[00:00:00] Speaker 02:
United Services on the Real Association versus PNC Bank.

[00:00:05] Speaker 02:
All right, before we begin, I think we'd like to hear from both counsel about the issue that we raised in the order, and that is whether there's a final judgment in the light of the counterclaims.

[00:00:17] Speaker 02:
Mr. Fleming, do you agree that there's no final judgment in either of these cases?

[00:00:21] Speaker 00:
I believe there is a final judgment, Judge Dyk, and I'm happy to explain our position on that.

[00:00:26] Speaker 02:
Go ahead.

[00:00:28] Speaker 02:
Don't start the clock yet.

[00:00:30] Speaker 00:
Good morning and may it please the court Mark Fleming together with Greg Lanterre on behalf of PNC Bank.

[00:00:35] Speaker 00:
There is a final appealable judgment here on both parties' claims regarding in this case the 136 patent in the other case regarding the other two patents that weren't tried.

[00:00:45] Speaker 00:
The judgment is a dismissal without prejudice and let me say three things as to why.

[00:00:48] Speaker 00:
First, USAA chose to drop its infringement claim regarding the 136 before trial.

[00:00:53] Speaker 02:
But that has nothing to do with the counterclaims.

[00:00:55] Speaker 00:
No, that's true.

[00:00:56] Speaker 00:
And then it went to trial.

[00:00:57] Speaker 00:
Neither party put in any evidence on it.

[00:00:59] Speaker 00:
There was no verdict on it.

[00:01:00] Speaker 00:
Second of all, after the trial, USAA filed a motion seeking to have a second trial on the 136 patent, which it hadn't tried.

[00:01:07] Speaker 00:
The district court denied that, saying it was no longer in the case.

[00:01:11] Speaker 00:
Neither party said at that time that PNC's counterclaim was somehow still alive.

[00:01:15] Speaker 00:
And then after that, the third thing,

[00:01:17] Speaker 00:
There was a telephonic status conference.

[00:01:19] Speaker 00:
This isn't in the appendix.

[00:01:20] Speaker 00:
It happened on January 18, 2023, to discuss what was left to be decided in the case.

[00:01:27] Speaker 00:
And during the course of that, Chief Judge Gilstrap stated his intention as to what to do with matters that could have been tried to the jury but were not.

[00:01:34] Speaker 00:
And I'll read from the transcript on page eight of that teleconference.

[00:01:38] Speaker 00:
This is the district court saying, to the extent we're talking about counterclaims and defenses and things that could have been part of the jury trial and have been dropped,

[00:01:47] Speaker 00:
as part of either side or both sides narrowing of the case on the eve of trial or as we approach trial.

[00:01:52] Speaker 00:
My practice has, I think, pretty uniformly been that the court encourages that to narrow cases to get down to the real issues so that the trial is more streamlined.

[00:02:01] Speaker 00:
But that narrowing is without prejudice on both sides of the docket.

[00:02:05] Speaker 00:
If the plaintiff's got something they drop that could have gone to the jury or been a part of the jury trial, it's without prejudice.

[00:02:12] Speaker 00:
If defendants have things they could have raised that they didn't,

[00:02:15] Speaker 00:
that they jettisoned in light of the upcoming trial, then those are without prejudice too.

[00:02:19] Speaker 00:
It's the same treatment for each side of the docket.

[00:02:23] Speaker 00:
That's it?

[00:02:24] Speaker 00:
Well, that's that part of it.

[00:02:26] Speaker 00:
And then at the end of the status conference, he says on page 12, if there's a dispute between you about items that were jettisoned or dropped in advance of trial that could have been a part of the trial in this case before the jury, the court's position is those are dropped or jettisoned without prejudice.

[00:02:43] Speaker 00:
I'm happy to clarify that.

[00:02:44] Speaker 00:
If you need me to clarify on the docket or in the record, but there's no need to make an issue out of that.

[00:02:49] Speaker 00:
I'm going to be consistent with what I've done for years in that regard.

[00:02:52] Speaker 00:
And that's the position the court's going to be at.

[00:02:54] Speaker 00:
So I think both parties believed that the counterclaim on the 136, just like the affirmative claim on the 136, had been dismissed without prejudice.

[00:03:01] Speaker 00:
That's how everyone proceeded.

[00:03:02] Speaker 00:
Now, if the court doesn't think that's enough, and the court thinks the judgment in both of these cases somehow need to be reworded, we don't think it's necessary.

[00:03:09] Speaker 00:
But if the court does,

[00:03:11] Speaker 00:
then what we propose is that the court grant leave to file a motion under Rule 60A, and we can ask the district court to make changes to the judgments.

[00:03:20] Speaker 00:
We don't think that's necessary, but we're prepared to do that if this works.

[00:03:23] Speaker 02:
Mr. Fleming, I've got to say that I think you were obligated to tell the court about this in terms of the jurisdiction, rather than putting us in a position of having to figure it out and hearing an argument about it.

[00:03:35] Speaker 02:
Let's hear from Mr. Jay as to what their position is on the jurisdictional issue.

[00:03:41] Speaker 04:
Good morning, Your Honor.

[00:03:45] Speaker 04:
Our position is the same.

[00:03:46] Speaker 04:
There is a final judgment because neither our claim nor the counterclaim on the 136 patent remains to be adjudicated in the district court in this case.

[00:03:56] Speaker 01:
Because of what he just read, do you construe that as an oral order dismissing all these claims and counterclaims?

[00:04:04] Speaker 04:
So I think that the claims were dismissed when we dropped them.

[00:04:08] Speaker 04:
But my answer is yes.

[00:04:09] Speaker 04:
What about the counterclaims?

[00:04:11] Speaker 04:
My answer is yes as to the counterclaim.

[00:04:12] Speaker 04:
I think that the district court entered judgment in this case.

[00:04:17] Speaker 04:
And there's nothing about the 136 patent in the judgment.

[00:04:22] Speaker 04:
I think that that's not an accident.

[00:04:24] Speaker 04:
I think that's conscious.

[00:04:25] Speaker 04:
And we had proposed to the judge, or the DNC in this case, had proposed to the judge.

[00:04:31] Speaker 04:
expressly stating that there's nothing left to resolve anything that anyone else wants relief on that is still pending.

[00:04:42] Speaker 01:
It's really hard for us to have to dig through the record and find

[00:04:47] Speaker 01:
an oral order that isn't even very clear from what you've read to me that he was dismissing all of the unadjudicated claims without prejudice.

[00:04:56] Speaker 01:
I mean, I understand from what he said there, but it certainly didn't show up in any of the actual documents.

[00:05:04] Speaker 01:
And I'm not going to read, and my clerks aren't going to read every single transcript of every single status conference and the like to determine whether

[00:05:14] Speaker 01:
these unadjudicated claims that were apparent on the record were somehow dismissed without an official document.

[00:05:23] Speaker 04:
So I understand that, Your Honor, and I do think that it's better practice to do what the district court did.

[00:05:27] Speaker 02:
You're both at fault, particularly since there's a dispute between you as to whether these other patents are before us as part of this appeal.

[00:05:38] Speaker 04:
I think that we've both agreed with each other that the counterclaim was not live in this case.

[00:05:45] Speaker 04:
And I think if there had been any dispute about that, we certainly would have raised it as a jurisdictional issue at the moment the notice of appeal was filed.

[00:05:51] Speaker 02:
Is that an oral order?

[00:05:52] Speaker 02:
Which case?

[00:05:54] Speaker 02:
Was that in both cases, or just the one case, or what?

[00:06:01] Speaker 04:
The one with the lower docket number that you're hearing argument in now.

[00:06:04] Speaker 02:
So what about the other case?

[00:06:06] Speaker 04:
So in that case, I think it's

[00:06:07] Speaker 04:
Much simpler, the district court in the judgment has a line saying what PNC had asked him to put in this case.

[00:06:16] Speaker 04:
All other requests for relief now pending and requested by either party but not specifically addressed herein are denied.

[00:06:21] Speaker 04:
So that, I think, is more than sufficient to do what the district court is supposed to do.

[00:06:28] Speaker 04:
It's not required to document each individual claim.

[00:06:33] Speaker 04:
I understand that

[00:06:34] Speaker 04:
the point that Judge Dike and Judge Hughes have both raised, that it would be easier when the question is raised to trace it back.

[00:06:42] Speaker 04:
But I think that the court's intention is unambiguous.

[00:06:45] Speaker 04:
And I think as I read this court's cases on finality, the question is, did the district court intend to enter a final judgment?

[00:06:52] Speaker 04:
What matters is whether the district court has clearly declared his intention.

[00:06:54] Speaker 04:
And I think that the materials that we've given you indicate that he has.

[00:06:58] Speaker 02:
OK.

[00:06:58] Speaker 02:
So the next question is, are those patents

[00:07:02] Speaker 02:
the 136, the 559, and the 779, are they before us on appeal here?

[00:07:10] Speaker 04:
So I'm going to answer that no, they're not before you on appeal because they've been withdrawn from the case.

[00:07:16] Speaker 04:
In other words, the only thing that could be appealed would be

[00:07:21] Speaker 04:
someone arguing that the district court erred by allowing them to leave the case.

[00:07:25] Speaker 02:
So basically you're saying that by the specific order in the second case and by the oral transcript in the first case, those claims were, counterclaims were withdrawn from the case.

[00:07:43] Speaker 04:
I think that they had been withdrawn

[00:07:45] Speaker 04:
without the court needing to say so.

[00:07:47] Speaker 04:
But I think that it is documented, and there's no doubt in light of both of those things.

[00:07:51] Speaker 04:
There's more history about other counterclaims in the second case, which I'm happy to talk about as additional context for why it's very clear that counterclaim four, which is the only claim the court has asked us about, there was no counterclaim on the 779 patent.

[00:08:06] Speaker 04:
Never.

[00:08:07] Speaker 04:
So the only counterclaim that was in the second case that was raised by the court's order was one about the 559 patent.

[00:08:15] Speaker 04:
And as to that, after the trial, there were counterclaims five through eight were other claims that PNC brought for infringement of its own patents.

[00:08:27] Speaker 04:
And there was extensive discussion in that case about what remains to be done with these other counterclaims.

[00:08:34] Speaker 04:
I think if counterclaim four had been live, it certainly would have been discussed at the time that counterclaims five through eight were being discussed extensively.

[00:08:42] Speaker 04:
Would it be tried in that case?

[00:08:43] Speaker 04:
Would they be severed, which is what the district would ultimately decided to do.

[00:08:47] Speaker 04:
So I think that that's further confirmation.

[00:08:49] Speaker 02:
OK, but the problem is this, that these other claims were the subject of summary judgment motions on 101 and validity.

[00:09:02] Speaker 02:
Are those summary judgment orders before us as part of the appeals of these two cases?

[00:09:08] Speaker 04:
They're not, because they are the claim

[00:09:11] Speaker 04:
and the counterclaim, so the infringement arguments and the defenses slash counterclaim on any of those patents were all withdrawn from the case at the same time.

[00:09:22] Speaker 02:
So I think you can, in other words, the district court did not... So the two of you differ on whether the judge issued a judgment with respect to those claims or treated them as withdrawn?

[00:09:34] Speaker 04:
I think that

[00:09:35] Speaker 04:
We differ to some degree.

[00:09:37] Speaker 04:
I think that we both agree that the ruling is not embodied in the judgment.

[00:09:42] Speaker 04:
Our friends on the other side have argued that they were dismissed without prejudice.

[00:09:47] Speaker 04:
And what this court could decide is that they should have been resolved with prejudice.

[00:09:52] Speaker 02:
There's no big difference whether they were withdrawn or whether they were dismissed without prejudice over their objection.

[00:09:59] Speaker 04:
Our position is that the claims and the counterclaim

[00:10:05] Speaker 04:
whether you package the defenses with the claim or with the counterclaim, that they're all withdrawn from the case.

[00:10:10] Speaker 04:
They're not embodied in the judgment.

[00:10:12] Speaker 04:
And the parties are free to, as the district court said in the first action, to file a new action on that.

[00:10:18] Speaker 01:
Go ahead.

[00:10:20] Speaker 01:
I'm a little confused.

[00:10:22] Speaker 01:
Because I understand there was a summary judgment, and then you withdrew some of the claims from the case.

[00:10:29] Speaker 01:
But there was still a summary judgment of eligibility on those claims.

[00:10:33] Speaker 01:
Do you think that somehow they conceded that those claims, their counterclaims of ineligibility, were no longer part of the case just because you withdrew that from your infringement case?

[00:10:48] Speaker 01:
Yes.

[00:10:49] Speaker 04:
That is our position, right?

[00:10:51] Speaker 01:
Because the only... I mean, the record is not particularly clear, but if they objected, wouldn't those claims still be part of the case, even if you withdrew your infringement case on them?

[00:11:06] Speaker 01:
the summary judgment would merge with the final judgment.

[00:11:08] Speaker 04:
Yes, that's right.

[00:11:09] Speaker 04:
So if they'd said, we want to go to judgment on our counterclaim on the 779 patent.

[00:11:15] Speaker 04:
Again, that's the only counterclaim that we're talking about in the second case or on the 136 patent in the first case.

[00:11:22] Speaker 04:
Those counterclaims had not been finally adjudicated either.

[00:11:24] Speaker 04:
In other words, it's not as if the summary judgment on 101 was the end of the

[00:11:29] Speaker 04:
end of the ballgame for the counterclaim.

[00:11:32] Speaker 04:
So in other words, if what they wanted was to go to judgment and get a declaratory judgment and have it granted or refused, then they would have needed to say so.

[00:11:41] Speaker 04:
Instead, when we withdrew the claim, I think as Mr. Fleming's told you, that they did not regard there being anything left to do on the counterclaims.

[00:11:50] Speaker 03:
And that includes- But the counterclaims were limited to 101, right?

[00:11:54] Speaker 04:
Correct.

[00:11:55] Speaker 04:
That's right.

[00:11:58] Speaker 04:
559 patents stayed in what I'm going to call the second case, meaning the second appeal to be argued today.

[00:12:06] Speaker 04:
Had that happened, then there would have been litigation.

[00:12:09] Speaker 04:
There would have been testimony and witnesses in trial.

[00:12:14] Speaker 03:
But whether or not the foreclosure with regard to the 101 doesn't answer the question about whether or not the 102, 103 are alive.

[00:12:21] Speaker 04:
Well, they withdrew the 102 and 103 on the eve of trial, even before we'd withdrawn the file.

[00:12:25] Speaker 04:
So we're really only talking about 112.

[00:12:27] Speaker 03:
withdrew the counterclaims?

[00:12:28] Speaker 04:
They withdrew their defenses, I think, both as defenses and as counterclaims.

[00:12:33] Speaker 03:
Is that in the record someplace?

[00:12:35] Speaker 04:
It is.

[00:12:35] Speaker 04:
Sorry.

[00:12:36] Speaker 04:
624?

[00:12:43] Speaker 04:
624.

[00:12:48] Speaker 02:
What is that?

[00:12:49] Speaker 04:
That is the notice that PNC filed withdrawing its 102 and 103 arguments before.

[00:12:54] Speaker 02:
What did it say?

[00:12:56] Speaker 04:
I don't have that with me, because it's not in the appendix.

[00:13:00] Speaker 04:
But it was akin to the other notices of narrowing that you'll find in the record in saying that.

[00:13:05] Speaker 03:
Doctrine and entry 624, you said?

[00:13:08] Speaker 04:
624 in the case that corresponds to appeal 1778 in this court.

[00:13:16] Speaker 02:
What about the other case?

[00:13:18] Speaker 04:
So in that case,

[00:13:20] Speaker 02:
You're relying on the oral discussion, the transfer?

[00:13:25] Speaker 04:
Well, no.

[00:13:25] Speaker 04:
Also, the district court's decision on the Rule 59 motion in which he expressly said that the dropped patent had been dismissed without prejudice.

[00:13:36] Speaker 04:
It was no longer live in this case, and USA could file a new action on it.

[00:13:40] Speaker 04:
So in other words, if PNC wanted to pursue a declaratory judgment or an adverse ruling that said,

[00:13:49] Speaker 04:
part of your argument has been rejected on the merits and have it embodied in the judgment, then they could have asked for that.

[00:13:55] Speaker 04:
But I think we all understood that the parties were withdrew.

[00:13:59] Speaker 04:
Once the judge denied the Rule 59 motion, the

[00:14:03] Speaker 04:
that patent was out of the case along with the defenses and counterclaims.

[00:14:06] Speaker 02:
This is not the way to litigate.

[00:14:08] Speaker 02:
I mean this is not good.

[00:14:10] Speaker 02:
You're supposed to be clear about it.

[00:14:12] Speaker 02:
You're supposed to help the district court be clear about it and you're supposed to help the district court be clear about it so we can be clear about it.

[00:14:19] Speaker 02:
We shouldn't have to waste time fooling around with this.

[00:14:24] Speaker 02:
Let's hear from Mr. Fleming about whether he views the sum of the judgment rulings as being before us.

[00:14:33] Speaker 00:
Your honor, the answer is yes.

[00:14:34] Speaker 00:
The summary judgment rulings are properly before this court for two reasons.

[00:14:38] Speaker 00:
One, the grant of summary judgment at Alice step one is a legal issue, merges into the final judgment under the Supreme court's decision in Dupree versus Young.

[00:14:47] Speaker 02:
Not if you withdrew the counterclaims.

[00:14:49] Speaker 00:
I think regardless of the counterclaims and regardless of the infringement claim, what we had is a summary judgment deciding

[00:14:57] Speaker 00:
that we, uh, that we wouldn't, we did not prevail on the issue of Alice step one.

[00:15:03] Speaker 00:
That meant that when the counterclaims were, when the affirmative claims were withdrawn and when the counterclaim was withdrawn, that amounted to a dismissal without prejudice.

[00:15:13] Speaker 00:
I think we're agreed.

[00:15:14] Speaker 00:
We are entitled under this court's HR technologies case.

[00:15:17] Speaker 00:
to appeal the dismissal without prejudice in order to try to get a dismissal with prejudice.

[00:15:22] Speaker 02:
If that's what it was, perhaps.

[00:15:24] Speaker 02:
But we don't know whether that's what it was.

[00:15:26] Speaker 02:
There's a disagreement between you as to whether it was withdrawn or whether it was dismissed without prejudice.

[00:15:34] Speaker 00:
I think if Mr. Jay's position is that there is a final judgment, which I heard him say that there is, then I think the final judgment has it.

[00:15:42] Speaker 02:
No, no, no.

[00:15:43] Speaker 02:
His argument is that there's a final judgment on the other claims.

[00:15:47] Speaker 02:
not on this one.

[00:15:49] Speaker 02:
His view is that you would groove your counter-climbs.

[00:15:53] Speaker 03:
Do you have the Operator 624?

[00:15:56] Speaker 00:
I do not have it in front of me.

[00:15:57] Speaker 03:
You're the one that filed that.

[00:15:59] Speaker 00:
I suspect.

[00:16:00] Speaker 03:
Your side filed that.

[00:16:01] Speaker 00:
I suspect it was either a filing or an email to the court notifying the court that we were not going to pursue this patent because USAA had said it was no longer accusing us of infringing it in the case.

[00:16:15] Speaker 00:
And so we were not going to put on any defenses as to it.

[00:16:18] Speaker 00:
I suspect that's what it says.

[00:16:19] Speaker 00:
I must confess I haven't looked at it.

[00:16:21] Speaker 03:
You wanted to put on a defense but you still wanted to challenge its validity.

[00:16:27] Speaker 00:
We had already attempted to challenge its patent eligibility and lost decisively at summary judgment.

[00:16:33] Speaker 00:
Had we won, then there would have been no question of withdrawing or not.

[00:16:36] Speaker 00:
We would have been entitled to judgment with prejudice that these claims were not eligible and should never have issued.

[00:16:42] Speaker 00:
We lost that.

[00:16:43] Speaker 00:
There was nothing further we could have done as to that.

[00:16:46] Speaker 01:
Well, but you could have withdrawn your continued reliance on 101.

[00:16:52] Speaker 01:
uh... you close your specifically said we're not going to pursue the one-on-one argument that we've lost we withdraw any defense or counterclaim with regard to one-on-one that would be part of the case with it

[00:17:07] Speaker 00:
I understand your position.

[00:17:08] Speaker 00:
I don't know that we could have done.

[00:17:09] Speaker 00:
We would have lost it already.

[00:17:11] Speaker 00:
We still would have been subject to that summary judgment.

[00:17:13] Speaker 00:
The reason we've appealed it.

[00:17:15] Speaker 02:
Look, there's a big difference between the judge saying, I'm dismissing these claims without prejudice and you're saying, no, we should get them adjudicated so we can appeal them and saying that we would voluntarily withdraw the counterclaim.

[00:17:29] Speaker 02:
Right now, it's pretty confusing as to which happened.

[00:17:32] Speaker 00:
What happened is our 101

[00:17:35] Speaker 00:
argument, which would have invalidated these claims and gotten us a dismissal with prejudice, failed as a matter of... What about your 102 and 103 claims?

[00:17:45] Speaker 00:
Well, once USAA no longer... Later, once they said, we are no longer going to accuse infringement of this patent at trial... That somehow mooted your request for... No, it didn't moot.

[00:17:56] Speaker 00:
As a matter of narrowing the case for trial, we decided we are not going to burden the court or the jury with

[00:18:03] Speaker 00:
prior art and validity arguments on claims that we're not being accused of infringing.

[00:18:07] Speaker 00:
And that was to narrow the case, as Chief Judge Gielstrap said, as something laudable that he encouraged us.

[00:18:12] Speaker 03:
That, in essence, constituted withdrawing your previous request for adjudication, your counterclaim.

[00:18:20] Speaker 00:
on 102 and 103, but that didn't change the fact that we had opposed their summary judgment motion on 101.

[00:18:27] Speaker 01:
We had lost it.

[00:18:28] Speaker 01:
Is there anything, I understand it seems that you probably wouldn't do that, but there is anything that would have prevented you, even after you got the interlocutory summary judgment ruling against you on the 101 cases, by saying we no longer wish to pursue this and we withdraw the 101 issues from the case.

[00:18:46] Speaker 01:
If you had done that, and it's not clear to me you did that, if you had done that, it wouldn't matter about the final judgment or not.

[00:18:53] Speaker 01:
It would be out of the case.

[00:18:54] Speaker 01:
And you can do that, can't you?

[00:18:57] Speaker 01:
If you hadn't done that, I think that it makes sense that the summary judgment ruling merges into the final judgment.

[00:19:04] Speaker 01:
But it is very unclear, with all this talk about withdrawing certain defenses and withdrawing certain counterclaims, what you withdrew and what you didn't.

[00:19:12] Speaker 00:
I don't know that we could have withdrawn.

[00:19:15] Speaker 00:
Let's assume there was no counterclaim at all.

[00:19:21] Speaker 00:
All that happened was USA accused us of infringing.

[00:19:24] Speaker 00:
We said these claims are ineligible under 101.

[00:19:27] Speaker 00:
The district court says summary judgment, you are wrong.

[00:19:31] Speaker 00:
That is the same position as having withdrawn whatever counterclaim we had.

[00:19:34] Speaker 00:
We never filed it.

[00:19:35] Speaker 00:
We never had a counterclaim.

[00:19:36] Speaker 00:
we were just responding to their summary judgment motion.

[00:19:39] Speaker 00:
They won the summary judgment motion.

[00:19:41] Speaker 00:
We didn't have to do anything further.

[00:19:43] Speaker 01:
And if they then had said, you know what, we're glad that our claims are...

[00:19:52] Speaker 01:
ineligibility didn't matter here because you have a introductory ruling on eligibility that merges into the final judgment no matter what.

[00:20:03] Speaker 00:
That is correct.

[00:20:04] Speaker 02:
And we are entirely... It is not true that it merges into the final judgment no matter what, because if you withdrew the claim from the case, it's out of there no matter what happened at summary judgment earlier.

[00:20:15] Speaker 00:
What matters is they...

[00:20:18] Speaker 00:
know your honor because there's something you say at the end of the law we withdraw our counterclaim that still the summary judgment motion survives how could that be because the result of the USAA assume we never had a counterclaim at all the result of the USAA taking out its infringement contention means

[00:20:39] Speaker 00:
they are still able to sue us in a later case under the same patent.

[00:20:44] Speaker 02:
We are entitled to say we're giving up on the counterclaim.

[00:20:47] Speaker 02:
The counterclaim's out of there, no matter what happened earlier.

[00:20:50] Speaker 00:
Yes.

[00:20:51] Speaker 00:
I'm not relying on the counterclaim for jurisdiction in this court.

[00:20:54] Speaker 01:
But the problem is, I get what you're saying if the patent was still alive for other reasons in the case.

[00:21:00] Speaker 01:
But at least what we're talking about is the two patents that were specifically withdrawn from the case by the plaintiff.

[00:21:09] Speaker 01:
and whether you agree to the withdrawal entirely, including the 101 argument.

[00:21:15] Speaker 01:
If that's the case, if they're withdrawn before the final judgment enters, including any argument, and I don't care whether it's termed a counterclaim or just an argument that it was ineligible, if you withdraw any argument you have with regard to that patent,

[00:21:30] Speaker 01:
and that patent is entirely out of the case before the final judgment enters, then what is there left to merge into the final judgment?

[00:21:37] Speaker 01:
With regard to that patent, with regard to the other patents, it's clear it merged into the final judgment.

[00:21:43] Speaker 00:
If that is the court's view, then I just want to be clear about one thing, which is if USAA sues us again on these patents, we are not as stopped by a summary judgment ruling against us that we have been deprived the opportunity to appeal.

[00:21:56] Speaker 01:
That's what we're worried about.

[00:21:59] Speaker 01:
If it was all withdrawn from the case, if this entire patent was withdrawn from the case, including your arguments against eligibility are out of the case before final judgment, there is no final judgment and no final decision of the district court that this is eligible and so I don't see how it could

[00:22:16] Speaker 00:
possibly a stop you if that is the courts I mean we can hear from here I think we're getting into the merits of some of these arguments over movies we we haven't and that's fine I just want to be very clear just because I recognize I'm on the record here and I don't want to be quoted as not having said this we did not withdraw arguments as to 101 we made the arguments as fulsomely as we could to the district to the magistrate judge to the district court and we lost

[00:22:41] Speaker 00:
And we're trying to appeal that because we think there was nothing more to do on this patent with respect to 101.

[00:22:47] Speaker 00:
There is no reason in any future lawsuit to burden the district court with arguments that's already decided.

[00:22:53] Speaker 00:
But if the court takes a different view and we live to fight another day on this patent, then that's fine.

[00:22:58] Speaker 02:
I think you both should be embarrassed that the court is being put in this position.

[00:23:02] Speaker 00:
I rather am, Your Honor.

[00:23:03] Speaker 00:
I'm very sorry.

[00:23:05] Speaker 00:
I thought our position was clear to the district judge and to each other.

[00:23:07] Speaker 00:
We're going to take a quick recess.

[00:23:09] Speaker 00:
Yes, Your Honor.

[00:23:10] Speaker 02:
What we're going to do here is we're going to require both parties to go back to Judge Gilstrap and clear this up so that we have in order it's clear to us and that we can address properly on appeal and that may require you to file another notice of appeal when the time comes and if so we'll

[00:23:31] Speaker 02:
have that appeal consolidated with this one up here on the same docket.

[00:23:37] Speaker 02:
We're going to go forward with the oral argument, but obviously we're not going to render any kind of decision until the status of the judgment gets cleared up.

[00:23:47] Speaker 02:
So, Mr. Fleming, go ahead in the first case.

[00:23:51] Speaker 00:
Thank you, Your Honor.

[00:23:52] Speaker 00:
Good morning again, and may it please the Court, Mark Fleming together with Greg Lanterre on behalf of PNC Bank.

[00:23:58] Speaker 00:
These claims do not say we have invented a new technical capability for customer devices.

[00:24:04] Speaker 00:
They are directed to, as USAA says on page 49 of its red brief, a new way of depositing checks.

[00:24:11] Speaker 00:
And they recite simply using pre-existing computer capabilities that USAA did not invent.

[00:24:17] Speaker 00:
That's confirmed by the specification, which reads like a high school textbook describing off-the-shelf technology.

[00:24:23] Speaker 00:
It boasts not of any technical improvement,

[00:24:26] Speaker 00:
but of depositing checks with electronics that today's consumers actually own.

[00:24:31] Speaker 00:
And it states its benefit not as any improvement to a prior art device, but as avoiding having to go to a local bank branch and physically present the check to a bank teller.

[00:24:40] Speaker 00:
That's the top of column two of the 638 patent on page 231 of the appendix.

[00:24:45] Speaker 00:
Nothing is claimed or even disclosed that suggests that the devices do anything technical that they couldn't do before.

[00:24:52] Speaker 03:
So remote deposits instead of going to the bank,

[00:24:55] Speaker 03:
remote deposit was known in the art, right?

[00:24:58] Speaker 00:
It certainly was.

[00:24:59] Speaker 03:
And there were scanners for things that businesses would have.

[00:25:03] Speaker 00:
I mean, I'm old enough to remember depositing checks by mail.

[00:25:05] Speaker 00:
Yes, of course.

[00:25:06] Speaker 03:
So the advance over the art was, in the view of the patentee, we've got a different way of doing it than using these scanners.

[00:25:15] Speaker 00:
A different way?

[00:25:16] Speaker 03:
So it's something more like a consumer could have instead of a business.

[00:25:21] Speaker 00:
And as the patent articulates it, it means you don't have to go into the bank branch and give it to a seller.

[00:25:26] Speaker 03:
You don't have to go into the bank branch if the scanner, if a business, you know, like if Walmart has a scanner so it can take a check and do it, right?

[00:25:39] Speaker 00:
Well, this solution was not directed to Walmart.

[00:25:42] Speaker 03:
It's directed to personal... We ask what's the improvement over the prior art, right?

[00:25:49] Speaker 00:
The stated improvement over the prior art.

[00:25:51] Speaker 00:
is not over high volume scanners that businesses were using.

[00:25:55] Speaker 00:
It is over the ways that individual retail personal banking was done to deposit checks.

[00:26:00] Speaker 00:
This is what it says at the top of column two, the passage that I read.

[00:26:04] Speaker 00:
It's all about people, individual customers, going to the bank to deposit a check to the teller.

[00:26:10] Speaker 00:
And that is what they claim to have improved.

[00:26:13] Speaker 00:
And they claim to have done so not by improving any actual device or technical capability,

[00:26:19] Speaker 00:
but simply by putting together capabilities that the devices itself could already do.

[00:26:25] Speaker 00:
And recall.

[00:26:26] Speaker 03:
I asked this because I didn't see the seminal question is, what's the improvement over the art?

[00:26:31] Speaker 03:
What's the advance?

[00:26:31] Speaker 03:
And I didn't see you clearly saying in your brief it was over the way human beings do this.

[00:26:36] Speaker 03:
Instead of going to the bank, you use your phone.

[00:26:39] Speaker 00:
No, we certainly cited column two of the 638 patent, which is the statement of the improvement over the prior art.

[00:26:46] Speaker 00:
You know, the spec itself does not purport to improve specialized check processing machines.

[00:26:53] Speaker 00:
They're specifically excluded in the specification.

[00:26:56] Speaker 00:
There's no improvement over that.

[00:26:58] Speaker 00:
The improvement here, to the extent there is one, is merely in using pre-existing devices to make it easier for individuals to deposit checks.

[00:27:07] Speaker 00:
I'll say also on this point, Judge Clevinger, USAA cites no case, and I know of none.

[00:27:12] Speaker 00:
that claims to a general purpose computer that perform a financial transaction suddenly become non-abstract just because there were other prior arc devices out there that some companies were already using to perform the transaction.

[00:27:26] Speaker 00:
I mean, look at Solutran.

[00:27:27] Speaker 00:
Solutran had prior arc, micker readers, low volume readers at the point of sale.

[00:27:33] Speaker 00:
that scanned checks and the patented invention supposedly replaced them with a high volume backroom or outsource scanning operation.

[00:27:42] Speaker 00:
It was still abstract because all the claims were doing was using general purpose devices functioning in the way they always have to gather up information and process it.

[00:27:51] Speaker 00:
Content extraction, right?

[00:27:53] Speaker 00:
The prior art had

[00:27:54] Speaker 00:
ATMs that couldn't scan checks, they were replaced with ATMs that could scan checks.

[00:28:00] Speaker 00:
It was still ineligible because all the patent he did was not invent an improvement to technology, just rely on conventional data processing techniques.

[00:28:08] Speaker 00:
So this notion that the presence of some businesses using check scanners is somehow relevant to the asserted invention in these patents, I think, is a distraction and needn't detain the court very long.

[00:28:23] Speaker 00:
because the purported invention here is really just to what ordinary people, customers, were doing to deposit checks, and that's all that column, you know, column two recites that at length.

[00:28:32] Speaker 00:
I quoted the beginning of it, but it goes on for a couple of paragraphs about the inconvenience of going into the bank branch, interrupting your work day, going and talking to a teller, maybe the bank is closed, maybe it's a long way away.

[00:28:43] Speaker 00:
Those are not problems that the businesses were having with their scanners.

[00:28:46] Speaker 00:
Those are problems individuals were having.

[00:28:48] Speaker 03:
You don't have to recall off the top of your head which lines in column two

[00:28:52] Speaker 03:
from the 638, right?

[00:28:57] Speaker 00:
Sure.

[00:28:58] Speaker 00:
638, you'll now view the appendix page.

[00:29:09] Speaker 00:
I'll start at the bottom of column 1.

[00:29:10] Speaker 00:
This is page 231 of the appendix.

[00:29:12] Speaker 00:
At the bottom of column 1, line 65.

[00:29:14] Speaker 00:
Why would a check may provide a payor with a convenient and secure form?

[00:29:19] Speaker 00:
231.

[00:29:19] Speaker 00:
231.

[00:29:20] Speaker 00:
Yes, Your Honor.

[00:29:22] Speaker 00:
While a check may provide a payor with a convenient and secure form of payment, receiving a check may put certain burdens on the payee, such as the time and effort required to deposit the check.

[00:29:37] Speaker 00:
For example, depositing a check typically involves going to a local bank branch and physically presenting the check to a bank teller.

[00:29:44] Speaker 00:
In addition to the time commitment that may be required, visiting a bank branch may be problematic for the payee,

[00:29:49] Speaker 00:
if the bank's hours of operation coincide with the payee's normal hours of employment.

[00:29:54] Speaker 00:
Thus, the payee may be required to leave work early and or change work schedules.

[00:29:58] Speaker 00:
Carrying on, a check may pose other burdens for the payee.

[00:30:01] Speaker 00:
As noted above, a check may not be freely transferable, thereby limiting the payee's ability to use funds from the check.

[00:30:07] Speaker 00:
For example, it is usually difficult for the payee to purchase goods and or services using a check issued by the payor.

[00:30:12] Speaker 00:
While the check may be endorsed and accepted by a third party, and I can carry on, and then at the end of this paragraph,

[00:30:18] Speaker 00:
Line 23, therefore, there is a need for a convenient method of remotely depositing a check while enabling the payee to quickly access the funds from the check.

[00:30:29] Speaker 00:
That's what these claims are directed to, a convenient method of remotely depositing a check while enabling the payee to quickly access the funds from the check.

[00:30:38] Speaker 00:
And that is all done by using existing, well-known devices and computer functionalities that USAA does not claim to have invented.

[00:30:48] Speaker 00:
and certainly not even disclosed or claimed.

[00:30:51] Speaker 00:
At step two, let's recall, the abstract idea itself, check deposit, cannot be the inventive concept.

[00:30:59] Speaker 00:
The test, as this court has repeatedly said in cases like BSG versus by seasons, and I'm quoting here, is not whether the claimed invention as a whole is unconventional or routine.

[00:31:10] Speaker 00:
Rather, the question is, quoting again,

[00:31:13] Speaker 00:
whether the claim limitations, other than the invention's use of the ineligible concept to which it was directed, were well understood, routine, and conventional.

[00:31:21] Speaker 00:
Here, but for check deposits.

[00:31:23] Speaker 00:
Every piece of claimed technology and functionality is conventional and they're used in their ordinary way.

[00:31:28] Speaker 01:
So hypothetically, if we have this same problem and USAA decides it can come up with a cheap and convenient special purpose device that it's going to mail to every single customer that requests one.

[00:31:40] Speaker 01:
It's some kind of electronic device that you can just push the check through yourself.

[00:31:45] Speaker 01:
It'll scan it.

[00:31:46] Speaker 01:
It'll communicate with the bank.

[00:31:47] Speaker 01:
and do all those details.

[00:31:50] Speaker 01:
Would that device be patent eligible?

[00:31:54] Speaker 00:
It would depend on whether the device was simply putting together well-known computing and networking features.

[00:32:02] Speaker 01:
I mean if it's a special purpose device, like it's actually they said well we're just going to create, and maybe obvious clearly, but we're going to create a

[00:32:13] Speaker 01:
handheld scanner and we figured out a way to do it cheaply enough to give to every single customer that requests them and we're going to put our own special purpose programming on that device if that's what they're claiming this device that with this special purpose programming that allows a consumer to deposit a check is that eligible so I'm going to say maybe but let me say why I'm hedging because I think that's very close to the facts of content extraction where content extraction said

[00:32:42] Speaker 00:
You know, we have these ATMs, but they can't scan checks.

[00:32:45] Speaker 00:
Let's make it so that the ATM can scan checks.

[00:32:48] Speaker 00:
That'll be better for the banks.

[00:32:49] Speaker 00:
It'll be better for the customers.

[00:32:50] Speaker 00:
This court said that was ineligible because it was just using routine conventional technology in a specific environment of check deposit.

[00:32:58] Speaker 00:
And what your honor has described doesn't sound that different from that.

[00:33:00] Speaker 01:
Now, it may be... Well, let's just assume a hypothetical means that they actually... I mean, I'm answering the question by posing this condition on my hypothetical.

[00:33:10] Speaker 01:
But it is a special purpose device that doesn't exist.

[00:33:15] Speaker 01:
They come up, like I said, with a convenient, inexpensive way.

[00:33:19] Speaker 01:
This clearly would never practically work.

[00:33:21] Speaker 01:
We would never do this.

[00:33:22] Speaker 01:
what they did, but they did have a physical device that nobody had ever invented.

[00:33:27] Speaker 01:
It's not just an adaptation on something.

[00:33:30] Speaker 01:
And it actually has specialized computer programming.

[00:33:34] Speaker 01:
It seems to me that you may want to quibble or want to hedge your bets, but it seems like that it's pretty arguably over the eligibility line.

[00:33:44] Speaker 00:
I think, as Your Honor has described it, it could well be.

[00:33:47] Speaker 01:
And in fact, it could be.

[00:33:48] Speaker 01:
So here's my question.

[00:33:52] Speaker 01:
And again, hypothetically, take away the special purpose device, but keep the specialized programming and just use it on a phone.

[00:34:02] Speaker 01:
What's the difference there?

[00:34:04] Speaker 00:
I think if they had claimed a specific algorithm or a specific way to take an image of a check that would be depositable and they had disclosed what was actually innovative about that, technically innovative, and they had claimed that,

[00:34:22] Speaker 00:
then they might well have something patent eligible.

[00:34:24] Speaker 00:
But they didn't do that.

[00:34:25] Speaker 00:
They just claimed the result.

[00:34:27] Speaker 00:
The closest they get, if you take claim 13 of the 598, it ensures, it says that the image has to have an appropriate orientation or be appropriately sized.

[00:34:37] Speaker 00:
There's no technical improvement stated on how to accomplish that.

[00:34:40] Speaker 00:
It's not even clear what the result is, other than that it be appropriate.

[00:34:44] Speaker 00:
Now they could have claimed more narrowly, but they wrote the claims this way for a reason.

[00:34:48] Speaker 00:
They wanted to claim as broadly as they could so they could go after the entire industry, which is what they've done.

[00:34:53] Speaker 00:
Had they claimed an algorithm or something specific, a specific program and a way to do this, not just claiming the result, they might well have had something.

[00:35:02] Speaker 00:
But that's not what they've done.

[00:35:03] Speaker 00:
They've just claimed the result or the goal without reciting a way of achieving it.

[00:35:08] Speaker 00:
And if claims like this can get over step one, then I think there are a number of this court's cases that were wrongly decided.

[00:35:13] Speaker 00:
I mean, I don't think it's distinguishable from Apple versus Amaranth, for instance, where the patentee said,

[00:35:19] Speaker 00:
Well, it's hard to program this functionality in this way.

[00:35:21] Speaker 00:
There are all kinds of innovative programming details involved.

[00:35:24] Speaker 00:
This court said that was irrelevant because those details aren't in the claims.

[00:35:28] Speaker 00:
All the claims are is directed to a certain functionality, not an improvement in the way the computers operate.

[00:35:33] Speaker 00:
Here we don't even have it in the spec.

[00:35:34] Speaker 00:
There's no explanation in the spec of how exactly to achieve these claims, these supposed technical

[00:35:42] Speaker 00:
improvements other than simply to use these devices in the way that they've always been used.

[00:35:47] Speaker 00:
And then with respect to step two, this is first of all a case I think like Chamberlain or like Free Stream Media where the court can get to step two even though the district court didn't because there are no genuine disputes of material fact.

[00:36:00] Speaker 00:
And I think in order, I stress material because no doubt USA is going to say there are lots of disputes of fact, but the facts are immaterial.

[00:36:07] Speaker 00:
And that has to do with the legal flaw in the theory.

[00:36:12] Speaker 00:
All of the evidence that USAA has cited to this court includes the abstract idea of check deposit in its step two analysis.

[00:36:21] Speaker 00:
There's no authority for doing that.

[00:36:23] Speaker 00:
The authority is the other way.

[00:36:24] Speaker 00:
As I said at the beginning, in cases like BSG and in Chamberlain, the relevant inquiry is not whether the claimed invention as a whole, including the abstract idea, is unconventional or routine.

[00:36:35] Speaker 00:
I mean, take Alice, right?

[00:36:36] Speaker 00:
The question was not whether it was unconventional to use a computer to do intermediated settlement.

[00:36:42] Speaker 00:
You take out intermediated settlement and say, what else is there that's new and unconventional that adds to the abstract idea.

[00:36:48] Speaker 00:
I'm sorry, Judge.

[00:36:49] Speaker 03:
As to material facts, your adversary says that there is a material factor regarding the OCR performing the function of reading the MICR information.

[00:37:01] Speaker 00:
So I'm glad, Your Honor, raised that.

[00:37:03] Speaker 00:
There is no, I mean,

[00:37:06] Speaker 00:
There may well be an attempt to dispute on that.

[00:37:09] Speaker 00:
They don't claim to have invented using OCR to read a Micker line.

[00:37:14] Speaker 00:
That's shown by the redacted material, which is discussed on page 52 of our brief.

[00:37:19] Speaker 00:
I can't discuss it in open court, but if you look at page 6666 of the appendix and page 52 of our blue brief, it explains why USAA did not invent OCR for the Micker line.

[00:37:30] Speaker 00:
Their expert, Mr. Creuzer, admitted that.

[00:37:33] Speaker 03:
Doctors are not specifically claiming

[00:37:35] Speaker 03:
There are some claims that recite that.

[00:37:40] Speaker 00:
They don't all.

[00:37:41] Speaker 00:
It's true.

[00:37:41] Speaker 00:
There are some in this case and in the other.

[00:37:45] Speaker 00:
Sorry.

[00:37:45] Speaker 00:
None of the asserted claims in this case recite OCR for the micker line.

[00:37:49] Speaker 00:
I believe maybe claim three of the 598 talks about just one image of OCR and one image of the check.

[00:37:59] Speaker 00:
But the only claims that mention... Is that the problem?

[00:38:03] Speaker 03:
If they had cited that other patent in this case, would they take away one of your arguments?

[00:38:07] Speaker 00:
No, they wouldn't, Your Honor, because there are some claims that do recite it.

[00:38:12] Speaker 00:
The 136 has a couple, and two of the patents in the other case do recite it.

[00:38:18] Speaker 00:
But the point is,

[00:38:19] Speaker 00:
None of the patents nowhere say that there's anything innovative or unconventional about using OCR on the Micker line.

[00:38:27] Speaker 00:
If there was something innovative as to that, you'd expect to see it resided.

[00:38:30] Speaker 03:
They'd expect to recognize that OCR is capable of reading MICR.

[00:38:35] Speaker 00:
Right.

[00:38:35] Speaker 03:
And they don't say that wasn't the conventional way.

[00:38:38] Speaker 03:
The folks that had these big standards lined up, they read the MICR in a different way.

[00:38:43] Speaker 00:
But that doesn't mean that a skilled artisan, which is an electrical engineer or someone with years of experience doing software for imaging, didn't know how to do it.

[00:38:52] Speaker 00:
If there was something actually technically difficult about using OCR for the Micker line, then they would have said that in the patent.

[00:39:00] Speaker 00:
All the patents says about this, it has one line on this.

[00:39:02] Speaker 00:
Page 236, column 11, lines 40 to 41.

[00:39:06] Speaker 00:
OCR can be useful in determining micker line information.

[00:39:10] Speaker 00:
There is no suggestion that there was anything technically difficult about it.

[00:39:13] Speaker 03:
The fact that it wasn't being done in the conventional arts is irrelevant.

[00:39:18] Speaker 00:
Well, the fact that it wasn't being done in the banking industry is irrelevant because bankers are not persons of skill in the art.

[00:39:25] Speaker 00:
Persons of skill in the art are, as their expert admits on page 6251,

[00:39:30] Speaker 00:
Our experts said they're electrical engineers.

[00:39:33] Speaker 00:
They took no issue with that.

[00:39:35] Speaker 00:
They said it could also include people with one or two years of experience making software for imaging.

[00:39:41] Speaker 00:
And let's remember.

[00:39:41] Speaker 00:
I mean, our expert put in testimony.

[00:39:44] Speaker 02:
I think we're out of time.

[00:39:45] Speaker 02:
I'll give you two minutes.

[00:39:46] Speaker 02:
Thank you, Your Honor.

[00:39:48] Speaker 02:
Mr. Jay.

[00:39:55] Speaker 04:
Thank you, Your Honor.

[00:39:59] Speaker 04:
claimed advance is enough.

[00:40:00] Speaker 02:
So looking at page 31 of your brief, you have this wonderful quote.

[00:40:06] Speaker 02:
It says, ultimately admitted that accomplishing a check deposit on a consumer device, quote, required the development of extremely non-obvious algorithms, close quote.

[00:40:18] Speaker 02:
Those algorithms are not in the claims, right?

[00:40:22] Speaker 04:
The algorithms at a software level are not in the claims.

[00:40:26] Speaker 04:
That's right.

[00:40:27] Speaker 04:
But I think what that quote is getting at is another point admitted by the same expert, which is that when you seek to use consumer technology to do the job that had previously been done by a commercial scanner, new technical challenges are created.

[00:40:44] Speaker 04:
And that comes from the pretty simple and intuitive point that- But you didn't overcome them.

[00:40:50] Speaker 02:
The claims don't-

[00:40:52] Speaker 02:
do not claim overcoming those problems.

[00:40:56] Speaker 02:
It doesn't tell you how to do it.

[00:40:58] Speaker 04:
It does claim a number of ways of how to do it, your honor.

[00:41:02] Speaker 04:
So let me walk you through it.

[00:41:04] Speaker 04:
So the advance is using consumer technology to achieve check deposit and solving the technical challenges that arise when you try to use a phone camera instead of a

[00:41:19] Speaker 04:
copier-sized scanner or a specialized check scanner.

[00:41:22] Speaker 04:
So those are new technical challenges.

[00:41:24] Speaker 04:
And if you look at the claim language, the way in which the claims go about solving that are, one, allowing the bank to- That's the advance over the hurt?

[00:41:34] Speaker 03:
Yes.

[00:41:35] Speaker 03:
Where do we see that in this pet?

[00:41:37] Speaker 04:
A couple of places.

[00:41:39] Speaker 04:
And one is the most basic point that in column four, where you see the-

[00:41:46] Speaker 04:
I'm sorry, of the 6-3-8 pattern.

[00:41:52] Speaker 04:
Right.

[00:41:58] Speaker 04:
If you're with me, it's lines 16 and 10.

[00:42:03] Speaker 04:
What page?

[00:42:04] Speaker 04:
Oh, I'm sorry, 232.

[00:42:05] Speaker 03:
232?

[00:42:06] Speaker 03:
232.

[00:42:08] Speaker 03:
Column 4, OK.

[00:42:09] Speaker 03:
Yes.

[00:42:10] Speaker 04:
Which lines?

[00:42:11] Speaker 04:
So we're starting at line 16.

[00:42:14] Speaker 04:
The term general purpose computer specifically.

[00:42:16] Speaker 04:
The term general purpose computer specifically excludes specialized equipment as may be purchased by a business or other commercial enterprise, for example, for the specialized purpose of high speed volume check deposits.

[00:42:29] Speaker 04:
A particular advantage of embodiments of the invention is its ability to operate in conjunction with electronics that today's consumers actually own

[00:42:36] Speaker 04:
such as a general-purpose computer.

[00:42:38] Speaker 02:
Okay, but your problem is this.

[00:42:43] Speaker 02:
It's a concept of doing that.

[00:42:45] Speaker 02:
It doesn't tell you how to do it.

[00:42:47] Speaker 02:
In fact, by your own admission, you can't do it without highly non-obvious algorithms, and those aren't in the claims.

[00:42:55] Speaker 04:
Well, what is in the claim is, and I'll start with the 638 patent, claim 20, which is inside the front cover of our brief, is that the

[00:43:05] Speaker 04:
The concept that my friend says is the concept of the claims is just depositing a check.

[00:43:12] Speaker 04:
What this is directed to is solving the technical issues of obtaining an image with a camera.

[00:43:18] Speaker 02:
It doesn't tell you how to do it, does it?

[00:43:20] Speaker 04:
Sure it does.

[00:43:21] Speaker 04:
So first, the bank sets the criteria that are necessary to deposit the check.

[00:43:25] Speaker 04:
That's part of the claim construction of deposit, so that the image has to be suitable for deposit.

[00:43:33] Speaker 04:
creates the software and places it on the consumer's device.

[00:43:37] Speaker 04:
The bank's software then controls the consumer's device, and this is in the claims, to generate a compliant image.

[00:43:44] Speaker 04:
That wasn't a problem that you had to face when it's the bank teller looking at a paper check or even a large business running checks through a specialized scanner that don't have the problems of poor lighting or skew or all the problems that go with a 3D versus 2D image.

[00:44:03] Speaker 04:
which is what a cell phone camera is taking.

[00:44:06] Speaker 01:
What language in claim 20 do you think claims this non-obvious algorithm?

[00:44:18] Speaker 04:
So it has to place the bank's app on the customer's mobile.

[00:44:24] Speaker 04:
The bank then causes the customer's mobile to perform the following steps.

[00:44:29] Speaker 04:
It instructs the customer to take a photo.

[00:44:31] Speaker 04:
It assists the customer as to an orientation.

[00:44:34] Speaker 04:
And then, as we skip down to the next to last step, the system is configured to check for errors to confirm that the mobile check deposit can go forward.

[00:44:43] Speaker 04:
If you look at the construction that goes with deposit a check or mobile check deposit, at 5102 of the appendix... Is there... I mean, this doesn't do it for me.

[00:44:53] Speaker 01:
Is there anything in the specification that actually further describes

[00:44:57] Speaker 01:
what the non-obvious algorithm behind claim 20 is?

[00:45:01] Speaker 04:
Well, so there are a number of things in both the specification and the dependent claims of the other patent in this case.

[00:45:07] Speaker 04:
And then as we get deeper into the second case, the claims get more detailed, and we get to auto capture in 2009.

[00:45:14] Speaker 04:
But in this case, sorry.

[00:45:18] Speaker 04:
The specification explains that the criteria are set by the consortium of banks for a compliant check.

[00:45:29] Speaker 01:
In other words, that you can't just take... I'm not hearing a non-obvious algorithm in your answer.

[00:45:35] Speaker 01:
This, to me, will run a final means plus function claim that actually points to a specific algorithm which might help you.

[00:45:45] Speaker 01:
even if we don't go down that route, like we did in Infish, I don't hear the words, the non-obvious algorithm is disclosed at color and something in the specification and includes these steps.

[00:46:01] Speaker 04:
So the steps of these two patents that we're talking about, and I do want to get to the dependent claim that Mr. Fleming referred to as well, but the steps are not

[00:46:12] Speaker 04:
programming the software in particular ways.

[00:46:15] Speaker 04:
But I think that that McRoe and Fish, any number of cases,

[00:46:20] Speaker 01:
uh... make clear and i think the other side doesn't just know you don't know for algorithmic claims yet but but well it is really dependent on the fact that actually disclosed very specific detailed steps right it is all you're telling me is that the banks the court insertion of banks get together and decide all the criteria but you even disclosed what those criteria are well i think the specification does talk about this is the sixteen aspects of a compliant image and that is a uh...

[00:46:50] Speaker 02:
claim 13 of the 598 patent, which is on page 206 of the... I thought you said it wasn't possible to do this until 2009, and the patent priority date is 2006.

[00:47:05] Speaker 02:
It seems to be claiming something that was invented in the future.

[00:47:10] Speaker 04:
I know that that's not correct, your honor.

[00:47:13] Speaker 04:
But the USAA developed this innovation, and that there is evidence in the record of when the first deposit using an image was coming.

[00:47:30] Speaker 04:
I don't think that's right.

[00:47:32] Speaker 04:
But I don't think that that's material.

[00:47:36] Speaker 04:
The question you're asking sounds like a written description.

[00:47:38] Speaker 04:
you know, possession argument.

[00:47:40] Speaker 04:
And what we're talking about is what was either the claimed innovation over the prior art or what was routine and conventional in 2006.

[00:47:48] Speaker 02:
It's not just a written description question.

[00:47:49] Speaker 02:
It's a question of whether you invented something that was a real invention or whether it was just an abstract concept that somebody else was going to fill in and invent in the future.

[00:47:59] Speaker 02:
That's what 101 is directed to, among other things.

[00:48:03] Speaker 04:
So if it were claiming the result, I would understand your question, but these are not claims directed to the result of remote check deposit.

[00:48:11] Speaker 04:
They're not even directed just to the result of achieving remote check deposit with a

[00:48:18] Speaker 04:
consumer device, even though that had never been done before.

[00:48:21] Speaker 04:
Other banks had been chasing this innovation and had not made it work.

[00:48:26] Speaker 04:
USAA made it work with a consumer device.

[00:48:30] Speaker 04:
How did they make it work?

[00:48:32] Speaker 04:
They make it work because the bank sets the criteria in its software, puts its software on the customer's device, and then controls the customer's device and tells the customer what to do.

[00:48:43] Speaker 02:
It works because something that's not claimed is used.

[00:48:47] Speaker 04:
i'm sorry about everything else is a little bit something that's not claimed is used to accomplish it well but the criteria that not that uh... invasions use with these are for example let's look at them thirteen of the five ninety five right uh... to confirm that the image is legible is what you have to tell us which page two oh six we were on the six thirty eight of course i'm sorry

[00:49:13] Speaker 04:
Right.

[00:49:14] Speaker 04:
So Mr. Fleming read part of this, but not all of it.

[00:49:17] Speaker 04:
And this is to confirm that the... 206, which point are you talking about?

[00:49:22] Speaker 04:
13.

[00:49:27] Speaker 04:
We're analyzing the at least one electronic image to confirm that the image is legible, is appropriately sized, has an appropriate orientation, has an appropriate format, includes a validating image feature, includes a properly located image feature or a combination thereof before triggering the deposit.

[00:49:41] Speaker 01:
How does it analyze it?

[00:49:43] Speaker 01:
Isn't that the problem?

[00:49:44] Speaker 01:
This is what it looks at, but you need to show that you invented how it does it, beyond just saying analyze it.

[00:49:57] Speaker 04:
What we've invented is a system that can allow a bank to do this without having to take a bunch of photos taken and uploaded by the customer and being overloaded with

[00:50:10] Speaker 04:
non-compliant images.

[00:50:11] Speaker 04:
It ensures that the customer takes an image that complies with the bank's criteria.

[00:50:16] Speaker 04:
Claiming exactly what the lighting criterion is from day to day to make a technically compliant image.

[00:50:23] Speaker 04:
I don't think, respectfully, Your Honor, that this Court's 101 cases require us to claim exactly what subroutines necessary to specify what lighting criterion is good enough.

[00:50:33] Speaker 04:
The point is that the human eye can't judge from an image whether it's going to be technically sufficient

[00:50:40] Speaker 04:
for the back processing by the bank.

[00:50:44] Speaker 04:
Processing a photograph had never been OCR'd to take the MICR data and deposit it.

[00:50:52] Speaker 04:
Scanners had been used.

[00:50:54] Speaker 04:
Of course, the MICR line originally had magnetic ink.

[00:50:58] Speaker 04:
That's what the MI stands for.

[00:51:00] Speaker 04:
And so taking a device that can be held at a distance from the check

[00:51:05] Speaker 04:
and a quick digital image snap raises all kinds of different technical challenges, which is exactly what the other side's expert agreed to, that the technical considerations in taking a 3D image from a distance under ambient lighting without specialized knowledge.

[00:51:24] Speaker 04:
That's the challenge that we're solving.

[00:51:26] Speaker 04:
And just because it doesn't.

[00:51:28] Speaker 03:
We have a first step problem in deciding whether we agree with you or whether you're ever sitting on what the claims are drawn to.

[00:51:34] Speaker 03:
whether it's to improving over the human being going in the bank to make the deposit, or improving over standards, right?

[00:51:42] Speaker 04:
That's basically right.

[00:51:43] Speaker 03:
Or if we agree with him, you're out, right?

[00:51:47] Speaker 04:
Right.

[00:51:48] Speaker 04:
We're not claiming that it would be non-abstract to... We're not claiming that it'd be a check deposit.

[00:51:53] Speaker 03:
It's a non-abstract idea.

[00:51:54] Speaker 03:
No, this is a fundamental question of what are the claims drawn to.

[00:51:57] Speaker 04:
Right.

[00:51:58] Speaker 04:
We obviously don't agree with the idea that it's drawn to check deposit.

[00:52:04] Speaker 04:
Even if you thought it were drawn to check deposit, I think we have our step two argument.

[00:52:10] Speaker 04:
We have our step two argument about the fact that this had not been accomplished

[00:52:15] Speaker 04:
that this was truly innovative in the industry.

[00:52:19] Speaker 04:
The admission of the other side's expert that he had never looked at the ordered combination, just as the other side's brief tries to do in this case, trying to slice individual elements and saying, this is abstract, this is abstract, OCR is not patentable, comparisons are not patentable, didn't look at the ordered combination.

[00:52:35] Speaker 04:
And here the ordered combination involves having the bank

[00:52:38] Speaker 04:
set these criteria, having the bank control the consumer's device and having the consumer's device take a compliant image by following instructions provided by the bank along the lines we've just been discussed that meet the claim limitation of ensuring that the image will be sufficient for deposit.

[00:52:59] Speaker 04:
So perhaps no further questions about 101, although I'm certainly happy to answer them.

[00:53:03] Speaker 04:
We do have a cross appeal in this case, which I'll just say a word about.

[00:53:06] Speaker 04:
And that word is this, that the other side's citation counting methodology, I think the expert basically acknowledged that you can't value, you can't determine the value of a single patent just by the sheer number of citations that have been put into other patents.

[00:53:29] Speaker 04:
and in this case the question of hypothetical negotiation is what would the value have been to a financial institution trying to license uh...

[00:53:38] Speaker 04:
u.s.a.'

[00:53:38] Speaker 04:
's technology i think that expert basically acknowledged he had to come up with some limitation to try to make it germane he tried but he didn't succeed and that the five subject areas that he limited to aren't even germane to financial services they include things like media i think that that really in one sentence is the

[00:53:56] Speaker 04:
uh... the gist of our challenged his methodology and uh... we submit that uh... that would be a place to reverse the damage of support.

[00:54:05] Speaker 04:
Mr. Court has any further questions?

[00:54:08] Speaker 02:
Thank you.

[00:54:08] Speaker 02:
We'll give you a minute for rebuttal on the cross field.

[00:54:11] Speaker 02:
Mr. Fleming, you have two minutes.

[00:54:13] Speaker 00:
Thank you, Your Honor.

[00:54:17] Speaker 00:
May I proceed, Your Honor?

[00:54:19] Speaker 00:
Yes.

[00:54:19] Speaker 00:
Judge Clevenger, I'd like to complete my answer to your question on OCR for the Micker Line.

[00:54:24] Speaker 00:
on page 5607 and 08, our expert Mr. Peterson points out, and this is not disputed, by 1999 the standards institute required Micker lines to be OCR readable.

[00:54:36] Speaker 00:
He says this on 5578 as well.

[00:54:39] Speaker 00:
He also says on 5618 and 5620 that in the early 90s and early 2000s, sorry, in the 1990s and the early 2000s,

[00:54:46] Speaker 00:
fraud detection software was using OCR to read micker line routing number and signatures and to identify duplicates.

[00:54:53] Speaker 00:
The only evidence on the other side is the assertion that OCRing the micker line was not being used in commercial products.

[00:55:01] Speaker 00:
I don't think that's true, but even if it were true, that does not limit the knowledge of a skilled artisan.

[00:55:07] Speaker 00:
A skilled artisan, page 6251, is electrical engineers or people with experience developing software for imaging.

[00:55:13] Speaker 00:
They would know to use OCR for the micker line

[00:55:16] Speaker 03:
Even if banks... Do you happen to know what kind of technology was being used to read the MICR?

[00:55:22] Speaker 03:
It wasn't OCR.

[00:55:24] Speaker 00:
It was OCR in fraud detection software, as our expert says on 5618 and 5620.

[00:55:32] Speaker 00:
It was also being read using magnetic ink recognition.

[00:55:35] Speaker 00:
You know, in commercial scans.

[00:55:36] Speaker 03:
I remember you had a comment that said it's not being used.

[00:55:38] Speaker 03:
It means something else is being used, because you have to read the law.

[00:55:42] Speaker 00:
Magnetic character recognition was being used before that.

[00:55:45] Speaker 00:
I mean, MICKR has been around for a very long time, as has OCR.

[00:55:50] Speaker 00:
And it was being used for the MICKR line starting in the 90s and then again in the 2000s.

[00:55:54] Speaker 00:
I didn't hear Mr. Jay identify any actual, by the way, just to finish that, I'm sorry.

[00:56:00] Speaker 00:
I meant to say this.

[00:56:01] Speaker 00:
If OCR for the MICKR line were really all that technically difficult or innovative,

[00:56:05] Speaker 00:
then they would have disclosed that and explained how they did it in the specification of their patents.

[00:56:11] Speaker 00:
They don't.

[00:56:12] Speaker 00:
I read, Your Honor, the line, the only line that talks about OCR for the Micker line that says it can be useful, because it didn't need to be explained.

[00:56:18] Speaker 00:
Skilled artisans knew how to use it.

[00:56:20] Speaker 00:
The claim construction... You're out of time.

[00:56:22] Speaker 00:
Thank you.

[00:56:22] Speaker 02:
Thank you, Your Honor.

[00:56:24] Speaker 02:
Mr. Jay, there was no argument on the cross appeal, so you don't get in the bubble.