[00:00:06] Speaker 02: Before we get started this morning, we have an administrative matter to attend to that's part formal and part tradition. [00:00:17] Speaker 02: And this is the admission of one of our law clerks. [00:00:21] Speaker 02: Gina, can you stand, please? [00:00:27] Speaker 02: Well, Gina, it's been one year since you have been clerking for me. [00:00:32] Speaker 02: I know the time has come by fast for you, but that's what happens when you're working hard. [00:00:38] Speaker 02: Your excellent work product has been a benefit not only to my chambers, but to this honorable court as well. [00:00:46] Speaker 02: I see that you've earned the respect of your colleagues, and I'm not surprised by that, the respect they have for your legal prowess, but also for your professional character. [00:00:58] Speaker 02: So I tell my colleagues on my left and right, [00:01:01] Speaker 02: that before you stands in the well of this court, a woman who is an excellent lawyer and will be a leading light in the US legal profession. [00:01:12] Speaker 02: So I move for the admission of Gina H. Cremona, who is a member of the bar and is in good standing with the highest courts in California, New York, and the District of Columbia. [00:01:22] Speaker 02: I have knowledge of her credentials, and I'm satisfied that she possesses the necessary qualifications. [00:01:30] Speaker 01: Your motion is granted. [00:01:33] Speaker 04: Now if you would please face the clerk and he will administer the oath. [00:01:53] Speaker 02: Okay, we have a number of cases before us today. [00:01:58] Speaker 02: We have four cases that have been submitted on the briefs, and the court is attending to those cases. [00:02:04] Speaker 02: We have two cases before us on oral argument, Apple Inc. [00:02:08] Speaker 02: versus Content Guard Holdings Inc. [00:02:11] Speaker 02: 16-2548. [00:02:16] Speaker 02: Counselor Unical? [00:02:18] Speaker 05: Yes, sir. [00:02:19] Speaker 02: You have reserved three minutes of your time, I take, for rebuttal. [00:02:25] Speaker 02: And you're sharing five minutes of your time with Councilor Lamarca. [00:02:30] Speaker 02: Yes, Your Honor. [00:02:31] Speaker 02: OK. [00:02:33] Speaker 02: And on the other side, I guess you reserved two minutes of your time for it to rebut. [00:02:39] Speaker 03: Yes, thank you, Your Honor. [00:02:40] Speaker 02: OK, well, let's get started on that. [00:02:43] Speaker 02: You may begin. [00:02:44] Speaker 04: With your permission, Your Honor, we had agreed that the government would begin, if that's all right. [00:02:47] Speaker 02: OK, that's fine. [00:02:53] Speaker 05: As you pointed out, Your Honor, I only have five minutes, so I'll try to be brief. [00:02:57] Speaker 05: It may please the court. [00:02:59] Speaker 05: This case was, the reason we're here, we filed a brief for the limited purpose of defending the agency's institution of a CBM procedure. [00:03:07] Speaker 07: So this case is pre-Unwired Planet, right? [00:03:10] Speaker 05: Correct, Your Honor. [00:03:11] Speaker 07: And so the problem with this is the board in this case still uses the incidental language, I think, that we found. [00:03:20] Speaker 07: not proper. [00:03:21] Speaker 07: Are you essentially saying that that's harmless error? [00:03:28] Speaker 07: I mean I know you argued that it was kind of an alternative holding that it would be financial in nature anyway but I have a hard time reading that into the board's decision. [00:03:38] Speaker 05: Yeah I think if you look at the final board decision that's where the board goes on and further says that the elements in this claim are financial in nature and therefore they qualify as a CBM. [00:03:48] Speaker 07: But it's still [00:03:50] Speaker 07: I agree that that language is in the board decision. [00:03:57] Speaker 05: We don't dispute that but we do think the board decision sufficiently articulates why this is a financial in nature type claim and therefore qualifies even if they didn't use [00:04:09] Speaker 05: the perfect language in their decision, we think the claim qualifies. [00:04:13] Speaker 07: Shouldn't it really be a question for the board to make in the first instance of whether this is financial in nature under the proper standard? [00:04:20] Speaker 05: Well, let me give you an example. [00:04:22] Speaker 05: In Versata, which is where the court determined that the board relied on the wrong incidental complementary to language, even there Versata said, nevertheless, the claim qualifies. [00:04:31] Speaker 05: So similarly here, even if this language is in the board decision, [00:04:35] Speaker 05: And there's a problem with that language. [00:04:37] Speaker 05: Never the less. [00:04:37] Speaker 07: But Rosado is a lot easier of a case. [00:04:39] Speaker 07: It was a pricing tool, which seems clearly a financial problem. [00:04:44] Speaker 07: This one seems, to me at least, on the facts of the claims and the way they're written and the way the specification supports them, it's closer. [00:04:55] Speaker 07: I mean, I have a hard time thinking that this is so clearly a CBM that it would be harmless not to. [00:05:04] Speaker 07: that it would be harmless for the board to rely on incident language and have us go ahead and decide it. [00:05:09] Speaker 05: Yeah, I think our position is the claim qualifies. [00:05:13] Speaker 05: The claim meets the statutory requirement. [00:05:15] Speaker 05: Here, we do think it's a financial in nature claim. [00:05:19] Speaker 01: What is it about this claim that you think makes it financial in nature? [00:05:24] Speaker 01: Because there's nothing in the claims themselves that identify financial activity. [00:05:29] Speaker 01: I mean, the word [00:05:30] Speaker 01: consumer and supplier appears, but that's in the context of consumer rights and supplier rights, which is, is a reference, as I understand it, to the respective rights of the parties, not with respect to the activities of consumer in the financial sense. [00:05:48] Speaker 05: Agreed, Your Honor. [00:05:48] Speaker 05: But if you read consumer and supplier and you read it in the context of the specification, what the specification talks about, and the board pointed this out in repeated places, [00:05:57] Speaker 05: the consumer and the supplier are transferring these rights. [00:06:01] Speaker 05: They call them meta-rights. [00:06:02] Speaker 05: Let's just call them rights to music or rights to videos. [00:06:05] Speaker 05: There's many, many recitations of where the way that's enforced, because the claim also talks about an enforcement mechanism called a repository, the way it's enforced is collection of license fees, payment of fees, et cetera. [00:06:16] Speaker 05: Now, there are examples that may include others, but even if you look at it even deeper, [00:06:24] Speaker 05: determining by a repository whether the rights consumer is entitled to the rights specified, well, we know for a fact that this spec incorporates by reference a prior art reference called Steffic. [00:06:35] Speaker 05: And when you look to Steffic, Steffic says the repository is integrated with the fees and the payments. [00:06:40] Speaker 05: So that's not in dispute. [00:06:42] Speaker 05: In fact, right in the specification here, the 280 patent expressly says the mechanism for enforcing is the repository. [00:06:52] Speaker 05: And the repository that's back in Stefic is the repository. [00:06:55] Speaker 05: And when you read Stefic, it's all about payment of fees and using the repository to enforce the rights to the exchange. [00:07:02] Speaker 01: But if we are to use the specification only for purposes of determining the proper construction of the claims, then it seems to me the specification, correct me if you think this is wrong, but the specification does not tell us that the claims are necessarily to be read [00:07:20] Speaker 01: as if they read on financial activity, even though the specification includes allusions to financial activity. [00:07:28] Speaker 05: Well, if I take you to the language of the unwired planet case, which I believe we might have mentioned that earlier, what unwired planet requires us to do is it says a CBM patents are limited to those with claims that are directed to methods and apparatuses of particular types and particular uses in the practice, administration, or management of a financial product or service. [00:07:48] Speaker 05: Well, what we have here [00:07:50] Speaker 05: is we have claims that are directed to financial activity. [00:07:54] Speaker 05: That's exactly what we've got. [00:07:55] Speaker 02: That doesn't mean the claim can't... No, it's directed to maybe a commercial transaction down the road. [00:08:01] Speaker 02: Well, the incident of a commercial transaction at that, the rest of the law and the law goes on and points that out, that just because the patent itself can lend itself or involve [00:08:13] Speaker 02: the potential commercial transaction, an item being sold, doesn't render the claims to be financial in nature. [00:08:24] Speaker 05: We agree, Your Honor, because what I think the language. [00:08:26] Speaker 02: Why don't you walk back the language from the institution, the incidental two. [00:08:32] Speaker 02: You didn't walk back from that in the final written decision. [00:08:36] Speaker 02: You just try to build on top of it by pointing to the preeminent, not necessarily the specification. [00:08:42] Speaker 02: You take us to the preamble. [00:08:44] Speaker 05: But the preamble is integrated with the body of the claim. [00:08:46] Speaker 05: The body of the claim is all about the relationship between the supplier and the consumer. [00:08:51] Speaker 05: And the preamble simply introduces the antecedent for that relationship. [00:08:55] Speaker 05: Furthermore, the body of the claim is centrally focused on the enforcement mechanism and the enforcement mechanism, which is what this is all about. [00:09:02] Speaker 05: The whole purpose of this whole invention is to allow a rights holder to enforce those rights on downstream people in the chain, in the distribution chain. [00:09:10] Speaker 05: And the way they enforce that [00:09:12] Speaker 05: If we read Stefik, which is specifically incorporated by reference and expressly referenced as that's the repository function of this claim, this claim says the repository enforces the rights. [00:09:24] Speaker 05: It says it right in the claim. [00:09:25] Speaker 05: And what is the repository? [00:09:27] Speaker 05: It's a mechanism used to enforce. [00:09:29] Speaker 05: And Stefik says the way you enforce is by collecting fees and providing fee reports. [00:09:35] Speaker 01: Right. [00:09:35] Speaker 01: Let me give you a hypothetical. [00:09:37] Speaker 01: Suppose that you have a claim [00:09:40] Speaker 01: a patent on a barcode reader. [00:09:44] Speaker 01: And the claims simply say the barcode reader, barcode and a reader that interprets the barcode. [00:09:51] Speaker 01: All right. [00:09:52] Speaker 01: And the specification says, well, the barcode reader can be used for a variety of purposes, such as a cashier at the grocery store can use it, or you can use it to keep track of your furniture in your house or your books in your house. [00:10:07] Speaker 01: Would that, in your view, constitute a claim to [00:10:11] Speaker 01: or a patent is directed to financial activity. [00:10:14] Speaker 05: I think that's a much weaker case. [00:10:15] Speaker 05: That's much more closer to the examples that were criticized in Unwired Planet as well as, I think, the now vacated secure access cases. [00:10:23] Speaker 01: Even though the specification alludes to financial activity, that wouldn't be enough. [00:10:28] Speaker 05: For example, I invented a chair, and the chair can sit in a bank. [00:10:32] Speaker 05: It doesn't qualify as financial activity. [00:10:34] Speaker 05: That's very easy. [00:10:35] Speaker 05: I invented a ditch-digging device. [00:10:38] Speaker 01: Those are the examples. [00:10:39] Speaker 01: It seems to me that this case, the barcode, is closer to this case than those. [00:10:44] Speaker 01: And you're saying, I infer that you're saying that the barcode wouldn't exist. [00:10:49] Speaker 05: I think it's a lot tougher situation. [00:10:51] Speaker 05: I think you'd have to read a spec where the spec would have to say that it's used in that situation predominantly here. [00:10:57] Speaker 05: We know for a fact, when we read this spec, when we read Stefik and we read the language of this claim, that the purpose of this invention is predominantly in the use of enforcing [00:11:08] Speaker 05: rights, and the way it enforces it is through licenses and fee collection. [00:11:12] Speaker 05: Yes, we agree that the claim may be read to be broad enough to encompass some other activities that may not be that. [00:11:19] Speaker 05: But when the core of the claim is centered on the financial activity of enforcing rights through the collection of fees or other type of financial business relationships, we find it hard to believe that this does not qualify for a CBM patent, Your Honor. [00:11:33] Speaker 05: And I think I'm past my five minutes. [00:11:35] Speaker 05: I'm sorry. [00:11:37] Speaker 05: Please don't deprive. [00:11:39] Speaker 02: We won't. [00:11:45] Speaker 02: OK. [00:11:45] Speaker 02: So you have seven minutes, correct? [00:11:47] Speaker 04: Thank you. [00:11:48] Speaker 04: Yes, Your Honor. [00:11:49] Speaker 04: May it please the court, Robert Unichel on behalf of Appellants and Cross Appellees. [00:11:53] Speaker 04: I'd like to address two follow-up points on the CBM eligibility, if I might. [00:11:57] Speaker 04: First, in answer to the question of whether these claims are required [00:12:01] Speaker 04: to include financial activity or are directed to financial activity, yes, they are, because not only in the preamble but in the body of the claim, it specifies a transaction involving a consumer. [00:12:12] Speaker 04: And the specification uses multiple words to describe use recipients. [00:12:17] Speaker 04: Sometimes they're called users. [00:12:18] Speaker 04: Sometimes they're called recipients. [00:12:20] Speaker 04: But it specifically states in the specification that for transactions involving consumers, that's the term it uses, it defines them as business models. [00:12:30] Speaker 04: So on Appendix 96, in the 280 patent, in column 5, it actually describes typical business models and specifies that consumers are the rights recipients in a business model that uses. [00:12:45] Speaker 06: But it does have at least examples of non-monetary uses. [00:12:50] Speaker 04: Not for consumers. [00:12:51] Speaker 04: No, Your Honor. [00:12:53] Speaker 04: The other examples that are in the patent talk about recipients. [00:12:56] Speaker 04: They talk about users, and I agree [00:12:59] Speaker 04: that a general user of rights might include people that are not involved in monetary transactions. [00:13:05] Speaker 07: And since the hospital data records. [00:13:07] Speaker 04: I'm sorry? [00:13:07] Speaker 07: The hospital data records. [00:13:08] Speaker 07: Aren't they consumers of data? [00:13:13] Speaker 07: Honestly, it seems to me you're making a point you don't need to make to win this case. [00:13:17] Speaker 07: You're overreading the specification. [00:13:19] Speaker 07: But because I did not see the distinction you're showing, maybe you want to point out to me [00:13:25] Speaker 07: where it says consumers only relates to people that pay fees. [00:13:30] Speaker 04: Well, it's not necessarily that it's only that the consumers pay fees. [00:13:34] Speaker 04: But what the specification states in column five, lines 39 through 52, and then column six, one through 17, is that in business models that use the invention, you have suppliers and consumers. [00:13:48] Speaker 04: Those are the terms it uses when it's describing business models. [00:13:51] Speaker 07: And that's what it is. [00:13:52] Speaker 07: disagree with you. [00:13:53] Speaker 07: I mean, this specification is replete with references to licensing and fees and things like that and using this digital rights management control system for the sale of digital rights. [00:14:07] Speaker 07: But it seems like it also has examples that aren't monetary. [00:14:12] Speaker 04: It does have examples of non-monetary. [00:14:15] Speaker 04: But when the claim, so obviously it's a black letter law principle that you can claim narrower than you disclose. [00:14:21] Speaker 04: And here, the claims are directed to a supplier and consumer relationship, not just in the preamble, but there's a second reference in the actual body of the claim elements to the consumer. [00:14:32] Speaker 07: So you think that they've defined consumer in a more limited way than just consumer of the data rights. [00:14:39] Speaker 07: It's a monetary consumer. [00:14:42] Speaker 07: Can you point to me in the specification? [00:14:44] Speaker 04: Yes, for example, Your Honor, in column 5, line 39, [00:14:50] Speaker 04: Patent states, as noted above, typical business models for distributing digital content include plural parties, such as owners, publishers, distributors, and users. [00:15:02] Speaker 04: Each of these parties can act as a supplier granting rights to a consumer downstream in the distribution channel. [00:15:08] Speaker 04: And it's referring there to typical business models. [00:15:11] Speaker 02: But you want us to read consumer as a purchaser. [00:15:16] Speaker 02: No, Your Honor. [00:15:16] Speaker 02: Consumer can just simply mean somebody who uses [00:15:20] Speaker 02: or possesses and makes use of some of these rights. [00:15:26] Speaker 04: I am not asking the court to find that a consumer is a purchaser. [00:15:29] Speaker 04: But what they are, according to the specification, is a party to a business model that uses the invention. [00:15:36] Speaker 02: Yeah, I say that because when I look at the summary of the invention at 94, line 53, column 2, and it's talking about the exemplary embodiments of this, there's nothing there that [00:15:49] Speaker 02: that has a dollar sign to it. [00:15:51] Speaker 04: Agreed, Your Honor, but a party to a business model in this might not necessarily transfer money. [00:15:57] Speaker 02: So it is a case that this can be used somewhere down the line where money can be said to exchange as a result of the granting of rights. [00:16:08] Speaker 02: But the granting of rights itself, that's what the invention is about. [00:16:12] Speaker 04: Yes, but there's... It's not to verify payments. [00:16:15] Speaker 04: No, but let me give an example, Your Honor. [00:16:17] Speaker 02: It has nothing to do with the payment. [00:16:20] Speaker 02: It's all about the rights itself, vested in other parties. [00:16:24] Speaker 04: And let me give an example, Your Honor, to address the concern about payment. [00:16:27] Speaker 04: It's frequently done, for example, that you might give somebody a free chapter of a book without any requiring any payment of money to induce them to later purchase either that book or a different book. [00:16:39] Speaker 04: You might give [00:16:40] Speaker 04: 30 seconds of a song for free, so somebody can hear the song, hear the artist, and maybe later make a purchase. [00:16:47] Speaker 02: This patent is, in the examples you're giving, isn't this patent used to make the granting of the rights, whether it's free or not, to make sure that the party, the person consuming the content, that that person has the right to consume. [00:17:04] Speaker 02: And that's not related to payment, not as far as invention is concerned. [00:17:07] Speaker 04: You're correct, Your Honor, that it's not necessarily related to payment, but it is related to a business model when the claim is restricted to the supplier and consumer interaction. [00:17:17] Speaker 04: It's not just a general user or a general recipient of rights. [00:17:21] Speaker 02: Eventually, a distributor can tell their consumer, I want you to give me $2, and I'll let you download this particular song, or you can read the book for $2. [00:17:34] Speaker 02: But the distributor can also say, you don't have to give me any money. [00:17:40] Speaker 02: In fact, it's free. [00:17:41] Speaker 02: You can download it, and your nephew can download it where he wants. [00:17:45] Speaker 02: But as long as what this patent does, it makes sure that the distributor has granted that consumer that particular right to the meta rights. [00:17:55] Speaker 04: That's correct, Your Honor, and has been established in the case law of Versada and Calypso. [00:18:00] Speaker 04: actual exchange of money is not necessarily required. [00:18:03] Speaker 02: And in a word, we say that even though there may be an exchange of money, that necessarily does not turn something into a CBM. [00:18:11] Speaker 04: Agreed, Your Honor. [00:18:12] Speaker 04: The question is whether or not the claims are requiring activity that is financial in nature. [00:18:17] Speaker 04: And when the specification makes clear that the supplier-consumer interaction is a business model, it's meant to define a business model using these features, [00:18:26] Speaker 04: it is making clear that this claim is directed to activity that is financial in nature. [00:18:31] Speaker 04: And in fact, to address the point about- I want to ask you this. [00:18:35] Speaker 07: What happens if, because these claims clearly don't specifically address the financial nature, you have to read them in the light of the specification to get there. [00:18:45] Speaker 07: What if we disagree with you that the specification isn't only about [00:18:51] Speaker 07: consumers in that kind of business model sense that you're pointing to, because I think there are other parts that suggest non-monetary uses of this data rights management. [00:19:02] Speaker 07: If the claims encompass both financial and non-financial products, does that qualify for a CBM? [00:19:10] Speaker 04: I believe it does, Your Honor. [00:19:11] Speaker 04: I believe as long as there is activity that is financial in nature that is encompassed by the claims, there's not a requirement under the statute or the definition [00:19:20] Speaker 04: that says it can only be financial in nature activity, but there does have to be some confidence that it's directed principally to financial in nature activity. [00:19:30] Speaker 04: There's virtually any type of claim other than one that says specify an exchange of dollars for a service that might encompass activities that do not involve monetary exchange, but that still would be considered CBM eligible. [00:19:45] Speaker 04: For example, [00:19:46] Speaker 02: So if you would like for us to read in the specification everywhere where it says the word consumer, you want us to read that in the context of a business context. [00:19:56] Speaker 04: I'm only responding to what's stated in the patent itself, where it defines that business models are how this is used, and then it goes on to say that suppliers and consumers are the participants in those business models. [00:20:10] Speaker 01: No, it's the rights consumers and rights suppliers. [00:20:12] Speaker 01: You keep saying consumers, but you're leaving out the word rights, which to me, at least, [00:20:17] Speaker 01: is a very important feature of the definition that's used in the, or at least the phrase that's used in the claims. [00:20:25] Speaker 01: Because that, if it just said consumers, then I'd be much more sympathetically inclined toward your position. [00:20:31] Speaker 01: But rights consumers and rights suppliers seems to me to focus on the transfer of the right, not something that is inherently financial. [00:20:40] Speaker 01: That's my problem with your position. [00:20:42] Speaker 04: Again, Your Honor, I appreciate that. [00:20:44] Speaker 04: And obviously, the guidance from the court has been that you have to look at the specification terms to understand the claim terms. [00:20:51] Speaker 04: And here, when the claim terms use those terms, rights consumer and rights supplier, you go back and look, well, what were they intending to encompass by that? [00:21:00] Speaker 04: And it looks in the specification in column five and column six, where they introduce that notion of consumer, that these are in what they call typical business models. [00:21:11] Speaker 04: Again, when you look in total at the patent, in light of the claim terms that they chose, it appears the board is correct when it made the separate finding that these are financial in nature. [00:21:22] Speaker 02: OK. [00:21:22] Speaker 02: You're into your rebuttal time. [00:21:24] Speaker 02: And so let's hear from the other side now. [00:21:26] Speaker 04: Thank you, Your Honor. [00:21:35] Speaker 03: May it please the Court? [00:21:39] Speaker 03: The USPOs exercise of [00:21:41] Speaker 03: jurisdiction here was improper because the 280 patent is not a CBN patent. [00:21:49] Speaker 03: The institution decision and the final written decision both came out prior to Unwired Planet and Secure Access. [00:21:56] Speaker 03: It's clear that the board made the exact same errors in this case as had been made in those two cases. [00:22:03] Speaker 07: Specifically, rather than applying... Unwired Planet when we found that they [00:22:08] Speaker 07: use the wrong standard, we vacated and remanded, right? [00:22:11] Speaker 03: You did. [00:22:11] Speaker 07: For an application, why shouldn't we do that here? [00:22:14] Speaker 03: I think this case aligns much more closely with the situation in Secure Access. [00:22:19] Speaker 07: The Secure Access was vacated. [00:22:21] Speaker 07: That's no longer precedent at this court. [00:22:23] Speaker 07: We don't have to follow it. [00:22:25] Speaker 03: Well, in the Secure Access case, well, on Wired Planet, there was a claim to... Sure, I get it. [00:22:34] Speaker 07: To me, it seems clearly the board made the same error it did in Unwired Planet, which was use the incidental language. [00:22:41] Speaker 07: Through no fault of their own, it was pre-Unwired Planet. [00:22:43] Speaker 07: They had no direction from us. [00:22:45] Speaker 07: And there, we vacated and remanded for them to make a proper determination under the proper standard. [00:22:52] Speaker 07: Secure access came along. [00:22:53] Speaker 07: And if it was still good law, I think you'd probably have a pretty good case for us just reversing outright. [00:22:59] Speaker 07: But how do we know, given that the specification is not just [00:23:03] Speaker 07: a couple isolated incidents of payment of money. [00:23:06] Speaker 07: It is replete with references to licensing fees and the like. [00:23:11] Speaker 07: I mean, I've read it, or I read parts of it, and it's paragraph after paragraph of talking about how this can be used to control data rights in the context of paying for them. [00:23:22] Speaker 07: Shouldn't the board be the one to determine whether this is the CBM in the first instance? [00:23:27] Speaker 03: I don't believe so, Your Honor, based on the facts of this case. [00:23:32] Speaker 03: The facts of this case align very closely with the facts of secure access. [00:23:36] Speaker 03: And the secure access. [00:23:37] Speaker 07: You're not going to convince me by arguing with secure access, because it's not good precedent. [00:23:42] Speaker 07: And I dissent it from the denial of rehearing en banc. [00:23:44] Speaker 07: And I don't think it's right. [00:23:45] Speaker 07: So if I don't have to follow it, I'm not going to follow it. [00:23:47] Speaker 03: Understood. [00:23:48] Speaker 07: I don't speak for my colleagues. [00:23:51] Speaker 07: And if you want to argue it, you can. [00:23:53] Speaker 07: But I don't think that that's the right [00:23:55] Speaker 07: Look, Secure Access looked at the claims and determined whether the claims themselves were purely financial. [00:24:02] Speaker 07: I think we get a look at the specifications. [00:24:04] Speaker 07: So you need to argue the specification to me. [00:24:07] Speaker 03: The specification in this case confirms that the claimed invention is context neutral. [00:24:14] Speaker 03: That is a very important point under the holdings of Unward Planet and Secure Access. [00:24:20] Speaker 03: The claims themselves point out [00:24:22] Speaker 03: recite the transfer of rights between a rights consumer, a rights supplier, and a rights consumer. [00:24:29] Speaker 03: There is no other language in any of the claims within the expressed language of the claims themselves that confines that transaction to any financial setting. [00:24:39] Speaker 07: I agree entirely. [00:24:40] Speaker 07: The specification... The specification is overwhelmingly directed to licensing fees and the like, is it not? [00:24:47] Speaker 07: There are some stray examples of hospital records, university students and the like. [00:24:53] Speaker 07: But over and over again, it references fees for licensing and fees for these data rights. [00:25:02] Speaker 03: It does, and we don't deny that. [00:25:03] Speaker 07: But let me ask you this hypothetical. [00:25:05] Speaker 07: If the only examples, even though the claims themselves did not include anything talking about licensing fees, if the only examples in the specification [00:25:16] Speaker 07: were financial in nature and were directed to licensing fees and how you pay for data rights and how you distribute data rights. [00:25:24] Speaker 07: Would that be a CBN patent? [00:25:27] Speaker 03: The answer I would give is the analysis would require to conduct a Phillips claim construction analysis of the claim in light of that specification. [00:25:39] Speaker 03: And if under principles of claim construction, it was appropriate to limit the claims, even a single term, [00:25:46] Speaker 07: from the claims to a financial setting, then the answer... What if the claims include... I'm going to ask you the same question I asked your friend. [00:25:54] Speaker 07: What if the claims cover both financial and non-financial products? [00:26:01] Speaker 03: Then it's not a CBM, and here's why. [00:26:03] Speaker 03: Because, as I understand your question, if the claim can cover both financial and non-financial, that necessarily means the claim does not require financial [00:26:14] Speaker 03: The law is, I understand it, that this court provided us an unwired planet and secure access, is that we have to determine whether it's a CBN patent based on what the claims require. [00:26:28] Speaker 03: And to patent practitioners, we understand require means [00:26:32] Speaker 07: Does that conflict with the legislative history? [00:26:34] Speaker 07: I mean, what Congress was concerned about here was not just a very narrow category of patents. [00:26:41] Speaker 07: I mean, you look at the legislative history, and they were concerned about very broadly generically worded business method patents being wielded against defendants in ways that inhibited business. [00:26:56] Speaker 07: And indeed, I think the legislative history, I think this is in Judge Laurie's dissent [00:27:01] Speaker 07: and secure access noted that one of the claims itself wasn't financial in nature that they were concerned about and under secure access wouldn't have been invalidated. [00:27:12] Speaker 07: That sounds to me like you're making the same argument that unless the claim is specifically only construed as financial, that that's the only way it's a CBO. [00:27:21] Speaker 07: I don't see that that's consistent with the legislative history here. [00:27:26] Speaker 03: The definition itself refers to patents that claim a method or corresponding apparatus. [00:27:32] Speaker 03: So the word claim is in the definition. [00:27:36] Speaker 07: Sure, but we have to look at what they're saying, or at least I look at what they're saying in the legislative history. [00:27:41] Speaker 07: In the case they were most concerned about, one of the independent claims was not on its face directed to a claim for money or financial activity. [00:27:52] Speaker 07: Now, if you read it in the context of the specification, [00:27:55] Speaker 07: it clearly could be asserted against business methods. [00:27:58] Speaker 07: And why isn't that same principle here? [00:28:01] Speaker 07: You're absolutely right. [00:28:02] Speaker 07: These claims are written very broadly and generically to cover data rights. [00:28:07] Speaker 07: And it doesn't specifically say licensing fees. [00:28:10] Speaker 07: But it certainly is going to be asserted against data rights management in the context of providing content for money. [00:28:17] Speaker 07: Because that's almost, I mean, again, your specification is replete with those examples. [00:28:23] Speaker 03: I would say a couple of things. [00:28:25] Speaker 03: there only need to be one claim in the patent that claims a financial activity. [00:28:29] Speaker 03: So if there's even one claim, then that patent should qualify as a CBM if it does claim some sort of financial activity. [00:28:36] Speaker 03: But there has to be, the reason I agree it's good policy to require, and also consistent with the statutory definition, to require some specific financial activity element in the claim is because the CBM definition that Congress provided [00:28:53] Speaker 03: Reese says that it has, it's limited to patents that claim a method or apparatus for performing data processing or other operations in the practice of financial product or service. [00:29:04] Speaker 03: And so if, if may I finish? [00:29:06] Speaker 03: Yes, please. [00:29:08] Speaker 03: So sure, there can be a claim that could cover a financial implementation or a non-financial implementation. [00:29:17] Speaker 03: But because such a claim, like the claims in this patent, [00:29:22] Speaker 03: can cover a non-financial situation, a non-financial implementation, that's because the financial is not required in the claim. [00:29:32] Speaker 03: It's not recited. [00:29:33] Speaker 01: So... I'm unclear as to exactly the line that you're drawing here with respect to claims that are directed both to financial and non-financial activities. [00:29:45] Speaker 01: Suppose you had a claim that said, suppose you took this claim and the claim had, were a little more elaborate, and it said this is [00:29:52] Speaker 01: principally to be used for — this is bad claim drafting, but I'm going to put it in anyway — principally to be used for fee determinations, but can be used for other purposes as well. [00:30:08] Speaker 01: So that there's clearly a reference in the claim to financial activity, but the claim makes it possible to have a different application of the claim as well. [00:30:20] Speaker 01: Are you saying that that would not be [00:30:22] Speaker 01: a CBM because of the reference to some potential non-financial activity. [00:30:31] Speaker 03: It really depends on the language of the claim. [00:30:33] Speaker 01: If the claim you're describing requires that... Well, I'm trying to describe... No, it's saying that it is required to have rights consumers and rights suppliers, comma, normally in connection with [00:30:52] Speaker 01: the obtaining of fees, comma, although it can have some non-fee related uses as well. [00:31:01] Speaker 03: I'm not entirely certain that type of a claim would be permitted because it sounds a little indefinite to me. [00:31:06] Speaker 01: I know, it's a bad, it's a terrible claim, but you know what, every now and then a terrible claim gets through the PTO. [00:31:09] Speaker 01: Sure, sure. [00:31:10] Speaker 03: So let's assume my claim got through the PTO. [00:31:14] Speaker 03: That sounds like a difficult claim to analyze because it's unclear from my understanding of your question whether the [00:31:21] Speaker 03: the financial activity that you're alluding to in this claim is an actual claim limitation that is required in order to infringe. [00:31:28] Speaker 03: I mean, it's the infringement analysis. [00:31:30] Speaker 03: If something is recited in the claim, then that claim is only infringed if the accused method or process actually performs that step. [00:31:40] Speaker 01: And if this claim was... So if the claim could... If the step were explicit with respect to finance, but there were an alternative in the claim [00:31:51] Speaker 01: to that did not require financial activity, you would say that is not qualified, because it is possible to infringe the claim without engaging in financial activity. [00:32:03] Speaker 01: Is that your position? [00:32:04] Speaker 03: I'm not sure you can have a claim like that, because I suppose if you have a claim with an optional limitation, if the financial limitation is optional, then... It's explicit, but not necessary to infringement. [00:32:21] Speaker 03: I'm having real trouble with that, Your Honor, because if it's explicit, I think it is necessary to find infringement. [00:32:27] Speaker 03: And what we are not saying is it has to be. [00:32:29] Speaker 02: This Bryce's scenario, I think, is a really good one. [00:32:34] Speaker 02: And I'm surprised you don't understand or want to answer that question. [00:32:39] Speaker 02: And the reason I say that is because what we have here is almost in the opposite of that. [00:32:43] Speaker 02: If you look at how this invention described itself in the field of invention, it says, [00:32:49] Speaker 02: The present invention generally relates to the rights transfer, and more particular, to a method, system, and device for managing the transfer of rights. [00:33:01] Speaker 02: It doesn't say anything about fees or fee determinations or fee verifications or the transfer of money. [00:33:09] Speaker 02: It makes no, this does not make any reference to anything that's financial in nature. [00:33:15] Speaker 02: That puts you on the other side of the fence [00:33:19] Speaker 02: of what Judge Bryson was asking you. [00:33:22] Speaker 02: If it was the opposite, if it did mention, it's all financial in nature, but you can also use it for non-financial purposes. [00:33:30] Speaker 02: Does that make it a non-CVM? [00:33:37] Speaker 03: Well, you're asking if the specification said it's primarily financial, but it could be used for non-financial? [00:33:44] Speaker 02: if you go back to judge bryce yes sir but if one of the claims if everything is financial in nature but one of the claims included a step or mention the method that non-financial in nature does that one isolated portion of the claim render the entire uh... uh... pat non cvm no it does not as long as at least one claim as even one limit even one limitation [00:34:14] Speaker 03: that either expressly recites a financial activity of some sort or through proper claim construction based on the specification is properly interpreted to be in the financial realm. [00:34:28] Speaker 03: And we agree that financial is a fairly broad concept. [00:34:32] Speaker 03: We're not saying it has to be a payment of a fee or the transfer of money. [00:34:36] Speaker 03: We're not arguing that it has to be a specific type of financial activity. [00:34:41] Speaker 03: It doesn't have to be limited to banks or anything like that. [00:34:44] Speaker 03: But it has to be somewhere in the realm of a financial activity. [00:34:47] Speaker 07: So let me ask you a slightly different hypothetical. [00:34:50] Speaker 07: Suppose you have claims that on their face don't appear to be directed to a financial product, but can be used in a financial product. [00:34:58] Speaker 07: And then you go to the summary of the invention, the examples, and everything. [00:35:02] Speaker 07: And every single thing that's talked about is financial in nature. [00:35:06] Speaker 07: Is that a CBN patent? [00:35:08] Speaker 03: If, based on those facts, it is proper [00:35:11] Speaker 03: to interpret even a single word of the claim as being in a financial realm, then yes, it's a CBM penalty. [00:35:18] Speaker 07: So same scenario, but at the very tail end of the specification, it has one sentence that says, there may be possible other non-financial uses of this invention. [00:35:29] Speaker 07: Does that take it out of the CBM realm? [00:35:31] Speaker 03: Probably not, because it sounds to me from the facts you're portraying, [00:35:37] Speaker 03: that that would be the type of specification that would likely be construed under Phillips as having implicitly defined at least one term as being a financial term because it's a consistently used throughout the entire specification and the real invention is all financial. [00:35:52] Speaker 03: You can't just have that boilerplate at the end that says, well, there's a whole bunch of... I get it. [00:35:57] Speaker 07: I get your answer. [00:35:58] Speaker 07: Let me take the hypothetical one step further. [00:36:00] Speaker 07: Instead of just saying there may be other possible uses, it says after listing 50 financial uses, it says, [00:36:06] Speaker 07: here is one non-financial use and actually gives an example. [00:36:09] Speaker 07: Does that take it out of the CBM sphere? [00:36:13] Speaker 03: That sounds like a closer call on whether the claim would be interpreted under Phillips to be limited to financial. [00:36:18] Speaker 03: If there's 50 examples that are all financial and only one that's not financial, it could be a claim, properly interpreted, that actually excludes that one non-financial embodiment. [00:36:30] Speaker 03: The law obviously recognizes that [00:36:32] Speaker 03: In some cases, the claim may exclude certain disclosed embodiments. [00:36:36] Speaker 07: And if it's appropriate to interpret that claim... Let's just assume it doesn't exclude that embodiment, that that embodiment is a proper embodiment. [00:36:43] Speaker 07: Do you think Congress intended for these kind of patents that are almost overwhelmingly financial in nature to evade CBM review because there's one non-financial embodiment? [00:36:56] Speaker 03: I think Congress intended to answer the question based on the requirements of the claim. [00:37:02] Speaker 03: And if the requirements of the claim as construed under Phillips based on the specification include even a single financial component, then it's a CBN patent. [00:37:11] Speaker 03: In this case, we don't have a, I respectfully disagree with the characterizations that the specification is primarily financial. [00:37:18] Speaker 03: There are numerous specific scenarios disclosed that are non-financial. [00:37:23] Speaker 03: There are also six or seven figures that go through the flow of how meta-rights are created and transferred in detail. [00:37:32] Speaker 03: the book club example, Alice transferring rights from her PDA to her laptop. [00:37:39] Speaker 03: Not a single one of those examples has any financial step, no payment of fees, no crediting of an account. [00:37:47] Speaker 02: The arguments that... I think we have your argument. [00:37:50] Speaker 02: You're well into your butthole, Tom, and I don't want to waste your time. [00:37:54] Speaker 02: Thank you very much, Your Honor. [00:37:55] Speaker 02: Let's go back to the other side, and I'm going to restore you back, Mr. Unicom, to your three minutes. [00:38:00] Speaker 04: Thank you very much, Your Honor. [00:38:03] Speaker 04: Just to conclude this argument, Your Honors, on page 13 and 14 of the appendix, the final written decision, the board made specific findings that these were CBM patents and were financial in nature. [00:38:15] Speaker 04: That remains still good law, even after unwired planet, that that's part of the standard. [00:38:20] Speaker 02: That is not an arbitrary or capricious finding, because- To what extent does a final written decision rely on the incidental two language? [00:38:30] Speaker 02: It didn't walk away from it, did it? [00:38:33] Speaker 02: I mean, it tries to build on top of it. [00:38:36] Speaker 02: Correct. [00:38:36] Speaker 02: So is this a house built on shifting sand, so to speak? [00:38:40] Speaker 04: No, Your Honor. [00:38:41] Speaker 04: There were three elements that would allow you to find for a CBM patent even before Unwired Planet. [00:38:46] Speaker 04: And that was financial and nature activity, incidental to activity, or complementary to activity. [00:38:53] Speaker 04: After Unwired Planet, we know that incidental to and complementary to are no longer sound bases to find CBM. [00:38:59] Speaker 04: But the board did not restrict itself to those two. [00:39:02] Speaker 04: It did make findings on those two, which can be disregarded in light of Unwired Planet. [00:39:06] Speaker 04: But it made separate findings that use the proper standard that remains, in effect, of financial in nature. [00:39:12] Speaker 04: And that appears specifically on pages 13 and 14. [00:39:15] Speaker 02: Well, we can disregard them. [00:39:16] Speaker 02: But why is it that the board didn't disregard it? [00:39:21] Speaker 02: Is it because Unwired came after this? [00:39:24] Speaker 02: After the final written decision, that's not the case, is it? [00:39:27] Speaker 04: Well, they sort of adopted a belt and suspenders approach at the board where they found, at all three levels, the financial inactivity incidental to and complementary to. [00:39:35] Speaker 02: Incidental is not a good suspender. [00:39:38] Speaker 02: I mean, it's not going to hold up their hands in this situation. [00:39:41] Speaker 04: Agreed, Your Honor. [00:39:43] Speaker 07: Can you clarify? [00:39:44] Speaker 07: I thought the board decision in this case came before Unwired Planet was issued. [00:39:48] Speaker 07: It did. [00:39:48] Speaker 04: Yes, it did. [00:39:49] Speaker 04: And perhaps I misunderstood the question. [00:39:51] Speaker 02: You did, Mr. Moore. [00:39:52] Speaker 04: I apologize very much, Your Honor. [00:39:54] Speaker 04: Yeah, this came after. [00:39:56] Speaker 04: So it was applying the standard. [00:39:57] Speaker 04: No, it wasn't. [00:39:58] Speaker 04: I'm sorry. [00:39:58] Speaker 04: It came before. [00:40:00] Speaker 04: I meant Unwired Planet came after. [00:40:02] Speaker 04: I apologize. [00:40:03] Speaker 04: Unwired Planet came after. [00:40:05] Speaker 04: And as a result, the board, when it was dealing with its decision, was still presented with [00:40:11] Speaker 04: the three different ways you could find CBM eligibility. [00:40:14] Speaker 07: So that was my- So we're not really sure how they would have decided it without the incidental part. [00:40:20] Speaker 07: Why isn't that all intertwined with their analysis here? [00:40:23] Speaker 07: You want to parse it up and say they decided under these three standards. [00:40:27] Speaker 07: I don't see that. [00:40:28] Speaker 07: I think they decided under their interpretation at the time, which we have since corrected. [00:40:35] Speaker 04: Your honor, I can only go by what the specific words and findings of the board are. [00:40:39] Speaker 04: And on page 13 and 14, they specifically invoke the financial and nature element, not the incidental to or complementary to language, which has been now disavowed by Unwired Planet. [00:40:51] Speaker 04: So I can only take the board at its word and determine that, in fact, it was not arbitrary capricious because it looked at the entire specification. [00:40:59] Speaker 04: It looked at the words and the claims in light of the specification. [00:41:02] Speaker 04: And it determined specifically [00:41:04] Speaker 04: that as a result of reading them all together, that this patent was in fact directed to activity that was financial in nature. [00:41:11] Speaker 04: Even if it did not specifically require payment, it did say, as has been said in Versada and in Blue Calypso, that merely requiring payment is not necessary for CBM eligibility. [00:41:22] Speaker 04: There must be just financial in nature activity. [00:41:24] Speaker 04: And here the specification as a whole indicates that this is financial in nature. [00:41:30] Speaker 02: All right. [00:41:30] Speaker 02: Thank you. [00:41:31] Speaker 02: Mr. Maloney, we have two minutes. [00:41:37] Speaker 03: Thank you very much. [00:41:39] Speaker 03: I disagree with the characterization of what the board did. [00:41:42] Speaker 03: I believe the portion of the final written decision that counsel just referred to, it's not referring to the claims. [00:41:49] Speaker 03: It says the specification of the 280 patent reinforces that this consumer supplier relationship [00:41:56] Speaker 03: at least in some instances, requires the payment of a fee or the processing by a clearinghouse, both of which are activities that are financial in nature. [00:42:05] Speaker 03: That's just another place where the board looked at the specification and said, in some instances, the invention can be practiced in a manner that includes payment of a fee or processing of a fee. [00:42:19] Speaker 03: But it never made any finding that the claims actually require this. [00:42:24] Speaker 03: And it never construed the claims to require payment of a fee or processing by a clearinghouse or any other type of financial activity. [00:42:32] Speaker 03: It was never construed in the claims based on the specifications. [00:42:36] Speaker 03: So those comments were consistent with the board's other findings that the specification teaches in some instances the invention can be practiced in a financial manner. [00:42:46] Speaker 03: But our point again is that under the law as set forth in the two recent decisions, we have to look at the claims. [00:42:55] Speaker 03: And if the claims are properly interpreted to require financial activity, then it's a CBN patent. [00:43:00] Speaker 03: But if they're not, then it is not a CBN patent. [00:43:03] Speaker 03: And we submit to this court that these claims are very clear on their face. [00:43:07] Speaker 03: And the fact that the specification discloses that both financial and non-financial embodiments are not only possible, but expressly contemplated by this invention, that there's no basis to construe the claims narrowly. [00:43:21] Speaker 03: I'm sorry, Your Honor. [00:43:22] Speaker 01: That's all right. [00:43:24] Speaker 01: What do you think is the best authority? [00:43:26] Speaker 01: You've predicated your argument largely on the Phillips theory, we'll call it. [00:43:30] Speaker 01: What is the best source of support for the Phillips approach to the use that can be made of the specification? [00:43:39] Speaker 01: It's quite evident to me that the biggest difference between you and your opposing counsel is the extent to which we can rely on the specification. [00:43:49] Speaker 01: You say only to the extent that it [00:43:52] Speaker 01: dictates how, under Phillips, the claim would be construed, they suggest at least that that's broader. [00:44:00] Speaker 01: What case do you point to for your best point? [00:44:03] Speaker ?: Is that in Secure Access? [00:44:05] Speaker 03: It's in both Secure Access and in Unwired Planet. [00:44:08] Speaker 03: I think it's more explicit in Secure Access. [00:44:10] Speaker 01: Yeah, I thought so. [00:44:11] Speaker 01: Where is it in? [00:44:12] Speaker 03: Well, in Unwired, well, let me walk back from that slightly. [00:44:15] Speaker 03: It is, I believe in Unwired Planet, [00:44:18] Speaker 03: The point is made maybe a little less directly, and specifically what I'm referring to is the court's comment in Unwired Planet at... What page? [00:44:28] Speaker 03: 1382, so 841, F3rd, 1382. [00:44:32] Speaker 03: It cannot be the case that a patent covering a method and corresponding apparatus becomes a CBN patent because its practice could involve a potential sale of a good or a service. [00:44:46] Speaker 03: And that was in the context of arguments that this disclosure of the patent in Unware Planet included suggestions of using the invention in a financial context. [00:45:01] Speaker 07: But that's responding. [00:45:03] Speaker 07: I mean, that's in the context of getting rid of the incidental to language. [00:45:07] Speaker 07: And there's a difference between something being incidental to and directed to, isn't there? [00:45:15] Speaker 07: I mean, I think there's probably a difficult issue here that the court may have resolved in secure access, but may have to resolve again, which is whether claims that are directed to financial activities but not limited to our CBMPAT. [00:45:32] Speaker 07: It doesn't seem to me in Unwired Planet we were saying that. [00:45:34] Speaker 07: We were talking about things that were purely, merely incidental to, not necessarily directed to. [00:45:41] Speaker 03: OK. [00:45:43] Speaker 02: when you say that's because an unwired planet the court was looking at the actual claim language and seeing if there's any claim term in the claims that would disclose or embrace as a financial element and the fact if it doesn't as I think is the case here if it doesn't and you look at the specification [00:46:11] Speaker 02: And you say, well, but if you look at the specification, and the specification hints or says that there can be financial transactions involved in the implementation of the patent, UnWired takes us back and looks and says, that's not enough. [00:46:29] Speaker 02: The claims have got to have a financial element in them. [00:46:34] Speaker 02: I agree with that. [00:46:35] Speaker 07: Can you point to UnWired that says that? [00:46:37] Speaker 03: It doesn't say that directly, Your Honor. [00:46:39] Speaker 03: I am inferring. [00:46:41] Speaker 03: From the observation of the court in Unwired Planet that the disclosure of that patent indicated that the client application could be of a hotel or a restaurant that's trying to advertise to people who are in the vicinity. [00:46:55] Speaker 07: Do you think Versada, which precedes Unwired and therefore would be binding on Versada, makes it clear that the financial nature has to be in the claims? [00:47:06] Speaker 03: I don't think Versada candidly directly addresses this issue. [00:47:10] Speaker 03: Versada, by my reading, and as we've pointed out in our brief, Versada at least noted that this was a very broad authority. [00:47:17] Speaker 03: Financial is broad. [00:47:19] Speaker 03: The holding in Versada, as you know, was that it is not limited to patents owned by financial institutions or products and services of financial institutions. [00:47:28] Speaker 03: But in Secure Access, this court pointed out, Versada didn't have before it [00:47:33] Speaker 03: the need to address the scope of the definition of a CBN patent in the way that Secure Access did. [00:47:39] Speaker 03: And if I could also, in responding again a little bit more to your question, Judge Bryson, in Secure Access. [00:47:45] Speaker 01: Yeah, I was going to ask exactly that. [00:47:46] Speaker 01: Where is that? [00:47:47] Speaker 01: Secure Access says at 13. [00:47:49] Speaker 01: I think you're right that there is a reference. [00:47:51] Speaker 03: I just couldn't find it. [00:47:54] Speaker 01: What page? [00:47:55] Speaker 03: Page 1378, and I think it's carrying over to 1379. [00:47:59] Speaker 03: Right. [00:48:01] Speaker 01: Yes, I see the reference to Phillips. [00:48:03] Speaker 01: Yeah, that's the paragraph. [00:48:04] Speaker 03: The written description alone cannot substitute for what may be missing in the patent claims, and therefore does not in isolation determine CBM status. [00:48:12] Speaker 03: And I believe it's on 1381, although I don't have the exact quote here, Your Honor. [00:48:18] Speaker 03: There is a quote along the lines that the proper question is whether, when properly construed in light of the written description, the language of the claims affirmatively requires one or more [00:48:31] Speaker 03: of the wide range of financial activities. [00:48:34] Speaker 03: So the range of financial activities is very wide, but the claim has to require at least one of those. [00:48:40] Speaker 03: And that determination is made by looking not only at the express claim language, but the written description to see if there's a basis to construe the claim to cover at least one of those financial activities. [00:48:52] Speaker 03: That's where we get our argument from. [00:48:54] Speaker 03: Thank you very much. [00:48:55] Speaker 02: All right. [00:48:55] Speaker 02: We thank the party for the arguments.