[00:00:00] Speaker 02:
We will hear argument next, the number 23.

[00:00:12] Speaker 01:
Good morning.

[00:00:13] Speaker 01:
May it please the court?

[00:00:15] Speaker 01:
My name is Steve Hill.

[00:00:16] Speaker 01:
I represent the appellants in this action.

[00:00:18] Speaker 01:
We're here because the district court on a motion to dismiss held that claim 44 of the 223 patent failed step one of the Mayo-Alice test and then on summary judgment determined that there was no genuinely disputed issue

[00:00:35] Speaker 01:
of law, or no genuinely disputed issue of fact, to preclude the entry of summary judgment at step two in the same framework.

[00:00:43] Speaker 01:
I'm going to first address the motion to dismiss holding by the law court.

[00:00:49] Speaker 01:
Looking at claim 44, which is at the appendix at 140, we see a technological claim.

[00:00:57] Speaker 02:
One small matter of housekeeping.

[00:01:01] Speaker 02:
Do we need to address the claim construction question if we agree with the district court about 101?

[00:01:09] Speaker 02:
No.

[00:01:09] Speaker 02:
Okay.

[00:01:10] Speaker 02:
One reason I ask that, I think in the red brief, there's a listing of claims and claim 50 doesn't seem to be in the listing of 101 claims.

[00:01:24] Speaker 02:
Is that just

[00:01:30] Speaker 01:
That may be an error, Your Honor, because there have been a lot of claims that have been disclaimed as the record reflects or as a continuing business method review.

[00:01:43] Speaker 02:
But in any event, if the 101 ruling is upheld, the claim construction ruling need not be addressed.

[00:01:51] Speaker 01:
That is correct, Your Honor.

[00:01:56] Speaker 01:
As I was saying, we have a claim that is driven by specific rules that determine the nature of the game processor.

[00:02:06] Speaker 01:
The game processor is configured for, and then it's followed by six steps, some of which

[00:02:12] Speaker 01:
including the testing and the automatically displaying step, have specific language within them that defines not only the what of the characteristic of the rule, but also the when.

[00:02:27] Speaker 01:
Now, the district court said Claim 44 is analogous to this court's decisions in cases like N. Ray Smith.

[00:02:37] Speaker 01:
Enrae, Marco, Goldenar, and also Planet Bingo, where the claim is covering rules for playing a game.

[00:02:48] Speaker 01:
There is a distinction that I wish to draw between the notion of rules for playing a game in those cases and the structure of Claim 44.

[00:03:00] Speaker 01:
Because specifically, in each of those three cases that the district court relied upon, the claims actually got into the interior of the game as it was being played, whether it was Blackjack in Ray Smith or whether it was the active playing of a bingo game in Planet Bingo.

[00:03:18] Speaker 01:
Of course, if you're actually playing the game, the rules of the game really matter at that point.

[00:03:25] Speaker 01:
But if you look at the fifth rule of claim 44, it recites determining if the player has decided to play the displayed game.

[00:03:37] Speaker 01:
And then you go to the final rule of the claim, and it displays an outcome resulting from play of the displayed game.

[00:03:49] Speaker 01:
The rules of the game itself are actually agnostic to claim 44.

[00:03:55] Speaker 00:
But our 101 jurisprudence goes well beyond rules of the game, right?

[00:04:01] Speaker 00:
So then you have to show that even though this is going beyond the rules of the game, it's somehow not abstract in doing so.

[00:04:08] Speaker 00:
For example, determining if a player has decided to play and displaying an outcome, how does that change it from

[00:04:18] Speaker 00:
So it's not abstract.

[00:04:22] Speaker 01:
Great.

[00:04:22] Speaker 01:
Your Honor, in looking at a case like McRoe, for example, the rules that are at issue in that case are driving a software structure or process that is creating a new kind of software for animators to use.

[00:04:44] Speaker 01:
The process that's described within the framework of the game processor and its concomitant rules is undeniably a technological process.

[00:04:57] Speaker 00:
What is the technological improvement that's gained by Claim 44, precisely?

[00:05:04] Speaker 01:
Prior art electronic game terminals played games of chance.

[00:05:10] Speaker 01:
And as a result, they could not transform the game in the setup of the game so that it was a new kind of game.

[00:05:23] Speaker 01:
And that's exactly what Claim 44 does.

[00:05:26] Speaker 01:
And this is at the appendix 1692, paragraph 7.

[00:05:31] Speaker 01:
That's the statement of facts that the appellees put in favor of their summary judgment motion.

[00:05:36] Speaker 00:
So I understand.

[00:05:37] Speaker 00:
Make sure I understand correctly.

[00:05:41] Speaker 00:
none of the prior games would allow the player to see what the game board was prior to the play.

[00:05:52] Speaker 00:
Is that what it is?

[00:05:53] Speaker 00:
That's the technological improvement?

[00:05:56] Speaker 01:
That's one part of the technological improvement.

[00:05:59] Speaker 01:
The technological improvement

[00:06:02] Speaker 01:
as the end result of the technological improvement is you have a game of elevated skill that was created not from the rules of the game itself, but from the rules used in the architecture of setting up the game before it's even been shown to the player.

[00:06:23] Speaker 01:
Can you explain how this is a game of

[00:06:27] Speaker 03:
elevated skill over the prior art, Tic Tac Fruit.

[00:06:31] Speaker 03:
My understanding, Tic Tac Fruit, you commit to playing the game.

[00:06:37] Speaker 03:
And then the Tic Tac Fruit display will show you the game board on the monitor.

[00:06:45] Speaker 03:
And then you, the player, I assume that is some period of choice on where to put the wild card inside of that grid.

[00:06:58] Speaker 03:
How is that, I don't know, more a game of random chance than the game that you've set up in your claim where you set up that same game field before you initiate play, or before you commit to initiating play?

[00:07:16] Speaker 01:
It's counterintuitive, Your Honor, but the

[00:07:20] Speaker 03:
But both times, a player, a would-be player, gets to look at the game and then try to figure out where they're going to alter the playing field in order to maximize their winnings.

[00:07:35] Speaker 01:
Respectfully, Your Honor, I disagree regarding the prior art version of Tic Tac Fruit.

[00:07:41] Speaker 01:
The prior art version of Tic Tac Fruit, the player pressed play.

[00:07:46] Speaker 01:
And only after that could the players see the game field.

[00:07:52] Speaker 01:
And it was only after that, according to the record, that it was only after pressing play that the process of even constructing the game board began.

[00:08:04] Speaker 01:
So there was no technological way in the code of that game for it to show the

[00:08:13] Speaker 01:
game board to the player before the player had made the decision to initiate gameplay by pressing play.

[00:08:20] Speaker 00:
So what is the technological improvement that occurred?

[00:08:23] Speaker 00:
What was the problem that like the software designer or engineer had to confront in order to be able to change

[00:08:32] Speaker 00:
the timing of when the outcome would be displayed before or after the person started playing.

[00:08:39] Speaker 01:
Right, Your Honor.

[00:08:40] Speaker 01:
Well, the record does reflect that there were concerns about whether or not the prior art, Tic Tac Fruit, went far enough

[00:08:47] Speaker 01:
in terms of elevating skill over chance.

[00:08:52] Speaker 01:
Because what the Prior Art Tic Tac Fruit game did for the first time was it used the testing that's described in the testing step of claim four.

[00:09:02] Speaker 01:
This is in 2004 when the Prior Art game was created.

[00:09:06] Speaker 01:
it used that testing step as a way of getting away from the use of a random number generator, which, of course, infuses a game.

[00:09:15] Speaker 01:
I mean, that's sort of become the talismanic symbol of what a game of chance is, is the use of a random number generator.

[00:09:23] Speaker 01:
But instead, he used this testing algorithm that's described in column four.

[00:09:29] Speaker 01:
That's in the prior art tic-tac fruit.

[00:09:31] Speaker 01:
You're correct, Your Honor.

[00:09:33] Speaker 01:
And so that was thought.

[00:09:35] Speaker 01:
to the elimination of the random number generator was thought to have created enough of an elimination of chance in order to alter the skill versus role of chance balance to make the game a skill game.

[00:09:50] Speaker 01:
When that fell into question,

[00:09:53] Speaker 01:
the inventor went back to the lab, so to speak, in order to determine if there was anything else that could be done to the way that the game was set up that would elevate the importance of player skill and reduce the role of chance.

[00:10:06] Speaker 03:
So then, therefore, the claim to dance here over prior art tic-tac-toe is displaying a preview of the game before the player commits to playing the game.

[00:10:22] Speaker 01:
That is correct, Your Honor.

[00:10:25] Speaker 02:
So doesn't that mean that what we have here is a set of rules for a game plus a familiar economic course of conduct of giving a preview to a potential customer and the opportunity for the customer, based on the preview, to decide whether to engage in that transaction?

[00:10:50] Speaker 02:
Both of those things abstract.

[00:10:53] Speaker 01:
respectfully, the purpose of the continuing business method review was to eliminate and disclaim all of the claims in the 223 patent that related to an economic

[00:11:12] Speaker 01:
transaction.

[00:11:14] Speaker 01:
There's no necessary nexus between an economic transaction with claim 44, the way claim 44 is... I wasn't asking anything about CBN standards.

[00:11:29] Speaker 02:
There's a whole set of cases or a piece of the doctrine that one of the kinds of things that's abstract based on

[00:11:41] Speaker 02:
are various kinds of familiar economic transactions or practices.

[00:11:47] Speaker 02:
Here's something you might want to take a look at in order to see whether you want to continue to actually enter into the transaction, namely play the game.

[00:12:00] Speaker 02:
So that on top of what's left is just the rules of the game being offered.

[00:12:09] Speaker 02:
What's wrong with that way of looking at it?

[00:12:12] Speaker 01:
Respectfully, Your Honor.

[00:12:15] Speaker 01:
In looking at Claim 44, we see two specific concrete rules, the testing and the automatic displaying.

[00:12:25] Speaker 01:
These are not only the what, but they also answer the question of the when.

[00:12:30] Speaker 02:
And we see these as being- But isn't the testing just part of defining the rules of a particular game?

[00:12:37] Speaker 01:
No.

[00:12:38] Speaker 01:
The testing is to determine whether or not.

[00:12:42] Speaker 01:
So there's an algorithm that's laid out in column four, starting at lines 55 and ending at line 64.

[00:12:49] Speaker 01:
And what that algorithm lays out is that the processor actually starts the construction of the game board by choosing the winning lines, then chooses the orientation of those lines, then chooses what the winning symbol will be.

[00:13:05] Speaker 01:
after which it then populates the remaining portion of the game and it then tests by going back and making sure that in populating the remaining symbols

[00:13:17] Speaker 01:
of the game that are not supposed to be a part of the winning combination, that it hasn't inadvertently created a scenario where the player could have a winning combination with symbols that are higher in value than what the processor has.

[00:13:33] Speaker 03:
Tic Tac Fruit does this testing scheme too, right?

[00:13:36] Speaker 01:
Yes, Your Honor, but on Alice Step 2,

[00:13:39] Speaker 01:
The fact that the inventor used the testing technique on one prior occasion does not, in our view, rise to the level of making the testing conventional, well understood, or routine.

[00:13:53] Speaker 00:
So some people would say that the rules of the game might include the setup of the board, right?

[00:14:01] Speaker 00:
So isn't the testing and how to set up the board, isn't that part of the rules of the game?

[00:14:08] Speaker 01:
hear no, respectfully, because what's admitted in the case at appendix 1692 paragraph 7, and the district court reiterated this during the summary judgment hearing, appendix 428, is that it's undisputed that the claim here is

[00:14:29] Speaker 01:
actually capable of creating a new kind of game, a game of elevated skill, but it's because of the testing and the automatic displaying limitations which structurally infuse a level of skill or a reduced layer of chance into the game

[00:14:51] Speaker 01:
before the game is actually played.

[00:14:53] Speaker 00:
It's agnostic as to what kind of game.

[00:15:04] Speaker 01:
Respectfully, Your Honor, I don't agree with that.

[00:15:07] Speaker 01:
Because in Berkheimer 1, this court looked at the issue of whether disclosure of something in the prior art automatically rose to the level of well-understood, routine, or conventional.

[00:15:21] Speaker 01:
In this case, there is evidence that the testing was in the prior art

[00:15:26] Speaker 01:
that one time, but there's no additional evidence in the record suggesting that it was in any way routine or conventional or well understood to the gaming arts community.

[00:15:39] Speaker 01:
I see my time's about to expire.

[00:15:42] Speaker 02:
We'll restore your rebuttal time.

[00:15:44] Speaker 02:
Thank you.

[00:15:44] Speaker 02:
You'll hear from Mr. Gorman.

[00:15:54] Speaker 04:
Good morning, your honors.

[00:15:56] Speaker 04:
May it please the court.

[00:15:57] Speaker 04:
My name is John Gorman.

[00:15:58] Speaker 04:
I represent the appellees.

[00:16:01] Speaker 04:
To answer the question that you posed to counsel at the outset, claim 50 was disclaimed.

[00:16:06] Speaker 04:
And so it's not an issue.

[00:16:09] Speaker 04:
This court, I'll also mention that we also agree that this court need not reach the claim construction issue if it agrees with the district court that the claims of the 223 patent are invalid under section 101.

[00:16:21] Speaker 04:
So I'll start with section 101.

[00:16:24] Speaker 04:
The district court correctly decided that the claims of the 223 patent are directed to an abstract idea.

[00:16:32] Speaker 04:
Rules of a game which all involve this concept of previewing a game to a player before the player actually plays the game.

[00:16:41] Speaker 04:
The specification of the 223 patent makes clear that the patentee was setting forth not to address some sort of technological efficiency that existed in the prior art.

[00:16:51] Speaker 04:
The patentee was trying to address the legal problem.

[00:16:54] Speaker 04:
But there were certain states that prohibited it.

[00:16:55] Speaker 02:
Technological solutions can solve legal problems.

[00:16:59] Speaker 04:
They may, Your Honor.

[00:17:00] Speaker 04:
But in this case,

[00:17:02] Speaker 04:
Many of this court's cases have looked to what the particular problem that is to be solved to determine whether or not in fact there was a technological solution.

[00:17:11] Speaker 04:
Here there was no technological problem that was identified.

[00:17:14] Speaker 00:
So even if it was a legal problem that was seeking to be solved, if there was some hurdle technically that prevented them from being able to do this easily and they had to go to the drawing table and come up with

[00:17:26] Speaker 00:
all these details on how you would display at a particular time, that could still be a technological solution to that problem, right?

[00:17:34] Speaker 04:
In theory, but in this case, if you look at the claims, there is no such detail in any of these claims.

[00:17:40] Speaker 04:
These claims just recite, as opposing counsel just said, a new kind of game.

[00:17:45] Speaker 00:
Is there anything in the specification that supports the idea that the inventors struggled with how they were going to automatically display an actual thing as a technological matter, as computer software?

[00:18:00] Speaker 04:
There is not.

[00:18:00] Speaker 04:
There's no reference to improving the efficiency of computers or making computers faster or anything in particular about a technological issue that was being addressed at all in the specification.

[00:18:12] Speaker 04:
In fact, the only difference between what these claims were addressing and what was in the Prior Art Tic-Tac fruit game was this concept of preview.

[00:18:22] Speaker 04:
In fact, if you take claim 44 and you look solely at the automatically displaying limitation and you change the word prior to to after, you are reading on the Prior Art.

[00:18:33] Speaker 04:
So this is a classic example of claims being directed to an abstract idea invoking basic computer components as tools, not as a technological improvement.

[00:18:45] Speaker 04:
So the district court was correct that the claims of the 223 patent are directed to an abstract idea.

[00:18:51] Speaker 04:
At Alice Step 2, claims of the 223 patent lack a transformative inventive concept.

[00:18:58] Speaker 04:
Certainly beyond these recited game rules themselves, the recital of the computer components are generic things like game processor.

[00:19:06] Speaker 00:
What about testing the game flow prior to displaying the game to the player?

[00:19:10] Speaker 00:
Is that something that could be a

[00:19:12] Speaker 00:
technological improvement that transforms the abstract nature of the clinic?

[00:19:17] Speaker 04:
It was conceded below that that testing step, the idea of testing the game field and then displaying the game field to the player was in the prior Arctic Tech group.

[00:19:27] Speaker 00:
What about the argument that we heard this morning about just because something's in the prior isn't in its conventional and well-known?

[00:19:35] Speaker 04:
Well, there isn't anything that suggests that by adding the testing step there was something that was unconventional about it either.

[00:19:43] Speaker 04:
The record doesn't suggest that the testing step was somehow providing some sort of technological advancement at all.

[00:19:50] Speaker 04:
As I understood the other side's argument is, the purported technological advancement is that no processor had played this type of game before.

[00:19:59] Speaker 04:
That's not a technological improvement, even carrying out the testing.

[00:20:04] Speaker 04:
That's just carrying out these abstract ideas.

[00:20:07] Speaker 04:
The idea that the automatic group displaying stuff, which is truly the only difference between the prior Arctic Tech group game and the claims of the 223 pattern, that is just simply an abstract idea in itself as the only difference.

[00:20:23] Speaker 04:
And so this court should affirm the district court's finding that at Alistair 2, the claims lacked transformative inventive concept.

[00:20:32] Speaker 02:
I'm happy to address, for your honors, the- You didn't hear any actual argument on the construction point.

[00:20:38] Speaker 02:
So you don't have anything to respond to.

[00:20:41] Speaker 03:
But obviously, some of you- What if tic-tac fruit had never been invented?

[00:20:47] Speaker 03:
And this is the claim in front of us.

[00:20:50] Speaker 03:
And nobody had before.

[00:20:52] Speaker 03:
tried to test the game field to be displayed prior to displaying it.

[00:20:59] Speaker 03:
And so these people were the first people to have this type of game not rely on a random number generator.

[00:21:11] Speaker 03:
But they kind of put the fix in to make sure that things wouldn't get out of control by having this testing scheme.

[00:21:20] Speaker 04:
I think there could be a way to recite a testing step with sufficient detail in a way that that, in theory, could provide some sort of pass muster under section 101.

[00:21:34] Speaker 04:
But under these claims, even assuming that there wasn't a prior arc game that did the testing and displaying step, I think these claims would still be recited and directed to an abstract idea.

[00:21:45] Speaker 04:
If you look at each of those steps in the games, there's

[00:21:49] Speaker 04:
set forth at such a high level that, as we put forth in our briefs, these are things that, if you strip the claims away from the computer components, these are things that could be played by people with a deck of cards.

[00:22:01] Speaker 04:
So perhaps, but with respect to these claims, even in the instance where the prior art didn't do it, these claims would still be invalid under Section 101.

[00:22:10] Speaker 04:
I'll address briefly the claim construction argument.

[00:22:13] Speaker 04:
This records?

[00:22:15] Speaker 02:
I think what I was saying

[00:22:27] Speaker 04:
All right, well I'll return to the remain of my son.

[00:22:33] Speaker 04:
Thank you.

[00:22:44] Speaker 01:
Thank you, Your Honor.

[00:22:46] Speaker 01:
The testing and automatically displaying limitations improve the electronic game terminals as tools for delivering games to the players.

[00:22:58] Speaker 01:
And in that sense, ALICE Step 2 remains a viable alternative, and the district court erred

[00:23:06] Speaker 01:
in determining that there was no factual dispute when, in fact, the court made no fact findings on whether or not the testing limitation was routine or conventional, merely referenced that the testing was shown to exist in the prior art.

[00:23:23] Speaker 01:
Again, the only prior art.

[00:23:26] Speaker 01:
that shows any testing limitation is the 2004 Tic Tac Fruit game that preceded the patent application by two years.

[00:23:36] Speaker 01:
It's by the same inventor, and there's no indication in the record that anyone else ever picked up on it such that it became something that could be fairly described as conventional or routine in the gaming arts.

[00:23:50] Speaker 01:
I want to respond briefly.

[00:23:52] Speaker 03:
So an inventor could kind of double dip on the same inventive concept?

[00:23:56] Speaker 03:
One patent application, it's the inventive concept.

[00:23:59] Speaker 03:
The next patent application, two years later, go back and say, that's my inventive concept still.

[00:24:05] Speaker 01:
Well, Your Honor, the inventive concept here is not the testing limitation in isolation.

[00:24:13] Speaker 01:
It's the testing in combination with the automatic displaying limitation.

[00:24:20] Speaker 01:
And I beg to differ with my colleague regarding the characterization of how you could take the word in the automatic displaying limitation and change prior to to after two and you'd have the prior art version of Tic Tac Fruit.

[00:24:35] Speaker 01:
In fact, that's not accurate because what he neglects to point out is that in the testing limitation,

[00:24:42] Speaker 01:
You also have the prior to displaying language, which would be absent in the prior art Tic Tac Fruit as well.

[00:24:51] Speaker 01:
And there was struggle here.

[00:24:53] Speaker 03:
There is... Tic Tac Fruit does the testing after the display of the game?

[00:24:57] Speaker 03:
No.

[00:24:57] Speaker 03:
It does before the display of the game.

[00:24:59] Speaker 03:
Correct.

[00:25:00] Speaker 03:
But if the display of the game is after the player initiates play of the game, then that's why the claim would read on Tic Tac Fruit, right?

[00:25:11] Speaker 03:
So long as you've changed in the automatically displaying limitation, the phrase prior to to action.

[00:25:19] Speaker 01:
in both of the limitations.

[00:25:22] Speaker 01:
You would be right.

[00:25:25] Speaker 01:
What I'm saying, Your Honor, is that technically, the testing limitation, the way that it's described in the claim with the prior to language, is also absent from the prior art tic-tac fruit.

[00:25:37] Speaker 01:
There may be reasons for that.

[00:25:39] Speaker 01:
And there's obviously a one of three argument that can be made.

[00:25:43] Speaker 02:
Are you saying that there's prior to language, testing the game field prior to display?

[00:25:49] Speaker 02:
And I thought you agreed that Tic-Tac-Fruit did that.

[00:25:53] Speaker 01:
Tic-Tac-Fruit did the testing in the algorithmic process, but it didn't.

[00:26:00] Speaker 01:
Before display.

[00:26:02] Speaker 01:
Before, no, not, well, yes, of course, before displaying the game.

[00:26:06] Speaker 01:
If by displaying the game we mean displaying the game after the player has pressed play and initiated the game to be played, the testing has to proceed

[00:26:18] Speaker 01:
the display in the prior art tic-tac fruit, the testing was not initiated until after the player pressed play.

[00:26:28] Speaker 01:
So the testing and automatic displaying limitations, the displaying technically, are not practiced in the prior art, even in the prior art tic-tac fruit.

[00:26:38] Speaker 00:
I'm still confused by that, and it's really because the testing says testing the game field prior to displaying the game to the player.

[00:26:46] Speaker 00:
Stop.

[00:26:48] Speaker 00:
So that's what Tic Tac Fruit did.

[00:26:51] Speaker 00:
So it might be that Tic Tac Fruit didn't automatically display an actual game to be played until later, but I'm having a hard time following your argument about testing for the same reasons my colleagues have both pointed out so far.

[00:27:05] Speaker 01:
All right.

[00:27:07] Speaker 01:
I will move on, because I think that if I'm the only one that seems to be understanding that point in my own mind, I'm fully prepared to recognize that that's not going to be outcome determinative on step two.

[00:27:21] Speaker 01:
And there's still one or two more arguments that I'd like to get to that my colleague made.

[00:27:27] Speaker 01:
The inventor struggle is noted.

[00:27:31] Speaker 01:
in the record, in our statement of facts, and in our reply brief at appendix 1743 through 1745.

[00:27:39] Speaker 01:
You'll find the description of the inventor's own testimony about the technological tasks that had to be done in order to transform the prior art tic-tac fruit into the subject matter of the 223 patent.

[00:27:54] Speaker 01:
And finally, the human card analogy

[00:28:00] Speaker 01:
There are several cases now, I'll use data engine as one, where human analogs are not necessarily dispositive of step one of the Mayo-Alice framework.

[00:28:15] Speaker 01:
If they were, the fact that I got tabs in my notebook here would have potentially disposed of data engine at Alice step one in the opposite way from which this court ruled.