[00:00:17] Speaker ?:
Bye!

[00:01:23] Speaker 03:
Okay, the next argued case is number 18-1189, performance pricing holdings against Google LLC.

[00:01:31] Speaker 03:
Mr. Telscher.

[00:01:38] Speaker 01:
Good morning, your honors, both in the courtroom and remotely, and may it please the court.

[00:01:43] Speaker 01:
The 195 and 059 patents both share a common specification.

[00:01:50] Speaker 01:
Both patents have claims that are directed to

[00:01:53] Speaker 01:
the specific and unconventional idea of connecting user clicks to bonus impressions or decrease price based on user activity, third party activity in which the internet users are out there, determining which ads are better, clicking on them, that's recorded, and the bonus impressions are tied to that.

[00:02:16] Speaker 01:
The advantages from this, and it's undisputed on this record, it was an important invention in internet advertising.

[00:02:23] Speaker 01:
The advantages which are set forth in the patent have never been debated by Google or found contrary by the Patent Office.

[00:02:30] Speaker 01:
So it is an important invention.

[00:02:34] Speaker 01:
One thing that this court should certainly stand for is that the ALICE test be applied as a matter of law.

[00:02:41] Speaker 01:
In this particular case, step one, the panel was really all over the place.

[00:02:48] Speaker 01:
They found six different variations

[00:02:51] Speaker 01:
of what the abstract idea is.

[00:02:53] Speaker 01:
And I get that there can be shades of gray with abstract ideas.

[00:02:55] Speaker 01:
But it's all over the place.

[00:02:57] Speaker 01:
But they ultimately conclude with one at page 29 of their opinion.

[00:03:01] Speaker 01:
And that's where, in so many of this Court's cases, it's where we get to the meat of the Atlas determination, step two.

[00:03:07] Speaker 01:
And in step two, the law is absolutely clear that you have to now take what the abstract idea is, what is it that you found, you have to compare the abstract idea to the claims to determine whether the claims are narrowed.

[00:03:20] Speaker 01:
confined or tied down in a way that, and this is the test, quote, practical terms, the claims amount to more, significantly more than the abstract idea itself.

[00:03:31] Speaker 03:
Well, but the inventive step limitation is critical, is it not?

[00:03:35] Speaker 03:
Correct.

[00:03:35] Speaker 01:
It's absolutely critical.

[00:03:37] Speaker 01:
And in this case, if you look at the opinion, it pages 29 to 35, six pages, devoted to step two, not one, well, excuse me, one time.

[00:03:46] Speaker 01:
At page 32, one time, do they even mention bonus impressions?

[00:03:50] Speaker 01:
And there's no analysis.

[00:03:51] Speaker 01:
They just say it in passing when they're talking about ultramershal.

[00:03:57] Speaker 01:
At no point in the opinion, from pages 29 to 35, does the panel ever say, this is what we found the abstract idea to be.

[00:04:06] Speaker 01:
Here are the limitations in the claim.

[00:04:08] Speaker 02:
And does that tie it down?

[00:04:11] Speaker 02:
I ask you to address the following.

[00:04:14] Speaker 02:
So one version of the argument on the other side, and maybe what the board said too, is something like this.

[00:04:24] Speaker 02:
The abstract idea here is adjusting the terms of dealing by altering the prices and quantities, or quantities, of contracts.

[00:04:36] Speaker 02:
The only, and doing that,

[00:04:40] Speaker 02:
on the basis of a certain class of consumer reaction.

[00:04:47] Speaker 02:
Here, in the advertising world, they're kind of double-sided markets, and there are three parties sort of involved, the viewer, the advertiser, and the publisher.

[00:04:58] Speaker 02:
So even if there is something tied down about the use of

[00:05:08] Speaker 02:
performance information by consumers registering a certain level of interest, that doesn't actually tie it down to anything non-abstract, because all that's being done is using that consumer reaction to adjust a term of the contract.

[00:05:29] Speaker 01:
What's... To me, that's an incorrect generalization of what the invention is, and it's not consistent with what

[00:05:36] Speaker 02:
I should say, and that may be an extraordinarily valuable thing to do.

[00:05:42] Speaker 01:
Correct.

[00:05:42] Speaker 01:
Well, I mean, the benefits, I mean, it's been in practice for over 15 years, and its advantages have proven true, and there's no dispute about those advantages.

[00:05:52] Speaker 02:
What the panel found... But why aren't they the wrong kind of advantages for purposes of 101?

[00:05:59] Speaker 01:
Well, what 101 requires is that you have a specifically claimed method, and

[00:06:04] Speaker 01:
You have to compare the specifically claimed method to the abstract idea.

[00:06:08] Speaker 01:
What the Patent Office found was that the abstract idea was analyzing and collecting data in a performance-based advertising model.

[00:06:16] Speaker 01:
The patents discuss, and Google doesn't debate, nor did the Patent Office find differently, that in performance-based advertising, the price goes up as you have more viewers, or in the context of internet, more clicks.

[00:06:31] Speaker 01:
That is what their abstract idea was found to be, was based on performance-based pricing.

[00:06:37] Speaker 01:
It is an undisputed record that in performance-based advertising, the abstract idea, so called by the patent office, that as views go up, price goes up.

[00:06:47] Speaker 01:
As you click more, the price goes up.

[00:06:49] Speaker 01:
That's how it was.

[00:06:50] Speaker 01:
The unconventional thought was, and it had never been done before.

[00:06:54] Speaker 01:
Unconventional, and this is Google with all their resources, could not find that this has ever been done before.

[00:06:59] Speaker 01:
in any form of advertising.

[00:07:01] Speaker 02:
But what do you do with the idea, which I think we've articulated several times, I think maybe the brief's quote in particular, synopsis that never been done before abstract ideas are still abstract?

[00:07:17] Speaker 01:
And I think that's a great point.

[00:07:18] Speaker 01:
So the question is, what is meant by abstract?

[00:07:20] Speaker 01:
And that is, this Court has what I would say three buckets of abstract ideas that if I were looking at.

[00:07:26] Speaker 01:
And I know the jurisprudence, I've dealt with this issue a lot.

[00:07:29] Speaker 01:
One of them is, for example, Alice and Bilsky, where we have a conventional activity and it's performed with computers and just performing conventional activity on computers is abstract.

[00:07:40] Speaker 01:
You've got, for example, electric power grid, where we found that in the power grid arena where we collect data and we bring it in and we manipulate data and we display it, that that's an abstract idea.

[00:07:53] Speaker 01:
And we found then in the other class of cases,

[00:07:56] Speaker 01:
results-oriented claiming, where you have these, and software patents are akin to this, where you have like module one and input one, you have these vague, techie sounding claims, but at the end of the day, they don't mean anything, and you have a result that's claimed.

[00:08:12] Speaker 01:
And Judge Bryson, sitting by designation in loyalty conversion, I think is an excellent case, where he talks about patent claims that are dressed up in the argot of invention, but they claim only a result.

[00:08:23] Speaker 01:
This case doesn't fall into any of that.

[00:08:24] Speaker 01:
In this case, there is a specific method.

[00:08:27] Speaker 01:
where you take connecting clicks to bonus impressions based on viewers, third parties, that are out there looking at the ads, deciding what they like, they click it, it's recorded, and the bonuses are tied to that.

[00:08:40] Speaker 01:
If you look to, for example, and this is the danger of Atlas.

[00:08:44] Speaker 02:
How would you describe the difference between this case and Ultramershal in particular?

[00:08:48] Speaker 01:
Thank you for asking that question.

[00:08:50] Speaker 01:
Ultramershal, I think, is probably one of the most classic cases that shouldn't have survived.

[00:08:55] Speaker 01:
101.

[00:08:56] Speaker 01:
Why?

[00:08:57] Speaker 01:
What was Ultramershal?

[00:08:58] Speaker 01:
Ultramershal was a case in which in order to get free media content on the internet, you had to look at a paid advertisement.

[00:09:07] Speaker 01:
So the notion is you look at the ad, I'll give you the free stuff.

[00:09:11] Speaker 01:
That is how public TV has worked since the beginning of public TV.

[00:09:16] Speaker 01:
If I want to watch the Super Bowl, I have to watch the advertisements and then I get the free Super Bowl.

[00:09:22] Speaker 01:
If I want to watch Dateline NBC, I gotta watch the advertisements

[00:09:25] Speaker 01:
then I get my news or my Dateline, NBC, whatever I'm getting.

[00:09:30] Speaker 01:
That's conventional.

[00:09:32] Speaker 01:
And tying conventional activity to the internet is not patentable.

[00:09:36] Speaker 01:
And if you look at DDR, this case is right on top of DDR.

[00:09:40] Speaker 01:
In DDR, there was one advance.

[00:09:43] Speaker 01:
Internet users in DDR would be on, clicking around, looking.

[00:09:47] Speaker 01:
I get to a website.

[00:09:48] Speaker 01:
I'm at that website, and now I see an ad I like.

[00:09:51] Speaker 01:
Prior to DDR, if you clicked on the edit, it took you to another website.

[00:09:55] Speaker 01:
All that DDR did, only one thing, and this is patent law, incremental steps of improvement.

[00:10:00] Speaker 01:
All that DDR did was pull the content back to the website so you didn't leave.

[00:10:05] Speaker 01:
And that helped retain customers.

[00:10:07] Speaker 01:
Let's look at Bascom.

[00:10:09] Speaker 01:
In Bascom, there was no new firewall in Bascom.

[00:10:13] Speaker 01:
Bascom was simply taking existing firewall and putting it in a different location, remote, from the user.

[00:10:19] Speaker 01:
And because that one thing, one little thing, was moving the location of that server, it was patentable.

[00:10:25] Speaker 01:
And that's patent law.

[00:10:26] Speaker 02:
I mean, right now, in this country, we have- What physical thing have you moved here?

[00:10:32] Speaker 01:
The physical thing, it's business method.

[00:10:34] Speaker 01:
So that's why we're in the CBM.

[00:10:37] Speaker 01:
And I'll start by saying, in Alice, the court specifically says business methods are patentable.

[00:10:44] Speaker 01:
So the method here, what is the specific method here?

[00:10:47] Speaker 01:
And it's specifically claimed.

[00:10:49] Speaker 01:
And that's all patent law requires to not be abstract, is that it be specific, that it

[00:10:54] Speaker 01:
is tied down and confined so that it's more... I'm sorry, what did you say Alice said?

[00:11:00] Speaker 01:
It says specifically that business methods are patentable.

[00:11:04] Speaker 02:
Some things that might be called business methods can be patentable.

[00:11:08] Speaker 01:
Correct.

[00:11:09] Speaker 02:
That's what Bilsky said.

[00:11:10] Speaker 02:
That doesn't mean that adjusting the terms of sale can be one of those things.

[00:11:15] Speaker 01:
And that is how Google characterizes this and that is not this invention.

[00:11:18] Speaker 01:
This invention has nothing to do with a pricing model for advertising.

[00:11:23] Speaker 01:
The negotiation on pricing occurred before our patent.

[00:11:28] Speaker 01:
That same negotiation for pricing occurs after our patent.

[00:11:31] Speaker 01:
What the patent says, what the patent say is not how to negotiate the best price or any particular price.

[00:11:39] Speaker 01:
The invention here is specific.

[00:11:42] Speaker 01:
Connecting clicks to bonus impressions based on third party activity that's recorded, monitored, and then you give the bonus impressions.

[00:11:52] Speaker 01:
And it leads to the advantages of better ads.

[00:11:55] Speaker 02:
That's one of the patterns.

[00:11:56] Speaker 02:
And then the other one is some kind of price adjustment.

[00:12:00] Speaker 01:
The decrease in price.

[00:12:02] Speaker 01:
Is this my 10 minutes?

[00:12:04] Speaker 01:
I want to make clear that I'm.

[00:12:06] Speaker 03:
Well, if there's a thought you want to finish, we'll preserve your rebuttal time.

[00:12:09] Speaker 01:
No, that's it, Your Honor.

[00:12:10] Speaker 03:
Thank you.

[00:12:11] Speaker 03:
Thank you.

[00:12:20] Speaker 00:
Ms.

[00:12:20] Speaker 00:
Major.

[00:12:21] Speaker 00:
May it please the court

[00:12:23] Speaker 00:
I want to start with step two, because I think that is really the thrust of the argument from the other side.

[00:12:30] Speaker 00:
With respect to step two, I think the synopsis decision is directly on point.

[00:12:35] Speaker 00:
And that is because what you hear from the appellant and what you see throughout their brief, their arguments before the board, and at every step along the way, is the notion that they have an inventive concept because they claim that the pricing model

[00:12:52] Speaker 00:
that they have in their claims is novel.

[00:12:55] Speaker 00:
That isn't the test under step one or under step two.

[00:13:00] Speaker 00:
Synopsis says quite clearly that a claim for a new abstract idea is still an abstract idea, and that is precisely what we have here, even if you were to grant them their argument that this was in fact a novel pricing model.

[00:13:16] Speaker 00:
Ultimately, what ALICE step two requires

[00:13:18] Speaker 00:
is something more, something that will tie that abstract idea into something that is concrete in the claims.

[00:13:27] Speaker 00:
And here we don't have that.

[00:13:28] Speaker 00:
And the reason that we don't have that is what the claims provide is completely conventional computer hardware, computer, computer network.

[00:13:38] Speaker 00:
There's no dispute about that.

[00:13:40] Speaker 00:
Their own expert admitted, and this is at appendix page 2972,

[00:13:45] Speaker 00:
He agreed that the hardware that is described in the patent for implementing the inventions is generic computer hardware.

[00:13:54] Speaker 00:
He even said that the value of the invention here has nothing to do with the computer or the performance of the invention on the computer, but rather it is the type of algorithm that is discussed.

[00:14:04] Speaker 03:
You see, it's performed by computer.

[00:14:06] Speaker 03:
That's not a matter of dispute.

[00:14:08] Speaker 00:
Exactly.

[00:14:08] Speaker 03:
But that's not saying that any sequence of events, any method or system

[00:14:15] Speaker 03:
performed by computer is never patentable.

[00:14:18] Speaker 03:
We know that.

[00:14:20] Speaker 03:
So let's be specific to that which they say is their inventive step.

[00:14:26] Speaker 00:
Right.

[00:14:26] Speaker 00:
So on that point, Your Honor, there's nothing in the claim that's hardware that would be the inventive step.

[00:14:31] Speaker 00:
So then you have to look to this algorithm that they're claiming is the inventive step.

[00:14:35] Speaker 00:
And if you look at the algorithm that they're pointing to, their expert admits that each of the steps of the claim

[00:14:42] Speaker 00:
was routine and conventional.

[00:14:44] Speaker 00:
And this is an appendix.

[00:14:45] Speaker 00:
No.

[00:14:45] Speaker 03:
They say that each step can be performed routinely through computer-initiated algorithms.

[00:14:53] Speaker 03:
But we still need to concentrate on the specific step, not in the prior art, as seems to be the case.

[00:15:02] Speaker 03:
Perhaps the searches were inadequate.

[00:15:04] Speaker 03:
I don't know.

[00:15:05] Speaker 03:
But there were no 102, 103 issues.

[00:15:09] Speaker 03:
The only question was that of secondary considerations.

[00:15:12] Speaker 03:
which is a separate matter.

[00:15:14] Speaker 00:
Right, Your Honor.

[00:15:15] Speaker 00:
So I think there's a couple of things here.

[00:15:16] Speaker 00:
So first is there was no 102 or 103 challenge brought in this petition.

[00:15:21] Speaker 00:
That's not to say that there wouldn't be one.

[00:15:23] Speaker 00:
But in this petition, we're only dealing with 101 and then the 112 issue.

[00:15:27] Speaker 00:
With respect to 101, I think what you're pointing out is exactly what I'm getting at, which is their only articulation of this inventive step is the suggestion that no one before this time had thought of giving bonus impressions

[00:15:42] Speaker 00:
in response to user action.

[00:15:44] Speaker 00:
And they're saying that's the thing that's novel and new about our invention.

[00:15:48] Speaker 00:
That is itself an abstract idea.

[00:15:50] Speaker 00:
That is not something that actually ties the claim down.

[00:15:54] Speaker 00:
What this court's precedent has found to satisfy ALICE step two is something that changes either the hardware or the algorithm in a way that is specific and technological.

[00:16:06] Speaker 00:
As Synopsis said, you can't simply say, well, on Alice step two, I have a new idea.

[00:16:11] Speaker 00:
And yes, that idea might be abstract, but it's new.

[00:16:13] Speaker 00:
Therefore, I have an inventive step.

[00:16:16] Speaker 03:
They have a whole sequence of events, of steps, implementing the concept.

[00:16:22] Speaker 00:
Certainly, Your Honor, but that's no different than an ultramercial or in by-safe or in any of the many cases where this court has found that there is an abstract idea and there is an insufficient inventive step.

[00:16:32] Speaker 00:
Because all that you are doing in the claim

[00:16:35] Speaker 00:
is implementing that abstract idea using conventional and routine hardware and conventional, in this case, conventional and routine implementation of the hardware application.

[00:16:45] Speaker 03:
You're overstating, I think, where precedent takes us.

[00:16:49] Speaker 03:
We know that there are lines being drawn, difficult lines to draw, there's a good deal of attention being given to that.

[00:16:57] Speaker 03:
But here we have a whole sequence of steps for an idea which

[00:17:04] Speaker 03:
we're conceding is a novel concept because there was no citation to show otherwise.

[00:17:12] Speaker 03:
So why aren't the sequence of steps that implement a novel concept, why don't they include an inventive step?

[00:17:23] Speaker 00:
Because, Your Honor, all that they are doing is implementing the abstract idea.

[00:17:27] Speaker 00:
So I would agree with you that

[00:17:31] Speaker 00:
What you're dealing with here is an argument from the other side or the contention from the other side that the inventive step that is being provided is the novel idea of giving bonus impressions in response to user action for the 195 patent or for the 059 patent, the idea of reducing the price for the advertisements based on the action by the user.

[00:17:52] Speaker 00:
In both cases, all that we are doing is implementing that abstract idea.

[00:17:57] Speaker 00:
And if you look at the claims themselves,

[00:18:00] Speaker 00:
The claims aren't providing any more detail or technological solution of how to do that than you would find in the claims in Ultramershal, for example.

[00:18:11] Speaker 00:
In Ultramershal, there were numerous steps that were being implemented to achieve the process of previewing an advertisement in order to pay for the copyrighted material.

[00:18:23] Speaker 00:
In the same way, what these claims do is they say, look, define a contract between the buyer and the seller

[00:18:30] Speaker 00:
So I'm looking at the 195 patent at page 109 of the appendix.

[00:18:35] Speaker 00:
Define a contract where they set a price for the advertisement, provide the number of impressions, automatically record the number of times that there's a view of that impression, and then give bonus impressions based on that.

[00:18:49] Speaker 00:
The specification itself acknowledges that there's nothing inherently technological about that.

[00:18:55] Speaker 00:
In fact, what it says is,

[00:18:57] Speaker 00:
You could do this in the context of a billboard, or a print media, or a radio ad, or a television ad, and record the user action based on, for example, phone calls into a particular number.

[00:19:09] Speaker 00:
There's nothing technological about this.

[00:19:11] Speaker 00:
Ultimately, with this... The law does not require that an inventive step be technological.

[00:19:17] Speaker 00:
It requires that it be inventive.

[00:19:19] Speaker 00:
It requires that it be inventive, but inventiveness is about tying down the abstract idea

[00:19:25] Speaker 00:
not simply that the claim is novel, because otherwise the 101 inquiry would just reduce into a 102 or 103 inquiry.

[00:19:33] Speaker 00:
Remember, of course, claim step two of Alice is about the modification to step one, or is about the implementation of the invention to remove it from the ambit of the abstract idea that's unpatentable.

[00:19:46] Speaker 00:
It can't simply be, oh, we have an abstract idea, but it's novel, therefore patentable, because all then you have

[00:19:52] Speaker 00:
is a 102 analysis or a 103 analysis.

[00:19:55] Speaker 00:
The inventive step has to be something that takes the abstract idea and actually tethers that to something concrete and tangible so it is no longer an abstract idea.

[00:20:06] Speaker 00:
Otherwise, all you have is the 102 or 103 inquiry.

[00:20:10] Speaker 03:
So we have the sequence of events where we have the predetermined number of impressions.

[00:20:15] Speaker 03:
I'm looking at claim one.

[00:20:17] Speaker 03:
Correct.

[00:20:17] Speaker 03:
The automatic recording, the other automatic determining.

[00:20:22] Speaker 03:
These are all steps.

[00:20:23] Speaker 03:
We agree they're conducted by computer.

[00:20:25] Speaker 03:
But they, whether they're conducted by computer or some other way doesn't really affect the inspection to determine whether there is an inventive step.

[00:20:38] Speaker 03:
And we get the automatic determination all performed and they describe in their specification.

[00:20:46] Speaker 03:
straightforward algorithms to conduct each of these steps but they say the sequence is new and the steps are not shown in the prior art and therefore by any analysis of patentability are new and conceivably patentable.

[00:21:07] Speaker 00:
So I would differ with you on one point within that which is

[00:21:12] Speaker 00:
that the steps are not themselves new.

[00:21:15] Speaker 00:
So I think what their experts said is you could take each of the types of actions that is claimed in this, for example, presenting impressions, for example, counting user feedback.

[00:21:25] Speaker 00:
All of that was known.

[00:21:27] Speaker 00:
What they're saying is new is the idea that if you record a certain number of clicks or certain number of actions, you provide bonus impressions.

[00:21:36] Speaker 00:
All that they are arguing is new is a particular contract

[00:21:40] Speaker 00:
for pricing advertising.

[00:21:42] Speaker 00:
So in the 195 patent, that contract is if I give you a certain number of impressions and you get a certain number of user actions back, I'll give you more impressions.

[00:21:54] Speaker 00:
That's the terms of a contract.

[00:21:55] Speaker 00:
In the same way for the 059 patent, all that they're arguing is new.

[00:22:00] Speaker 00:
They're not arguing there's any new hardware, any change whatsoever to the way in which you serve ads.

[00:22:05] Speaker 00:
or even any step in ad serving that is new or different than what was done before.

[00:22:10] Speaker 00:
It is only the terms of the contract, and in the 059, that is, I'm going to agree to give you a certain number of impressions for a certain price.

[00:22:18] Speaker 02:
Is there a dispute about whether collecting clicks is new?

[00:22:24] Speaker 00:
I don't believe there's a dispute about that, Your Honor.

[00:22:26] Speaker 00:
So their expert acknowledged, and I think he would have to,

[00:22:30] Speaker 00:
that that can't be new.

[00:22:31] Speaker 00:
And the reason for that is if you look at, for example, the billboard example in the patent, it acknowledges that you could put a phone number on a billboard and call that number and then record the number of people that call.

[00:22:43] Speaker 00:
In the same way on the internet, recording interaction with an advertisement isn't something new and there was no suggestion from them that that itself is new.

[00:22:52] Speaker 00:
It's only the idea, the abstract idea of changing the pricing model for the advertisement

[00:22:59] Speaker 00:
based on that into one of these two particular flavors of pricing model that is alleged to be new.

[00:23:05] Speaker 00:
And that is simply the definition of the contract between buyer and seller for purposes of creating a contractual advertising relationship, which is precisely the kind of thing that's abstract in Ultramershal, in OIP, in BuySafe, in Versata.

[00:23:23] Speaker 00:
There are all of these cases that found

[00:23:26] Speaker 00:
That all you're doing is taking this abstract idea and defining the interaction between two parties with respect to pricing or with respect to advertising.

[00:23:36] Speaker 00:
Those are abstract ideas and saying implement them on a computer using these steps isn't enough.

[00:23:43] Speaker 00:
I mean, if we look at the process and the claim in Ultramershal, it does exactly what your honor was just pointing out.

[00:23:50] Speaker 00:
It says, here's an idea of how to structure

[00:23:53] Speaker 00:
the relationship for purposes of providing advertising before you see copyrighted material.

[00:23:58] Speaker 00:
And here are the steps of the process that we're going to follow.

[00:24:01] Speaker 00:
That's no different than the claims of the 159 and the 095.

[00:24:05] Speaker 00:
They define the contractual relationship.

[00:24:08] Speaker 00:
They implement it on conventional hardware using conventional known steps on that hardware.

[00:24:15] Speaker 00:
And the only thing that is even alleged to be different

[00:24:18] Speaker 00:
is the structure of the contract between the buyer and the seller.

[00:24:24] Speaker 00:
And that cannot be enough to take what is otherwise an abstract idea and render it sufficient under step two.

[00:24:32] Speaker 00:
Because if that were enough, then Ultramershal, OIP, BuySafe, all of those cases would have been decided differently.

[00:24:40] Speaker 00:
And what it would ultimately do is say, well, all you're doing ultimately on step two of ALICE is a 102 inquiry, and it would collapse the 101 and 102 inquiries into the same thing.

[00:24:50] Speaker 00:
That's not what step two requires.

[00:24:53] Speaker 03:
Did your petition include sections 102 and 103?

[00:24:57] Speaker 00:
It did not, Your Honor.

[00:24:58] Speaker 00:
So on the CBM, we filed on 101 and 112 for the 059 and 101 for the 195.

[00:25:08] Speaker 00:
That's not to say that in a district court action, for example, if we hadn't filed the CBMs or if they'd gone differently, there wouldn't be 102 or 103 art.

[00:25:18] Speaker 00:
But the question that was presented on the 101s, because it was a very focused and very specific question, was are these patent eligible?

[00:25:26] Speaker 00:
And we made the showing.

[00:25:27] Speaker 00:
And the board did a detailed analysis of why applying this court's precedence, these are not patent eligible.

[00:25:34] Speaker 00:
So that was the decision that was made, was to focus on patent eligibility.

[00:25:38] Speaker 00:
And on the 059, the 112 issue, because the claims are such a mismatch from the specification.

[00:25:45] Speaker 00:
So that was the issue.

[00:25:47] Speaker 03:
Yes, the board mentioned 112, which is something that we rarely see in these cases.

[00:25:54] Speaker 00:
Yes, Your Honor.

[00:25:54] Speaker 00:
So the board on the 059 found, in addition to finding all of the claims not patent eligible, it found on the 059

[00:26:03] Speaker 00:
the challenge claims were also found invalid under section 112.

[00:26:09] Speaker 00:
And the reason for that was, and again, there's no question here with respect to what the legal standards are.

[00:26:14] Speaker 00:
There's no legal challenge.

[00:26:15] Speaker 02:
And this is just as to the 059.

[00:26:17] Speaker 00:
This is just as the 059.

[00:26:19] Speaker 00:
And your honors wouldn't need to reach this, of course, if you affirm the patent eligibility decision.

[00:26:24] Speaker 00:
But on just the 059 patent with respect to 112, the question that was presented was,

[00:26:30] Speaker 00:
Can you have claims that claim a process or a method that is directly in conflict with the purported invention that's described in your specification and, in fact, capture the very thing that your specification is criticizing as the problem that you were trying to solve?

[00:26:49] Speaker 00:
And there's no question under this court's precedent in By Meda and in Bamberg

[00:26:53] Speaker 00:
that that poses a fundamental 112 problem.

[00:26:56] Speaker 02:
And you don't think that that 112 ground is undermined by, let's just call it an assumed fact, that this method of pricing turns out to make the advertiser-seller, Google here, a ton of money?

[00:27:15] Speaker 00:
No, Your Honor.

[00:27:16] Speaker 00:
I don't think it's undermined by that.

[00:27:17] Speaker 00:
And the reason for that is there, so first of all.

[00:27:20] Speaker 02:
So that systemically, this actually

[00:27:23] Speaker 02:
kind of guarantees you a whole lot more money than you were getting from the earlier one.

[00:27:29] Speaker 00:
I'm almost out of time or maybe just over time.

[00:27:32] Speaker 00:
May I respond to that, Your Honor?

[00:27:33] Speaker 00:
So, Your Honor, I don't think it makes a difference.

[00:27:36] Speaker 00:
First of all, the question assumes the premise that Google practices the patent that has not been shown that is not in the record.

[00:27:43] Speaker 00:
And I think second of all, there are lots of different ways to implement advertising structure, as many different ways as you can create contracts to do it.

[00:27:51] Speaker 00:
That's precisely the 101 problem.

[00:27:53] Speaker 00:
with respect to 112, this patent purports to claim a very specific model.

[00:27:59] Speaker 00:
And these claims are very specific in requiring that when you actually set the price, you reduce the price over time based on action from the user.

[00:28:10] Speaker 00:
The specification directly and repeatedly criticizes that and says that's precisely the kind of model that it wants to overcome because it doesn't give the seller

[00:28:20] Speaker 00:
guaranteed revenue.

[00:28:21] Speaker 00:
So for this issue, one simply doesn't look outside the four corners of the document?

[00:28:26] Speaker 00:
For this issue, I don't think you need to look outside the four corners of the document and the experts who talk about this.

[00:28:32] Speaker 00:
And there was a credibility judgment on the experts by the board on that very issue.

[00:28:36] Speaker 03:
Anymore questions?

[00:28:38] Speaker 03:
OK.

[00:28:38] Speaker 03:
Thank you.

[00:28:38] Speaker 03:
Thank you, Your Honors.

[00:28:44] Speaker 03:
OK.

[00:28:45] Speaker 03:
Ms.

[00:28:45] Speaker 03:
DeTelschik.

[00:28:46] Speaker 01:
So the one thing I noticed in the argument is when they're talking about 112, our patent's specific.

[00:28:51] Speaker 01:
And when we're talking about 101, it's not specific.

[00:28:54] Speaker 01:
What we have before us is, and you've picked up on your question, Your Honor, I mean, this was a real invention.

[00:29:00] Speaker 01:
Money was paid by a real company that still has a business based around this patent.

[00:29:05] Speaker 01:
They paid for the patents.

[00:29:06] Speaker 01:
It passes 102.

[00:29:07] Speaker 01:
It passes 103.

[00:29:09] Speaker 01:
Google's using this invention, or at least we claim.

[00:29:12] Speaker 01:
And that's a real invention that's just going by on a test.

[00:29:16] Speaker 01:
The panel never applied the test in step two.

[00:29:19] Speaker 01:
And if we're going to say patents are going down, then they at least deserve the dignity of comparing the abstract idea to the specifics of the claim.

[00:29:28] Speaker 01:
And this is a specific method.

[00:29:31] Speaker 01:
They keep calling it a pricing model or adjusting a contract.

[00:29:34] Speaker 01:
It is a method by which clicks by users are connected to bonus impressions or decreased price based upon third party users looking at ads on the internet.

[00:29:46] Speaker 01:
It's never been done before.

[00:29:47] Speaker 01:
It's a specific method.

[00:29:49] Speaker 01:
If patent law stands for anything, it's that incremental improvements that are specifically claimed is all the patent law requires.

[00:29:56] Speaker 01:
And we find ourselves in a crisis.

[00:29:59] Speaker 01:
On IP Law 360 and IP Watchdog, you can't help but read.

[00:30:03] Speaker 01:
And Alice is ruining the patent system on software patents, business methods.

[00:30:07] Speaker 01:
And if you look at Alice, the seminal decision, the court says,

[00:30:12] Speaker 01:
We can't let the exception be the rule.

[00:30:14] Speaker 01:
And we've now gotten to a point where arguments, like I heard the argument, it's not technological.

[00:30:19] Speaker 01:
You were correct to say it doesn't have to be technological.

[00:30:22] Speaker 01:
Bilsky specifically says it doesn't have to be technological.

[00:30:25] Speaker 01:
The Patent Act talks about processes.

[00:30:28] Speaker 01:
The Patent Act doesn't say technological.

[00:30:30] Speaker 01:
Business methods are patentable.

[00:30:32] Speaker 01:
State Street Bank says so.

[00:30:35] Speaker 01:
Alice says so.

[00:30:36] Speaker 01:
This is a specific business method.

[00:30:38] Speaker 01:
It's as specific as DDR.

[00:30:40] Speaker 01:
As I said, DER was one little incremental step.

[00:30:43] Speaker 01:
Instead of taking somebody away, we bring the content to us.

[00:30:46] Speaker 01:
Bascom, no new firewall, nothing different.

[00:30:49] Speaker 01:
What was different?

[00:30:50] Speaker 01:
One thing in Bascom that the location of the firewall would be in a remote location.

[00:30:55] Speaker 01:
That's it.

[00:30:56] Speaker 01:
And as long as that incremental step was claimed, if we looked at Amdocs, what was different in Amdocs?

[00:31:01] Speaker 01:
Amdocs, one little thing.

[00:31:02] Speaker 01:
Amdocs used to have a central server where you would process and store data.

[00:31:07] Speaker 01:
Amdocs' idea was process the data closer to the source.

[00:31:10] Speaker 01:
that prevents congestion.

[00:31:12] Speaker 01:
One difference, that's all it took in Amdocs.

[00:31:16] Speaker 01:
MCRO, there's no new computers or anything in MCRO.

[00:31:19] Speaker 01:
This is all software running on a computer.

[00:31:21] Speaker 01:
MCRO rules with phenoms and morphs to automate lip syncing.

[00:31:27] Speaker 01:
Rules running on a computer, specific, that was enough.

[00:31:30] Speaker 01:
In this case, we have a specific rule.

[00:31:33] Speaker 01:
This is not about adjusting contracts or making contracts or setting price or any such thing.

[00:31:39] Speaker 01:
They mentioned Versata.

[00:31:40] Speaker 01:
Versata was a setting the price case.

[00:31:42] Speaker 01:
It was grouping customers and products in a way that you could determine a price.

[00:31:46] Speaker 01:
That's what people have been doing forever.

[00:31:48] Speaker 01:
The Versata case turned on the notion of if you automate that with computers, is that patentable?

[00:31:53] Speaker 01:
Alice says no.

[00:31:54] Speaker 01:
Bilsky says no.

[00:31:55] Speaker 01:
We all know that's rote law at this point.

[00:31:57] Speaker 01:
Four years after Alice, we know that if you have a conventional activity and you automate it with the computer, that's not patentable.

[00:32:03] Speaker 01:
But we have to be remiss in turning Alice into a rule

[00:32:09] Speaker 01:
That is, now abstract idea is not the exception for software and business methods.

[00:32:13] Speaker 01:
It's the rule.

[00:32:15] Speaker 01:
And we've fallen this past, I call it like the finger to the wind test.

[00:32:18] Speaker 01:
It doesn't feel like it's something that should be patentable.

[00:32:21] Speaker 01:
That's exactly what went wrong here.

[00:32:22] Speaker 01:
Google sold the panel on the fact that it wasn't technological.

[00:32:26] Speaker 01:
Don't take my word for it.

[00:32:27] Speaker 01:
Look at pages 24, 30, and 33 of this opinion, where the patent office said several times, this is not technological.

[00:32:34] Speaker 01:
If that's the rule in CBMs, you may as well not even have a CBM proceeding.

[00:32:38] Speaker 01:
The litmus test for getting CBM is that you're not technological.

[00:32:41] Speaker 01:
And all of a sudden, there's a default that if I'm not technological, I don't get a patent.

[00:32:45] Speaker 01:
This is specifically claimed.

[00:32:47] Speaker 01:
Connecting clicks, two bonus impressions based on third party activity that's recorded on servers and bonus impressions are produced.

[00:32:55] Speaker 01:
It was a wonderful invention with wonderful advantages.

[00:32:57] Speaker 01:
And as to written description, I'll just briefly comment on that.

[00:33:00] Speaker 01:
That was completely wrong.

[00:33:01] Speaker 01:
The patent never says that you can't use this method.

[00:33:04] Speaker 01:
with performance-based advertising.

[00:33:06] Speaker 01:
It says in column one, line 60 to 65, you want a reasonable balance between performance and fixed fee contracts.

[00:33:13] Speaker 01:
This invention will help you improve your balance.

[00:33:16] Speaker 01:
It never once says that you can't use this invention with a performance-based contract.

[00:33:21] Speaker 01:
It obviously works that way as well.

[00:33:23] Speaker 01:
The written description portion of this decision is incorrect.

[00:33:28] Speaker 01:
Nothing further unless you have more questions for me.

[00:33:31] Speaker 01:
Thank you, Your Honors.

[00:33:31] Speaker 03:
Thank you both.

[00:33:32] Speaker 03:
The case is taken under submission.