brief.

[00:16:04] Speaker 01:
Based on these admissions alone, I think we have everything we need to fall within this court's binding precedent.

[00:16:11] Speaker 01:
We have commercial activity that's been done well for hundreds of years, as they say.

[00:16:16] Speaker 01:
And we have mental steps.

[00:16:19] Speaker 01:
Under step one of Alice, there's simply nothing but an abstract idea that's here.

[00:16:27] Speaker 01:
Just to address a couple of additional points, it sounds as though the court fully understands most of what we put in our brief.

[00:16:33] Speaker 01:
With respect to the Abilie decision that was just discussed.

[00:16:36] Speaker 02:
What don't we understand?

[00:16:38] Speaker 01:
No, I think that you understood all of the points that we were trying to present in our briefs.

[00:16:42] Speaker 01:
I certainly hope so.

[00:16:44] Speaker 01:
But with respect to the Abilie decision, we were just

[00:16:48] Speaker 01:
pointed out that we didn't respond to this.

[00:16:50] Speaker 01:
That's because the test that was at issue in Abilie was overturned in Vilsky, which was then later refined by the Supreme Court.

[00:16:58] Speaker 01:
But not only that, if you actually go back to the Abilie CCPA decision, the independent claims there were actually found not to constitute patent-eligible subject matter.

[00:17:08] Speaker 01:
Where the claims were written as broadly as just displaying a type of data that was calculated in a specific way, the CCPA held that was not enough.

[00:17:17] Speaker 01:
It was nothing more than an algorithm.

[00:17:20] Speaker 01:
It wasn't until you got to the dependent claim that required the data to be a specific type, x-ray data, that was calculated with a specific type of hardware, a specific type of scanner, that they found that there was patent-eligible subject matter.

[00:17:34] Speaker 01:
These claims are nowhere near the claims that were upheld in the Abelli decision.

[00:17:40] Speaker 01:
DDR, the same thing.

[00:17:41] Speaker 01:
I don't think that we're anywhere near that.

[00:17:43] Speaker 01:
Neither with respect to the type of problem that was at issue, which was a very technical internet-only problem in DDR, nor with respect to the solution.

[00:17:53] Speaker 01:
The solution in DDR was, again, a technical solution.

[00:17:58] Speaker 01:
There was a specific type of hardware that was operating in a specific type of way.

[00:18:03] Speaker 01:
It was not just a generic solution that was offered, as it is here displaying a perspective view.

[00:18:11] Speaker 01:
So final point is responsive to the question.

[00:18:15] Speaker 01:
We also don't think that there were any facts that were pointed out that were overlooked by the district court.

[00:18:21] Speaker 01:
The district court, as it said in its summary, if the question of patent eligibility comes down to the answers to legal questions, there are no facts to resolve.

[00:18:32] Speaker 01:
There's no need to look at the clear and convincing evidence.

[00:18:35] Speaker 01:
We believe that the district court was right in that conclusion, as well as the conclusion that these claims simply do not pass muster under 101.

[00:18:43] Speaker 00:
Let me ask you a question on your last point.

[00:18:46] Speaker 00:
Does the presumption of validity apply in Section 101 of the Actions?

[00:18:51] Speaker 01:
It certainly doesn't apply in cases like this, where it turns solely on questions of law, which is you're looking at the scope or character of the claims.

[00:19:01] Speaker 00:
So 101 inquiry can have a factor component.

[00:19:04] Speaker 01:
I believe that it could, but again, not in cases like this and not in any of the many cases where this court has been able to affirm judgments on the pleading or 12b6 motions.

[00:19:16] Speaker 00:
So in your view, if there is a factual component to the Section 101 analysis, what's the standard to review there, to the factual issue?

[00:19:26] Speaker 01:
Again, just to clarify, we don't believe that there are any factual issues in this case.

[00:19:32] Speaker 01:
You know, the question is not really before the court.

[00:19:36] Speaker 01:
But hypothetically speaking, we have not seen any clear precedent that would outline what the standard of review should be.

[00:19:45] Speaker 01:
I think that something that's instructive is possibly what this court has done with indefiniteness in the law, which is to say, following the TEVA standard, that typically you can decide that as a question of law, and you don't need to answer the question of standard of review.

[00:20:00] Speaker 01:
But if it gets to the point that you do have a factual dispute, that then the raised standard of proof would apply.

[00:20:09] Speaker 01:
I think that the court said that in Sprint versus Cox Communication recently.

[00:20:15] Speaker 01:
Unless there are any further questions, I'll.

[00:20:18] Speaker 02:
Well, I have a comment.

[00:20:19] Speaker 02:
I just want to say that I think 108 years is quite long enough.

[00:20:25] Speaker 00:
Worth the wait, Your Honor.

[00:20:26] Speaker 01:
Thank you.

[00:20:34] Speaker 04:
Just two points, Your Honors.

[00:20:37] Speaker 04:
Picking up on Judge Raina's question, it just can't be that some cases the presumption does not apply.

[00:20:49] Speaker 04:
We have a federal statute.

[00:20:53] Speaker 04:
It applies in all cases and controversies, not just some cases and not this one.

[00:21:01] Speaker 04:
That simply cannot be the answer.

[00:21:04] Speaker 04:
And I'll point to the Microsoft case as clearly setting forth that the presumption applies.

[00:21:12] Speaker 04:
But we don't proceed in this court on that basis.

[00:21:15] Speaker 04:
We don't need that.

[00:21:17] Speaker 04:
Because this is a valid process under section 101 on substance.

[00:21:24] Speaker 04:
And that's what we rely on.

[00:21:26] Speaker 04:
In counsel's argument,

[00:21:30] Speaker 04:
with purported admissions in her reply brief are taken in context of us relying on Judge Dyke's opinion, where he supports his analysis with the Abelli case, which defendant does not cite.

[00:21:53] Speaker 04:
And it explains it in this court now,

[00:22:00] Speaker 04:
I take that for what it's worth.

[00:22:04] Speaker 04:
But please visit Judge Dyke's analysis for the principle that... In which case are you referring to now?

[00:22:12] Speaker 04:
You know, I don't have it in mind.

[00:22:23] Speaker 04:
Cyber source, 654 F3rd at

[00:22:31] Speaker 04:
1373.

[00:22:33] Speaker 04:
And Judge Dyke relies on the Abilie case for the principle that method steps performed in the head are perfectly allowable under Section 101.

[00:22:50] Speaker 03:
CyberSource found the claims an issue not patentable.

[00:22:54] Speaker 04:
That's correct, Your Honor.

[00:22:58] Speaker 03:
Thank you.