[00:00:00] Speaker 04:
Our final case this morning is number 23, 2215, Vox International Corporation versus Southwest Dealer Services, Inc.

[00:00:10] Speaker 04:
Okay, Mr. Santuri.

[00:00:12] Speaker 01:
Good morning, Your Honors.

[00:00:13] Speaker 01:
I'm Mike Playsacourt.

[00:00:15] Speaker 01:
I'm Ryan Santuri on behalf of Vox International in this appeal.

[00:00:18] Speaker 01:
Vox is formally known as AudioVox.

[00:00:20] Speaker 01:
That may be more familiar.

[00:00:21] Speaker 01:
It's a publicly traded electronics manufacturing retailer.

[00:00:25] Speaker 01:
that we are here before the court today on appeal of a dismissal of a patent infringement action from Central District of California on Alice at the motion to dismiss level.

[00:00:35] Speaker 01:
I would like to, before I jump into the issues, briefly touch on the products of issue that we have in this case.

[00:00:41] Speaker 01:
The products themselves are vehicle security systems.

[00:00:45] Speaker 01:
They would have been typically installed at dealer lots prior to purchase.

[00:00:50] Speaker 01:
What this allowed the dealers to do was install them initially, and then once you had a purchaser, they may or may not have wanted certain dealer options.

[00:00:59] Speaker 01:
And the system that's claimed in the 135 patent essentially allowed the dealers to, without having to rip the parts out, without having to stock a bunch of different parts,

[00:01:10] Speaker 01:
They were able to reconfigure these devices wirelessly in order to provide whatever functionality that the customer actually wanted.

[00:01:18] Speaker 02:
So you pre-install everything into the car and then at the dealership you turn on some, you turn off others.

[00:01:27] Speaker 01:
Yes, your honor, they pre-install them at the dealer, so this wouldn't have been a manufacturer level.

[00:01:32] Speaker 01:
This would be the card that gets to a dealer.

[00:01:34] Speaker 01:
The dealer installs all the components, the control module and the function module, and then when the customer says, well, I want a full security system or I want remote keyless entry system only, I don't want to pay for the security system, the dealer was able to then reconfigure it without having to either go to the work of

[00:01:54] Speaker 01:
of actually uninstalling and ripping the components out or, on the other hand, selling the car as is but not being able to charge the customer because they didn't want that functionality, essentially losing the cost of those units that they had pre-installed.

[00:02:07] Speaker 01:
So that was sort of the premise behind this.

[00:02:10] Speaker 00:
Do you agree that claim one is representative?

[00:02:12] Speaker 01:
Yes, Your Honor.

[00:02:13] Speaker 01:
I think that the claim one is representative of all of these.

[00:02:17] Speaker 02:
And we don't have to worry about claim construction, right?

[00:02:20] Speaker 01:
Yes, sir.

[00:02:21] Speaker 01:
I believe that's true.

[00:02:22] Speaker 02:
There was no claim construction that was below you didn't argue that there's any fact questions.

[00:02:27] Speaker 02:
Is that right?

[00:02:28] Speaker 01:
I don't think that's entirely right your honor I think that what what we argued in particular in the heat in the motion at the hearing was that Was that the the patent itself along with the allegations of the complaint which included?

[00:02:43] Speaker 01:
the actual pictures of the accused products and the description of how they functioned, we argued that those facts were sufficient to get beyond the Alice analysis.

[00:02:54] Speaker 01:
One of the primary issues we are here on today is whether when the court ultimately said, I don't see enough explanation of how this works to find an inventive concept and therefore this doesn't meet step two of Alice,

[00:03:11] Speaker 01:
whether that was an error because we believe that the specification provided sufficient detail if you had one of skill in the art explaining that to the court, whether through fact or expert testimony.

[00:03:22] Speaker 02:
But you didn't argue some kind of claim construction argument where whatever is contained in the specification should be shoveled into any particular claim terms.

[00:03:32] Speaker 02:
Is that right?

[00:03:34] Speaker 01:
I think there's two issues there.

[00:03:36] Speaker 01:
One, we didn't argue that the terms of the patent needed some particular construction in order to reach the issue.

[00:03:47] Speaker 01:
However, they still have to be understood.

[00:03:51] Speaker 01:
Even the plain language of the specification of the claims requires that those be viewed through the eyes of one of ordinary skill in the art.

[00:03:58] Speaker 01:
And that's really the argument that we've made in our

[00:04:01] Speaker 01:
in our initial brief too is that just because we're not saying that a term requires a particular construction that one would explain to the jury, you still need to know how one of ordinary skill in the art would understand this technology and that could come in through expert testimony without ever touching whether it needs a particularized definition.

[00:04:20] Speaker 04:
I'm not sure that I understand that.

[00:04:23] Speaker 04:
So you're saying the details of how to put these three modes together is in the specification.

[00:04:30] Speaker 04:
Judge Chen was asking you how that then read into the client.

[00:04:35] Speaker 04:
And I don't understand how that gets read into the client.

[00:04:39] Speaker 01:
Well, for example, Judge Chen kept going back to, you know, from our perspective, we believe it was an overgeneralization of the claim.

[00:04:48] Speaker 01:
But for example... I'm sorry, you're referring to Judge Wu?

[00:04:52] Speaker 00:
Sorry.

[00:04:54] Speaker 00:
Yes, okay.

[00:04:55] Speaker 01:
I apologize, Your Honor.

[00:04:58] Speaker 01:
What I'm saying, at the district court level, the court was asking for

[00:05:05] Speaker 04:
You're not really answering my question.

[00:05:08] Speaker 04:
What's the answer to the question?

[00:05:09] Speaker 04:
You claim there are details in the specification as to how to do this.

[00:05:15] Speaker 04:
Those are not in the claim.

[00:05:17] Speaker 04:
How do we get them into the claim?

[00:05:20] Speaker 01:
I think that stepping back as a general principle, when you read the claims, you have to read them in view of the spec.

[00:05:26] Speaker 01:
That's what all the case law says.

[00:05:28] Speaker 01:
And so, for example, when we are

[00:05:30] Speaker 01:
reading the specifications.

[00:05:31] Speaker 04:
Are you saying that the claims are limited to the specific implementation shown in the spec?

[00:05:36] Speaker 01:
No, Your Honor.

[00:05:37] Speaker 04:
No, I didn't think so.

[00:05:39] Speaker 01:
But what I'm saying is that the claims have to be understood in view of the specs.

[00:05:43] Speaker 01:
So for example, when the district court said, I don't see how the claim limitation that restricts to a singular mode, there's no description of that, we don't believe that's true.

[00:05:56] Speaker 00:
There is a- You made no request for claim construction and proposed no claim constructions needed to be done before deciding the motion to dismiss, right?

[00:06:06] Speaker 01:
Correct, Your Honor.

[00:06:07] Speaker 01:
So for example, when the court says, I don't see any details on how restriction was done, we disagree with that.

[00:06:18] Speaker 01:
Ways to do that are explained within the specification.

[00:06:21] Speaker 01:
For example, it describes how you could use a jump list to describe that.

[00:06:24] Speaker 04:
What you're saying is that he's made a deliberate choice to write the claims so that they were as broad as possible, and that the implementation described in the specification was much narrower.

[00:06:36] Speaker 04:
And I'm not understanding how you can say that's an answer to your one-on-one problem.

[00:06:45] Speaker 01:
You're right.

[00:06:47] Speaker 01:
The stepping back, yes, there are multiple embodiments described in this.

[00:06:53] Speaker 01:
Well, there's one particular embodiment described in the spec.

[00:06:55] Speaker 01:
You're correct.

[00:06:56] Speaker 01:
No, I'm not suggesting that the claim itself is limited by a particular embodiment.

[00:07:01] Speaker 01:
What I'm saying is that the judge says there's nothing described within the patent that explains to me how, for example,

[00:07:07] Speaker 01:
the modes are restricted.

[00:07:09] Speaker 01:
I think one of scale the outreach the specifications as well.

[00:07:12] Speaker 04:
The idea is that you could you get credit for inventing something if you said how to do it.

[00:07:18] Speaker 04:
But if you choose to go beyond what you've discovered as to how to do it to claim much more broadly than you run into the abstraction problem.

[00:07:28] Speaker 01:
I respectfully disagree on that your honor.

[00:07:30] Speaker 01:
I think that the whole purpose of the specification is to explain

[00:07:34] Speaker 01:
ways in which the claim can be implemented.

[00:07:36] Speaker 01:
Here, for example, to restrict the mode of operation, you could use jumpers.

[00:07:40] Speaker 01:
One skill in the art would know how to do it.

[00:07:42] Speaker 01:
It's set forthright in the claim.

[00:07:43] Speaker 02:
At the same time, you know, the Supreme Court has told us that when it comes to Section 101 and abstract idea,

[00:07:51] Speaker 02:
we have to look at your claim and think of the abstract idea exception as serving some kind of gating function as to whether or not you're even allowed to have a claim like this considered for the patent system if your claim is written on such a broad abstract level that it doesn't even properly define an invention for the patent system.

[00:08:17] Speaker 02:
And so that's where

[00:08:19] Speaker 02:
We have to figure out, have you violated that principle here?

[00:08:24] Speaker 02:
When I look at your claim, am I supposed to be thinking about like a remote control device?

[00:08:32] Speaker 02:
So the control module, the function module, that's what this claim is directed to?

[00:08:38] Speaker 01:
So the security system that's installed in the vehicle has a control module and a function module.

[00:08:44] Speaker 01:
The patent also describes in order to program those, so stepping back to what we discussed earlier, when it comes to customer only wants remote keyless entry,

[00:08:55] Speaker 01:
the dealer is able to wirelessly, as one way, can wirelessly configure it to only provide remote keyless entry.

[00:09:02] Speaker 01:
That was done via the wireless transceiver that's described in the specification.

[00:09:06] Speaker 01:
That's how to wirelessly, and in fact I think wirelessly selecting is in the clean language itself.

[00:09:11] Speaker 02:
So, I guess, here's a hypothetical.

[00:09:14] Speaker 02:
What if I had a control panel in my family room?

[00:09:22] Speaker 02:
And this control panel,

[00:09:25] Speaker 02:
has three modes of operation.

[00:09:27] Speaker 02:
It can control the TV, it can control the overhead lights, and it can control the window shades in the family room.

[00:09:36] Speaker 02:
And then I draft a claim that says a multi-mode control system having three modes.

[00:09:48] Speaker 02:
TV mode, overhead lights mode, window shade mode, period.

[00:09:56] Speaker 02:
Would you think that's a patent-eligible invention, or would you think that's an abstract idea?

[00:10:01] Speaker 01:
I think you'd still have to come back to the specification to see how it's described, Your Honor.

[00:10:05] Speaker 01:
I think we have a number of cases at this court here.

[00:10:07] Speaker 02:
Let's just assume plain and ordinary meaning for my control system having three modes.

[00:10:16] Speaker 02:
TV mode, window shade mode, overhead lights mode, period.

[00:10:21] Speaker 02:
Do you think that's just the abstract idea of a control system having three modes?

[00:10:26] Speaker 01:
No, Your Honor, not if it's properly described in the specification, not if it's directed towards a question that's been identified by the inventor as something that needs to be overcome within the art.

[00:10:38] Speaker 01:
I mean, here we have, not simply as in the examples that the Southwest Dealer Services provides, they talk about, well, it was known that you could arm or disarm a security system in the past.

[00:10:52] Speaker 01:
That may be true, but here we had a system that had three different modes.

[00:10:55] Speaker 01:
you could enable one and at the same time you can restrict the use of the others.

[00:11:00] Speaker 01:
And the idea was that when a customer only wanted said, they only told you they wanted remote keyless entry and they only paid the dealer for remote keyless entry, when they left, they weren't able to go back.

[00:11:10] Speaker 02:
What if my claim was a magic machine that controls the TV, the window shades and the lights?

[00:11:20] Speaker 02:
That's not an abstract idea claim.

[00:11:22] Speaker 01:
Well, I think if somebody claims something is a magic machine, they're going to have a number of problems.

[00:11:30] Speaker 02:
I'm just trying to figure out at what point do you think something becomes an abstract idea?

[00:11:35] Speaker 01:
Well, I think at the point where we're talking about, you have specific control module and a function module.

[00:11:43] Speaker 04:
Is your answer that it's an abstract idea unless there's some specific teaching in the specification of how to do it?

[00:11:50] Speaker 01:
I think that is part of it.

[00:11:51] Speaker 01:
I think this court, in some of its decisions, has specifically cited to, for example, the specification and the explanation of the specification for doing it.

[00:12:02] Speaker 00:
For example, the Bascom decision and several others have... Is it your view that reference to a physical device in the claim means that the claim cannot be directed to an abstract idea?

[00:12:14] Speaker 01:
I don't think that would necessarily be consistent with this court's case law on it.

[00:12:19] Speaker 01:
I think, for example, the Chamberlain case made a big deal over just because you have a physical device that's not abstract.

[00:12:26] Speaker 01:
But I think in the Chamberlain case, at least in my view of it, what was abstract was the idea that all you were getting was a status alert of the status of something as opposed to here where you could actually configure this physical device to perform certain functionalities and lock out other functionalities.

[00:12:43] Speaker 00:
I thought you might have contended that you said, are there any factual disputes that you are arguing to us or no?

[00:12:49] Speaker 01:
Well, from our perspective, we believe that the district court misunderstood or needed the benefit of testimony and expert testimony in particular to be able to better understand the technology that was described in the specification.

[00:13:05] Speaker 01:
The lower court said he was unable to find an explanation of, for example, how this device worked.

[00:13:13] Speaker 01:
Um, if he had, if we've gone past the motion dismissed and been able to get evidence on that, we could have better addressed this.

[00:13:19] Speaker 01:
And so that's one of the issues that we've raised.

[00:13:22] Speaker 01:
I do not see I've gone into my rebuttal time.

[00:13:25] Speaker 01:
Okay.

[00:13:26] Speaker 01:
We'll let you save the rest of it.

[00:13:27] Speaker 01:
Thank you.

[00:13:34] Speaker 04:
Mr. Lewin.

[00:13:43] Speaker 03:
may please the court, represent the Appalee Southwest Dealer Services.

[00:13:47] Speaker 03:
And I want to start off by making clear that Vox seems to be asking for a change in the law in their briefing and to some extent in their argument today.

[00:13:58] Speaker 03:
For mechanical and electrical hardware devices, they think ALLA shouldn't apply, that 102, 103 should apply.

[00:14:06] Speaker 03:
And for all the references in the briefing and this morning about the accused product,

[00:14:13] Speaker 03:
that they cite to the Research Court versus Microsoft case, which is a pre-ALICE case that doesn't follow the ALICE case law.

[00:14:19] Speaker 03:
By contrast, the district court properly applied the two-step ALICE framework to Representative Claim 1 in great detail.

[00:14:27] Speaker 03:
And the court found that Claim 1 was an abstract idea.

[00:14:32] Speaker 03:
And actually, the verbatim wording of the abstract idea found by the district court was taken from

[00:14:41] Speaker 03:
thoughts as district court opposition brief to our motion to dismiss.

[00:14:45] Speaker 03:
So it was their definition of what the inventor invented.

[00:14:50] Speaker 03:
And as mentioned earlier, neither party raised claim construction.

[00:14:53] Speaker 03:
And very importantly, there's not a single factual allegation in the first amended complaint relating to 101.

[00:15:00] Speaker 03:
So there's no well-pleaded allegations regarding the 101 issue.

[00:15:06] Speaker 03:
And at the hearing, Vox admitted that any further amendment to the complaint would be futile.

[00:15:14] Speaker 03:
So the primary basis for the district court's ruling was that the claim language is purely functional and results-oriented, the selecting of a mode and restricting of other modes, and that the claim is missing the how for both selecting and restricting.

[00:15:30] Speaker 03:
And I think that goes back to the discussion of, you know,

[00:15:35] Speaker 03:
an incompletely drafted claim or a specification disclosure that doesn't link to the claim language itself.

[00:15:41] Speaker 03:
There's just nothing in the claim that explains how those steps are done.

[00:15:47] Speaker 03:
So the operations that are in the claim are generic.

[00:15:53] Speaker 03:
The components that are in the claim are generic.

[00:15:56] Speaker 00:
Is there a response to opposing counsel's argument, at least I just heard, that there were some factual disputes that needed to be resolved before the motion to dismiss could be decided?

[00:16:06] Speaker 03:
Yeah, I don't think there are.

[00:16:09] Speaker 03:
I think this is a case like in Sanderling where district court shouldn't be required to rule on a vague and generalized assertion of a fact issue.

[00:16:19] Speaker 03:
If you go back to the

[00:16:23] Speaker 03:
where this was raised in the briefing in the district court, there's a very vague statement that just says the foregoing creates a fact issue.

[00:16:32] Speaker 03:
And so there really wasn't anything specific from our standpoint of a fact issue at the district court.

[00:16:41] Speaker 03:
And in fact, the district court's order explicitly stated that it didn't make any factual findings.

[00:16:49] Speaker 03:
It considered a number of things, the patent,

[00:16:52] Speaker 03:
certain parts of the file history and other documents, but did not make any factual findings as to them.

[00:16:57] Speaker 03:
So we don't think that there is any fact issue that would prevent dismissal of the complaint.

[00:17:06] Speaker 00:
Was there ever a request for some type of discovery that needed to be taken before the motion to dismiss was rolled on?

[00:17:12] Speaker 03:
I'm sorry, could you repeat that?

[00:17:13] Speaker 00:
I'm sorry, was there ever a request for any type of discovery that needed to be taken before the motion to dismiss could be rolled on?

[00:17:19] Speaker 03:
No, Your Honor.

[00:17:28] Speaker 03:
So I would just point out also at step two, the Vox's briefing basically tried to repackage the abstract idea and try to supply the inventive concept in that way, but of course there's quite a bit of Federal Circuit case law that says you can't do that.

[00:17:51] Speaker 03:
And again, the how of missing from the claim is also relevant to step two, and that how can't be provided by the spec.

[00:17:59] Speaker 03:
I know Council for Vox said that one of Ordinance Skill in the Arc should come in and interpret the specification and

[00:18:07] Speaker 03:
then the claims could be understood in light of the specification.

[00:18:09] Speaker 03:
But to me, that sounds like an admission that the specification does not link to the claims, and that you'd actually need an expert to come in and explain the how that's not actually even presented explicitly in the spec.

[00:18:22] Speaker 03:
He's also saying the specification's description doesn't limit the claims.

[00:18:27] Speaker 04:
It doesn't limit the claims, which is the very problem with things being abstract.

[00:18:33] Speaker 04:
Right.

[00:18:35] Speaker 03:
So our position based on the law is that the inventive concept must be evident in the claims, and we don't think that's the case here.

[00:18:45] Speaker 03:
So unless the panel has any further questions, we'll ask for court to affirm.

[00:18:51] Speaker 03:
OK, thank you.

[00:18:55] Speaker 04:
Mr. Santura, you've got almost two minutes.

[00:19:06] Speaker 01:
So to sort of circle back to something that we touched on before, the district court said that he needed additional details about how to realize the incorporation and restriction that's referenced in the claim.

[00:19:20] Speaker 01:
This is where I sort of come back to.

[00:19:23] Speaker 01:
The district court apparently wasn't in a position, based on the specification, the complaint, and everything else, to determine how these features would be implemented.

[00:19:33] Speaker 00:
Did you ever make any express request for discovery before the motion to dismiss could be ruled on?

[00:19:41] Speaker 01:
No, we did not.

[00:19:43] Speaker 01:
Ultimately, at the end of the day, I think that the

[00:19:49] Speaker 01:
The patent itself is in the record.

[00:19:51] Speaker 01:
The amended complaint was in the record.

[00:19:53] Speaker 01:
We believe that one of our may still in the art would understand exactly how the incorporation of these modes is in there and how they are restricted.

[00:20:02] Speaker 01:
The district court didn't or said that it wasn't present.

[00:20:06] Speaker 01:
And that's why I think in light of that,

[00:20:09] Speaker 01:
That's where we come back to, you know, ultimately the step two of the process where we have to look at whether something is conventional routine, not out of the ordinary.

[00:20:19] Speaker 01:
I don't know how a district court judge that doesn't necessarily know the technology area or know the technology is in a position to do that without evidence and without testimony.

[00:20:30] Speaker 01:
But ultimately the court at the, you know, really there was reference to the fact we didn't request leave to amend again in the court's

[00:20:38] Speaker 01:
in the district court's ruling.

[00:20:40] Speaker 01:
And at the hearing, the district court basically said he didn't see anything presented in the patent.

[00:20:45] Speaker 04:
What's the factual allegation in the complaint that you say precludes dismissal?

[00:20:52] Speaker 01:
So we didn't go through the specification and start plugging in factual allegations drawn direct from the patent.

[00:21:01] Speaker 01:
The patent was part and parcel with the complaint.

[00:21:04] Speaker 04:
The answer is there's nothing in the language of the complaint.

[00:21:08] Speaker 04:
Well, I think that... Other than the incorporation of the patents?

[00:21:11] Speaker 01:
Well, certainly there are allegations that the patent was valid and enforceable, but I'm not aware of any court case, any of this court's decisions that say that we have to, you know, add magic language to the complaint.

[00:21:23] Speaker 01:
The court has the complaint.

[00:21:25] Speaker 00:
Just a bit of a pin on this.

[00:21:27] Speaker 00:
Can you point to any specific peer rep in the complaint that raises a specific factual dispute?

[00:21:34] Speaker 00:
before the 101 inquiry could be resolved at the motion to dismiss stage.

[00:21:39] Speaker 01:
In the complaint, no.

[00:21:40] Speaker 01:
In the specification that's referenced in the complaint, yes.

[00:21:46] Speaker 04:
OK.

[00:21:46] Speaker 04:
Thank you very much.

[00:21:48] Speaker 04:
Thank you.

[00:21:48] Speaker 04:
Thank both counsels.

[00:21:50] Speaker 04:
That concludes our session for this morning.