[00:00:00] Speaker 03:
dot com versus AOL advertising.

[00:00:35] Speaker 03:
Mr. Daniels, please proceed.

[00:00:37] Speaker 01:
Yes.

[00:00:38] Speaker 01:
May it please the court?

[00:00:39] Speaker 01:
The sole issue in this case is whether our claims meet the second part of the Alice test.

[00:00:46] Speaker 01:
Now, appellees, in a definition adopted by the court, said that the abstract concept here is setting a price based in part on a buyer's participation in an activity.

[00:01:01] Speaker 01:
Now, our claims are patent eligible.

[00:01:04] Speaker 01:
because they don't preempt that basic concept.

[00:01:07] Speaker 01:
They don't even preempt a small part, a very, very small part of that concept.

[00:01:12] Speaker 01:
And the error of the trial court here was in two parts, two related parts.

[00:01:19] Speaker 01:
First, the trial court failed to appreciate the strong interrelationship among our limitations and failed to appreciate how that strong interrelationship resulted

[00:01:33] Speaker 01:
in a new way of marketing products across the internet that would engage customers in a new and exciting way.

[00:01:41] Speaker 01:
And second, the court applied the Ultramershal decision and other precedents of this court in a way that would result in a rule essentially forbidding the issuance of business by the patents.

[00:01:59] Speaker 01:
So before

[00:02:03] Speaker 01:
I begin to talk about the significance of the limitations in our claimed invention.

[00:02:10] Speaker 01:
I think it's important to step back and look at the fact that this invention arose in 1999, the very early days of the internet, at a time where a lot of what we take for granted about internet sales just wasn't known.

[00:02:28] Speaker 01:
So with that perspective, in that context,

[00:02:33] Speaker 01:
Let's look at the limitations of our claim.

[00:02:38] Speaker 01:
It begins at the very beginning with a commitment by the buyer to buy the product at a price within a particular range.

[00:02:51] Speaker 01:
So at the very beginning of our process, we have a twist on what would ordinarily be done.

[00:02:56] Speaker 01:
That price, then, is determined by a combination of factors, the auction and

[00:03:02] Speaker 01:
the result of a competitive activity involving the buyer.

[00:03:07] Speaker 01:
Now the auction itself is a twist on what went before.

[00:03:12] Speaker 03:
The twist is... But all of these are abstract ideas.

[00:03:15] Speaker 03:
This is what the court held.

[00:03:17] Speaker 03:
I mean, it's like you want a patent because instead of one abstract idea, you put two together.

[00:03:22] Speaker 03:
And therefore, you think it's now patentable.

[00:03:24] Speaker 03:
Like, one is better than two is better than one?

[00:03:26] Speaker 03:
I mean, not if they're all abstract ideas.

[00:03:28] Speaker 01:
That's not what we're doing here, Your Honor.

[00:03:31] Speaker 01:
We are not stacking the way the patentee was criticized in Ultramershal.

[00:03:37] Speaker 01:
We are interrelating all the different concepts that we've recited.

[00:03:41] Speaker 02:
To say that- I'm not sure I understand the difference between stacking and interrelating.

[00:03:46] Speaker 01:
Yes.

[00:03:47] Speaker 01:
For instance, in Ultramershal, there's a patent on marketing or broadcasting copyright material, essentially doing what every broadcast TV channel does.

[00:04:05] Speaker 01:
They put on a program and then there are various characteristics about how it's received, how the recipient doesn't pay for the

[00:04:17] Speaker 01:
the service, but he has to watch commercials instead.

[00:04:21] Speaker 01:
And so what the claim did in Ultramershal, even though there are 11 steps in it, it just further recited the characteristics of broadcast TV.

[00:04:32] Speaker 01:
Now in our situation, what we've done is to take the concept of an auction as a way of promoting sales on the internet and combined it with the competitive activity so that unlike

[00:04:47] Speaker 01:
the normal auction where you'd expect the high bidder to get the best price.

[00:04:53] Speaker 01:
That's not necessarily true here because we combine it with the competitive activity and the competitive activity isn't something that's normally a part of internet sale and it's not a normal competitive activity either.

[00:05:13] Speaker 01:
It's one in which

[00:05:15] Speaker 01:
the winner of the activity doesn't necessarily get the lowest price.

[00:05:20] Speaker 01:
And then we have the further qualification on this, that the product that's being purchased has to be associated with the competitive activity.

[00:05:29] Speaker 01:
And we give the Mark McGuire card and trivia quiz as an example.

[00:05:35] Speaker 01:
So I think if you were to apply the analysis of Ultramershal to our invention,

[00:05:43] Speaker 01:
and the patent attorney were to write it in a certain way to take the auction and further recite the characteristics of what we all know an auction to be, then Ultramershal would apply.

[00:05:59] Speaker 01:
But it doesn't apply here, because that's not what we did.

[00:06:02] Speaker 01:
We took different concepts and made them into something that had a much greater significance.

[00:06:12] Speaker 01:
And on the question of, aren't all these limitations abstract?

[00:06:17] Speaker 01:
Well, I think that point made by the trial court conflates the two steps of the Alice test.

[00:06:29] Speaker 01:
We admit that our claim is to an abstraction.

[00:06:32] Speaker 01:
What we don't admit, though, is that it doesn't claim something significantly more than the abstract concept identified by the court.

[00:06:42] Speaker 01:
And that abstract concept was basing a price on the result of a competitive activity.

[00:06:49] Speaker 01:
We do something significantly more than that.

[00:06:52] Speaker 01:
Now, if you say, well, an auction, that's an abstraction too.

[00:06:57] Speaker 01:
Well, then there's no two-part test to Alice.

[00:07:01] Speaker 01:
It's simply a step where, is it abstract?

[00:07:08] Speaker 01:
Then it's not patentable.

[00:07:09] Speaker 00:
Just out of vital curiosity, isn't an auction always a competitive activity?

[00:07:13] Speaker 01:
Well, our claim says that the auction has to be distinct from the competitive activity so that you would not have an auction that would meet our limitations, an auction by itself.

[00:07:25] Speaker 01:
Our claims require that there be a competitive activity and that there also be an auction that together result in the price to be paid by the customer.

[00:07:36] Speaker 01:
So you agree with me.

[00:07:37] Speaker 01:
I do agree with you, but our claim excludes the possibility of the single auction satisfying both the auction and the competitive activity requirements.

[00:07:52] Speaker 01:
So I think the same is also true of the buy safe decision, which is another case relied upon by the appellees here.

[00:08:04] Speaker 01:
There was a notion that the abstract concept there was use of a guarantee across the internet to help secure a sale.

[00:08:15] Speaker 01:
And then the limitations merely described what would be involved in the guarantee across the internet.

[00:08:25] Speaker 01:
In other words, these were limitations like the ones in Ultramershal that merely could have been authored by the patent attorney in an attempt to make the claim look something that was not.

[00:08:39] Speaker 01:
In our case, at the very beginning of the internet, we had a gentleman who was very sophisticated in this technology.

[00:08:48] Speaker 01:
And he put together a system that had never been known before and significantly

[00:08:54] Speaker 01:
During the argument before Judge Andrews in the district court, he said to the attorney for AOL, I've never seen anything like it.

[00:09:04] Speaker 01:
And he invited the AOL attorney to identify where this had been done before.

[00:09:10] Speaker 01:
And the AOL attorney really didn't reply, made no identification of anything that had been like this before.

[00:09:20] Speaker 01:
And the judge continued.

[00:09:21] Speaker 01:
Well, you would agree with me that if you take all these limitations, it's an incredibly narrow set of circumstances, isn't it?

[00:09:28] Speaker 01:
So what he was doing in the oral argument on this motion was to focus on this issue of preemption, which is the issue of the second part of the Alice test.

[00:09:43] Speaker 02:
What exactly is the, let's just take Google, what is it the

[00:09:48] Speaker 02:
Google's technology that you're accusing.

[00:09:52] Speaker 01:
Yes.

[00:09:53] Speaker 01:
It is the sale of advertising where the price is set by the combination of two factors.

[00:10:04] Speaker 01:
One is an auction that the... And the other is the number of hits.

[00:10:08] Speaker 01:
What?

[00:10:09] Speaker 02:
And the other is the number of hits that that particular... Exactly.

[00:10:12] Speaker 01:
Exactly.

[00:10:12] Speaker 02:
So...

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

[00:10:15] Speaker 01:
One is the auction and one is the competitive activity and they are combined to make a price.

[00:10:20] Speaker 02:
So you think the number of hits that a particular site has received is a competitive activity?

[00:10:26] Speaker 01:
Yes I do and I'm a blogger myself and I dearly appreciate the fact that I compete with other bloggers to get a maximum number of hits but again this was not something that was known at the time.

[00:10:41] Speaker 01:
This is

[00:10:43] Speaker 01:
an infringement that occurred after our patent was applied for.

[00:10:47] Speaker 02:
And if you look at the prior art... So you don't think your patent is broadly preclusive when it reaches so far as to incorporate that kind of... Yes.

[00:10:58] Speaker 01:
Yes, but it's not broadly inclusive because it excludes just an enormous number, almost an infinite number of possible embodiments, even those that would combine an auction and a competitive activity.

[00:11:13] Speaker 01:
So on this point of the prior art, I want to point out that the other side went to some length in a very large footnote toward the end of its brief to say that earlier claims by our patentee have been rejected as being obvious over the prior art.

[00:11:36] Speaker 01:
Well, the fact is that the Patent Office has decided in an inter-party's review this May

[00:11:42] Speaker 01:
that our claims are patentable, are non-obvious over the prior art that was submitted by the appellees in this case.

[00:11:55] Speaker 01:
So I think that although I don't want to conflate section 101 with section 103, it would be a very... It's a big work, beat you to it.

[00:12:12] Speaker 01:
Certainly, though, to the extent that I am conflating the two, it is something I'm invited to do so by the Supreme Court that has focused on prior art as an issue in Section 101 analysis.

[00:12:29] Speaker 01:
The typical case is someone comes in with an invention for a certain method, and the clever lawyer on the other side finds that Hammurabi did the same thing thousands of years ago.

[00:12:40] Speaker 01:
So prior art,

[00:12:42] Speaker 01:
not through my doing, but through the Supreme Court and through various accused infringers over the years has done that for us.

[00:12:52] Speaker 01:
And I think that we would result, we would obtain a very odd result if a claimed method, a claimed system were found to be not obvious over the prior art and at the same time be so commonplace

[00:13:10] Speaker 01:
that it covers a vast swath of potential systems so that those systems would constitute a fundamental building block that we should not preempt.

[00:13:27] Speaker 03:
You're into your rebuttal time.

[00:13:28] Speaker 03:
Would you like to reserve it?

[00:13:29] Speaker 01:
I would, Your Honor.

[00:13:30] Speaker 01:
Thank you.

[00:13:31] Speaker 03:
Mr. Joseph.

[00:13:38] Speaker 04:
Good morning, and may it please the court

[00:13:40] Speaker 04:
Because everyone agrees the claims are directed to an abstract idea, the only question is whether they contain an inventive concept.

[00:13:47] Speaker 04:
And they do not because they just claim the combination of two abstractions, two long-standing business models, what I'd call the 72-out steak business model and an auction.

[00:13:57] Speaker 04:
So what I mean is that every time someone in a restaurant buys, say, a steak, and if they consume it within a certain amount of time, they'll get it discounted or for free.

[00:14:07] Speaker 04:
That combines all of the elements except for the auction.

[00:14:10] Speaker 04:
The same is true of any incentive contract, where I... And how critical is the auction to this invention?

[00:14:16] Speaker 03:
Like, how many times in the spec is it mentioned, and how important is it?

[00:14:21] Speaker 04:
It's not at all.

[00:14:22] Speaker 04:
And so this would be... If you go to the spec, it confirms that just adding the auction to that business model is not what the applicant even claims to be inventive.

[00:14:30] Speaker 04:
We know that first, because every time this specification talks about, quote, the present invention, it always talks about a price-determining activity.

[00:14:38] Speaker 04:
It never uses the word auction or synonym.

[00:14:40] Speaker 04:
The entire summary of the invention section never discusses auctions.

[00:14:45] Speaker 04:
There are two references to auctions that come later, and this would be an appendix.

[00:14:48] Speaker 03:
Well, one's in the background section, so I think it might technically come earlier, but.

[00:14:53] Speaker 04:
Well, when we get to the two references that I noticed, at least, about the combination of the two.

[00:14:58] Speaker 04:
Well, you're right.

[00:14:59] Speaker 04:
There's background discussion of auctions being prior art.

[00:15:00] Speaker 03:
It just mentions auctions.

[00:15:01] Speaker 03:
Right.

[00:15:01] Speaker 03:
The word auction only appears twice.

[00:15:03] Speaker 04:
Right.

[00:15:03] Speaker 04:
But the place where it discusses the combination

[00:15:06] Speaker 04:
What it confirms is that that combination is not even what's alleged to be inventive.

[00:15:10] Speaker 04:
Because what it says, and this will be appendix page 17, column four starting at line 60, it says that the price determining activity can be combined with quote, any other way, end quote, of selling goods and services, with auctions being just one of those examples.

[00:15:27] Speaker 04:
And it then says, so that for example, if there is an auction, then the buyer may be able to obtain a reduction of the auction price.

[00:15:36] Speaker 04:
based on participation in a competitive activity.

[00:15:40] Speaker 04:
And that's also bottom of appendix page 17 spilling on the top of appendix page 18.

[00:15:46] Speaker 04:
Now, the significance of that is that as, is that it shows that what's alleged to be invented here was the price determining activity.

[00:15:54] Speaker 04:
not putting it together with an auction as opposed to a retail sale or a wholesale sale or anything else.

[00:16:00] Speaker 03:
Is it possible that a claim that really at heart is just two abstract ideas sort of combined could nonetheless meet and survive Alice?

[00:16:12] Speaker 03:
Is that possible?

[00:16:14] Speaker 04:
At least in theory, if there was something inventive about how it was implemented.

[00:16:17] Speaker 03:
One of the abstract ideas was really inventive somehow.

[00:16:22] Speaker 04:
Yeah, if it's an abstract idea, then by definition, that's not good enough.

[00:16:27] Speaker 04:
But as the court explained, for example, in internet patents against active video or active networks, what you're looking for is inventive.

[00:16:34] Speaker 04:
Is this the how?

[00:16:35] Speaker 04:
Is there an inventive how these things are put together?

[00:16:37] Speaker 04:
Does the claim just broadly claim the combination of the two abstractions, which it does here?

[00:16:41] Speaker 04:
Or does it set forth a specific way of doing so that could be inventive?

[00:16:46] Speaker 04:
So if you take, for example, DDR holdings.

[00:16:49] Speaker 03:
For example, as your only example, keep going.

[00:16:52] Speaker 04:
Well, but that is, I mean, what you had there was, you had a business method that had been, a comparable business method had been used in brick and mortar stores.

[00:16:58] Speaker 04:
That was, you know, for example, there's a kiosk in one store.

[00:17:01] Speaker 04:
Now, moving on to the internet requires some inventiveness because making it on the internet caused a problem we didn't have before, which is that when someone goes to that kiosk, they just leave me entirely and I'll never see them again.

[00:17:12] Speaker 03:
Do you agree DDR applies to both internet patents as well as sort of computer networking?

[00:17:17] Speaker 03:
Basically, if the abstract idea is being used to improve the functioning of the computer or the network or the internet, then that would all qualify?

[00:17:25] Speaker 04:
Yeah, if you have any kind of computer-centric solution to a computer-centric problem, then it would fall under DDR.

[00:17:31] Speaker 04:
I think so.

[00:17:32] Speaker 04:
I mean, I take the point that the court has indicated in, say, intellectual adventures and in DDR itself that it's talking about internet-centric problems.

[00:17:39] Speaker 04:
I personally wasn't reading that to be distinct from other computer-centric problems.

[00:17:44] Speaker 02:
How close do you think we are to adopting the view expressed by Judge Mayer, I guess, for this court, and by the dissent in Bielski, that the 101 really is a device for separating technology and technological inventions

[00:18:07] Speaker 02:
from non-technological inventions.

[00:18:10] Speaker 02:
This is another way of saying, do you have an example of something that wouldn't satisfy Judge Mayer's test, but would satisfy our test?

[00:18:21] Speaker 04:
In terms of our test, I assume that would include the buy-safe decision of this court?

[00:18:26] Speaker 02:
The entire body of our decisions, you can distill them down to a single test.

[00:18:32] Speaker 04:
Buy-safe does say that at step two, you're looking for

[00:18:37] Speaker 04:
an improvement in, I think it says, the physical realm, the realm of physical things, which I take to mean really good ideas are still abstract until they're reduced to some physical innovation.

[00:18:48] Speaker 04:
Now, because we're talking computers, we're talking tech in terms of anything that would be physical.

[00:18:54] Speaker 04:
But in this case, you know, you don't, in this case, obviously, there's some hard, I'm not the first to say there's some hard questions out there in one-on-one land.

[00:19:02] Speaker 04:
In this case, you know, you don't get to them because

[00:19:06] Speaker 04:
Everyone agrees it strikes an abstract idea, and there's just nothing innovative anywhere in these claims, physical or otherwise, technological or otherwise.

[00:19:13] Speaker 04:
And it gives rise to the internet patents problem in terms of over-breadth, because the claims just say, take the one long-standing business method, add another long-standing business method, auctions, add conventional computer equipment, period.

[00:19:24] Speaker 04:
That's all the claims do, broadly.

[00:19:26] Speaker 04:
There's no further limitation in the claims as to how you do that, which means two things.

[00:19:31] Speaker 04:
One, that even if there was something inventive,

[00:19:33] Speaker 04:
about even if there's a particularly clever, inventive way of combining these ideas, the patent is blissfully unaware of that.

[00:19:39] Speaker 04:
The patent doesn't disclose any difficulties in combining them, doesn't disclose any solutions to difficulties in combining them, and doesn't claim a particular way of combining them.

[00:19:48] Speaker 02:
It claims all ways of doing so.

[00:19:50] Speaker 02:
Do you think then that if the combination of these two abstract ideas does not give rise to patentable subject matter, that Google's system

[00:20:01] Speaker 02:
for charging a certain amount for their ads based on both the auction and a combination of auction plus number of hits is itself not patentable?

[00:20:20] Speaker 02:
Sounds like, given the test you've articulated.

[00:20:22] Speaker 03:
Let's not call it Google's.

[00:20:23] Speaker 03:
Let's just say hypothetical system.

[00:20:25] Speaker 04:
I mean, whatever the system is, I'm going to, whatever the system is,

[00:20:28] Speaker 04:
whether it's a client in this case or not, I mean the answer is going to be that in that context is something alleged to be inventive and in particular with some as in DDR is some new technology needed to make it work.

[00:20:40] Speaker 04:
I mean you're going to be looking for is there something inventive and that's hard to answer totally in the abstract because some of these things are really hard to do and there may be technological innovation or other innovation that goes into figuring out how

[00:20:52] Speaker 02:
But you're saying that it better be some kind of technological innovation.

[00:20:57] Speaker 02:
It isn't enough simply to say, you know, it would be a great idea if we were to modify the price generated by the auction by the number of hits that somebody has gotten.

[00:21:07] Speaker 04:
That sounds to me to be a classic abstract idea.

[00:21:11] Speaker 04:
And then the question is, how do you do it?

[00:21:12] Speaker 04:
And that's the point of internet patents, is you can't just claim the concept of doing something.

[00:21:15] Speaker 04:
You've got to claim a particular innovative way of doing it.

[00:21:18] Speaker 04:
I think, so yeah, it's hypothetical.

[00:21:20] Speaker 04:
I don't know the rest, but that certainly sounds right.

[00:21:22] Speaker 00:
Let me ask you a little tiny real-world question.

[00:21:24] Speaker 00:
I don't think any of you is brief.

[00:21:25] Speaker 00:
I noted that you said Priceport Play purports to own several patents, and litigation related to those patents appears to be its primary business.

[00:21:38] Speaker 00:
But you didn't cite anything for that, Calvin and me.

[00:21:42] Speaker 04:
Yes, that's why we stuck with the appears with, I think.

[00:21:45] Speaker 04:
I mean, we're here on a motion to dismiss on 12b6, so really anything that's relevant is what we pull out of the complaint or the patent.

[00:21:52] Speaker 04:
So you put the appears in?

[00:21:54] Speaker 04:
I don't think it's really disputed, but we put the appears in because we don't have a record site for it.

[00:21:59] Speaker 04:
I mean, if we didn't think it was right, we wouldn't put it in there, obviously.

[00:22:02] Speaker 04:
But it's not something that's legally relevant, which is why I put appears in and figured I'd leave it in without a site.

[00:22:07] Speaker 04:
Obviously, I wouldn't be there if I thought it was wrong.

[00:22:09] Speaker 02:
What exactly is the state of play right now before the PTO will respect these patents?

[00:22:15] Speaker 02:
Thanks for asking.

[00:22:15] Speaker 04:
That's the other thing I meant to mention, especially in light of something that was said earlier.

[00:22:18] Speaker 04:
The PTO instituted CBMs on both of these patents for purposes of 101.

[00:22:23] Speaker 02:
This went through CBM?

[00:22:25] Speaker 04:
For each of these two patents.

[00:22:27] Speaker 04:
The 917 patent is now finally dead and all the claims are cancelled.

[00:22:31] Speaker 04:
We put in a 28-J letter on this because it came in after our briefing.

[00:22:34] Speaker 04:
But the PTO has now finally determined that all claims in the 917 patent are invalid.

[00:22:40] Speaker 04:
It's finally canceled the claims, and that's now preclusive.

[00:22:45] Speaker 04:
There's no further procedure to be had on that.

[00:22:47] Speaker 04:
In fact, they consented to that in the PTAB, so they canceled it.

[00:22:52] Speaker 04:
The 982, the CBM, with respect to section 101, is still pending.

[00:22:59] Speaker 04:
It's been instituted, but it's still running through things in the natural course of business.

[00:23:04] Speaker 02:
When was that instituted?

[00:23:07] Speaker 02:
There's a time limit, I guess, on CDM residents.

[00:23:10] Speaker 04:
Let me pull up our 28-J letter very quickly.

[00:23:14] Speaker 04:
Here it is.

[00:23:15] Speaker 02:
Well, I guess asking for the backing, do you happen to know when the time runs on that?

[00:23:20] Speaker 04:
I'm sorry.

[00:23:21] Speaker 04:
There have been no updates.

[00:23:25] Speaker 04:
Nothing has happened that I'm aware of, at least, since we put in our 28-J letter in October.

[00:23:28] Speaker 04:
uh... so what effect uh... it would effectively with respect to the ninety two and after this court finally determine that happens to be invalid can they amend the claims in cbm somehow to continue i'm going to say no

[00:23:54] Speaker 04:
I mean, honestly, I don't know what they could try.

[00:23:56] Speaker 04:
In this context, there would be no basis for trying to amend the claims in the CVM.

[00:24:01] Speaker 04:
In theory, I'm not sure exactly what their options would be.

[00:24:04] Speaker 04:
But the thing is, there's a pattern here on the PTO.

[00:24:08] Speaker 04:
These are continuations.

[00:24:10] Speaker 04:
The initial parent pattern, when PTO examined those, that two of the claims involved the auction combination.

[00:24:15] Speaker 04:
PTO found that was obvious as a matter of law.

[00:24:18] Speaker 04:
In 917, that's now out.

[00:24:21] Speaker 04:
They've now done it in a suit of CVM in the 982.

[00:24:24] Speaker 04:
PTO looks at any of these patents.

[00:24:27] Speaker 04:
I mean, the parent's gone, the divisional's gone, and now the 982 is what's left.

[00:24:31] Speaker 04:
So I assume that this court getting in front of PTAB, which obviously doesn't happen very often.

[00:24:37] Speaker 04:
PTAB oftentimes gets there quicker.

[00:24:39] Speaker 04:
This court doing it for PTAB, I assume PTAB will decide it doesn't need to do much more.

[00:24:43] Speaker 02:
Of course, this court's already validated.

[00:24:45] Speaker 02:
I may have misunderstood him.

[00:24:46] Speaker 02:
I thought he had said that some of the claims, at least, had been confirmed.

[00:24:52] Speaker 04:
He must be referring to something other than the pending CBM as the 982, because the pending CBM as the 982, I mean, the 917 is now officially dead.

[00:25:02] Speaker 04:
Right.

[00:25:03] Speaker 04:
No question of that.

[00:25:04] Speaker 04:
The 982, there's a pending CBM that finds that all the claims are likely invalid under section 101.

[00:25:10] Speaker 04:
So he must be referring to a different proceeding involving prior art.

[00:25:14] Speaker 04:
But as to 101, what we have now is a preliminary determination that are likely invalid under 101.

[00:25:18] Speaker 03:
Do you have anything else?

[00:25:22] Speaker 04:
The court is up for the questions.

[00:25:24] Speaker 03:
Thank you, Mr. Joseph.

[00:25:25] Speaker 03:
Mr. Daniel?

[00:25:28] Speaker 01:
Yes.

[00:25:28] Speaker 01:
Judge Bryson, what I meant to say was that the Patent Office in the covered business method post-grant review proceeding received a petition from the police here.

[00:25:41] Speaker 01:
And there was a 103 argument.

[00:25:44] Speaker 01:
In fact, two grounds under 103 were presented.

[00:25:48] Speaker 01:
And the Patent Office decided not to institute

[00:25:51] Speaker 01:
on either of those grants.

[00:25:52] Speaker 02:
But the 101 is still pending.

[00:25:55] Speaker 01:
It is still pending.

[00:25:56] Speaker 01:
And certainly the decision there to institute a post-grant review based on the 101 issue doesn't decide the case for this court or for our case.

[00:26:09] Speaker 00:
Well, a decision not to institute doesn't have any presidential value at all.

[00:26:12] Speaker 01:
That's right.

[00:26:13] Speaker 01:
Exactly.

[00:26:15] Speaker 02:
But do you happen to know what the deadline for the PTO's decision on the 101 issue is?

[00:26:24] Speaker 02:
There's a fixed period of time in which they have to ask to act.

[00:26:29] Speaker 01:
Yes.

[00:26:30] Speaker 02:
Well, it's all right.

[00:26:30] Speaker 02:
It doesn't matter.

[00:26:31] Speaker 01:
We can find out.

[00:26:36] Speaker 01:
The decision not to institute came in May of 2015.

[00:26:40] Speaker 01:
So going back about six months would take us to December.

[00:26:45] Speaker 01:
I would think it would be May of 2016 that we would expect a final decision from the Patent Office on that issue.

[00:26:56] Speaker 01:
If I could just address very briefly this question of combining the auction with the competitive activity.

[00:27:03] Speaker 01:
A number of prior art examples were cited by the other side and by the trial court.

[00:27:09] Speaker 01:
The Babe Ruth story, the stake.

[00:27:15] Speaker 02:
Excuse me?

[00:27:16] Speaker 02:
72 ounce steak.

[00:27:17] Speaker 01:
Yes, yes, yes.

[00:27:20] Speaker 01:
Which might be appropriate for Babe Ruth.

[00:27:23] Speaker 01:
But nowhere do they explain how they would combine that kind of competitive activity with an auction.

[00:27:31] Speaker 01:
And there's nothing about Babe Ruth flipping a coin or the 72 ounce steak that suggests an auction to it.

[00:27:41] Speaker 01:
And in fact, when

[00:27:43] Speaker 01:
They wanted to show on page 24 of their brief that... Was it worth to you to see me eat a 72 ounce steak?

[00:27:54] Speaker 02:
Well, how about, since we're in the realm of baseball, how about a very common phenomenon, which is various teams are bidding for the services of a particular free agent.

[00:28:05] Speaker 02:
And one of the teams says, our bid is going to be 100 million over seven years.

[00:28:11] Speaker 02:
And even though that's lower than the bid by the Reds, we'll give you an extra million dollars for every home run you hit next year.

[00:28:21] Speaker 02:
Isn't that, would that infringe your patent?

[00:28:23] Speaker 01:
No.

[00:28:24] Speaker 01:
Why not?

[00:28:25] Speaker 01:
For two reasons.

[00:28:26] Speaker 02:
But it's a combination of competitive activity and auction, right?

[00:28:30] Speaker 01:
I think that's solely an auction because

[00:28:33] Speaker 02:
The terms, in addition to the... Why isn't the number of home runs he hits a competitive activity?

[00:28:40] Speaker 01:
It's an auction.

[00:28:41] Speaker 02:
He gets an extra million dollars for every home run he hits.

[00:28:44] Speaker 02:
He's competing, in effect, against the pitchers to try to increase himself.

[00:28:48] Speaker 01:
And I'll tell you why.

[00:28:49] Speaker 01:
Go ahead.

[00:28:50] Speaker 01:
Because the bidding of the auction is done by the team owners.

[00:28:54] Speaker 01:
The competitive activity is done by the baseball player.

[00:28:58] Speaker 00:
The team owners are going to lose money if he hits a home run.

[00:29:04] Speaker 01:
But but the competitive activity the competition is being done by the baseball player Not by the baseball team not by the owner so in our claims it is the the prospective buyer who's doing both the bidding at the auction and the competitive activity

[00:29:23] Speaker 03:
Also... I think your time is up, Mr. Danos.

[00:29:26] Speaker 03:
I have no more.

[00:29:28] Speaker 03:
Okay.

[00:29:29] Speaker 03:
I think we need to move on.

[00:29:30] Speaker 03:
Exceeded your time.

[00:29:32] Speaker 03:
I thank both counsel for the argument the case is taken under submission.