[00:00:00] Speaker 00:
Your Honor, the PTO erred in construing the jurisdictional statute.

[00:00:19] Speaker 03:
If we affirm the 101 decision in the other case, is there any need for us to reach a decision here?

[00:00:25] Speaker 03:
Isn't this patent dead and therefore isn't this case moot?

[00:00:29] Speaker 00:
Your Honor, if you decide the 101 issue against us, the court does not have to reach this particular issue on a CBM jurisdiction.

[00:00:39] Speaker 00:
So it's moot.

[00:00:41] Speaker 03:
If the patent's invalid in the district court case, then there's no need to readdress what this TTO did here on CBM.

[00:00:49] Speaker 00:
That's correct.

[00:00:50] Speaker 00:
It's not required, Your Honor.

[00:00:53] Speaker 00:
I would say that this court would vacate the decision below as moot

[00:00:59] Speaker 00:
In other words, it's not sitting out there as a decision that this court is affirming.

[00:01:08] Speaker 02:
Well, we'll ask Mr. Davis if he shows that view.

[00:01:11] Speaker 00:
Understood, Your Honor.

[00:01:13] Speaker 02:
The argument here with respect to whether this is a proper CBM proceeding seems to turn, in your view, on the fact that there

[00:01:26] Speaker 02:
is a dependent claim which talks about this being non-financial, and that therefore the independent claim must include things that are non-financial.

[00:01:40] Speaker 00:
That is part of it, Your Honor, when we think about it.

[00:01:43] Speaker 02:
Let's talk about that part of it.

[00:01:45] Speaker 02:
Certainly.

[00:01:45] Speaker 02:
Why isn't an appropriate construction of that dependent claim, I think it is five,

[00:01:52] Speaker 02:
when it's talking about something being non-financial, that it's not related to payment in view of the definitions which appear in the patent itself about what's financial or non-financial.

[00:02:11] Speaker 02:
It's a claim that extends beyond the issue of payment.

[00:02:18] Speaker 00:
Your Honor, the dependent claim five is talking about the transaction that's recited in the preamble as well as the various steps of the claim.

[00:02:27] Speaker 00:
The electronic transaction at issue is this broader concept of engaging in activities involving the internet.

[00:02:37] Speaker 00:
And so when this dependent claim talks about the electronic transaction during when this authentication is occurring, it's identifying

[00:02:46] Speaker 00:
transactions involving e-commerce, and the dependent claim then goes on to say those transactions are non-financial in nature.

[00:02:56] Speaker 02:
So the point is, under the... But I don't think you're addressing my question.

[00:03:02] Speaker 02:
Isn't a reasonable construction of claim five, which talks about a non-financial transaction, referring to something that doesn't involve payment,

[00:03:15] Speaker 02:
in view of the definition of financial information in column two of the patent as relating financial information to the use of a credit card.

[00:03:25] Speaker 02:
In other words, the transaction referenced in claim five when it says the transaction is a non-financial transaction means that it's not a payment transaction.

[00:03:38] Speaker 02:
It could be, for example, an ordering transaction for internet goods.

[00:03:45] Speaker 00:
I understand Your Honor's question now.

[00:03:47] Speaker 00:
The answer is yes.

[00:03:49] Speaker 00:
It can be construed and understood to be an activity that is not involving an exchange of money.

[00:03:57] Speaker 00:
And that would be a reasonable construction, which brings us back to its relationship with the independent claim.

[00:04:04] Speaker 00:
So here, under the broadest reasonable interpretation standard, which is what we use at the PTO until they decide otherwise, the independent claim

[00:04:14] Speaker 00:
talks about a transaction, but doesn't specifically say it's financial or non-financial in nature.

[00:04:20] Speaker 02:
In other words, it's broader in scope.

[00:04:22] Speaker 02:
The way it was construed by the board was that it has to relate to purchase of goods and services.

[00:04:31] Speaker 02:
It can relate to purchase of goods and services without relating to the payment for those goods and services, right?

[00:04:39] Speaker 00:
That's correct, Your Honor.

[00:04:40] Speaker 00:
That's correct.

[00:04:41] Speaker 02:
And this concept of... So why isn't a claim

[00:04:45] Speaker 02:
which is financial in nature that addresses the method or procedures for making a purchase but doesn't relate to payment.

[00:04:54] Speaker 02:
Why isn't that within the CBM statute?

[00:04:58] Speaker 02:
That is what business does.

[00:05:00] Speaker 00:
Your Honors, when we talk about goods and services that, as you note, it doesn't relate to payment, but it doesn't necessarily involve exchange of money.

[00:05:08] Speaker 00:
And remember, when we're looking at the claims as... That's not a question, though.

[00:05:13] Speaker 01:
So it involves, for example, the ability to pick up the goods that were purchased.

[00:05:21] Speaker 01:
And you have an electronic verification for that.

[00:05:24] Speaker 01:
It's not exchange of money.

[00:05:25] Speaker 01:
It's the other end of the transaction in which the goods are received.

[00:05:32] Speaker 01:
I think that's what the question is.

[00:05:34] Speaker 00:
And Your Honor, I will say this.

[00:05:36] Speaker 00:
When we're talking about the electronic transaction, the focus of the claims is what we have to look at for CBM jurisdiction.

[00:05:43] Speaker 00:
And the focus of the claims is not on what kind of transaction is occurring until we get to dependent claim five.

[00:05:50] Speaker 00:
It's describing this.

[00:05:51] Speaker 02:
I don't understand what you're saying.

[00:05:52] Speaker 02:
If a claim is limited, let's take Judge Wallach's example, is limited to picking up goods that you purchased on the internet and verification and connection with that.

[00:06:08] Speaker 02:
Isn't that sufficient to come within the CBN statute?

[00:06:13] Speaker 00:
It's not, Your Honor.

[00:06:15] Speaker 00:
Under this court's prior case law, including Versada, the concept of engaging in e-commerce and exchange of goods and services is not enough to make it a covered business method patent.

[00:06:28] Speaker 00:
There has to be this focus on a financial aspect that's embedded

[00:06:33] Speaker 00:
within the plain language of the claims or the claims as construed.

[00:06:37] Speaker 02:
Well, we're talking about construing the claims as relating to a particular claim that relates to the means for picking up a purchased good that has been purchased over the internet.

[00:06:53] Speaker 02:
And you don't think that comes within the CBN statute?

[00:06:58] Speaker 00:
The claim as construed relates to e-commerce activities

[00:07:03] Speaker 00:
that can involve goods and services.

[00:07:06] Speaker 00:
But if a claim may involve financial transactions, that is not enough to bring it within the scope of CBM jurisdiction.

[00:07:16] Speaker 00:
In other words, if it's broader and encompasses both financial and non-financial... Well, the question is what's meant by financial.

[00:07:23] Speaker 02:
What I'm suggesting to you here is that the dependent claim when it says financial is referring to actual payment, which is consistent with the definitions that were included here in the patent.

[00:07:33] Speaker 02:
And it seems to me that is a much narrower definition of financial than the statutory definition of financial product or service.

[00:07:42] Speaker 02:
A claim which relates to verification for picking up the purchased goods certainly fits within the practice, administration, or management of a financial product or service, no?

[00:07:55] Speaker 00:
No.

[00:07:55] Speaker 00:
Two points, Your Honor.

[00:07:56] Speaker 00:
First, the claims 4 and 29, which relate to transactions that are financial in nature,

[00:08:02] Speaker 00:
They were disclaimed before initiation of the CVM proceedings.

[00:08:08] Speaker 00:
Going to 5 and 30, as well as claim one, they don't claim financial... You're not answering my question.

[00:08:17] Speaker 02:
I'm asking a hypothetical.

[00:08:19] Speaker 02:
Let's assume the hypothetical has a claim for method of verifying identity for picking up goods that were purchased over the internet.

[00:08:29] Speaker 02:
That's the hypothetical claim, okay?

[00:08:32] Speaker 02:
Is that within the CBM statute as relating to a financial product or service?

[00:08:39] Speaker 00:
No, Your Honor, because the focus of the claims is on the authentication method, not claiming the pickup of goods or services.

[00:08:51] Speaker 01:
The hype I posed was that that's how they verified that that was the person picking up the goods.

[00:08:59] Speaker 01:
This is an authentication system.

[00:09:01] Speaker 00:
Understood, Your Honor.

[00:09:02] Speaker 00:
And I want to make sure that we're focusing on the claims as properly construed.

[00:09:07] Speaker 00:
So let me go to the point about the central entity, for instance.

[00:09:11] Speaker 02:
The central entity is an... I'm trying to avoid to make this simpler by giving you a hypothetical of a claim which is explicit, that it says here is a method for allowing someone to authenticate himself in picking up purchased goods, okay?

[00:09:29] Speaker 02:
And the question is, is that within the statute?

[00:09:34] Speaker 00:
And the answer is it's not within the statute because the claim is focused on the secure authentication method.

[00:09:43] Speaker 00:
The context in which it occurs is not the focus of the claims.

[00:09:49] Speaker 00:
And we have to look at the claims as properly construed here.

[00:09:52] Speaker 00:
So just because it involves activities on the internet involving e-commerce,

[00:09:58] Speaker 00:
In certain situations, it may involve services.

[00:10:01] Speaker 00:
In other situations, it may involve goods.

[00:10:03] Speaker 00:
There's nothing about the claims that talks about payments.

[00:10:07] Speaker 00:
There's nothing about the claims that talk about exchanging money or engaging in bartering or things like that.

[00:10:14] Speaker 00:
The context of the discussion within the specification is focused on e-commerce activity, engaging activities involving goods and services.

[00:10:23] Speaker 00:
But let's be clear, those activities can incur using your email.

[00:10:28] Speaker 00:
engaging in activities involving a file sharing program, right?

[00:10:33] Speaker 00:
So these are not activities that are financial in nature.

[00:10:37] Speaker 00:
And the point I'm trying to make, Your Honor, is when the claim is focused on activities that are not financial in nature, and the claims as construed demonstrate that they can... The activity in the hypothetical was financial in nature in the sense that the goods were purchased for the Internet.

[00:10:56] Speaker 00:
So let me, it sounds like your honor is making a claim limitation around purchasing.

[00:11:01] Speaker 00:
And I just want to make it clear that that is not a claim limitation here.

[00:11:05] Speaker 00:
And it's not a limitation of the claims as construed.

[00:11:08] Speaker 02:
You're changing the hypothetical.

[00:11:15] Speaker 02:
People come, lawyers come here, we ask them hypotheticals.

[00:11:18] Speaker 02:
People have to answer the hypotheticals.

[00:11:21] Speaker 02:
They don't get to change the hypothetical.

[00:11:24] Speaker 00:
Let me go back and make sure I understand your honor's hypothetical.

[00:11:28] Speaker 00:
If there is a situation involving authentication.

[00:11:31] Speaker 02:
There is a claim which says, here is a method for authenticating the person picking up goods that were purchased over the internet.

[00:11:43] Speaker 00:
Then that is focused on a situation where the authentication occurs while there is a transaction involving picking up goods that

[00:11:54] Speaker 00:
It's unclear to me from your hypothetical whether there's a monetary exchange or not.

[00:12:00] Speaker 03:
What's purchased over the internet?

[00:12:03] Speaker 03:
Purchase means buying something, which means money.

[00:12:08] Speaker 00:
And if that is an element of the claim, then it's closer to the case law where there is a financial element.

[00:12:17] Speaker 00:
And in that particular situation, I would agree it falls within CVM jurisdiction.

[00:12:22] Speaker 00:
But that is not the case here.

[00:12:25] Speaker 00:
These claims are focused on authentication involving the user, an external entity, and a central entity.

[00:12:32] Speaker 00:
There's no payment language within the claims or the specifications.

[00:12:37] Speaker 01:
If you had been listening to our hypothetical, you could have said that 10 minutes ago.

[00:12:40] Speaker 00:
I'm sorry, Your Honor?

[00:12:42] Speaker 01:
I said if you had been listening to the language of our hypothetical, you could have said that 10 minutes ago.

[00:12:48] Speaker 00:
Understood, Your Honor.

[00:12:49] Speaker 00:
I want to get to this question about the technological invention

[00:12:54] Speaker 00:
exception, the safe harbor under CBM.

[00:12:58] Speaker 01:
What the PTO has done here is it has had, through its regulations... You said in the blue graph at note 62, page 46, even though you didn't, quote, did not argue with the issue to the PTAB, you didn't waive it because it's contrary to statute.

[00:13:22] Speaker 01:
Is that a correct summation?

[00:13:23] Speaker 00:
Your Honor, we didn't argue it to the PTAB because there is not an opportunity during the proceeding where the regulation applies to argue that the regulation is wrong.

[00:13:33] Speaker 00:
That's not part of the procedure at the PTO.

[00:13:36] Speaker 00:
So as courts have recognized in these situations where you're arguing the agency got the regulation wrong, that is an issue that can be addressed on appeal even if it wasn't addressed in the proceeding below.

[00:13:49] Speaker 00:
So that's the point that we're making here.

[00:13:51] Speaker 01:
You cite, too, a DC circuit case, Pacific Gas and Electric, which, of course, didn't involve the PTO, which says the underlying policy embodied in the rule is not generally subject to challenge before the agency.

[00:14:10] Speaker 00:
That's right, Your Honor.

[00:14:12] Speaker 01:
Why does that case support your position that a child party cannot challenge a regulation in a foreign agency?

[00:14:18] Speaker 00:
It supports our position in the sense that where the agency has implemented a regulation, it's actually stronger than a policy.

[00:14:26] Speaker 00:
It's the rules for acting and engaging in activities before that court.

[00:14:30] Speaker 01:
Are there any PTO rules that say a party cannot challenge them?

[00:14:35] Speaker 01:
I read before the P10.

[00:14:37] Speaker 00:
I would answer that in the negative, which is there is no procedure.

[00:14:44] Speaker 01:
Your time's short.

[00:14:46] Speaker 00:
No, Your Honor.

[00:14:46] Speaker 00:
There is no ability during the PTO PTAB proceeding to raise an issue with a regulation that you think is contrary to statute.

[00:14:58] Speaker 01:
We've held an evasive that a party waves an argument because it fails to present a question before the PTAB because it deprives this court of the benefit of the PTAB's informed judgment.

[00:15:11] Speaker 01:
Why should we disregard this practice?

[00:15:13] Speaker 00:
Your Honor, because the PTAB has already spoken on what it thinks the technological invention exception is, there's nothing that the PTAB can add to the record here.

[00:15:24] Speaker 00:
It engaged in rulemaking and comment.

[00:15:26] Speaker 00:
It decided to implement this regulation based upon a comment of a senator.

[00:15:31] Speaker 00:
And so there's nothing that it can add from the record to help this court review this, because it's a pure legal issue.

[00:15:39] Speaker 00:
It's a question of whether the regulation is contrary to statute.

[00:15:43] Speaker 00:
And under Chevron Step 2, even if we decide that the statute is ambiguous, it's not one of the permissible understandings of the statute as it should be implemented in a regulation.

[00:15:57] Speaker 00:
So again, there's no difference there.

[00:16:01] Speaker 02:
Thank you, Your Honors.

[00:16:15] Speaker 04:
the court.

[00:16:16] Speaker 04:
Let me start first with Judge Hughes' question on mootness.

[00:16:19] Speaker 04:
I actually think, unfortunately, that this case might not be moot if you affirm on 101 because there were a few dependent claims that were at issue in the CBM that I'm not sure were at issue in the district court.

[00:16:32] Speaker 04:
And so if I could unpack that.

[00:16:34] Speaker 03:
I mean, if you think that the district court invalidated the entire pack, then it's moot.

[00:16:39] Speaker 04:
Yes, I agree with that.

[00:16:40] Speaker 03:
The complaint, as I read it,

[00:16:43] Speaker 03:
At least.

[00:16:43] Speaker 03:
I did have it.

[00:16:44] Speaker 03:
It says at least.

[00:16:46] Speaker 03:
Yep.

[00:16:47] Speaker 03:
Given your friend's concession on the other side, if we dismiss this as moot, isn't that going to prevent them from asserting those dependent claims in any further litigation, if that's what you're worried about?

[00:16:59] Speaker 04:
That would be the concern.

[00:17:00] Speaker 04:
And so yeah, I think if the court reads the 101 judgment to cover all the claims of the patent and affirms that, then that would moot the CDM.

[00:17:07] Speaker 04:
It's just a question of does the judgment actually cover all the claims.

[00:17:12] Speaker 03:
if your friend is conceded that it does.

[00:17:15] Speaker 04:
We'll take that concession.

[00:17:17] Speaker 04:
So turning then, subject to the panel's preferences, I'll focus on the two issues regarding the definition of whether this patent is a covered business method.

[00:17:26] Speaker 04:
On the first piece of it, it does meet the statutory definition because claim one claims a method for performing operations used in the practice of a financial service.

[00:17:37] Speaker 04:
And in particular, it has a financial activity element

[00:17:40] Speaker 04:
through the PTAB's construction of the term external entity.

[00:17:44] Speaker 04:
The PTAB construed that term to mean a party offering goods or services in e-commerce that also meets some other requirements.

[00:17:53] Speaker 04:
And appellants expert conceded that e-commerce involves the buying and selling of goods and that it involves financial transactions.

[00:18:00] Speaker 04:
And so given the PTAB's construction and given the concessions of the appellants expert,

[00:18:06] Speaker 04:
there is that financial activity element.

[00:18:09] Speaker 04:
And the fact that there's additional things in the claims about authentication and all that, it doesn't change the fact that there's this financial activity element.

[00:18:19] Speaker 02:
So what about claim five, which talks about non-financial?

[00:18:22] Speaker 04:
So our reading of claim five is in accord with what your honor had suggested, that it is, when it's saying non-financial there, it's talking about non-payment.

[00:18:32] Speaker 04:
And so it's true that claim one might cover situations

[00:18:35] Speaker 04:
in which not every transaction is going to involve payment.

[00:18:39] Speaker 04:
But regardless of that, there's still this additional requirement that the external entity is offering good services in e-commerce.

[00:18:47] Speaker 01:
Let me offer you another hypothetical.

[00:18:49] Speaker 01:
Supposing that claim five is non-financial, if there's presence of a potentially non-financial claim, can a patent still be CBN eligible?

[00:19:05] Speaker 04:
Yes, Your Honor, because as long as one claim of the patent meets the statutory definition of a CBM, the patent is a CBM.

[00:19:13] Speaker 04:
And that's certainly the PTO's position.

[00:19:16] Speaker 04:
It took that position in response to a comment during its rulemaking.

[00:19:20] Speaker 02:
I'm not following that, because claim four was disclaimed.

[00:19:25] Speaker 02:
And what we've got left is the independent claim.

[00:19:28] Speaker 02:
And the question is whether the independent claim is limited

[00:19:32] Speaker 02:
to the financial product or service.

[00:19:35] Speaker 02:
They're arguing that it's not because claim five necessarily implies that the independent claim applies to non-financial transactions.

[00:19:47] Speaker 04:
Right.

[00:19:48] Speaker 04:
So I was just kind of answering the hypothetical that just generally if there's one claim that's a CBM claim, the whole patent.

[00:19:55] Speaker 04:
To your question, though, I think we would agree that claim one

[00:20:00] Speaker 04:
It includes the claim five within its scope.

[00:20:04] Speaker 04:
And so it does relate to both financial and non-financial transactions.

[00:20:08] Speaker 04:
But the patent uses that word financial to refer to payment.

[00:20:11] Speaker 04:
And that's a different sense than how the statute uses it.

[00:20:15] Speaker 04:
And so even if claim one here includes both payment and non-payment transactions, claim one

[00:20:22] Speaker 04:
still does have this financial activity element, because the external entity is someone that has to be involved in e-commerce, which is the buying and selling of goods.

[00:20:30] Speaker 04:
And so it goes to some of the hypotheticals that were asked of counsel about, you know, it might be a non-payment transaction involving, you know, pickup, authentication of pickup of the goods, but it's still, that's still an operation that's being used in the practice of a financial service, because there has been a transaction

[00:20:50] Speaker 04:
And it's just facilitating and allowing someone to complete that transaction.

[00:20:56] Speaker 04:
So we believe claim one does have a financial activity element.

[00:21:00] Speaker 04:
This is not like the cases some of the hypotheticals have been offered in this court's other opinions about a patent to ditch digging or the light bulb where it only kind of incidentally touches on financial activity.

[00:21:13] Speaker 04:
Here, the entire specification ties the present invention as a whole to a means of increasing security in e-commerce.

[00:21:21] Speaker 04:
And that's how it frames the entire problem.

[00:21:24] Speaker 04:
And e-commerce is certainly financial.

[00:21:27] Speaker 04:
So this isn't a situation where the PTAB relied on the forbidden legislative history.

[00:21:33] Speaker 04:
PTAB's final written decision doesn't reference that.

[00:21:35] Speaker 04:
It cites this Court's decisions in Unwired Plan

[00:21:39] Speaker 04:
and the now vacated decision in secure access.

[00:21:41] Speaker 04:
And so the PTAB applied the right standard.

[00:21:44] Speaker 04:
There is a financial activity element, and its determination on that part of the CBM analysis should be affirmed.

[00:21:50] Speaker 04:
Turning to the technological exception, invention exception, here it's just important to remember that the issue is very narrow.

[00:21:57] Speaker 04:
We have a statute that directs the director of the patent office to promulgate regulations, specifically delegates that, the director did

[00:22:06] Speaker 04:
promulgate those regulations.

[00:22:08] Speaker 02:
There's no dispute that... The trouble is that one part of those regulations is questionable, as Versada and maybe other cases have suggested also.

[00:22:17] Speaker 02:
And the problem is that's the part of the regulation that the board relied on here, rather than the part that's not questionable.

[00:22:25] Speaker 04:
And to that, we don't think it is questionable.

[00:22:29] Speaker 04:
I know there's some language in some of this court's cases that have expressed some doubt on it, but

[00:22:34] Speaker 04:
Ultimately, the question we're asking is, is this a reasonable interpretation of the statute?

[00:22:40] Speaker 04:
And the director gets Chevron deference on that point.

[00:22:43] Speaker 04:
And it is reasonable for two reasons.

[00:22:45] Speaker 04:
It tracks the statutory text.

[00:22:46] Speaker 04:
So the text talks about a technological invention.

[00:22:49] Speaker 04:
An invention, just the plain meaning of the word, is something that somebody comes up with first.

[00:22:55] Speaker 04:
You know, when we say Thomas Edison invented the light bulb, it's because he was the first person to come up with a light bulb.

[00:23:01] Speaker 04:
That's where this concept of novelty and non-obviousness comes in in the board's regulation.

[00:23:09] Speaker 04:
And then the statutory text says, well, technological invention.

[00:23:13] Speaker 04:
So technological modifies invention.

[00:23:15] Speaker 04:
So the director has reasonably said that it's got to be the technological feature in the claim that is the new and non-obvious thing.

[00:23:25] Speaker 04:
And so given that the director's regulation is a reasonable interpretation of the plain meaning of the statute,

[00:23:31] Speaker 04:
We think that part of the regulation is permissible.

[00:23:34] Speaker 04:
It also does track the legislative history when Senator Schumer was discussing the technological exception.

[00:23:41] Speaker 04:
He uses that same phrase.

[00:23:43] Speaker 04:
He says that the exception only excludes those patents whose novelty turns on a technological invention over the prior art.

[00:23:51] Speaker 04:
And so there again, the legislative history refers to this novelty of the technological feature.

[00:23:57] Speaker 04:
And so given both the plain meaning of the statute

[00:24:00] Speaker 04:
and the legislative history, the board in their regulation was reasonable in imposing that requirement.

[00:24:08] Speaker 04:
There's no dispute that if the regulation is sustained, that this patent doesn't meet it, because the board made a specific finding that all the alleged technologies here were known, that these were just generic computer components.

[00:24:20] Speaker 04:
And really, the board's findings here are very similar to the SightSound case, where the court affirmed

[00:24:27] Speaker 04:
the finding that that was a CBN patent under similar facts.

[00:24:31] Speaker 04:
It didn't expressly talk about the validity of this regulation, but certainly the board's factual findings were the same in both this case and in SightSound.

[00:24:40] Speaker 04:
And to the point that was being discussed with counsel, this whole issue was potentially waived because it was never made to the agency.

[00:24:48] Speaker 04:
And certainly there was an opportunity to do that, often

[00:24:55] Speaker 04:
litigants find themselves in a lower court or lower tribunal where they might be bound by some higher authority, but you still make the argument to preserve it in the lower tribunal, even if the lower tribunal might say, well, we're bound.

[00:25:08] Speaker 04:
then you've preserved it for appeal and that wasn't done here.

[00:25:12] Speaker 02:
I think there's a lot of law about whether agencies can invalidate regulations as exceeding statutory authority or constitutional provisions.

[00:25:26] Speaker 02:
None of that authority is discussed in the briefs.

[00:25:31] Speaker 02:
what the answer to that is, maybe even if they don't have the authority to decide that the issue still has to be raised there, but this is a more complicated issue than the police would suggest, I think.

[00:25:41] Speaker 04:
And that's a fair point, Shichdeck.

[00:25:43] Speaker 04:
I guess I would just suggest that if it's the appellant that's the one raising the issue, ultimately the onus should be on them to show it's not waived, and if they haven't done that, it doesn't seem like it's probably presented here.

[00:25:55] Speaker 04:
But I understand your point, and I think, and that's why I started out with the merits, because frankly,

[00:26:00] Speaker 04:
I think if we get to the merits of this regulation, it is a reasonable reading of the statute.

[00:26:06] Speaker 04:
Since the actual merits of the case weren't addressed, I don't have anything further to say on them unless there are questions about the continuity issue or the board's written description findings.

[00:26:19] Speaker 04:
Thank you.

[00:26:28] Speaker 02:
Just so that we're absolutely clear about this, do I understand your position correctly that we should read the district court's judgment with respect to 101 as invalidating all the claims of the 432 patent?

[00:26:46] Speaker 00:
Yes, Your Honor, that's what the court did.

[00:26:47] Speaker 00:
It determined that the claims are directed to non-patentable subject matter.

[00:26:52] Speaker 00:
So I think Your Honor's getting to the mootness issue of CBM.

[00:26:56] Speaker 00:
Our understanding is if the patent, the full patent is invalidated, there's nothing for the court to deal with in the CBM proceeding.

[00:27:05] Speaker 00:
With respect to this issue about the permissible interpretations, I just want to make a few points.

[00:27:11] Speaker 00:
A permissible interpretation of a jurisdictional statute does not import a mini patentability test.

[00:27:18] Speaker 00:
And as this court indicated in Versada, one of the problems with the

[00:27:23] Speaker 00:
patents, the PTO's regulation is that it's circular in nature.

[00:27:28] Speaker 00:
It calls it a technological invention by talking about a technological invention.

[00:27:34] Speaker 00:
What the AIA requests that the PTO do is issue guidelines for understanding whether something meets or doesn't meet the technological invention exception.

[00:27:45] Speaker 00:
And let's keep the framework of the AIA appellate process in mind here.

[00:27:51] Speaker 00:
What has happened is they have an IPR,

[00:27:53] Speaker 00:
They have a post-grant review program.

[00:27:55] Speaker 00:
And CBM is an exception.

[00:27:57] Speaker 00:
It's a special program that sunsets in 2020.

[00:28:01] Speaker 00:
It's focused on a particular type of patent that has a particular type of claims.

[00:28:07] Speaker 00:
And what this court's case law tells us is if a claim is read in a manner that it can involve both financial and non-financial activities.

[00:28:17] Speaker 00:
In this case, we're focusing, I think, on the transaction concept within the claim.

[00:28:23] Speaker 00:
that does not bring it within the purview of the CBM jurisdictional statute.

[00:28:29] Speaker 00:
And then we go to that step two that we've been talking about as well.

[00:28:32] Speaker 00:
Is it a technological invention such that it is not a business method, that it falls within the safe harbor?

[00:28:41] Speaker 00:
This is a computer implemented technology that's focused on a specific problem arising from the way people engage in activities on the internet.

[00:28:52] Speaker 01:
It provides a specific- But they, in the past, did the same thing, manually.

[00:28:59] Speaker 00:
Your Honor, in the past, there were manual activities not involving the internet, but they did not involve this real-time, dynamic, time-dependent code that is the dynamic code at issue in this case.

[00:29:13] Speaker 00:
And even if we look in the context of computer technology and the prior technology, it often involved hardware,

[00:29:21] Speaker 00:
It involved digital certificates.

[00:29:23] Speaker 00:
And in fact, the PTO today, when you're engaging in practice before the PTO, you use this digital certificate that you have to request ahead of time.

[00:29:32] Speaker 00:
It takes weeks to get.

[00:29:34] Speaker 00:
You have to upload it.

[00:29:35] Speaker 00:
Sometimes it doesn't work, right?

[00:29:37] Speaker 00:
And it doesn't expire unless and until you tell the office that you need a new one.

[00:29:42] Speaker 00:
So this is a specific implementation to deal with a specific problem that was not fixed by the prior

[00:29:49] Speaker 00:
computer authentication methodologies.

[00:29:55] Speaker 02:
Thank you your honor.