[00:00:17] Speaker 00: That's case number 19-1062. [00:00:43] Speaker 00: Ready when you are, Mr. Doar. [00:00:53] Speaker 05: Good morning, Your Honors. [00:00:54] Speaker 05: May it please the Court, Jeremy DeRere for Appellants. [00:01:00] Speaker 05: We're here today, the claims stand rejected. [00:01:03] Speaker 05: We're here today on the appeal of a board affirmance of an eligibility rejection of the claims as directed to the abstract idea of facilitating cash transactions without the need for a customer to receive coins as change due from a cash purchase. [00:01:21] Speaker 05: The Appellants have [00:01:22] Speaker 05: three major concerns they want to highlight today. [00:01:25] Speaker 05: The first concern is the appellants are not sure that this identified idea falls within or that the abstract idea's eligibility exception should be construed so broadly as to encompass this identified idea. [00:01:37] Speaker 00: But what would you say that the claims are directed to? [00:01:42] Speaker 05: It's a great question. [00:01:43] Speaker 05: I mean, I think what we would agree, and so I would say [00:01:47] Speaker 05: It's uncontested. [00:01:48] Speaker 05: I think the appellants in the office agree that the claims are definitely designed to achieve the result of facilitating cash transactions without the need for a customer to receive coins. [00:01:57] Speaker 00: And that's not abstract? [00:01:59] Speaker 00: That's not an abstract idea? [00:02:00] Speaker 05: Well, I think it can definitely be characterized as abstract at some level. [00:02:04] Speaker 05: And we're actually OK with just moving on and arguing at step two, if you want. [00:02:08] Speaker 05: But we're not entirely sure that the implicit judicial exception for abstract ideas should be construed so broadly as to encompass everything which can be characterized as abstract at some level. [00:02:18] Speaker 05: The Supreme Court in Alice [00:02:20] Speaker 05: was careful to note that it hasn't really defined the crime. [00:02:23] Speaker 01: Sure. [00:02:23] Speaker 01: We're not supposed to read the claims at a really broad level, because you can do that and say everything is abstract at some broad level because it has an idea behind it. [00:02:34] Speaker 01: But your claims have to be directed at something that's more specific and not at that broad level. [00:02:41] Speaker 01: What are your claims directed at in a specific way that's not that abstract idea? [00:02:45] Speaker 05: Got it. [00:02:46] Speaker 05: And I think here what we'd say is we have [00:02:49] Speaker 05: an unconventional combination of steps that we think presides a specific way of implementing this abstract idea that represents a- You really are relying on step two. [00:02:57] Speaker 03: That's step two. [00:02:58] Speaker 03: Yes. [00:02:58] Speaker 05: Yeah, yeah. [00:02:59] Speaker 00: I mean, our step- You concede step one. [00:03:02] Speaker 01: We're not conceding step one, but I think it's going to be more- Well, you're not conceding it, but you have yet to articulate what the claims are directed to that's not an abstract idea. [00:03:13] Speaker 05: If we are not contesting, here's what I would say, and I apologize for any confusion on this. [00:03:19] Speaker 05: We are not going to contest the Patent Office's assertion that the claims are directed to facilitating cash transactions without the need for a customer to receive coins as change due from a cash purchase. [00:03:29] Speaker 05: To the extent that we're making a step one argument, it's just asking this court to consider, is this an abstract idea within the meaning of the abstract ideas eligibility exception? [00:03:39] Speaker 05: It may well be that this court concludes. [00:03:41] Speaker 00: Well, what we're doing is we're reviewing the final written decision of the board. [00:03:47] Speaker 00: And why are they wrong when they found that's what the claims are directed to and that that's an abstract idea? [00:03:54] Speaker 05: Well, I think that they're wrong when they find that that's an abstract idea, because I think that that's very different and more specific than the types of things that the Supreme Court has looked at and identified as an abstract idea. [00:04:07] Speaker 05: In Allison Bilsky, they looked at fundamental economic concepts and longstanding practice. [00:04:13] Speaker 05: Here, [00:04:14] Speaker 05: There's no real, it's not clear that this is being done at all or that this idea of facilitating cash transactions without the need for a customer to receive coins as change due is a fundamental or long-standing economic practice or a building block. [00:04:29] Speaker 00: I think the pen says it is a pen says this is a big problem in commerce that somebody purchases something and they get coins back and these coins are heavy and they're in your pocket you lose them and or you leave them there in the little tray at the supermarket or they throw them away and coins are a hassle and This pen does away with that hassle [00:04:52] Speaker 05: Yes, that's what it's trying to do. [00:04:54] Speaker 05: And what we would say is, so consider some sort of software invention or networking invention where you're eliminating the need for electronic transactions. [00:05:01] Speaker 05: You're improving the efficiency of a network or a system where you're eliminating the need for electronic transactions. [00:05:06] Speaker 05: It would seem strange if that's sufficient to [00:05:09] Speaker 05: you know, connote patent eligibility or to move it outside of the abstract ideas eligibility exception. [00:05:15] Speaker 05: But something that eliminates the need for a physical transfer of coins isn't enough to remove it from the abstract ideas eligibility exception. [00:05:22] Speaker 05: In other words, we're not obviating the need for an election. [00:05:24] Speaker 01: Well, the first one's not eligible either, unless it's more than just the abstract idea of getting rid of something in whatever you were talking about. [00:05:34] Speaker 01: It's got to be specific enough and directed to a specific technological advance rather than the more general idea that you just stated. [00:05:44] Speaker 01: So I'm not sure how that example helps you say that this is not similar when this is also directed a very high level idea of a way of processing a financial transaction using cash. [00:05:58] Speaker 05: My apologies, Your Honor, because I wasn't clear. [00:06:00] Speaker 01: Well, you don't have to apologize, but it's not a very helpful answer to say, well, this other set of things would clearly be eligible when the way you stated it seemed clearly ineligible. [00:06:10] Speaker 05: And I wasn't intending to say that it would clearly be eligible. [00:06:14] Speaker 05: What I was intending to say was, that's the type of thing that might demonstrate an improvement in computer or network functionality. [00:06:20] Speaker 05: And so it was just kind of analogizing it to, if you're eliminating the need for network transactions or network communications, that might be an improvement in computer functionality. [00:06:28] Speaker 05: Here, you would be eliminating the need for physical. [00:06:31] Speaker 03: Is your point that the invention improves the exchange, commercial exchange? [00:06:39] Speaker 03: I mean, I think that's what you're trying to say. [00:06:41] Speaker 03: If you're trying to identify what the system is that you're improving. [00:06:44] Speaker 05: I think it's that it improves the efficiency of, you know, a retail transaction. [00:06:49] Speaker 05: But I don't think at this point that it's really productive to focus on the step one inquiry. [00:06:53] Speaker 05: I think I would like to move on to step two if that's okay. [00:06:55] Speaker 05: Yes, please do. [00:06:56] Speaker 05: Okay. [00:06:58] Speaker 05: So it's step two. [00:06:58] Speaker 05: I want to focus on what was actually uncontested. [00:07:01] Speaker 05: What's uncontested is that the [00:07:02] Speaker 05: The claim recites an electronically implemented method, which achieves the result that's this identified abstract idea of facilitating cash transactions without the need for a customer to retrieve coins as change do. [00:07:15] Speaker 05: We think that it's uncontested that this claim actually includes an unconventional combination of steps reciting a specific way of achieving this result. [00:07:23] Speaker 05: And in particular, this is debiting a tracking fee. [00:07:27] Speaker 00: What do you mean by uncontested, that the [00:07:31] Speaker 00: PTO is not challenging that argument? [00:07:34] Speaker 05: That is what I would say. [00:07:35] Speaker 05: I mean, so we have made that argument repeatedly. [00:07:37] Speaker 05: And for example, in the opening brief, we noted that the board did not seem to dispute that these steps were unconventional. [00:07:44] Speaker 05: And the solicitor appeared to confirm this, and they acknowledged the argument. [00:07:49] Speaker 05: And so here I'm citing from the brief for the director at Page. [00:07:57] Speaker 05: at page 15 where they said, they acknowledged the argument that we said that claim one uses an unconventional combination of steps to provide a specific or practical way of achieving the desired result of facilitating cash transactions without customers receiving change in coins, but they never really suggested that it was conventional. [00:08:14] Speaker 05: They simply alleged that the problem is that the combination of steps itself is the abstract idea. [00:08:19] Speaker 03: And I ask you some, I understand your point, but just a different little minor question that I have about this, which is, you know, reading this specification, I wasn't able to see what the advantage was or what the reason why was for why you have this tracking fee where I guess you move the money here and then you move it back here. [00:08:38] Speaker 03: And I'm just trying to understand what is, what, there are some extra steps that are being performed here with this tracking fee and then debiting later. [00:08:48] Speaker 03: What is the purpose of that? [00:08:50] Speaker 05: I think my understanding is that if payment networks and point of sale terminals were set up to easily return money, in other words, credit money to someone's debit card or something like that, and not in a return or that type of thing, there might be no need for this type of step. [00:09:06] Speaker 05: But as it is, this is a way to work within conventional technology, conventional point of sale terminals, conventional payment networks, and still find a creative way, an innovative way [00:09:17] Speaker 05: to accomplish the desired result, which is facilitating cash transactions without the need for a customer to receive coins as change due from a purchase. [00:09:25] Speaker 02: Did you learn that from the specification? [00:09:28] Speaker 05: No. [00:09:29] Speaker 02: How am I supposed to know that from the specification? [00:09:32] Speaker 05: Well, I would say that it's an unconventional combination of steps that achieve the result. [00:09:38] Speaker 03: I mean, what you're talking about sounds pretty good. [00:09:40] Speaker 03: You know, doesn't it? [00:09:41] Speaker 03: Yeah, in terms of why. [00:09:42] Speaker 03: This is the only way that it could be implemented on the system that exists, but there's [00:09:46] Speaker 03: There's absolutely nothing in the specification that talks about that. [00:09:50] Speaker 05: And certainly we would wish that it was in the specification. [00:09:53] Speaker 05: But I think that it still remains an unconventional combination of steps that achieves this result. [00:09:59] Speaker 05: And I think that the issue we have with the [00:10:03] Speaker 05: boards decision is that the board rather than considering and they seem to acknowledge that it's unconventional but rather than considering that they just ignore the steps they thought that they could just ignore the steps as part of the abstract idea and we don't think that's appropriate I mean this the steps are part of the abstract idea that whether they're arranged in conventional ways or not they're still all abstract doesn't that make it ineligible [00:10:26] Speaker 01: Well, I think that what we would say is that... I mean, in step two, you can't go back to the abstract idea. [00:10:31] Speaker 01: You have to show something outside of the abstract idea that makes it whatever the phrasing is, unconventional and the like. [00:10:38] Speaker 05: That makes perfect sense. [00:10:39] Speaker 05: I think that what we would say is two things, two major points. [00:10:44] Speaker 05: that, and I'm quoting from interval licensing here, this court's recent abstract idea exception decisions have stressed that a claimed invention must embody a concrete solution to a problem having the specificity required to transform a claim from one claiming only a result to one claiming a way of achieving it. [00:11:00] Speaker 05: And I think that here we're actually reciting a way of [00:11:03] Speaker 05: specifically achieving this identified result has been alleged to be the abstract idea. [00:11:08] Speaker 05: We're not just claiming it in the abstract, and I think that in our brief we look at the cases of Wyeth v. Stone and O'Reilly v. Morse, which the Courton interval licensing actually compared to as well. [00:11:19] Speaker 05: The court said that in both Wyeth and Morse, the inventors received a patent containing at least one claim directed to a particular technical solution to a problem, whether for cutting ice or for printing at a distance using electromagnetism. [00:11:31] Speaker 05: But each inventor also lost a claim that encompassed all solutions for achieving a desired result. [00:11:36] Speaker 00: Councilor, you're into your rebuttal time. [00:11:37] Speaker 00: Do you want to go on, or can we reserve your time? [00:11:40] Speaker 05: I'm going to keep going for another minute or so, and I understand. [00:11:43] Speaker 05: Thank you. [00:11:45] Speaker 05: So I think that here, that's exactly what we do, and we have a specific [00:11:50] Speaker 05: way of achieving that result. [00:11:52] Speaker 05: The other thing I would say is that, although in Burkheimer this court indicated that the second step of the Alice test is satisfied when the claim limitations involve more than performance of well-understood, routine, and conventional activities previously known to the industry, we would actually go a step further. [00:12:05] Speaker 05: And here we believe that these unconventional steps are actually inventive over this identified abstract idea. [00:12:11] Speaker 05: In other words, even if you assume that the identified idea of facilitating cash transactions without the need for a customer to receive coins is changed due from a cash purchase is old and known, we believe that the unconventional combination of steps here is actually non-obvious over this idea, inventive over this idea. [00:12:29] Speaker 05: Notably, this is the analysis the Supreme Court used in Parker v. Floot, where the court indicated that [00:12:35] Speaker 05: The discovery of a phenomenon cannot support a patent unless there is some other inventive concept in its application. [00:12:41] Speaker 05: The court in Fluke outlined its reasoning, saying that the claimed process is unpatentable under section 101. [00:12:47] Speaker 05: And here I'm quoting from Fluke at five minutes. [00:12:49] Speaker 00: I suggest you save your time for rebuttal. [00:12:51] Speaker 00: We got the essence of your argument. [00:12:53] Speaker 00: OK, thank you. [00:12:58] Speaker 00: Counselor Nelson. [00:13:01] Speaker 04: Good morning. [00:13:02] Speaker 04: May it please the court? [00:13:04] Speaker 04: This case or the board here engaged in a straightforward application of the Alice to step framework and Determining that the claim dimension is patented eligible if you look to the claims there are essentially three steps There's tendering cash there's debiting and there's crediting and what the board determined is that those are fundamental economic practices that are [00:13:25] Speaker 04: debiting and crediting are building blocks of banking, that this is effectively that the claim is to a method of organizing human activity and therefore abstract. [00:13:35] Speaker 04: And that's up to the additional limitations, which are simply a processor, a credit and debit card reader. [00:13:42] Speaker 01: Do you understand how this actually would work? [00:13:45] Speaker 01: I mean, there must be some way to connect. [00:13:49] Speaker 01: Purchaser to some account somewhere that's going to get debited and credited for the change Correct or they're going to get credit for the change How does the specification explain how it's going to work? [00:14:03] Speaker 04: well it sounds like at least from the the picture that the Purchaser comes with their cash and their card in hand they have some sort of a card that is then used and then there's some kind of debiting it seemed as though the debiting and crediting is just for that particular [00:14:19] Speaker 04: Merchant but it wasn't entirely completely clear to me, but what about from the claims themselves from the claims? [00:14:27] Speaker 04: It seems that the first transaction is this debiting of this Tracking fee which is equal to whatever that change coin change do and then credits twice as much So it sort of debits that amount and then credits twice amount. [00:14:40] Speaker 04: I don't know if that's some way to make sure to verify that it's Correct. [00:14:44] Speaker 04: I mean, I have no idea it's not clear from the specification why they do it that way, but that's what they do and [00:14:49] Speaker 03: So Purvis's counsel says that the board has admitted that these extra steps that we're talking about here of this extra crediting of the tracking fee and then the later debiting of it, that those are unconventional. [00:15:04] Speaker 04: Do you agree with that? [00:15:07] Speaker 04: I think what he quoted from there was actually our quotation or our summary paraphrasing of their argument in the brief at page 15. [00:15:15] Speaker 04: There was no finding by the examiner that this was obvious or novel. [00:15:22] Speaker 04: The examiner did not find it to be anticipated or obvious based on the prior art. [00:15:26] Speaker 04: However, this court and the Supreme Court has been very clear, both in Fluke and in Affinity Labs, which we cite in our brief, that the novelty or non-obviousness of an abstract idea doesn't render it any less abstract. [00:15:39] Speaker 04: And they seem to focus, Prima seems to focus very much on actually this order of steps, [00:15:44] Speaker 04: the particular amounts of crediting and debiting. [00:15:47] Speaker 04: And the board rightly said that that doesn't change those particulars of the abstract idea. [00:15:53] Speaker 04: And that's at page 6 and at 12 to 13 in the rehearing decision. [00:15:57] Speaker 04: It doesn't render it any less abstract. [00:16:00] Speaker 04: Point this court to the recent trading technologies. [00:16:03] Speaker 04: I know there's been a lot of trading technologies decisions recently the particular one that issued after our Brief came in it's at 921 f 3rd 1084 and the Penn site is 1092 where it says that the fact that the claims add a degree of particularity in that case it was as to how an order is placed and [00:16:23] Speaker 04: Did not impact our analysis of step one it cites to ultramershal that says something very similar although certain additional limitations At a degree of particularity the concept embodied by the majority of limitations describes only the abstract idea I think that's exactly what we have here. [00:16:40] Speaker 04: Yes, we may have a certain variation and just the debiting and crediting but at bottom those are [00:16:49] Speaker 04: Those are fundamental economic practices, and they are abstract. [00:16:55] Speaker 04: And once you move to step two, all that's left are those generic computer components. [00:17:02] Speaker 04: And the board looked at those individually and as an ordered combination and determined that they were not sufficient to transform the abstract idea [00:17:13] Speaker 04: Into a patent eligible invention if you don't have any further questions. [00:17:17] Speaker 04: I'm happy to see the remainder of our time. [00:17:20] Speaker 00: Thank you very much Mr.. Dory you have three minutes Thank you your honors. [00:17:30] Speaker 05: I want to use this remaining time so we can emphasize that There's an uncon there's a combination of steps that we believe is unconventional that we have repeatedly asserted is unconventional and that the office has never contested [00:17:43] Speaker 05: is not unconventional. [00:17:45] Speaker 05: Again, we're not even just relying on that. [00:17:47] Speaker 05: We also would go a step further and say that we believe that these steps are actually inventive over the identified abstract idea itself. [00:17:56] Speaker 05: There's at least some indications that the patent office may agree. [00:17:59] Speaker 05: As the solicitor noted, there is no rejection of this claim for novelty or non-obviousness. [00:18:08] Speaker 05: And not only that, but if the office has found that this claim [00:18:12] Speaker 05: is non-obvious. [00:18:13] Speaker 05: It satisfies the Hotchkiss condition for patentable invention. [00:18:17] Speaker 05: But the office has also alleged that this identified abstract idea is in long-standing use. [00:18:22] Speaker 05: And it's clear that this identified abstract idea, this result, can't be what conveys the non-obvious properties to this claim. [00:18:30] Speaker 05: There has to be something left. [00:18:31] Speaker 05: We would contend, and we suggest, and it's been our position the whole time, [00:18:35] Speaker 05: That it's this non-obvious, or it's this unconventional combination of elements that recites a specific way of achieving this identified result that they've alleged is an abstract idea that represents the inventiveness in this claim. [00:18:49] Speaker 05: That yes, it may be simple, and yes, it may be something that seems like it's a simple innovation or a simple invention, but it's not contested that it's unconventional. [00:18:59] Speaker 05: It's not contested that it's not inventive. [00:19:02] Speaker 05: We believe that that's an inventive concept. [00:19:06] Speaker 00: Okay, you want to conclude?