[00:00:35] Speaker 00:
Next case is personalized media communications versus Amazon 2016 2606.

[00:00:44] Speaker 00:
Mr. Schreiner.

[00:00:57] Speaker 03:
May it please be the court.

[00:00:58] Speaker 03:
My name is Stephen Schreiner.

[00:00:59] Speaker 03:
I'm here from the contractor on behalf of the patent owner, personalized media communications.

[00:01:06] Speaker 03:
This case involves a denial, a board's denial of a motion to amend on the basis that the patent holder had not demonstrated the substitute claims to be patentable.

[00:01:20] Speaker 03:
This court should reverse that decision for any of three reasons.

[00:01:23] Speaker 03:
First, the board was then operating in a pre-Aqua products environment.

[00:01:30] Speaker 03:
So throughout the board's decision, the burden was imposed upon the patent holder to demonstrate the patentability of the claims.

[00:01:37] Speaker 03:
We know now under operable products that what must be shown is that to decline the claims is that the claims are not operable.

[00:01:47] Speaker 00:
Mr. Schreiner, I've found that when someone comes out with the first argument based on procedure, it sort of indicates that they're weak on the merits.

[00:01:57] Speaker 00:
Didn't the board adequately find that the references indicated that the substitute claims would not have been non-obvious?

[00:02:06] Speaker 03:
No, the board did not.

[00:02:07] Speaker 03:
Even setting up the products aside, the board made significant errors of law that led to the wrong conclusion.

[00:02:15] Speaker 03:
First and foremost, the board failed to consider the substitute claim as a whole.

[00:02:20] Speaker 03:
The substitute claim has 11 steps.

[00:02:24] Speaker 03:
In analyzing the substitute claim,

[00:02:26] Speaker 03:
The board only looked at the new limitations.

[00:02:29] Speaker 03:
So the board only looked at the new limitations and applied some new art.

[00:02:33] Speaker 03:
The board never looked at the substitute claim as a whole, nor did the board ever look at the prior art combination as a whole.

[00:02:39] Speaker 03:
That is an error of law.

[00:02:42] Speaker 03:
Even if you were to disregard that and just focus on the new limitations in the substitute claim and look at the new art that was applied to the substitute claim, which was two references.

[00:02:54] Speaker 03:
board failed to establish a motivation to combine those two new references.

[00:02:59] Speaker 03:
PMC raised this issue in a request for a hearing to give the board an opportunity to clarify the record and to resolve that error.

[00:03:12] Speaker 03:
And the board came back and simply responded that the two new references collectively disclose the pieces of the limitation, new limitations in the claim.

[00:03:25] Speaker 03:
The board did not make any showing, provided no explanation as to why these two new references would be combined so as to meet.

[00:03:34] Speaker 04:
When you were arguing for the patentability of the new claims, did you argue to the board that somehow these new features made the claims patentable when combined with the old features, or did you limit yourself

[00:03:53] Speaker 04:
to the fact that we had new features which rendered it patentable.

[00:04:00] Speaker 03:
If I understand your honor's question, PMC, in our motion to amend papers,

[00:04:06] Speaker 03:
We primarily focused on the new limitations and the new prior art.

[00:04:12] Speaker 04:
I mean, that was really... That's the problem.

[00:04:14] Speaker 04:
So if you focused on the new limitations and the new prior art, now you come up here and complain that they didn't consider the new limitations in connection with the original claim limitations.

[00:04:27] Speaker 04:
It seems a bit unfair, doesn't it?

[00:04:29] Speaker 03:
Let me correct myself.

[00:04:32] Speaker 03:
The patent owner did address the full

[00:04:36] Speaker 03:
four-part combination of art that was applied to the substitute claims.

[00:04:41] Speaker 04:
In connection with the motion for leave to amend?

[00:04:43] Speaker 04:
Yes, sir.

[00:04:44] Speaker 04:
Could you show me where you did that?

[00:04:56] Speaker 03:
If we look at the request for rehearing, it's this Appendix 827 through 827.

[00:05:01] Speaker 03:
Request for rehearing?

[00:05:03] Speaker 03:
Yes, this is before I'm referring to a request for rehearing that in the briefs here I'm talking about originally before the rehearing request.

[00:05:15] Speaker 04:
Did you make this argument to the board?

[00:05:21] Speaker 03:
Yes, for example In the final written decision for

[00:05:33] Speaker 03:
the court to Appendix 15 through 16, PMC explained with support from its expert declaration why there would be no reason to combine these four different references.

[00:05:48] Speaker 03:
And PMC's expert explained without getting into it.

[00:05:52] Speaker 04:
You're asking me to look at the decision of the board?

[00:05:57] Speaker 03:
Yes.

[00:06:09] Speaker 04:
I'm asking you something very specific.

[00:06:19] Speaker 04:
You come here and you say, well, it isn't just the new claim elements that were in the amended claims.

[00:06:27] Speaker 04:
It's that the combination of those with the original elements makes this patentable.

[00:06:31] Speaker 04:
I just want to see where you argued that to the board before the re-hearing.

[00:06:39] Speaker 03:
OK.

[00:06:39] Speaker 03:
Page 15, this is Appendix 15 of the final written decision, the ward acknowledges that the patent owner had made the argument that these references could not be combined without substantial modification, including replacement or reconfiguration of many of the components.

[00:07:01] Speaker 04:
So this was an argument that... But this isn't about the amended claim.

[00:07:08] Speaker 04:
This is about the original claim.

[00:07:13] Speaker 03:
With the burden being on the petitioner to demonstrate.

[00:07:18] Speaker 04:
No, the burden of proof is on the petitioner.

[00:07:21] Speaker 04:
The burden of production is on you with respect to the amendments.

[00:07:26] Speaker 04:
You can't just say that the board has to come up with every possible argument and consider it.

[00:07:32] Speaker 04:
They consider the arguments that you make to them.

[00:07:35] Speaker 04:
And the question is, did you make the argument to them that you are coming here and making today?

[00:07:41] Speaker 03:
I believe we made the argument to the board about the full claim, that the entirety of the substitute claim needed to be considered.

[00:07:52] Speaker 03:
And we, PMC, addressed the full prior art combination.

[00:07:58] Speaker 03:
But even if one were to set that aside and say, for example, it's not reasonable to ask the board to, after rejecting, finding the original claims unpatentable, to rehash its reasoning.

[00:08:10] Speaker 03:
when it gets to the substitute claims.

[00:08:12] Speaker 00:
But the original claims were found not that knowledgeable under 101.

[00:08:18] Speaker 00:
Why wouldn't the same be true with respect to the substitute claims?

[00:08:22] Speaker 00:
Because the new limitations only related to transmission of information, other abstractions.

[00:08:31] Speaker 03:
For the substitute claims, the decision from the Delaware District Court that was affirmed by this court

[00:08:40] Speaker 03:
does not present an identical issue of patentability under section 101.

[00:08:46] Speaker 04:
If you look at... You agree that the board has to consider and rule on 101 in connection with the motion for leave permit, even though in considering the original claims, 101 is not a relevant grant, right?

[00:09:04] Speaker 03:
Could you repeat the question, please?

[00:09:06] Speaker 04:
Addressing the motion for leave to amend, the board is obligated to consider 101 in addition to 103 and 102, correct?

[00:09:18] Speaker 03:
I agree that section 101, if it is deemed an issue, should be considered by the board.

[00:09:24] Speaker 03:
The board didn't consider that issue in connection with the substitute claim.

[00:09:28] Speaker 03:
They didn't decide.

[00:09:29] Speaker 03:
They didn't even take it up.

[00:09:30] Speaker 03:
There's not a single finding by the board on the question of 101.

[00:09:34] Speaker 03:
But it was argued by both sides.

[00:09:36] Speaker 04:
I'm sorry?

[00:09:36] Speaker 04:
It was argued by both sides.

[00:09:39] Speaker 03:
It was addressed in both sides' papers in connection with the motion to amend, but no findings were made.

[00:09:45] Speaker 03:
And furthermore, the issue of collateral estoppel that Your Honor raised, it doesn't apply.

[00:09:50] Speaker 03:
The collateral estoppel applies to the original claim 2, which is

[00:09:57] Speaker 03:
this court's decision is certainly binding on claims.

[00:10:01] Speaker 00:
I don't think I used the term flat or estoppel.

[00:10:03] Speaker 00:
I was asking about the patent eligibility of the new claims.

[00:10:10] Speaker 03:
Patent eligibility of the new claims was not addressed whatsoever below.

[00:10:15] Speaker 02:
But that's not the question.

[00:10:16] Speaker 02:
The question is

[00:10:18] Speaker 02:
If your amendments, even though they're different claims than what we considered before, are still patent-ineligible, because all they add is more things about sending and receiving data, which we clearly found ineligible before, why aren't the amended claims also ineligible?

[00:10:38] Speaker 03:
With all due respect, the premise that the new limitations are routine and conventional under step two of the Alice inquiry

[00:10:48] Speaker 03:
has not been demonstrated.

[00:10:50] Speaker 03:
And in fact, these limitations that are added to the new claims are not conventional and routine.

[00:10:57] Speaker 03:
Would they describe?

[00:10:59] Speaker 04:
You admitted that auto-tuning was well known.

[00:11:02] Speaker 03:
Absolutely.

[00:11:03] Speaker 03:
That's absolutely incorrect.

[00:11:05] Speaker 03:
The new limitation provides that in response to a user reply, the user input, that is going to trigger the processing of a signal that is transmitted.

[00:11:18] Speaker 03:
And then that will effectuate a channel change.

[00:11:22] Speaker 03:
But the whole thing is triggered by a user reply, a local user reply.

[00:11:26] Speaker 03:
Auto-tuning is a prior art concept just involving the central station sending a signal to control the receiver station to change channel.

[00:11:38] Speaker 04:
Well, I'm looking at page 31 of your blue brief.

[00:11:43] Speaker 04:
And you say, PMC acknowledged that forced tuning initiated by a central facility

[00:11:48] Speaker 04:
was known in New York.

[00:11:49] Speaker 04:
So you agreed that auto-tuning generally was well-known, but as I understand it, what you're saying is that a bottoms-up approach was not well-known.

[00:12:00] Speaker 03:
That's correct.

[00:12:01] Speaker 03:
Is that a fair statement?

[00:12:02] Speaker 03:
That is a fair statement.

[00:12:03] Speaker 03:
PMC raised that issue, re-raised the issue, and its request for re-hearing made the point that what the board called auto-tuning was top-down channel changing, in other words,

[00:12:16] Speaker 03:
You've got a remote head end or central computer sends down an instruction that causes a receiver station to change channels.

[00:12:23] Speaker 04:
What we're talking about here... But it does so in response to a user input, right?

[00:12:28] Speaker 03:
No, sir, it is not.

[00:12:29] Speaker 03:
That is not in the prior art.

[00:12:32] Speaker 03:
Amazon and the board cited to some sections in the prior art.

[00:12:38] Speaker 03:
And when you go to those sections, you see that those two things, a user input and then the processing of the message to effectuate a channel change,

[00:12:46] Speaker 03:
are different features, different functions in the prior art.

[00:12:50] Speaker 03:
And the problem is, we look at the claim limitation as a whole.

[00:12:55] Speaker 03:
We look at claim 56, and it refers to processing, receiving a message over a first communication channel responsive to said user reply, and then going on to process that to change channels.

[00:13:09] Speaker 00:
Counsel, you're into your rebuttal time.

[00:13:11] Speaker 00:
You can continue or save it.

[00:13:13] Speaker 04:
That's one of the questions.

[00:13:16] Speaker 04:
Yes.

[00:13:16] Speaker 04:
Suppose we were to reject your distinction between top-down and bottom-up.

[00:13:22] Speaker 04:
Then you lose on the 101 issue?

[00:13:26] Speaker 03:
No.

[00:13:27] Speaker 03:
I believe that as we set forth in our papers, the board still erred in failing to, for example, establish a motivation to combine.

[00:13:38] Speaker 03:
Those two new references, Campbell and Furukawa.

[00:13:40] Speaker 03:
That's the 103 issue.

[00:13:42] Speaker 03:
I'm talking about 101.

[00:13:44] Speaker 03:
Oh, on 101.

[00:13:46] Speaker 03:
On 101, PMC has submitted expert evidence in support of the 101 issue and explaining that this limitation, and we're talking about a circa 1987 timeframe, that this bottoms-up limitation was not... No, no, no.

[00:14:04] Speaker 04:
You're not accepting my hypothetical.

[00:14:05] Speaker 04:
My hypothetical is we reject any distinction between bottoms-up and top-down.

[00:14:11] Speaker 04:
Then you lose on the 101 issue, right?

[00:14:16] Speaker 03:
If this court deems that the substitute claim 56 is co-extensive with the original claim 2 that was deemed to be ineligible by the district court, then I think that is the logical outcome.

[00:14:33] Speaker 00:
Thank you, counsel.

[00:14:34] Speaker 00:
Thank you.

[00:14:51] Speaker 01:
Good morning.

[00:14:51] Speaker 01:
May it please the court?

[00:14:53] Speaker 01:
I think the discussion here is exactly on point.

[00:14:57] Speaker 01:
The question here is what did they argue in their motion to amend as a basis for the patentability of the substitute claims?

[00:15:04] Speaker 01:
What they argued in their motion to amend was that autotuning was not known, that it was not obvious, and there would have been no motivation to use autotuning generally.

[00:15:12] Speaker 01:
Just the idea of receiving a signal and having it change channels.

[00:15:17] Speaker 01:
Opposition to that motion

[00:15:19] Speaker 01:
Amazon explained that autotuning was widely known, that autotuning in response to the user reply was known, and that there was a motivation to combine.

[00:15:27] Speaker 01:
Amazon submitted a 75-page declaration from its expert just on the substitute claims, with claim charts addressing all of those issues and specific combinations of prior art references.

[00:15:39] Speaker 01:
The important part is that in PMC's reply on that motion to amend, it did not dispute that autotuning was known.

[00:15:46] Speaker 01:
It did not dispute that auto-tuning in response to the user reply was known, and it did not dispute that there was a motivation to combine.

[00:15:54] Speaker 01:
But it went even further than that.

[00:15:55] Speaker 01:
It said that the one reference that Amazon relied on for auto-tuning in response to the user reply, which is the Hartong reference, BMC represented to the board that that reference was merely cumulative of the other auto-tuning references.

[00:16:09] Speaker 01:
And the board accepted that representation and cited it in its decision at page 37 of the appendix.

[00:16:15] Speaker 01:
So the one reference that most clearly disclosed auto-tuning in response to user reply, they said was just cumulative of all the other auto-tuning art.

[00:16:25] Speaker 01:
And so they can't fault the board.

[00:16:26] Speaker 02:
Where in the board's decision does it affirmatively find a motivation to combine?

[00:16:33] Speaker 01:
The motivation to combine spans a few pages, 36 to 38 of the board's decision.

[00:16:39] Speaker 01:
And that discussion is where the board rejects their arguments as to no motivation.

[00:16:43] Speaker 02:
Right.

[00:16:45] Speaker 02:
I get that it's a little problematic for me, post-Aqua, that their affirmative finding is just a rejection of your friend's arguments, because that seems to be operating under the old standard, which no longer exists.

[00:17:02] Speaker 02:
It seems like there needs to be something more affirmative, that the board makes its own finding that under the preponderant standard, there is motivation to combine, rather than a lack of evidence

[00:17:15] Speaker 02:
that there is no motivation to combine.

[00:17:18] Speaker 01:
Yeah.

[00:17:18] Speaker 01:
And the board specifically in its decision said that it was crediting the testimony of Amazon's expert.

[00:17:24] Speaker 01:
And Amazon's expert specifically addressed the motivation to combine.

[00:17:28] Speaker 01:
And that's in the appendix at 5917, paragraph 152 of the Weshelberger Declaration.

[00:17:33] Speaker 01:
He's talking about specific combinations of prior art references and explaining what the motivation to combine would have been.

[00:17:39] Speaker 01:
And one of them was convenience.

[00:17:41] Speaker 01:
Obviously, this is taking a process where people used to have to change channels.

[00:17:45] Speaker 01:
and just doing it automatically.

[00:17:46] Speaker 01:
So one of the motivations to implement this is the convenience factor.

[00:17:49] Speaker 01:
It does it automatically.

[00:17:50] Speaker 01:
But he also goes on and provides a few other reasons as to why a person of skill and art would have been motivated, increasing security and some other issues.

[00:17:59] Speaker 01:
And the board accepted that and specifically stated that it was crediting his testimony and rejecting PMC's expert's testimony because PMC's expert had just given general note of motivation to combine arguments based on his theory that auto-tuning was new.

[00:18:15] Speaker 01:
And so PMC had argued that just autotuning generally was not known.

[00:18:20] Speaker 01:
And so when the board doesn't address explicitly the in response to user reply argument, it's because they never raised it.

[00:18:29] Speaker 01:
They raised it for the first time in their request for rehearing.

[00:18:35] Speaker 01:
With respect to the section 101 argument, the court has already decided 95% of the 101 issue.

[00:18:42] Speaker 01:
The only question remaining.

[00:18:44] Speaker 01:
is did the new limitations that were added in the substitute claims change the 101 analysis in any way?

[00:18:50] Speaker 01:
And it can't.

[00:18:51] Speaker 01:
The original claims were directed to the abstract idea of promoting programming and delivering it over a generic network.

[00:18:57] Speaker 01:
All they've done now is say that that programming is being received on a separate channel.

[00:19:01] Speaker 01:
It doesn't make the claim any less abstract.

[00:19:05] Speaker 02:
Under step two, these new limit... Is there any legal impediment under generate to us affirming on the 101 basis?

[00:19:13] Speaker 01:
No, there's a decision after Chenery.

[00:19:15] Speaker 01:
It's Henry Kraminski, which is at 554, F3, 967, where this court specifically addressed that issue and held that Chenery doesn't prevent this court from affirming a board decision on 101 as an alternative ground.

[00:19:31] Speaker 02:
Because 101 is generally a question of law.

[00:19:33] Speaker 01:
Correct.

[00:19:34] Speaker 02:
But what do you do with our recent cases that suggest at least part of the 101 inquiry is fact bound?

[00:19:41] Speaker 01:
So under step two, this court has said in recent cases that in some circumstances, at least, it's a factual question.

[00:19:47] Speaker 01:
And in particular, in some of those cases, they found where the patentee admits that it was well known that there can't be a factual issue here.

[00:19:56] Speaker 01:
So they submitted a declaration from their expert.

[00:19:59] Speaker 01:
But that can't supersede the admissions in the claim and the admissions they made about the prior art.

[00:20:04] Speaker 01:
The specification admits that the message that causes the autotuning

[00:20:10] Speaker 01:
was routine and conventional.

[00:20:11] Speaker 01:
The control signal that's embedded into television signal, those were well known.

[00:20:16] Speaker 01:
That's described in the specification in the appendix at page 911, column 43, lines 53 to 60.

[00:20:23] Speaker 01:
And the tuner that's being autotuned in this conventional manner is a conventional autotuner that's well known in the art.

[00:20:30] Speaker 01:
That's what the specification states.

[00:20:32] Speaker 01:
That's in the appendix at 963, column 148, lines 28 to 40.

[00:20:37] Speaker 01:
And at 970, columns 162, lines 39 to 43.

[00:20:42] Speaker 01:
And not only did the specification admit it, but their expert admitted it in the deposition in the IPR.

[00:20:49] Speaker 01:
And this is in the appendix 6691 to 92, where their expert agreed that what this patent is describing is off-the-shelf components with each component being used in a conventional manner.

[00:21:04] Speaker 01:
And specification confirms that.

[00:21:07] Speaker 01:
in the embodiment that this claim is supposed to be about.

[00:21:10] Speaker 01:
It's just a TV program.

[00:21:11] Speaker 01:
It's a cooking show that's promoting a recipe.

[00:21:15] Speaker 01:
It doesn't get any more abstract than that.

[00:21:17] Speaker 01:
I think this is a classic case of patent ineligibility.

[00:21:23] Speaker 01:
If there are no further questions, I'll cede the rest of the time to the court.

[00:21:27] Speaker 00:
Thank you, counsel.

[00:21:29] Speaker 00:
Mr. Feiner has a couple minutes.

[00:21:34] Speaker 00:
We'll give you two minutes.

[00:21:36] Speaker 03:
Thank you, Your Honor.

[00:21:37] Speaker 03:
Two questions just raised.

[00:21:42] Speaker 03:
One relates to the section 101 inquiry.

[00:21:46] Speaker 03:
Amazon did not make a showing under step two of the ALICE inquiry that these new limitations were routine, well understood, and conventional.

[00:21:58] Speaker 03:
We know from the recent case law emanating from the Berkheimer decision, the

[00:22:04] Speaker 03:
a Atrix software case, and there's one other unpublished decision, that the step two inquiry is, at its core, a factual inquiry.

[00:22:15] Speaker 03:
Now, there may be instances where there is no dispute of material fact as to whether something, the operations recited in the claim are routine, conventional, or well understood.

[00:22:28] Speaker 03:
In this instance, Amazon, in its papers,

[00:22:35] Speaker 03:
simply plucked words from the claim.

[00:22:38] Speaker 03:
So I'm referring to Amazon's brief at 58 through 59.

[00:22:41] Speaker 03:
Amazon looks at this substitute claim that has 11 limitations, and Amazon plucks the word receiving, processing, message.

[00:22:53] Speaker 03:
But Amazon never analyzes the claim limitation.

[00:22:57] Speaker 03:
They're just plucking words and then saying, well, this is well-known.

[00:23:00] Speaker 03:
The specification says that a receiver is well-known.

[00:23:04] Speaker 03:
What the case law mandates is an inquiry as to whether the operations specified by the claim are well understood, routine, or conventional.

[00:23:17] Speaker 03:
Amazon has not shown that in its briefing here or below.

[00:23:23] Speaker 03:
PMC has explained in its briefing why the limitation, what we're calling the bottoms up

[00:23:32] Speaker 03:
tuning feature is not routine or conventional as of 1987.

[00:23:36] Speaker 03:
And that was supported by expert evidence below.

[00:23:40] Speaker 03:
So we respectfully submit that the 101 issue as to the substitute claims, which was not addressed by the board at all, should not be addressed by this Court.

[00:23:53] Speaker 03:
On the second issue, the second issue involved the combination of this issue of auto-tuning.

[00:24:00] Speaker 00:
You see, as you might see, your red light is on.

[00:24:04] Speaker 03:
Okay, very quickly, in Appendix 47 through 48, we have the Board's decision on PMC's request for rehearing, where PMC specifically raised the issue of bottoms-up, re-tuning, and that the prior art did not disclose that, and that there had been no showing of motivation.

[00:24:23] Speaker 03:
And this is the Board's answer.

[00:24:25] Speaker 03:
The Board's answer is, thus we concluded that the combination of Campbell and Furukawa

[00:24:31] Speaker 03:
teaches the limitation.

[00:24:34] Speaker 03:
The board didn't answer the question at hand, which was... Thank you, counsel.

[00:24:37] Speaker 00:
The red light is meaningful.

[00:24:38] Speaker 00:
Yes, sir.

[00:24:39] Speaker 03:
Thank you very much.

[00:24:40] Speaker 00:
Thank you, Senator Biden.