[00:00:00] Speaker 01:
22574 Multimedia versus Lairley.

[00:01:04] Speaker 02:
Thank you, Your Honors.

[00:01:21] Speaker 02:
Good morning and may it please the Court.

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Section 101 expansively makes eligible for a patent any new and useful process or machine or any new and useful improvement thereof.

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Multimedia's 025 patent describes and claims just such a specific improvement in a machine, a learning management system or LMS, and a specific improvement in a process for using an LMS for administering and tracking training of a dispersed workforce.

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In a nutshell, that specific improvement is the caching of a high bandwidth training program on a local computer and only transmitting low bandwidth test information back to a central,

[00:01:59] Speaker 02:
administrative server via a low bandwidth connection in substantially real time.

[00:02:04] Speaker 01:
Using conventional hardware and software... I'm reading this specification and there's all kinds of things in here about, well really the whole point of this is to have somebody put the test answers into a local computer and send them on.

[00:02:19] Speaker 01:
I mean it says the training program can be on a DVD, a CD-ROM, and the employee can even write

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their answers on a piece of paper and someone else can type them into the computer.

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How is that changing the computer technology?

[00:02:38] Speaker 02:
The paper embodiment that's described is actually not claimed in the claims, Your Honor.

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That would be one of the ways that one could not infringe this very specific LMS configuration.

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It was mentioned that it was not claimed.

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We also had claimed IVR, telephone, telephony,

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as a possibility, as one of the ways that you could do this invention.

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There were claims to that.

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They were restricted out.

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And they're not in the patent.

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So that's another way that this, it's a very specific.

[00:03:09] Speaker 01:
But those, even those discussions are indicative of how simple the concept is, right?

[00:03:17] Speaker 02:
The concept is simple, but it's still not abstract though.

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The, I can, if you give me a minute to go into the,

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background of where we were technologically when this invention was created.

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It'll clear up why this is a technological solution to a technological problem.

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So at the time of the invention, very few retailers, and this is for retail training primarily, you know, like a coach or a Tiffany's or any store, any company that has lots of, you know, locations for retail or restaurants could be implicated.

[00:03:50] Speaker 02:
But back in 2004, very few retailers were connected to the internet at all.

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The maximum connection speed back then was 128 kilobits per second, perhaps.

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Typically, a training program for training employees in what not to do with a shoplifter or what to do for workplace harassment was deployed on an in-store machine where a standalone LMS server was installed.

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An employee would log in locally on the server, which contained both training content and the test results.

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corporate to see those results, typically the store manager would have to create a floppy disk and mail it to the corporate office.

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By the time the management had data to look at, it was old data and it wasn't giving you a good sense of how the training is working.

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The other alternative at the time, back in 2004, was to have a central server and host the LMS at corporate HQ.

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Since the bandwidth was very limited, as we said, and that bandwidth had to include all of the available bandwidth used for credit card transactions

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and other mission-critical transactions, the available bandwidth didn't allow for video or audio.

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You had just low bandwidth content being streamed, which was text and images, very limited images.

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There was not engaging content at all.

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Employees just weren't getting it.

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So multimedia's novel approach, and we argue non-abstract approach, was a hybrid of those two systems, best of both worlds.

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They maintained a central server with live test data.

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that's the low bandwidth information, but separated the high bandwidth content so it resided locally at the store.

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So multimedia could deliver both an engaging and media rich user experience and provide live data and metrics.

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So the high bandwidth information, that's the test itself?

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Yes.

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The low bandwidth information is the answers?

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Yes.

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So it's kind of like every year a bunch of high school kids have to take the SAT

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They all get the big booklet and then they have a Scantron and then they fill in the bubbles of the Scantron.

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And instead of sending all those test booklets back to the central SAT warehouse, only the Scantron sheets get sent back, right?

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I mean, if I understand how the SAT test-taking process works,

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What you're doing, it feels like the mere automation of that very process.

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Well, it's not just the automation of that process.

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It's the providing, in the SAT or Scantron hypothetical, there's no connection between the student and the central database.

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It's basically there's an error gap.

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You have to put your test dancers on the Scantron and they get mailed in.

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I mean, we all took the LSATs.

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We didn't find out for months until we got our results.

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And apparently, we all passed.

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But the result is that there's no low bandwidth connection.

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And that's the specific claim structure in the claims that, quite frankly, the district court ignored it when it was doing its analysis.

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Why is that a technical achievement of some sort?

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Well, by itself, that's a conventional component.

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in the context of an LMS, it's that by itself is a non-conventional arrangement of existing conventional components.

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Could you explain that a little more?

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Sure.

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The important aspect of the claim invention is that while the high bandwidth program resides on the local computer, only the employee's low bandwidth test information is transmitted back to the central server.

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And it's not just

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whenever, it's substantially as the employee is taking the test.

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Either it could be per by answer, or it could be every time the employee logs in.

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But it's not months later, and it's not on a floppy disk that's mailed in.

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So there's no air gap.

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And this non-conventional, non-generic arrangement of the components of an LMS and how they communicate with each other yields several advantages over what was previous with LMSs.

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It enabled employees to access high bandwidth material without burdening the retail location's data line and possibly compromising its electronic commerce.

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It also enables an employee to interact with a high bandwidth program now in 2017 on a smartphone or a tablet on his or her own time, even if she's in a bad signal area like a subway stop or an airplane.

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And the invention additionally enables a manager to review

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the employee data as it comes in, or reasonably practical data.

[00:08:44] Speaker 01:
Well, at the time this patent was issued, there was no concept of smartphones or smart data.

[00:08:54] Speaker 02:
That's exactly correct, Your Honor.

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The iPhone came out in 2007.

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But you're now saying that this whole method would read on all of those things.

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Well, it wouldn't read on all of it, because there are other limitations in the claims.

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You know, when Apple introduced the iPhone in 2007 and then launched the App Store in 2008, which was all after the patent, it came to the same conclusion that multimedia did back in 2004, which is that performance is greatly improved when high bandwidth content is cached on a local device and only low bandwidth information is transmitted to the central or remote computer via low bandwidth connection.

[00:09:34] Speaker 02:
You know, LMS, that technology didn't exist back in 2004 when they filed this application.

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And both sets of claims recite actual structural components and how they interact with each other in much greater specificity than just do it on a computer.

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And both sets of claims are directed to significantly more than the abstract idea of administering tests per se.

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So when we go to the two steps of the ALIS test, you know, the first step

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Are the claims directed to an abstract idea?

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No.

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They're directed to a specific improvement in LMSs, a specific technological area.

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And when we examine the claims as a whole, instead of the eviscerated claim that the district court examined, then we see that there's physical structural limitations that are more specific than just a computer.

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When we go to step two, we see that the claims recite meaningful limitations beyond generally linking the use of an abstract idea

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to a particular technological environment.

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And because of the specific distribution of functionality within the claimed LMS, all of the advantages I mentioned before of the invention are possible.

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And none of those were possible with prior LMSs.

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This court has repeatedly held that moving around the functionality within a network of devices so that the network performs better is eligible subject matter.

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It did so in Bascom when you move around the content filtering scheme from a local machine to a central machine while still maintaining customizable settings.

[00:11:08] Speaker 02:
That was deemed to be an inventive concept and eligible subject matter.

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The same thing in Amdocs.

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It was distributed architecture that minimized the impact on network system resources and enabled load distribution.

[00:11:19] Speaker 01:
That was... Are you saying that we have said that in those cases that if all you do is rearrange the architecture, that's enough?

[00:11:26] Speaker 01:
That's not the only test, but... I think we have said just the opposite, that just rearranging data architecture is never enough.

[00:11:38] Speaker 02:
Right, but this is not just data architecture, it's actually hardware components too.

[00:11:43] Speaker 02:
I mean, so for example, in electric power, the court held that inventive distribution of functionality within a network is patent eligible.

[00:11:52] Speaker 02:
It then went on to say in electric power that that's not happening in this case.

[00:11:56] Speaker 02:
It's happening

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If the claims hadn't moved around the functionality to make it perform better, then the claims might have been subject matter eligible.

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But in electric power, all it was doing was just looking at lots of data really quickly.

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Very similarly, in this case, the 025 patent moves a high bandwidth training program to the local device.

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A low bandwidth connection connects that local device to a central server and performance is improved greatly.

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when high bandwidth content is cached in the local device, and only low bandwidth test information is sent back to the central server.

[00:12:32] Speaker 02:
You're into your environment.

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I am.

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Unless you have any questions, I can send it.

[00:12:50] Speaker 00:
May it please the court.

[00:12:52] Speaker 00:
I think as Your Honor Judge Chen acknowledged, for decades, schools across the country have managed learning through standardized testing, where students are given a test booklet and an answer sheet.

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The teacher sits at the front of the class, watches the students take the test.

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Students put their name on the test, fill in the answers, and turn in the test sheet to the teacher.

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They transmit it to the teacher.

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The teacher can then grade the test manually,

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or with the Scantron can submit it into a computer that spits out results.

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The teacher then sorts the results, grades the students.

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That's the process of administering a test.

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All this invention does is take that real world analog that has been around since I've been alive and puts it on the internet to make it faster.

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Your honor asked whether

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A student could write down their answers and put it into the local computer.

[00:13:51] Speaker 00:
That's covered by the claims.

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If you look at claim one, it just says the student answers their answers on a local computer.

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It doesn't say it has to type them in.

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They could write them down, submit them in to a scanner, hit the send button, email them as an attachment, send them to the central server.

[00:14:05] Speaker 00:
That's within the scope of the claims.

[00:14:09] Speaker 00:
But taking a real world analog and merely putting it on the internet, as the district court found, is not patentable.

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The Supreme Court said so.

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This court has repeatedly said so.

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It's just not patentable.

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And I think if you go back, my counselor talked about the background and why this is an improvement.

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The background section of the patent talks about presenting a CD-ROM to disparate locations.

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And the problem with that approach was is that, and it talked about segregating the answers and the tests in a contemporaneous quiz.

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And the employee would have to take the quiz and send it either by email or however it got there to a central server.

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And then all of the test data would have to be entered manually.

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That was a problem.

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This purports to solve that problem by having it entered on a local computer and transmitted over the internet.

[00:15:07] Speaker 00:
That's not sufficiently inventive.

[00:15:10] Speaker 00:
But if you look at the summary of the invention section,

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It talks about administering a test using computers.

[00:15:17] Speaker 00:
Well, let's look at the computers that it describes.

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It is a conventional client server architecture with a communications link that is preferably a conventional internet connection.

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That is the technology we're talking about here.

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That predated and everyone I think knows that predated 2004.

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The conventional client server architecture quote,

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An overview schematic of the inventive training system 10 is shown in figure one.

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One, the main components of that system are local computers and a central server.

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Let's talk about the conventional inner internet link between them.

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Each local computer can communicate with the central server via communication link 23.

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And that can be any type of communications link, but preferably one that's kind of a conventional internet connection.

[00:16:13] Speaker 00:
Now this notion that it's he didn't touch an argument the notion that because there's a description of a system a hosted learning management system that all of a sudden makes it patentable.

[00:16:28] Speaker 00:
He didn't mention that but in the briefing he does and I just want to make clear that Alice specifically rejects that you just can't give a name to the in the preamble and all of a sudden it's patentable and it dictates quite the opposite.

[00:16:40] Speaker 00:
But the argument that he focused on is that this is an improvement to prior LMS systems.

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And if you look at the notion of an LMS system, it's abstracted in of itself.

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Administering a test is a learning management system.

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But we also know that that's not true because prior ways of doing it talks about segregating the test and the test questions.

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And we know that's been there throughout history.

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Or not history, but formal education.

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as long as I've lived.

[00:17:12] Speaker 00:
The alleged improvement of enabling a student to enter answers on the local computer, that's not inventive.

[00:17:20] Speaker 00:
That's merely typing in a computer or scanning something.

[00:17:23] Speaker 00:
So for example, if I have a test booklet on my desk and I take the test and I email it to my teacher, that's within the scope of the claims.

[00:17:33] Speaker 00:
It's input on a local computer.

[00:17:34] Speaker 03:
I guess the heart of what they're claiming to be their invention is

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an LMS system that now uses a low bandwidth connection between the computer and the server, which is new and different than what happened before, which required a high bandwidth connection because of all of the information that was getting sent from the test takers back to the server.

[00:17:58] Speaker 03:
Now they've altered the architecture by now requiring a cheaper, you know,

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and therefore a more convenient low bandwidth connection.

[00:18:11] Speaker 00:
I don't think they've changed the architecture.

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What they did is transmit the way they have transmitted the test program is via CD-ROM.

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It's not through the connection.

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It's on the local device.

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And test answers are still transmitted.

[00:18:27] Speaker 00:
But the background section, that's only one scenario that it talks about.

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It also talks about the other scenario of transmitting

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the test with the quiz to all of the employee sites through a CD-ROM and just typing in the answers using the conventional internet connection.

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They didn't change the internet connection.

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They didn't change the computer architecture.

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What they said is, we'll just transmit only the answers from a local computer to a server.

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And we're not going to stream the video program.

[00:18:58] Speaker 00:
That's not inventive.

[00:18:59] Speaker 00:
And the interesting thing is, is I was listening to oral arguments of previous cases.

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And one of them is Williams.

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that was recently argued.

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And they made the opposite argument.

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They said the old way, and that was a computer learning management type of claims, a virtual classroom, where they took a virtual classroom and put it in a distributed internet.

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And they made the argument, well, the prior way of doing it was mailing the CD and software to every local computer.

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And that was very problematic.

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And our improvement was doing it in a streaming fashion.

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The court rejected that.

[00:19:34] Speaker 00:
You can't, and also you can't improve one abstract idea with another abstract idea.

[00:19:39] Speaker 00:
And in this court in affinity in the Amazon said streaming media is not, is an abstract idea is not invented.

[00:19:46] Speaker 00:
The fact that you are not street taking, you're not doing one abstract idea.

[00:19:50] Speaker 00:
You're doing another doesn't change the result here.

[00:20:03] Speaker 00:
And again,

[00:20:03] Speaker 00:
Their alleged solution is entering the test answers on a local computer and transmitting them to a central server using generic computer architecture.

[00:20:16] Speaker 00:
That is not inventive and it's merely taking a real world analog is how we take tests.

[00:20:23] Speaker 00:
You take it on your desk, which is the analog to the computer.

[00:20:27] Speaker 00:
You write down your answers and you transmit them to the teacher.

[00:20:32] Speaker 00:
A similar real world analog, which you can call that as an improvement over, is where a teacher stands in the front of the classroom and streams its questions and texts.

[00:20:44] Speaker 00:
And people raise their hands and they have to respond.

[00:20:47] Speaker 00:
Well, that's a high bandwidth problem for the teacher if it doesn't want to talk a lot.

[00:20:51] Speaker 00:
It just puts it in a book and puts it on the desk.

[00:20:55] Speaker 00:
But again, I think there can be real no dispute that

[00:21:00] Speaker 00:
There's an abstract concept here.

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It's the idea of administering a test as the district court found.

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And all they did was is put it on a computer architecture that was well-known.

[00:21:12] Speaker 00:
That's how the internet worked.

[00:21:13] Speaker 00:
If you remember AOL, in the late 90s or early 90s, you got a CD in the mail.

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You put it on your local computer.

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And you signed on.

[00:21:25] Speaker 00:
And you transmitted your unique identifier, your name, and other additional

[00:21:29] Speaker 00:
information answering questions of how you want your connection set up.

[00:21:33] Speaker 00:
But every time you communicate with the server, it didn't transmit the AOL program that sat on your local computer to the central server.

[00:21:43] Speaker 00:
The other alleged improvement that they talk about is enabling the manager to review in real time.

[00:21:51] Speaker 00:
That's not a technological improvement.

[00:21:53] Speaker 00:
That's the way the internet works, right?

[00:21:55] Speaker 00:
You have a local computer.

[00:21:57] Speaker 00:
You send information to a central server, another local computer can access it in real time.

[00:22:02] Speaker 00:
That's the cloud.

[00:22:04] Speaker 00:
And it's the way the internet has worked at all times.

[00:22:06] Speaker 00:
And this court, the Supreme Court, has repeatedly said you can't take an abstract idea and implement it on a computer and say I have an invention.

[00:22:18] Speaker 00:
And the notion of, they said there was no claim construction and that there's these LMS definitions.

[00:22:24] Speaker 00:
If you look at the definitions they've provided

[00:22:28] Speaker 00:
they don't explain how that would change the result the definitions actually are purely functional and they don't explain how those definitions would change the result which is required under this court's precedent for example in cyber phone with that I don't really have anything else I'm happy to answer any questions thank you

[00:23:02] Speaker 02:
Your Honors, I just wanted to use my remaining time to just outline some of the errors that the District Court made.

[00:23:09] Speaker 02:
This Court reviews eligibility questions de novo, but it's instructive to look at the errors that the District Court made, of which there were several.

[00:23:18] Speaker 02:
Initially, regarding step one, the District Court ignored the actual claim language and focused on the supposed purpose of the claims, and the claims were gutted of all of their actual structural limitations.

[00:23:29] Speaker 02:
And the eviscerated version of claim 12 was then examined.

[00:23:32] Speaker 02:
That appears on page 8 of the appendix.

[00:23:34] Speaker 02:
That's what the district court in Bascom did, and this court reversed that.

[00:23:38] Speaker 02:
That's the opposite of what one is supposed to do when reviewing claims for subject matter eligibility purposes.

[00:23:43] Speaker 02:
Instead, one is supposed to review the claims as a whole.

[00:23:47] Speaker 02:
And to my friend's point about that's what the internet did, that's not really how AOL was working back in the 90s.

[00:23:56] Speaker 02:
AOL gave you executable code.

[00:23:59] Speaker 02:
that you then set up on your computer.

[00:24:01] Speaker 02:
And then if you really wanted to get content, you still had to stream it.

[00:24:04] Speaker 02:
And if we all remember, back in the 90s, it took a long time for it to be waiting for downloading to happen, because that was streaming the content.

[00:24:13] Speaker 02:
The district court also did not apply the inventive concept step correctly, because it failed to consider how the elements are arranged and how they interact.

[00:24:24] Speaker 02:
After the district court stripped the claims of all structural limitations,

[00:24:28] Speaker 02:
The district court went back to the structural limitations and indicated that each such limitation was merely a generic computer component.

[00:24:35] Speaker 02:
No thought was given as to how those components interacted and when they interacted, both of which are recited in the claims and both of which provide an inventive concept.

[00:24:44] Speaker 02:
That's exactly what the district court did in BASCOM and this court reversed as it should here.

[00:24:49] Speaker 02:
Procedurally, the district court failed to resolve all factual disputes in favor of the non-moving party multimedia, which is required in a motion on the pleadings.

[00:24:58] Speaker 02:
It's not required in every case to do a claim construction, but here it is.

[00:25:02] Speaker 02:
In the cases that were cited by the district court, both of those, in those cases, they said no claim construction dispute is relevant to the eligibility issue.

[00:25:12] Speaker 02:
In IP Learn Focus, for example, not only was there the basic character of the claim subject matter made the claim construction irrelevant, but the defendant was willing to agree with the patent holder's claim construction for the purposes of the summary judgment motion.

[00:25:26] Speaker 02:
We don't have any such agreement here.

[00:25:28] Speaker 02:
And relatedly, the district court ignored multimedia's preliminary evidence of what constitutes an LMS to one of ordinary skill in the art, because it deemed that evidence as not being in the pleadings.

[00:25:39] Speaker 02:
And yet, it relied on facts not only not in the pleadings, but not in evidence and not even prior to the application itself by citing a smartphone app that came out five years after the 025 patent issued for a device that came out three years after the 025 patent's application was filed.

[00:25:57] Speaker 02:
For at least those reasons, the district court should be reversed and the claims found to recite eligible subject matter.

[00:26:04] Speaker 02:
I have nothing else.

[00:26:05] Speaker 01:
Do you have any questions?