[00:00:00] Speaker 02: Before we begin our regular proceedings, I'm going to turn it over to Judge Taranto, who has three motions. [00:00:07] Speaker 04: I have three admission motions, and if the prospective admittees can stand, I'd appreciate it. [00:00:18] Speaker 04: The movements, I guess, or I guess I'm the movement, but the prospective admittees are Alison Drury of the Bar of [00:00:28] Speaker 04: Maryland and the Bar of District of Columbia, Tom Derbysh of the Bar of New York, and Clark Oberamt of the Bar of Texas. [00:00:45] Speaker 04: They are my outgoing law clerks. [00:00:49] Speaker 04: So today my task is bittersweet, bitter, because they're on the eve of abandoning me. [00:00:57] Speaker 04: leaving me wondering who these new people are in their offices to go and talk to. [00:01:03] Speaker 04: But sweet because I get to remember just how much they've meant to me over this year and how much help they've been as scholars and advisors and counsel and as friends with great good humor through many intense interactions. [00:01:25] Speaker 04: And for the formal part, [00:01:27] Speaker 04: Maybe I can, I guess I will do them one at a time. [00:01:30] Speaker 04: Won't take long. [00:01:31] Speaker 04: I move the admission of Alison Berkson Drury, who is a member of the bar and is in good standing with the highest courts of Maryland and the District of Columbia. [00:01:40] Speaker 04: I have knowledge of her credentials and I am satisfied that she possesses the necessary qualifications. [00:01:52] Speaker 04: I also move the admission of Thomas Derbysh. [00:01:56] Speaker 04: who's a member of the bar and is in good standing with the highest court of New York. [00:02:01] Speaker 04: I have knowledge of his credentials, and I am satisfied that he possesses the necessary qualifications. [00:02:12] Speaker 04: And finally, I move the admission of Clark Oberhemt, who is a member of the bar and is in good standing with the highest court of Texas. [00:02:21] Speaker 04: For him too, I have knowledge of his credentials, [00:02:23] Speaker 04: and I'm satisfied that he possesses the necessary qualifications. [00:02:35] Speaker 02: Well, I too have a little bit of knowledge about these individuals because Spencer and I spend a lot of time in Judge Toronto's chambers. [00:02:44] Speaker 02: So I'm delighted to grant the motion with Judge Chen's concurrence. [00:02:49] Speaker 00: I concur. [00:02:53] Speaker 00: the first case for argument this morning is seventeen two oh five one unilock u.s.a. [00:03:18] Speaker 02: versus amazon [00:03:22] Speaker 00: Help me with your name, sir. [00:03:24] Speaker 00: This is Tim Groszowski on behalf of the appellants. [00:03:27] Speaker 00: Welcome. [00:03:28] Speaker 00: Thank you. [00:03:32] Speaker 00: May it please the court. [00:03:35] Speaker 00: The district court erred in finding the claims of the 960 patent ineligible. [00:03:40] Speaker 00: With respect to step one of the ALICE test, it is well established that a court must articulate what the claims are directed to with specificity so that that step one analysis is meaningful. [00:03:52] Speaker 00: The district court in this particular case failed to do that. [00:03:56] Speaker 00: The district court's abstraction was divorced from the actual language of the claims. [00:04:00] Speaker 00: The district court held that the abstract idea issue was a time adjustable license. [00:04:06] Speaker 00: That's a financial instrument. [00:04:08] Speaker 00: The claims are not directed to a time adjustable license. [00:04:13] Speaker 00: What the claims are directed to is a specific application and implementation of how to adjust the license over time [00:04:20] Speaker 00: and in response to specific conditions. [00:04:23] Speaker 00: In other words, they're not directed to a financial instrument itself, but rather specific applications and implementations. [00:04:31] Speaker 00: Now recently, this court in the Finjin case held that a claim was eligible where it recited specific steps that were aimed at achieving a desired result. [00:04:41] Speaker 00: I submit to this court that the 960 patent claims are a very similar situation. [00:04:48] Speaker 04: think, and I guess I don't have them firmly in my mind, but say starting with Alice, and I guess I would have guessed that many of our other cases about creating contractual relationships are not limited to the contract itself, but to various processes for creating them and adjusting them, like those shadow account [00:05:17] Speaker 04: processes or whatever they're called in Alice. [00:05:22] Speaker 04: Why isn't that what is going on here, which is maybe just a small linguistic difference from what [00:05:30] Speaker 04: from the language the district court used. [00:05:33] Speaker 00: So when you look at those cases like Alice and a number of the other cases that are relied upon with the Apple lease, the focal point is on the financial instrument and in those cases you have a financial instrument or other economic practice that's being claimed and then it just says implement this via a generic computer. [00:05:49] Speaker 00: And so there's essentially two lines of cases where the target is the financial instrument itself [00:05:54] Speaker 00: implemented via a generic computer in contrast to situations where you have specific application claim with concrete steps to achieve a desired result or improvements in computer functionality. [00:06:06] Speaker 00: Now the fact that an improvement in computer functionality may relate to some financial instrument or some other financial concept does not render it ineligible. [00:06:15] Speaker 00: If that were the case, then every single economic practice would never be entitled to patent protection, which as the Supreme Court held in Bilski is not true. [00:06:23] Speaker 02: Well, the improvement in computer functionality is a step two analysis and not a step one. [00:06:28] Speaker 02: So why don't you take us to the specificity in which the complaint described that this was really an improvement in computer functionality. [00:06:36] Speaker 00: Certainly. [00:06:36] Speaker 00: With respect to step two, if you look at APPX 104 and 105, which is referencing the complaint, there are specific factual allegations as to why the patent is directed to eligible subject matter. [00:06:53] Speaker 00: This complaint, which was made pre-Burkheimer, has specific factual allegations that must be, at this level, at the Rule 12b6 stage, accepted as true. [00:07:02] Speaker 00: For example, it talks in paragraph 15 of the complaint of an APPX 104 that as at the time of the invention, the technologies taught in the patent claims were innovative and novel, as evidenced, for example, the breadth and volume of the reference is considered. [00:07:15] Speaker 00: And this goes on in 16 and 17. [00:07:17] Speaker 00: It gets into the actual claim language and talks about how those were meaningful, [00:07:22] Speaker 00: elements, limitations that are explicitly tied to machines. [00:07:26] Speaker 00: It goes on in 18 and 19 and 20. [00:07:29] Speaker 00: And I would submit that we don't even have a duty. [00:07:33] Speaker 00: We could have no factual allegations in the complaint whatsoever directed to eligibility. [00:07:39] Speaker 00: That is not a necessary prerequisite for a patent claim to be eligible. [00:07:43] Speaker 00: As this court articulated very clearly in the Berkheimer decision, the burden is on the challenger, in this case the appellee, to come forward with evidence [00:07:52] Speaker 00: that meets a clear and convincing burden to establish that the claims are ineligible. [00:07:57] Speaker 00: And so let's assume that the complaint in our case was completely devoid of any factual allegation whatsoever. [00:08:03] Speaker 00: That does not matter. [00:08:04] Speaker 00: What matters is whether or not the challenger, in this case Amazon and the other app police, comes forward with actual evidence to establish that the claims are ineligible under step two. [00:08:14] Speaker 00: There is no evidence whatsoever considered by the district court to establish that any element [00:08:22] Speaker 00: of the claims at issue were well understood. [00:08:24] Speaker 04: I guess I'm a little confused about the sort of procedural standards, right? [00:08:30] Speaker 04: This is a 12b6. [00:08:31] Speaker 04: It is. [00:08:32] Speaker 04: So evidence is never important on 12b6. [00:08:37] Speaker 04: What's important under Twombly and Iqbal is whether there are facts that plausibly would establish meeting of the standards. [00:08:50] Speaker 04: So one has to look at the facts alleged with some quite important distinction between facts alleged and what is often called a conclusory allegation and see if there are facts that would allow you to succeed if you could prove those facts. [00:09:12] Speaker 04: Isn't that essentially what's missing in particular from the paragraphs 15 through 17, that those are [00:09:20] Speaker 04: conclusory and they don't identify facts about, let's call it, innovative computer developments. [00:09:31] Speaker 00: I respectfully disagree. [00:09:33] Speaker 00: I think that there are factual allegations contained in those paragraphs. [00:09:36] Speaker 00: And I also think that even a factual allegation that a claim as a whole is inventive, that is relevant to the inquiry. [00:09:43] Speaker 00: because as the Supreme Court stated in Diamond v. Deere, part of the analysis under step two and under the entire analysis requires that you look at the claims as a whole, not just each limitation in isolation. [00:09:55] Speaker 00: But what I submit is that the district court's finding wasn't based on a lack of factual allegation. [00:10:02] Speaker 00: The district court didn't even consider the factual allegations. [00:10:05] Speaker 00: Instead, what the district court did under step two is it looked at each element in isolation. [00:10:11] Speaker 00: So first of all, it disregarded and at no point did it adhere to the Diamond versus Dear standard that requires that you look at the claims as a whole. [00:10:18] Speaker 00: Let's set that aside for now. [00:10:20] Speaker 00: What the district court then did is it said, okay, each element, if we take it in isolation, it said, is that known or generic? [00:10:28] Speaker 00: Now first of all, that is not the legal standard. [00:10:31] Speaker 00: The legal standard, and this was reiterated by this court in Berkheimer, is whether or not under step two, a limitation is well understood, routine, [00:10:40] Speaker 00: and, and I'm stressing the and, conventional. [00:10:44] Speaker 00: And this court went on to specifically hold that just because an element may be present in a piece of prior art, that's not enough. [00:10:52] Speaker 00: That doesn't meet the threshold standard under step two. [00:10:56] Speaker 00: The district court never even applied that correct legal standard. [00:10:59] Speaker 00: Instead, what the district court did is it just said, well, either based on defendant or appellee's argument, or based upon what the district court, I guess, is coming into with its own body of knowledge, [00:11:10] Speaker 00: is a limitation known or generic? [00:11:13] Speaker 00: And if the district court answered that question in the affirmative, that was enough. [00:11:18] Speaker 00: And I respectfully submit that is insufficient under step two. [00:11:23] Speaker 00: To meet the defendant's burden. [00:11:25] Speaker 02: Haven't we, in pre-Berkheimer cases, frequently referred to the fact that this is nothing more than a generic computer end of story? [00:11:35] Speaker 00: Yes. [00:11:36] Speaker 00: Wait, meaning what? [00:11:38] Speaker 00: I'm sorry, Your Honor. [00:11:39] Speaker 00: You definitely referred to the thing. [00:11:40] Speaker 02: That our court has concluded that that determination by the district court or whatever, that all it recites as a generic computer is sufficient to establish that there's no inventive concept in step two. [00:11:54] Speaker 02: You've said that repeatedly, haven't we? [00:11:56] Speaker 02: So your notion now that maybe Berkheimer changed that and requires a lot more in something different [00:12:07] Speaker 02: kind of hard to accept, right? [00:12:10] Speaker 00: I would agree with Your Honor if what the district court did is it said, here's an abstract idea and all you all did is you implemented it on a generic computer. [00:12:18] Speaker 00: I respectfully don't think that's what the district court's holding was. [00:12:21] Speaker 00: The district court, with a number of the limitations, found that they were just known in the art. [00:12:28] Speaker 00: Generic wasn't part of it. [00:12:30] Speaker 00: An example would be the device identifier based on sampling physical parameters, which is in both independent claims. [00:12:35] Speaker 02: Well, I guess your point is, and it kind of gets to what Judge Toronto referred to, which is like, it's drilling down on who has the burden and the burden of what. [00:12:46] Speaker 02: But if you look at, for example, you referred us to paragraph 15, and since accepting some burden on your part, and the specificity of that is you just say the claims were innovative and novel. [00:13:01] Speaker 02: Why just taking that? [00:13:03] Speaker 02: Is that sufficient? [00:13:04] Speaker 02: Isn't that [00:13:05] Speaker 02: just textbook classic conclusory for our purposes. [00:13:10] Speaker 00: I don't think it's textbook classic. [00:13:11] Speaker 00: And I think when you take 15, 16, 17, 18, 19, 20, and I'm reading from APPX 104 to 105, when you look at all of those together, I think that that meets the threshold of certainly creating a factual issue as to whether or not the claims are eligible. [00:13:29] Speaker 00: And my point is, Your Honor, is a little bit different. [00:13:33] Speaker 00: My point is that the district court, first of all, just completely ignored what was in the complaint. [00:13:38] Speaker 00: But setting that aside, the district court then went and essentially filled all of the gaps in the appellee's burden, where they bear the burden and this court has held specifically there must be evidence to support that. [00:13:52] Speaker 00: The district court didn't require evidence and just said, you know what, there's all these gaps, but that's okay. [00:13:57] Speaker 00: I'm just going to fill it with my own knowledge. [00:13:59] Speaker 00: Well, that's improper. [00:14:00] Speaker 00: under binding precedent, this court's own precedent, and that of the Supreme Court as well. [00:14:28] Speaker 01: Good morning. [00:14:28] Speaker 01: May it please the Court, Dan Bagatell on behalf of the Appellees with me are my colleagues Daniel Shabodian and Andrew Dufresne. [00:14:34] Speaker 01: The District Court correctly held that the claims are invalid under the two-part ALIS test. [00:14:39] Speaker 01: Starting with step one, the claims are directed to adjusting the terms of a license over time. [00:14:45] Speaker 01: I think it's a semantic debate over whether you were referring to the license itself or to adjusting the license over time. [00:14:53] Speaker 01: From the [00:14:54] Speaker 01: specification from the claim language all the way through, it's clear that that is the idea, the central idea of this patent and that is an abstract idea with all the hallmarks that this court has discussed in its cases. [00:15:05] Speaker 01: It involves legal and economic relations. [00:15:10] Speaker 01: Nothing is done in the physical world. [00:15:12] Speaker 01: You're simply grabbing some data, checking to see whether the device has been approved before and then perhaps adjusting the device limit from five to seven. [00:15:20] Speaker 01: Nothing occurs in the real world. [00:15:22] Speaker 01: There's [00:15:23] Speaker 01: No technical improvement. [00:15:25] Speaker 01: There's no solution to a technical problem. [00:15:28] Speaker 01: It is a business problem that people buy more devices and they need to adjust the device limit over time to reflect the fact that people are buying more devices. [00:15:38] Speaker 01: That is not a technical problem. [00:15:40] Speaker 01: You're using a generic computer to do what computers always do. [00:15:43] Speaker 01: They acquire data and they manipulate data. [00:15:47] Speaker 01: So there's no new hardware. [00:15:49] Speaker 03: Is it your view that anything that's [00:15:53] Speaker 03: manipulating legal obligations or managing a business arrangement is per se an abstract idea? [00:16:01] Speaker 01: I think if you were solving a business problem with a generic computer as you are here, that's straight power. [00:16:07] Speaker 03: I'm just trying to figure out, is that where our case law currently is? [00:16:11] Speaker 01: No, I think if you have a step two, I think the Supreme Court did hold that you don't rule out business ideas per se. [00:16:20] Speaker 01: But you need to go beyond that. [00:16:21] Speaker 01: to have a patent-eligible solution. [00:16:24] Speaker 01: And we don't go beyond that here. [00:16:26] Speaker 01: There's no new hardware here. [00:16:28] Speaker 01: There's no new software here. [00:16:29] Speaker 01: There's no new interface. [00:16:31] Speaker 01: There's no new database. [00:16:34] Speaker 01: It's basically just taking the idea of adjusting the terms of a license over time and applying that with software. [00:16:42] Speaker 01: There's really nothing more than that. [00:16:43] Speaker 01: It is not a technical solution. [00:16:45] Speaker 01: And there's really no inventive step at step two. [00:16:50] Speaker 01: We had some discussion about whether the complaint alleges that under ATRIX, and I'm happy to walk through paragraphs 13 through 21. [00:17:00] Speaker 01: But Judge Gross was exactly right. [00:17:02] Speaker 01: Chief Judge Gross was exactly right. [00:17:03] Speaker 01: These are conclusory allegations, and they primarily are legal argument of the lawyers regarding whether this is going to a technical invention. [00:17:11] Speaker 01: The closest they get is in paragraph 17, which says that certain claims require a specific configuration of modules. [00:17:19] Speaker 01: Basically, you've got a processor module, a memory module, a communication module. [00:17:23] Speaker 01: Well, that's pretty much every computer out there. [00:17:26] Speaker 01: There's nothing more specific than that. [00:17:27] Speaker 01: The combination, at best, what they have is that combination applies the inventive concept of adjusting the terms of a license over time. [00:17:36] Speaker 01: There's nothing substantially more than that. [00:17:38] Speaker 02: Well, what about claim 21? [00:17:40] Speaker 01: Claim 21? [00:17:41] Speaker 02: Claim 21 is cryptographic hash. [00:17:43] Speaker 02: Yes. [00:17:43] Speaker 02: How are we to know that that is not [00:17:46] Speaker 02: routine conventional well understood. [00:17:48] Speaker 01: Okay. [00:17:49] Speaker 01: Let me start with the fact that they didn't raise that in the district court. [00:17:52] Speaker 01: This is an issue that they've raised newly on appeal. [00:17:58] Speaker 01: Second of all, a cryptographic hash is simply a combination of two different numbers. [00:18:05] Speaker 01: If you look at this patent, it refers back to an earlier patent by the same inventor Richardson. [00:18:13] Speaker 01: It actually incorporates it bodily by reference in [00:18:16] Speaker 01: in column four. [00:18:18] Speaker 01: And that patent was from 1993. [00:18:21] Speaker 01: And it refers back to an earlier patent in the 1980s, which talked about hashing numbers to uniquely identify a computer. [00:18:28] Speaker 01: So this is all admitted prior art in this patent. [00:18:32] Speaker 01: It was not portrayed as an invented concept. [00:18:34] Speaker 04: Do I remember right that the reference in the patent on column nine, lines 28 through 31 to cryptographic hash, is that [00:18:46] Speaker 04: the only reference in the space. [00:18:49] Speaker 04: And it doesn't explain anything. [00:18:51] Speaker 04: It sort of assumes everybody knows exactly what this is. [00:18:55] Speaker 01: You went exactly where I was about to go because all it's describing there is basically an enablement of that dependent claim. [00:19:03] Speaker 01: All you're saying is take this known idea. [00:19:06] Speaker 01: It doesn't proclaim it to be inventive anywhere in the patent. [00:19:09] Speaker 01: The only thing the patent claims as inventive is adjusting the limits over time. [00:19:15] Speaker 01: All this is doing is a way to identify a device. [00:19:19] Speaker 01: It's treated as an enablement of many different ways. [00:19:21] Speaker 01: You can look at the processor number. [00:19:23] Speaker 01: You can look at the memory configuration, all sorts of things to uniquely identify. [00:19:27] Speaker 01: But all of those are known. [00:19:29] Speaker 01: They're not treated as inventive. [00:19:31] Speaker 01: At best, they're complementary to the main invention. [00:19:34] Speaker 01: But that's certainly true in Alice, too, in all of these sports cases. [00:19:38] Speaker 03: I'm sorry. [00:19:40] Speaker 03: That's a judgment in the eye of the beholder, whether all these limitations are merely complementary to what is the real invention versus perhaps them actually being part of the real invention itself. [00:19:50] Speaker 03: And that goes to what your opposing counsel was arguing that what failed to happen here was an evaluation of the claim as a whole, where you consider all of the elements in combination to try to determine whether on that level, in that larger context, whether there's an [00:20:09] Speaker 03: inventive concept here, as opposed to just studying each of the limitations in isolation. [00:20:16] Speaker 03: So I'd like to hear your thoughts on that. [00:20:18] Speaker 01: Yeah, the district court actually did. [00:20:19] Speaker 01: I think if you take a look at the district court's treatment of step two, he walked through each of them and also explained why the combination was not anything unusual. [00:20:29] Speaker 01: Basically, this patent, let's start with itself in column 11, talks about you can use hardware, you can use Hawthorne, you can do the steps in whatever order you want. [00:20:37] Speaker 01: It never claims that there's some unique combination. [00:20:41] Speaker 01: Any time you're going to approve a particular device to be used, you're going to have to define what that device is. [00:20:50] Speaker 01: That's what Richardson's 216 patent incorporated by reference into this patent did back in 1993. [00:20:55] Speaker 01: He already taught how to do that, and he incorporated it bodily into this patent. [00:21:02] Speaker 01: Any time you're going to be [00:21:04] Speaker 01: saying that this computer or this phone can use this software, you're going to need to know whether it's this computer or this phone. [00:21:10] Speaker 01: That's inherent in the idea of just licensing to a particular device. [00:21:14] Speaker 01: The only thing this patent says is novel or inventive is adjusting the device limit over time. [00:21:20] Speaker 01: There's nothing unique that adjusting it over time requires you to do in terms of device identification. [00:21:25] Speaker 01: It's old-fashioned device identification, never treated as new in the specification, never treated as new in [00:21:34] Speaker 01: in the complaint. [00:21:35] Speaker 01: Again, all they're trying to talk about here in the complaint is the idea of adjusting over time being an improvement to computer technology, and that's conclusory. [00:21:43] Speaker 02: Can I bring you back to the more global question we discussed with your friend is who's got the burden to do what and at what stage? [00:21:50] Speaker 02: So in your view, is it the burden for the patent owner to establish at the complaint stage to allege enough, plausibly, that this is [00:22:02] Speaker 02: not conventional, not routine, not well-known, or is this something even in the absence of specificity in the complaint they would be free to come back with in response to your motion to dismiss? [00:22:13] Speaker 01: I view it as analogous to sellotex. [00:22:16] Speaker 01: If I want to move to dismiss, I need to make some threshold showing that this complaint is... Does it? [00:22:21] Speaker 01: Sellotex is in the summary judgment context, but it's analogous in the sense that if I don't move to dismiss, [00:22:27] Speaker 01: then perhaps the district court on its own could identify it, but then you'd have an opportunity to respond to the issue. [00:22:33] Speaker 01: But somehow it needs to be raised so that the issue is in front of the court. [00:22:37] Speaker 01: In that sense, we filed a motion. [00:22:40] Speaker 01: We identified the fact that it's defective under Section 101. [00:22:43] Speaker 01: We explained why all these elements were well known in the art. [00:22:47] Speaker 01: And then they needed to come back and identify whatever they considered to be novel and inventive. [00:22:52] Speaker 01: And we can have an argument about whether that's sufficiently [00:22:55] Speaker 01: alleged in the complaint or in the specification? [00:22:57] Speaker 02: Yeah, that's what I was going to ask. [00:22:58] Speaker 02: Is it necessary for them, is what they come back with in response to a motion to dismiss necessarily to have also been included in the complaint? [00:23:07] Speaker 01: Well, I think under Berkheimer, if it's in the specification itself, that's adequate. [00:23:13] Speaker 01: The problem here, as I said, this specification only talks about the inventive idea being adjusting the terms of a license over time. [00:23:22] Speaker 01: Anything else is just, you need to identify the device and whoa, here are a whole bunch of known ways of doing so. [00:23:28] Speaker 01: If they wanted to declare that that was something invented, they should have said so either in the specification or in a complaint or an amended complaint, as in Atrix. [00:23:38] Speaker 04: Was there a motion for amended complaint here or anything like that? [00:23:42] Speaker 01: No, they stood on their complaint. [00:23:45] Speaker 01: as we discussed in our brief, did not call for additional claim construction. [00:23:48] Speaker 01: They conceded at the hearing that they didn't need claim construction. [00:23:51] Speaker 01: They said the motion is not premature to use their language. [00:23:54] Speaker 01: So they had their opportunity. [00:23:56] Speaker 01: We explained why even assuming their conception of what the patent was all about, it was still directed to an abstract idea. [00:24:03] Speaker 01: You're performing that abstract idea of adjusting the term over time on a generic computer. [00:24:09] Speaker 01: There's no technical invention here. [00:24:11] Speaker 01: There's no inventive concept that substantially [00:24:15] Speaker 01: alters the invention into more. [00:24:18] Speaker 01: That's what we need under ALICE. [00:24:19] Speaker 01: We just don't have that here. [00:24:22] Speaker 03: I think your opposing counsel also mentioned that the trial court looked through the various steps of the method claim and concluded that the various steps of receiving an authorization request, checking, verifying license data, the judge found that those to all be routine steps [00:24:46] Speaker 03: but didn't really point to anything to justify why those steps might be, why we should all deem them to be routine. [00:24:54] Speaker 03: What should we do about that? [00:24:55] Speaker 01: I think actually he cited our brief, which in turn cited the earlier Richardson 216 patent. [00:25:03] Speaker 01: That's the 1993 Richardson patent that he incorporated by reference in its entirety in column four of this patent. [00:25:10] Speaker 01: That's part of this patent. [00:25:12] Speaker 01: That talks about device registration. [00:25:15] Speaker 01: you tie a particular device to a license. [00:25:18] Speaker 01: And he talks about using the physical parameters and other unique ways of identifying devices. [00:25:24] Speaker 01: That's in this patent. [00:25:25] Speaker 01: It's bodily incorporated. [00:25:27] Speaker 01: And if you look at Column 4, you'll see that it's incorporated fully. [00:25:36] Speaker 01: Column 4 is lines 43 to 49. [00:25:41] Speaker 01: It's also referred to in Column 1. [00:25:45] Speaker 01: description of related prior art, essentially. [00:25:48] Speaker 01: Patent 216 was referred to twice in there. [00:25:52] Speaker 01: So they're basically incorporating, saying this is already known. [00:25:55] Speaker 01: The new wrinkle here is that we're going to adjust the term of the license over time. [00:25:59] Speaker 01: That is the only novel concept, and that is not something that is patent-eligible under numerous cases of this court and the Supreme Court. [00:26:11] Speaker 01: I will just add one more point on 21, which I neglected to mention. [00:26:16] Speaker 01: This court in smart systems already recognized that hashing is a well-known concept. [00:26:21] Speaker 01: It's discussed in the footnote in the smart systems opinion. [00:26:24] Speaker 01: Basically, a hash is simply taking two different numbers or whatever and combining them into one. [00:26:31] Speaker 01: It's a mashing up of two different things. [00:26:32] Speaker 01: It's actually discussed extensively in the 1980s patent that's incorporated into the earlier Richardson patent. [00:26:39] Speaker 01: So not only has it been recognized by this court, but it's also discussed in the art that's incorporated into this patent. [00:26:45] Speaker 01: So hashing is not new. [00:26:47] Speaker 03: The patent board recently found some of these claims to be patentable under 102, 103? [00:26:53] Speaker 01: Yes. [00:26:54] Speaker 01: It was not the setting of the first device limit, but they said that the particular art on which we relied did not disclose adjusting to a second device limit [00:27:05] Speaker 01: in response to something not being on record. [00:27:08] Speaker 01: It was a very, very precise thing saying you didn't exactly disclose X in response to Y. Not what was in claim one, not what was in claim 19 or 21 or claim 22 or 25, but in claim nine, this concept of adjusting a second time, not just the first time, but the second time also in response to it being on the record. [00:27:27] Speaker 03: And then I guess you would necessarily say that what the board found to be [00:27:31] Speaker 03: a patentable advance is itself nevertheless an abstract idea. [00:27:35] Speaker 03: So it fails under section 101 even though the patent board found it to be okay under 102 and 103. [00:27:40] Speaker 01: Well, in fact, the patent board and the same decision had a 101 ruling in which they endorsed the district court's analysis of the section 101 issue. [00:27:50] Speaker 03: But the idea of the idea or insight or technique, I don't know what the right word is to say, [00:27:56] Speaker 03: of moving to a second upper limit from an initial first upper limit is itself an abstract idea? [00:28:03] Speaker 01: Well, that is, certainly. [00:28:04] Speaker 01: If you're going to do it once, you're going to do it twice. [00:28:07] Speaker 01: Really, I don't think that's fairly characterized as an inventive concept to say that you're going to adjust the divisiveness once, and then once you hit that limit, not just going to move to five to seven, but after a month, we're going to be able to move to seven to 11. [00:28:20] Speaker 01: I don't think that's ever been alleged to be an inventive concept, and I think the idea of adjusting twice is just adding an abstract idea to an abstract idea, and we know from the Cognacorp that that doesn't equal more than an abstract idea. [00:28:34] Speaker 01: Thank you. [00:28:41] Speaker 00: Your Honors, Judge Prost, I'd like to start with what we've been talking about with the pleadings and the standards. [00:28:47] Speaker 00: It still remains in federal court, although it's getting whittled away. [00:28:50] Speaker 00: That notice pleading is still the standard versus detailed factual pleading. [00:28:55] Speaker 00: Now, you have Iqbal and Twombly, which altered the old standard under Form 18, et cetera. [00:28:59] Speaker 00: But what I'd like to bring to the court's attention is the appellees brought their motion not challenging the sufficiency of the pleading. [00:29:07] Speaker 00: The appellees didn't say, hey, look at these paragraphs here, and that's not a good enough factual allegation. [00:29:13] Speaker 00: That wasn't the basis of the argument. [00:29:15] Speaker 00: and that wasn't the basis of the district court's decision. [00:29:18] Speaker 00: And so essentially the panel is making some new arguments for the Apple Ease. [00:29:23] Speaker 00: The argument that was raised by Apple Ease was just under 101, the two test part test in Alice, that wasn't met. [00:29:31] Speaker 00: And circling back to step one, our contention is that when you look at the claim as a whole, you have specific steps that are articulated to achieve a desired result. [00:29:41] Speaker 00: The preamble of every independent claim sets forth what the result is that we're trying to get at. [00:29:45] Speaker 00: adjusting a license over time. [00:29:48] Speaker 00: I submit, like in Fingent, for example, the result wasn't even clear. [00:29:51] Speaker 00: The court had to go through and figure out what result they were trying to get at. [00:29:54] Speaker 00: Here, we lay it out. [00:29:56] Speaker 00: Here's the result. [00:29:57] Speaker 00: And then we go through in detailed fashion, step by step, here is a way to achieve that result. [00:30:03] Speaker 00: Now, my opposing counsel submitted to this court that all these claims do is they say take a time-adjustable license and implement it on a generic computer. [00:30:11] Speaker 00: I respectfully disagree. [00:30:13] Speaker 00: There are a whole lot of ways you could implement a time adjustable license, whatever that concept that the district court invented, essentially that verbiage, whatever that means. [00:30:22] Speaker 00: There's a lot of ways you can adjust the license over time on a computer. [00:30:26] Speaker 00: What the claims in the 960 patent set forth is a very specific way of doing so. [00:30:32] Speaker 00: And that's why in accordance with Finjin and core wireless and other decisions by this court, I submit that under step one, they are directed to eligible subject matter. [00:30:41] Speaker 00: It's the specificity to achieve a result that gets you there, as opposed to simply saying, either here's a result that we want to get at, do it on a generic computer, or here's an abstract idea, go do it on a generic computer. [00:30:55] Speaker 00: We don't do that. [00:30:55] Speaker 00: So how would you articulate the inventive concept here? [00:31:00] Speaker 00: I think the inventive concept- Line 22, for example. [00:31:02] Speaker 00: What's the inventive concept? [00:31:03] Speaker 00: I think the inventive concept is the claim when taken as a whole and the specific steps that you walk through. [00:31:07] Speaker 00: So like if you take claim 22, for example, it's very specific in the steps that you have to walk through. [00:31:12] Speaker 03: I know you said a number of times that it's very specific, but I'd just like you to just roll it up for me and tell me what is the inventive concept? [00:31:22] Speaker 03: What is the inventor's contribution to the useful arts? [00:31:26] Speaker 03: in Claim 22? [00:31:27] Speaker 00: The inventor's contribution to the useful arts in Claim 22 is the specific steps that he sets forth. [00:31:34] Speaker 00: I can read them. [00:31:35] Speaker 00: No, that's OK. [00:31:35] Speaker 00: It's going to take a little while. [00:31:36] Speaker 00: But the specific steps that he sets forth in order to adjust the license over time, which would be the result that we're trying to achieve. [00:31:44] Speaker 00: And if we go back to, for example, Fingin, in the Fingin case, the language was, I apologize, I have it right here, receiving a downloadable, which was just a file. [00:31:55] Speaker 00: generating a first downloadable security profile that identifies suspicious code and then linking by the inspector the downloadable security profile. [00:32:05] Speaker 00: And what was found to be inventive was generating a security profile. [00:32:11] Speaker 00: Although the claim itself doesn't even instruct really how to do so. [00:32:15] Speaker 00: It just says we're gonna generate it. [00:32:17] Speaker 00: Well, I think that our claims actually put forth more than that. [00:32:20] Speaker 00: We put forth more specificity in the 960 patent claims [00:32:24] Speaker 00: And then when we get into the dependent claims, we take it even further. [00:32:27] Speaker 00: And there's more specificity that's provided. [00:32:30] Speaker 00: And so I submit that it's the specificity in the actual organization and the steps that you go through to achieve the result that renders it inventive. [00:32:40] Speaker 00: What I'd just like to leave the court with is if we're going to be endorsing the framework that the district court applied here, essentially what we're saying is that [00:32:47] Speaker 00: We can ignore what's in a complaint, doesn't matter, because we don't even need to consider it, because the district court did not consider the allegations in the complaint. [00:32:54] Speaker 00: I understand this court believes them to be conclusory, but the district court didn't even say they're conclusory. [00:32:59] Speaker 00: It just ignored them completely. [00:33:02] Speaker 00: That's not proper. [00:33:03] Speaker 00: Setting that aside, though, it's not appropriate for a district court to just summarily say that an element is either known or generic. [00:33:10] Speaker 00: With respect to the Richardson patent, prior art, [00:33:13] Speaker 00: This court has held, very specifically, just showing that something is in a piece of prior art, that's not enough. [00:33:19] Speaker 00: That doesn't meet the defendant's burden. [00:33:22] Speaker 00: And so I respectfully submit that the district court applied an incorrect standard, and as such, its findings should be reversed. [00:33:30] Speaker 00: Thank you. [00:33:30] Speaker 00: Thank you, counsel. [00:33:31] Speaker 00: Thank you, Your Honor.