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This morning's number 18-1428 Power Analytics Corporation versus Operation Technology.

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Thank you.

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OK, Mr. Ruyak.

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May I please the court?

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My name is Robert Ruyak.

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I'm representing Higher Analytics Corporation.

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We're here on appeal because the lower court, the district court,

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committed error in finding that all of the patent claims of the three patents asserted in the district court were invalid as containing an eligible patent matter on one.

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There are three major reasons why the court erred.

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First is that the court viewed the patent eligible matter at an abstract level that was beyond what the courts require.

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Here's something that

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Maybe you can help me with that.

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You say that the, I'm quoting the Blue Bridge, the asserted claims disclose a scalable hardware architecture.

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Where in the asserted claims is scalability described?

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Well, it's described in the claims by saying, in patent jargon, in patent prosecution, A means one or more.

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And in the specification in particular... Give us a site while you...

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scalable is, Your Honor, if you look at appendix 53, page 53, and you look at the figure there, 4, this is an example of a system in figure

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Right.

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And it shows that it is, in fact, scalable and Appendix 78, Column 10, 36-52, it discusses the scalability of the system.

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Column 10.

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Column 10, lines 36-72 and 11, Column 11, line 53, it talks about the scalability of the system.

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Okay.

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Thank you.

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The claim, though, just says A data acquisition component communicatively connected to A sensor configured to acquire real-time data input.

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Is that right?

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Yes, Your Honor.

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In terms of drafting, of course, A means one or more.

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But there's nothing new about the data that's being collected here, right?

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Yes, there is, Your Honor.

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I think there is in the sense that it is only one element of the claim.

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The data collection is only one element of the claim.

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Wait, wait.

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That's not an answer to my question.

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Is there anything new here about the data that's being collected?

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Anything about the data being collected, yes.

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If you talk about how it's being collected by a sensor, no.

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But the data being collected and how, yes, because it's collecting data in real time.

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In other words, up-to-date data only from certain select locations in the system.

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We mean select what's different about the locations.

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Because under the old methodology, the old technology as described in the specification, you'd have to monitor every single of hundreds or maybe thousands of components of the system in order to understand how those components are changing over time.

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Where does this specification tell us that there's new data being collected?

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The specification, new data?

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Very clearly, it talks about new data being collected.

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No, the data being collected is data that is typical of the electrical system.

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I'm sorry, I want to make the distinction between the type of data and how it's being collected.

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The type of data, things like voltage amps.

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Well, it's being collected by sensors, which is old art, right?

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Yes.

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Sensors are old art.

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The types of material being collected are old art.

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The significance of the inventive

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Part of this invention is that instead of having to monitor all of the components of a system, you can selectively put sensors at particular locations so that you can measure those using the other components, the model, the virtual system model, which is a static model developed when the system's created, by then comparing the data coming into that system.

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So you use fewer sensors than the prior are?

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Yes, because now you're just selectively doing it.

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Where does it say that?

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It's in the specification.

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If you read in the specification, the pages, it starts with column one, line 45, and goes all the way through column two, line 55.

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It describes in great detail how the old systems were operated.

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The only alternative would be to- No, but just show me where it says that it's

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has fewer sensors than the old system.

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I would have to go with the specification because there's a lot of enablement, your honor.

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Well, if you can't show it to me, I've got to assume that it's not there.

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In paragraph 94, it's a very complete specification.

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In 94.

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What page?

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This would be appendix 94.

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Appendix 94.

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Yeah, okay.

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Lines 42, 18 through 41.

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42, 18, that's the claims.

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I'm sorry.

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I'm sorry, I can't.

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Because there's so many parts of this, I'm sorry I can't answer that question.

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But the point of the invention, the innovation of the invention, is that instead of having to either do a complete manual simulation of an aging system over time with changes and degradation, or having to put sensors on every single component, either load or supply,

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or protective things like switches and breakers by strategically locating in subsystems a sensor and creating data that you can then create a model of the entire system.

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You can update the entire system.

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I can't recall.

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Is this what you argued in your briefing in below?

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What the inventors invented was this more elegant solution of detecting all this information by using a much smaller number of sensors strategically positioned throughout the grid system?

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We talked about strategically.

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We didn't say sure or small, but we said strategically putting sensors in the system, because that's what the patents describe through the specifications.

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I guess I'm saying I just don't remember the specific argument that what this invention represents is a significant reduction in the number of sensors that need to be used in order to accurately assess the health of a power grid.

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Well, what we said was selectively rather than putting sensors on everything.

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I don't think we actually said

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using fewer or using less, but the whole patent is based on the idea that you have a system model that is based on the original design of the system.

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It's going to have manufacturer specifications.

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Where does it say that you're putting sensors in different places?

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It's throughout the specification.

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I guess for most immediate needs, where is it in the claim?

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Claim one of the 608.

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I know there are many claims, but Well because because it says the data acquisition component Connected to a sensor configured require real-time data put from the electrical system.

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It could be one it could be more But but I think your honor what we need to get to here is is what is the novelty of this system?

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whether you have five systems or 10 sensors or what it is.

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You're really making a step two argument, aren't you?

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No, I think first I'm making a step one.

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Well, yes, it's step one and step two.

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Step two argument would be that this is an inventive concept that solves a problem in the industry.

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In real time.

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Really, in real time.

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But step one is also, there's an inherent problem here with a little port in the level of abstraction.

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The court used terms like reflecting, reacting to predictive deviation as what the patents directed to.

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That's not true.

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If that were the case, then deer would be involved under 101.

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Because deer was reacting to predictive deviations and using an algorithm for rubber making.

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The court says, the defendants say data manipulation and the solution to a data problem.

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If they have the case, then deer would be invalid.

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What we have here, what is this directed to?

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It's in columns one and two of the claims.

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It's directed to the monitoring of a complex power system by creating up-to-date, real-time equivalent information on the current operating parameters of a system to identify and predict

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operating failures and contingency events of the entire system.

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Isn't that what electric power group was?

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No.

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That invention or the gist of that invention?

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I don't believe it was, Your Honor, because electric power group, first of all, there were no tools or systems described.

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Isn't your distinction really that you can do it in real time now?

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More than that, Your Honor, because you can do it in real time.

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But in addition to that, there are the features of this patent

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The virtual model.

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There was no virtual model in electric power.

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There was no analytics engine that made comparisons between the static data that the engineers developed at the time and the new data that was coming in from these sensors.

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There was no threshold.

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And the threshold basically is saying, look, variations are OK, but if you go beyond the variation, there could be a problem.

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The electricity coming into your house always fluctuates between 108, 114, but it's 110 is what you expect.

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But if it goes to 120, that's a problem.

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So thresholds can be built in, both using, in the specifications we talked about, I gave you all the sites, but it talks about, in 93, 39, 54 to 40, 13, it talks about how you create these thresholds.

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So that when you're getting this data coming in, you're looking at many, many thresholds.

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Voltage, wattage, amperage, draw and load.

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But if you put a sensor in, you can determine in a subsystem what's going on in that subsystem.

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Why was this done?

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Because the FAA wanted it.

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This invention is now operating in all eight FAA centers across the country.

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Why?

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Because before 2011, systems were going down.

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Air traffic control systems were going down.

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radar systems were going down, and you remember and I remember what that did to the air traffic system.

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Since 2011, once in Chicago, there was a fire in a data center.

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I guess just getting back to electric power group.

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Yes.

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I mean, again, that was a power grid like your power grid.

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It was collecting information about the status of the power grid, which is also what you're doing here.

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It was analyzing that data and then displaying

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measurements from the different collected data.

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It was displaying results of the analysis of that data, and then it was also displaying something called a composite indicator of reliability that is an indicator of power grid vulnerability, which sounds like, again, it's displaying, after analyzing the data, it's displaying some information about

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predicting what are the potential problems with the power grid.

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And so that, in its own way, sounds like it's creating and visualizing for the user some type of system model, predictive system model.

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It sounds like it, but that's why it's abstract.

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There's no meat on the bones in electric power.

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Electric power was properly decided.

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So where's the meat on the bones here?

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The meat on the bones is in the client's arm.

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Wait, wait, wait.

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Where's the meat on the bones here?

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As I read the specification and the patent, it's just using a description of functionality.

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It's not telling you how this would be done.

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But Your Honor, in fact, it is in the claims.

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Electric power was simply a broad abstract statement of what could be done.

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As a matter of fact, if this court had not done away with electric, it would have absorbed our patent, because it was so broad.

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Our patent is not preemptive.

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It is not preemptive because of the specific claims.

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It's talking about specific sensors with electricity going into a server.

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And the individual components limit, not preempt the world, but limit it.

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You have to have a virtual system modeling engine.

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That is a software program that models the original concept of this electric power system and tells you what it should be doing based on manufacturer specifications.

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But systems age over time.

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They degrade.

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And then problems occur, like arc flash and failures.

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You have an analytics engine configured to monitor both the real-time data coming in and comparing it to what's in the virtual model.

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OK.

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When that happens.

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Mr. Rueck, you're out of time.

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We'll give you two minutes for rebuttal.

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Mr. Vandenberg?

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May it please the Court?

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Two points in response to the argument by Council.

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One is that... Mr. Vandenberg, I want to ask a question.

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The specification of 608 says, design and production processes have benefited greatly from ellipsis computer simulations techniques, and such techniques are relatively well developed.

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But they have not been applied in real time, e.g.

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for real time operational monitoring and management.

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Doesn't this contend that the elements of the asserted claims do not recite matters well understood routine or conventional to a personal skill?

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No, Your Honor.

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We submit that what it is contending is that the abstract idea itself, the concept

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of updating the prediction model when there's a sufficient deviation from real world, it's submitting that that's innovative and that's useful.

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And for purposes of this case, we can concede that.

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And I think the key I would invite to court's attention, if I may.

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Do you concede the real time element of that?

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That is part to update in response to prediction deviations.

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That is, as part of, you know, based on real-time data, yes, that was also done, that was done in electric power.

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I invite the Court's attention, time permitting, to the electric power claims.

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But the focus of the invention here we know from the power analytics, and it's very unlike what we've heard today.

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And that, I think, the specification, if I could invite the Court's attention to Appendix 1685,

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So Appendix 1685 is what Power Analytics told the district court was the focus of their invention.

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And at 1685, at line 19, this is the first page of their opposition to our motion for summary judgment.

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So again, 1685, line 19, quote, in the asserted patents, the collection of real-time data is a relatively minor, but necessary, element of the inventions.

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that focus on the use of that data to calibrate and or synchronize the model of the virtual electrical system and use the new values to generate new calculations for the virtual system model.

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That is a data solution to a data problem.

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The data problem there was that prediction models, they called it virtual system model, same thing, got out of date.

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was to update the model when the deviation from the real world exceeded a certain threshold.

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The power analytics in this brief, in their opposition, was fairly consistent that that was the focus, which is step one.

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So turn three pages to 1688, where the power analytics describe the limitations of prior art and how the asserted claims overcame these many disadvantages

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through employment of the power analytics server.

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And they explained that the patents in suit solved problems and provided system operations with functionality that did not exist previously.

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And three, stated that prior to the inventions recited in the patents in suit, that is the virtual system model and its employment to assess electrical system status prior

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quote, did not incorporate real-time data and their accuracy was compromised as a result.

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Doesn't that convey the contention that the elements of the asserted claims don't recite matters which are well-understood routine or conventional to a person of skill?

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Yes, Your Honor, but only with respect to what the District Court correctly found as being the abstract idea.

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On the page that Your Honor cites on 1688 at the bottom,

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we see at line 23 to 24, when the differences between the electrical system's current status and the virtual system model's calculated outputs exceed a threshold, the inventions initiate a calibration and synchronization operation.

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So that is saying the same thing that I quoted earlier, the same thing the trial court said.

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We're saying step one.

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I'm saying step two.

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Correct.

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But what I'm saying is that both in the patents and in their opposition, they

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said what they said was inventive was the subject matter of step one.

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They did not, as a matter of law, distinguish step one and step two.

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They conflated it.

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And for an inventive concept in step two, they went back to the abstract idea.

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They said no one before has updated the prediction model when there was a deviation of threshold.

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And that, of course, is irrelevant under the law.

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What they don't do is to say, come up with any unusual or new way of doing that.

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They don't prescribe how to do it other than to use these generic devices.

[00:22:01] Speaker 01:
That's correct, Your Honor.

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And if I may invite the Court's attention to volume one of the appendix, which is the specification.

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And I would start at appendix 77.

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So appendix 77 is column 8 of the 608 patents.

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And at column 8, line 21 to 24, quote,

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a variety of conventional virtual model applications can be used for creating a virtual system model.

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So the patent specification admits there, the invention is not having a virtual system model or software for creating a model, et cetera.

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Then at appendix 80, this is specification, column 13, line 39, they admit the sensors are conventional.

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The monitored system can be any combination of components whose operations can be monitored with conventional sensors.

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So there is no new data here.

[00:23:02] Speaker 01:
They are not, the patent doesn't say we come up with some new sensor to detect some new electrical property of the system.

[00:23:09] Speaker 01:
The data is old.

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The sensors are old.

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The data acquisition hub is old.

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Servers were old.

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The client terminal was old.

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The displays were old.

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All of the equipment was old.

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Nor does the specification suggest, unlike BASCOM, cases like that with distributed argument.

[00:23:25] Speaker 02:
Could it be done in real time before this?

[00:23:28] Speaker 01:
Yes, Your Honor, and one evidence we have of that is electrical power system claims refer to real time data collection being collected, refers to prediction data, refers to updating the composite indicator that Judge Chan referenced earlier.

[00:23:44] Speaker 01:
And I'll point to that in a moment if I may just finish with the

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the patent in suit, the 608, inviting court's attention to Appendix 94.

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Appendix 94, column 41, at line 33, they're admitting that essentially this can be done with any type of computer system.

[00:24:05] Speaker 01:
So line 33, quote, the embodiments described herein can be practiced with other computer system configurations, including handheld devices, dot, dot, dot, mainframe computers, and the like.

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The embodiments can also be practiced in distributing computing environments where tasks are performed by remote processing devices that are linked through a network.

[00:24:30] Speaker 01:
But the claims don't require that.

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That's simply an embodiment.

[00:24:34] Speaker 01:
So they're saying any computers, any arrangement of computers.

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And then finally, on this point, at column 41, same column, appendix 94, lines 58 to 59.

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quote, in particular, various general purpose machines may be used.

[00:24:54] Speaker 01:
So very consistent in the specification.

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All of the hardware, all the combination of hardware is no.

[00:25:01] Speaker 01:
And then if I can compare that to electric power at appendix 945.

[00:25:06] Speaker 01:
Yeah.

[00:25:07] Speaker 02:
Because look, I think the only issue you have is step two and whether a person of skill would say,

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what they assert is the real-time nature is new.

[00:25:22] Speaker 02:
And that might be a question of fact to try.

[00:25:27] Speaker 02:
So show me why it isn't.

[00:25:29] Speaker 01:
Well, two reasons.

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One is procedural.

[00:25:31] Speaker 01:
So we move for summary judgment, and per the local rules, we said there is no material dispute as to any genuine dispute as to any material fact.

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In the local rules, they needed to come back and say otherwise.

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They needed to identify material facts that were generally disputed.

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That's important.

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They cited none.

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They cited none.

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In their opposition brief, they pointed to no material fact that was genuinely disputed.

[00:26:02] Speaker 01:
In the argument, same.

[00:26:04] Speaker 01:
Now on appeal, they said, well, we couldn't have because Berkheimer came out later as we've briefed.

[00:26:09] Speaker 01:
Well, I'm not sure we briefed because that was the gray brief.

[00:26:11] Speaker 01:
They said that.

[00:26:12] Speaker 01:
uh... burkheimer cites mortgage grader mortgage grader was in twenty sixteen before our motion mortgage grader cites a censure in twenty thirteen both mortgage grader and a censure were summary judgment cases both said that step two can raise questions of fact power analytics if they thought there was a fact question could have and should have and the trial court was entitled to rely on their failure and i don't think that's new law right and and

[00:26:40] Speaker 01:
And Judge Kronstadt was certainly entitled to rely on the local rules.

[00:26:44] Speaker 01:
And in his opinion, he said the facts were not disputed.

[00:26:48] Speaker 01:
What's your second point?

[00:26:49] Speaker 01:
Second point is, substantively, the real time aspect could arise from two things.

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One, you have some better hardware that is now able to do real time, which they don't.

[00:27:02] Speaker 01:
They admit conventional.

[00:27:03] Speaker 01:
Or it could be simply the idea.

[00:27:05] Speaker 01:
It's like, oh, let's update the prediction model as soon as possible.

[00:27:10] Speaker 01:
That, we submit, would be part of the abstract idea.

[00:27:14] Speaker 01:
Going back to Kepler, we analogize the Kepler because the problem... Well, if you organize, let's speak maybe hypothetically, maybe not.

[00:27:22] Speaker 02:
If you organize the system in a fashion such, all the old components, right, but all of a sudden it updates because it's drawing from fewer sensors and able to analyze differently, it updates everything

[00:27:37] Speaker 02:
faster and recognizes problems faster.

[00:27:41] Speaker 02:
Wouldn't you agree that that's at least a question of fact?

[00:27:45] Speaker 01:
If the claims recited some new configuration of software, recited that somehow you have fewer sensors, I could conceive a claim like that that had it been preserved, could have perhaps step two raised it.

[00:28:00] Speaker 01:
But you say it's not in there.

[00:28:02] Speaker 01:
No, it's certainly not in the claims.

[00:28:04] Speaker 01:
It's not in the specification.

[00:28:05] Speaker 01:
The column, on column one, the column two is what the council referred to.

[00:28:10] Speaker 01:
It does not say there are fewer censors, nor is the rest of what was cited.

[00:28:15] Speaker 01:
And if I may refer to appendix 945, appendix 945 is the bulk of claim 12 from electric power group.

[00:28:23] Speaker 01:
So at column 31, electric power group claim talks about and recites calculating and updating new data as part of its data solution.

[00:28:36] Speaker 01:
Power Analytics has said Electric Power Group had no new data.

[00:28:39] Speaker 01:
This is new data.

[00:28:42] Speaker 01:
Column 31, line 21.

[00:28:43] Speaker 01:
Yeah, what our opinion in Electric Power said there was no new data.

[00:28:47] Speaker 01:
Different estimates of new data.

[00:28:49] Speaker 01:
Not new data that was being created and input to the algorithm.

[00:28:55] Speaker 01:
Agreed.

[00:28:56] Speaker 01:
No new data like that.

[00:28:57] Speaker 01:
What I'm talking about is the output.

[00:28:59] Speaker 01:
What is output is a new analysis.

[00:29:02] Speaker 01:
So for instance, at Column 31, line 21,

[00:29:06] Speaker 01:
It says, quote, dynamic stability metrics derived from analysis of the measurements from the data streams.

[00:29:14] Speaker 01:
So part of the method is you get the input data, old data, and you create these dynamic stability metrics.

[00:29:22] Speaker 01:
At line 35 of column 31, it refers to prediction data, the same we have here.

[00:29:27] Speaker 01:
At line 41 of column 31, it says updating, dot, dot, dot, the dynamic stability metrics, dot, dot, dot, in real time.

[00:29:36] Speaker 01:
in real time.

[00:29:37] Speaker 01:
Electric power system received information from sensors, could have been the same sensors this Pat was talking about.

[00:29:43] Speaker 00:
Claims also talk about how the data streams are collected in real time and then detecting and analyzing events in real time.

[00:29:51] Speaker 01:
Yes.

[00:29:52] Speaker 01:
And then finally, as Judge Shen referenced earlier at line 45, deriving a composite indicator of reliability that is an indicator of power grid vulnerability.

[00:30:02] Speaker 01:
That is a prediction model.

[00:30:04] Speaker 01:
This was used to prevent blackouts, allow an operator to look at some screen and see some indicator that you have a reliability problem.

[00:30:14] Speaker 01:
So, Your Honor, we submit that this case can be decided on stare decisis, that both this patent's claims and the electric power system claims are directed to a data solution

[00:30:30] Speaker 01:
to a data problem and use generic hardware, and therefore ask the court to affirm the district court.

[00:30:37] Speaker 00:
Just a hypothetical.

[00:30:39] Speaker 00:
The principle you're espousing, a data solution to a data problem, that sounds really broad and could eat into a lot of things, like, for example, some kind of system for predicting the path of a hurricane.

[00:30:59] Speaker 00:
where with each passing day, you want to try to figure out if this hurricane's going to hit New York.

[00:31:06] Speaker 00:
And with each passing day, you get better and better information because the hurricane's on the move.

[00:31:13] Speaker 00:
And then you can alter the model for figuring out is it going to hit New York or maybe just Jersey.

[00:31:22] Speaker 00:
So we need to figure this out.

[00:31:26] Speaker 00:
And so there are big data solutions out there that seem to be very valuable.

[00:31:33] Speaker 00:
And so therefore, you would think, instinctively, ought to be part of the patent system.

[00:31:37] Speaker 00:
So when you say data solutions to data problems are not patent eligible, I wonder if things like my hypothetical get swept into that.

[00:31:51] Speaker 01:
Your Honor, to be more precise, the line that we would suggest is

[00:31:57] Speaker 01:
It's a distinction between improving an information-based aspect of what's essentially a mental task on the one hand, which I would say... You'd agree that a novel way of hurricane prediction would be patentable, right?

[00:32:12] Speaker 01:
Well, I'd like to go to the distinction between Benson and Fluke on the one hand versus Dear.

[00:32:18] Speaker 01:
If this technique is simply a new algorithm that allows you to take data that's already been collected,

[00:32:25] Speaker 01:
and the algorithm somehow gets more accurate results, then I would suggest probably not patent eligible.

[00:32:30] Speaker 01:
However, if it's more like deer, where there is a functional relationship between the mental aspect and some physical data collection, like the thermocouple in the mold, that would be patentable.

[00:32:45] Speaker 01:
And clearly, the fact that- I guess we don't need to decide that.

[00:32:48] Speaker 01:
No.

[00:32:49] Speaker 01:
And there's no need in this case for sure.

[00:32:51] Speaker 01:
This is so close to electric power group.

[00:32:54] Speaker 01:
that one need not, you know, define the exact line between Vence and Fluke on the one hand and Deere on the other hand for this case.

[00:33:03] Speaker 03:
Okay.

[00:33:03] Speaker 03:
Thank you, Mr. Menendez.

[00:33:04] Speaker 01:
Thank you.

[00:33:08] Speaker 04:
Mr. Roy, I have your citation for the censors.

[00:33:12] Speaker 04:
It is in Appendix 90, lines 33, 1 through 5.

[00:33:17] Speaker 04:
where it clearly states in specification it's not feasible to fully censor out an electrical system at all possible locations due to cost and physical accessibility limitations.

[00:33:27] Speaker 04:
Therefore, there's a need for techniques that predict through real-time simulation the sources of harmonic distortions within the electrical system.

[00:33:36] Speaker 04:
So that's really the point of this.

[00:33:37] Speaker 04:
Secondly... Well, where's that in the claims?

[00:33:42] Speaker 04:
It's in the claims... Well, it's in...

[00:33:44] Speaker 04:
In the specification, you have to read the claims in light of the specification.

[00:33:48] Speaker 04:
Where is it in the claims?

[00:33:52] Speaker 04:
It says in the claims, A, needing one or more sensors to get the real-time information.

[00:34:00] Speaker 04:
But you have to read that in light of the specification that says that we're not censoring the entire system.

[00:34:05] Speaker 04:
But that's not the major point.

[00:34:07] Speaker 04:
The major point here is that what Judge Wallach said is that this is different.

[00:34:12] Speaker 04:
And it's like the hurricane system.

[00:34:15] Speaker 04:
This is not preempting the world.

[00:34:17] Speaker 04:
We have a very specific set of machines and software programs that limit our invention to the specific elements here.

[00:34:27] Speaker 04:
And those elements are the inventive elements of the calibration and synchronization.

[00:34:34] Speaker 04:
Those aren't found anywhere else.

[00:34:36] Speaker 04:
And they were not in the prior art.

[00:34:37] Speaker 04:
And you read the specifications very explicit.

[00:34:40] Speaker 04:
That just getting real-time data is important.

[00:34:43] Speaker 04:
and not having that sense of the whole system is important, but getting that data and doing the right thing with it, which is comparing it to the old data so that you can see changes in the system, and then recalibrating that model so that that model knows what the system is actually doing, and synchronizing that data so an operator gets a picture of something that may happen with the system.

[00:35:11] Speaker 04:
That's very specific.

[00:35:13] Speaker 04:
It is not electric power.

[00:35:14] Speaker 04:
None of those specifics were there.

[00:35:16] Speaker 03:
Okay.

[00:35:17] Speaker 03:
Thank you, Mr. Reich.

[00:35:18] Speaker 03:
We're out of time.

[00:35:19] Speaker 03:
Thank both counsel.

[00:35:20] Speaker 03:
The case is submitted.

[00:35:21] Speaker 03:
That concludes our session for this morning.