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`UNITED STATES PATENT AND TRADEMARK OFFICE
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`SAP AMERICA, INC., ET AL,
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`Petitioner,
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`-against-
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`11 Patent of VERSATA DEVELOPMENT GROUP, INC.,
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`14 Case CBM2012-00001
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`15 Patent 6,553,350
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`Patent Owner.
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`February 26, 2013
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`2:00p.m.
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`T E L E C 0 N F E R E N C E
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`H E A R
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`I N G
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`B E F 0 R E:
`
`MICHAEL TIERNEY,
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`Administrative Patent Judge
`
`SALLY MEDLEY,
`
`Administrative Patent Judge
`
`RAMA ELLURU,
`Administrative Patent Judge VERSATAEXHIBIT2071
`SAP v. VERSATA
`CASE CBM2012-00001
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`212-267-6868
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`VERITEXT REPORTING COMPANY
`www.veritext.com
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`516-608-2400
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`UNITED STATES PATENT AND TRADEMARK OFFICE
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`-x
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`SAP AMERICA, INC., ET AL,
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`Petitioner,
`
`-against-
`
`11 Patent of VERSATA DEVELOPMENT GROUP, INC.,
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`12
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`13
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`14 Case CBM2012-00001
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`15 Patent 6,553,350
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`Patent Owner.
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`February 26, 2013
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`2:00p.m.
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`T E L E C 0 N F E R E N C E
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`H E A R
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`I N G
`
`B E F 0 R E:
`
`MICHAEL TIERNEY,
`
`Administrative Patent Judge
`
`SALLY MEDLEY,
`
`Administrative Patent Judge
`
`RAMA ELLURU,
`Administrative Patent Judge VERSATAEXHIBIT2071
`SAP v. VERSATA
`CASE CBM2012-00001
`
`212-267-6868
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`VERITEXT REPORTING COMPANY
`www.veritext.com
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`516-608-2400
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`Page 2
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`A P P E A R A N C E S:
` FINNEGAN, HENDERSON, FARABOW,
` GARRETT & DUNNER, LLP
` Attorneys for Petitioner
` 11955 Freedom Drive
` Reston, Virginia 20190
` BY: ERIKA ARNER, ESQ.
` MICHAEL V. YOUNG, SR., ESQ.
` JOSEPH E. PALYS, ESQ.
` DANIEL C. TUCKER, ESQ.
` ROPES & GRAY
` Attorneys for Petitioner
` One Metro Center
` Washington, DC 20005
` BY: J. STEVEN BAUGHMAN, ESQ.
`
` ROTHWELL FIGG ERNST & MANBECK, P.C.
` Attorneys for Patent Owner
` 607 14th Street, NW
` Washington, DC 20005
` BY: MARTIN M. ZOLTICK, ESQ.
` NANCY J. LINCK, Ph.D, ESQ.
` BRIAN S. ROSENBLOOM, ESQ.
` R. DANIEL HUNTINGTON, ESQ.
` * * *
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` Proceeding
` HON. TIERNEY: Is everybody on
` the line, starting with patent owner?
` MR. ZOLTICK: Yes, good
` afternoon, Your Honor. Marty Zoltick
` and Danny Huntington, Brian Rosenbloom
` and lead counsel Nancy Linck on the
` line.
` HON. TIERNEY: Welcome to the
` call.
` MR. ZOLTICK: Thank you.
` Hon. TIERNEY: Petitioner, who
` do we have today?
` MS. ARNER: Hi, Judge. This is
` Erika Arner for petitioner SAP. Also
` on the line is backup counsel, Steve
` Baughman and Joe Palys and Michael
` Young.
` HON. TIERNEY: And I believe we
` have a court reporter today?
` THE COURT REPORTER: Yes, good
` afternoon. Lisa Sansone.
` HON. TIERNEY: I assume you are
` ready to begin?
` THE COURT REPORTER: Yes.
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` Proceeding
` HON TIERNEY: All right. Thank
` you. I saw we had a few issues came
` up today. The e-mail received has
` three issues identified. Starting
` with issue one, it appears the parties
` are in disagreement about the
` cross-examination. Since it is
` identifying SAP's position first, we
` will start with SAP. Please give me
` at least a little bit of background on
` this issue.
` MR. BAUGHMAN: Your Honor, it is
` Steve Baughman from Ropes & Gray. If
` I could address that issue?
` HON. TIERNEY: Yes, please.
` MR. BAUGHMAN: The Board's order
` on February 21st, that is paper 45
` clarified that the 102 instituted
` grounds had been withdrawn from the
` trial, and what we are looking to do
` with this issue is to confirm before
` Friday's deposition that this
` indicates that the proper scope for
` cross-examination of our expert,
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` Proceeding
` Dr. Siegel will be limited to Section
` 101. And basically we are trying to
` clarify before we are actually before
` a court reporter in the process of a
` deposition whether there's a dispute
` that the Board may be able to resolve
` to avoid us having to break and
` disrupt the Board during the day on
` Friday.
` Our understanding from looking
` at Versata's stated position for
` today's call is that they are
` characterizing our argument as being
` that the subject matter claimed in the
` claims as a whole is nothing more than
` routine and conventional. Our
` position actually is that for 101
` purposes that beyond the abstract
` ideas such as organizing the data in
` the hierarchies, organizing and
` pricing data into groups, the claims
` are adding nothing more than what it
` is routine and conventional, and we
` believe that is what is in
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` Proceeding
` Dr. Siegel's report, for 101 purposes
` that is the proper scope of
` cross-examination.
` So our concern from our
` discussion so far has been that
` Versata appears to intend to dig into
` the abstract ideas and whether they
` are routine and conventional and that
` is the heart of the 102 ground that
` SAP has agreed to withdraw to expedite
` this matter.
` HON. TIERNEY: What is the
` prejudice if we allow them to delve
` into, if you would say, the matter?
` MR. BAUGHMAN: To begin with,
` Your Honor, it requires us to prepare
` our expert on a issue that is no
` longer in trial. It starts to
` undercut the very efficiencies that
` the expedited schedule was meant to
` deliver to the parties and to the
` Board.
` HON TIERNEY: If they are asking
` questions what is routine and
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` conventional and want to know what
` does prior art tell you about that,
` isn't that within the scope of 101?
` MR. BAUGHMAN: If it has to do
` with the peripheral material around
` the abstract ideas, Your Honor, we
` think that can be inquired into. And
` it's the question of whether the
` methodology of the hierarchy, the
` pricing organization is routine and
` conventional, we don't believe that is
` within the scope of 101, that is the
` abstract idea.
` HON. TIERNEY: So the real harm
` you are saying here is that this
` requires witness preparation?
` MR. BAUGHMAN: It requires
` preparation. It requires time during
` the deposition. It will require time
` after the deposition to deal with
` these issues in the transcripts,
` potentially in the briefing. We just
` thought it would be more efficient for
` the parties to have clarity on this
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` issue now so that we can avoid that
` perpetual dispute about whether 102
` issues are being brought back into the
` case.
` HON. TIERNEY: Let's hear from
` the patent owner at this point.
` Patent owner, can you take a couple of
` minutes and give us your position?
` MR. ZOLTICK: Yes, Your Honor,
` thanks. So we certainly understand
` based on the decision that the 102
` issue has been withdrawn by SAP;
` however, first of all, their expert
` that we are going to cross-examine on
` Friday very clearly in his testimony
` in paragraph 46 talks about nothing in
` claims 17, 26, 27, 28 and 29 adds
` anything but conventional, well-known
` activities to these abstract ideas.
` And in the paper that they had filed
` requesting the expedited schedule, SAP
` talked about the claim features
` because the claim features are routine
` and conventional, that was in their
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` request on page three. We simply want
` the ability to be able to explore with
` Dr. Siegel in cross-examining him the
` basis for his opinion. We think it's
` relevant to 101. He has raised it as
` a basis for his opinion and we don't
` feel that we should be limited in any
` way in going into what he believes is
` well-known. I apologize for the fire
` engines in the background. So that is
` our position as to why we should be
` able to delve into with the witness.
` We don't see that there is any
` prejudice at all. We are going to be
` there deposing him. He's put all this
` information in his report. He's
` relied on it and made these
` statements, and we think we are
` entitled to ask him about it.
` MR. BAUGHMAN: Your Honor, if I
` could respond briefly for the
` petitioner?
` HON. TIERNEY: Very briefly.
` MR. BAUGHMAN: Yes, Your Honor.
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` In paragraph 46 to which Mr. Zoltick
` just referred, that is our position as
` well. Dr. Siegel says that
` conventional, well-known activities
` were added to these abstract ideas.
` In other words, the issue is not
` whether the abstract ideas are
` conventional, but whether the
` peripheral material somehow lends
` patentability with it what is added.
` And again, we think that focusing on
` the portion of Dr. Siegel's report
` that actually pertains to Section 101
` is the appropriate scope here.
` There's a lot more material that takes
` a lot more space and a lot more time
` to deal with that addresses all the
` other issues that are no longer in the
` case.
` HON. TIERNEY: We have
` sufficient information to make a
` decision at this point. The panelists
` conferred and we are going to allow
` some leeway on this. In other words,
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` the patent owner will be allowed to
` ask the questions regarding prior art.
` Again, the reason being, to give a
` reason, is that Section 101 is a very
` course filter for statutory
` eligibility and it can implicate what
` is conventional. And so we are not
` going to decide it today in advance
` nor should we what questions go to
` conventional and what questions do
` not. And again, during the
` deposition, we expect SAP to give some
` leeway and not necessarily be calling
` us with every time there's a question
` that appears to go into what is or is
` not prior art.
` Again, we've expedited the
` proceeding, and we've tried to carve
` out 101, but 101 has tested many
` different areas of patent law. And so
` in this instance, we are going to
` allow a little bit of flexibility for
` how patent owner wishes to proceed
` during the deposition. Any questions,
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` Proceeding
` starting with the petitioner?
` MR. BAUGHMAN: No, your Honor, I
` understand the ruling.
` HON. TIERNEY: Okay.
` Patent owner, any questions
` before I continue?
` MR. ZOLTICK: No questions, Your
` Honor, thanks.
` HON. TIERNEY: Thank you. Next
` issue two goes to length of
` cross-examination. Although I notice
` in the e-mail it has SAP's position
` first, I'm going to start with
` Versata. I notice in our rule by
` default you have been given seven
` hours cross-examination. This is
` limited to 101. Just please give us
` some background as to why you feel the
` need for seven hours on 101 with this
` expert?
` MR. ZOLTICK: Your Honor, we
` were I guess basing our understanding
` that we would be provided up to seven
` hours for cross-examination as you
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` Proceeding
` noted and as we said in our e-mail
` based on the rule, we didn't see
` anything in paper 45 expediting the
` schedule that would have reduced that
` specific time provided by the rule. I
` have to say I don't know that I am
` going to use all seven hours. In fact
` I'm probably not, but I feel it's
` prejudicial for us to be limited at
` this point on it, and there really
` isn't any prejudice at all to SAP with
` respect to us being provided with the
` full seven hours.
` HON. TIERNEY: So let me just
` try and paraphrase and see if this is
` acceptable. My understanding is you
` do not necessarily require seven
` hours. At this point in time, you
` don't however know how much you will
` need to take on the deposition. It
` makes sense if you find interesting
` issues, you may want to explore and
` you may push more into the six- or
` seven-hour range, but you do not
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` expect it at this time that that is
` required?
` MR. ZOLTICK: I guess just the
` caveat is I don't know whether or not
` we will get there at this point. We
` have to deal with as you noted earlier
` that there are a number of different
` issues that touch on an overlap of
` 101. Certainly my goal is not to go
` seven hours.
` HON. TIERNEY: Thank you, that
` is all I needed to hear.
` SAP, what is the prejudice to
` going ahead and giving them the
` default time? I realize we are
` limited to just 101; however, everyone
` is already in the room, the witness is
` there, the witness has already had
` their declaration, 101 is a broad
` course filter on statutory
` eligibility. What is the harm of
` giving them up to the seven hours?
` MR. BAUGHMAN: Your Honor, Steve
` Baughman for petitioner. I note I
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` Proceeding
` guess the same points that we raised
` with respect to the 102 issues
` generally, we have some concern that
` having seven hours available with
` lawyers in the room does tend to lead
` to using seven hours with no
` excursions on Mr. Zoltick's
` intentions, especially if there is a
` possibility of exploring what we think
` is peripheral material.
` I understand the Board's
` guidance on giving leeway and not
` raising the issue every time it may
` arise about whether it is a 102
` question versus 101. Given the
` initial scope of the proceeding which
` would have invoked the seven hours and
` we would have understood that and the
` vastly reduced scope now, the number
` of pages of expert report here, I
` think it's in the order of three pages
` of the report or so that are dedicated
` to 101 as opposed to the entire
` report, we would have thought it was
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` Proceeding
` certainly within the proportions
` intended by the rule which can be
` adjusted by the Board under Rule 53C
` to have it proportionally reduced.
` And I think we included that on page
` four of our proposal.
` HON. TIERNEY: Let me jump in
` here. How many depositions are
` planned before the patent owner files
` their response? Is there the only one
` planned at this time?
` MR. ZOLTICK: This is Marty
` Zoltick. There's only one that has
` been noticed at this time, and I guess
` when we get to the third issue, we may
` talk about whether there is going to
` be any others, but that is all that is
` planned right now.
` HON. TIERNEY: At this point in
` time, all you have asked for is at
` this point with the issue two is seven
` hours total deposition before you file
` a response. Given that everyone is
` already in the room, the questions are
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` Proceeding
` being asked, we are affording some
` leeway on the 101 issue. I see no
` reason why we should deviate from that
` default time given the nature of this
` case. The panel concurs, so we will
` go ahead and we are giving the seven
` hours at this time. I do not feel
` though you need to use the entire
` seven, of course, but you understand.
` Any questions on that, starting with
` Versata?
` MR. ZOLTICK: No questions, Your
` Honor, thank you.
` HON. TIERNEY: Any questions
` from SAP?
` MR. BAUGHMAN: I don't have any,
` Your Honor. I don't know if my
` co-counsel do.
` HON. TIERNEY: Hearing anything
` from co-counsel from SAP?
` MR. PALYS: No, Your Honor.
` HON. TIERNEY: Next we get to
` issue three. There's a little more
` written here. I see Versata's
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` position goes first. I will follow
` the e-mail, and, Versata, can you
` explain issue three to us, please?
` MR. ZOLTICK: Yes, your Honor.
` I guess a little background that we
` had raised prior to institution some
` discovery issues and the Board
` determined that they were premature
` and we would wait until after
` institution. After institution we, of
` course, got into the issue of the
` expedited schedule and in connection
` with that, we had raised some issues
` regarding discovery. I had actually
` sent an e-mail to Amy. One of the
` papers, I don't remember which one,
` invited if there are discovery issues
` that you want to address of the Board,
` let us know. So I had sent an e-mail
` after the schedule was expedited
` indicating that we wanted to have a
` conference with the board on the
` discovery issue.
` This particular issue we went
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` through information from the public
` record to along the lines of the
` guidance provided to us by the Board
` early on, specifically identify those
` documents that we intended to and
` wanted to use. This is not a
` situation where we believe right now
` that we need to take additional
` discovery to request documents and
` testimony. We got it from the
` district court case. We identified a
` limited number of what were trial
` exhibits from the public record in
` that case that we believe relate to
` the 101 issue.
` There also is testimony from
` three witnesses from the district
` court case and you heard these names
` before, that is SAP's expert Dr. Boyd,
` SAP's expert Dr. Tigar and then Mr.
` Nettles who was an expert for Versata.
` The Boyd testimony was produced in
` routine discovery by SAP. Tigar was a
` declaration to SAP's opening claim
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` construction -- a reply to claimant's
` opening claim construction brief which
` was also produced during routine
` discovery and Nettles there's some
` testimony from the trial that we think
` is relative to the claim construction
` issue that bears on 101. So we
` attempted to identify all of this
` information specifically. We sent it
` over to SAP's counsel to see if we
` could reach agreement specifically on
` the issue of authenticity and
` admissibility because we given the
` expedited schedule and the
` streamlining of this process, we
` didn't think it was necessary, hoped
` it wasn't necessary for us to go do
` some depositions simply to
` authenticate and prove up these
` documents and this testimony when the
` admissibility of it was taken care of,
` if you will, in the district court
` case. These documents were
` authenticated, certified, testified
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` about and ultimately admitted into
` evidence in the district court case.
` So at least at this point, we
` raise that issue, and it's our
` understanding that SAP has some issues
` with respect to that. And what we are
` requesting is that if SAP does have
` objections to the evidence based on
` authenticity or admissibility, then we
` would like to request authorization to
` depose one or more witnesses to
` address SAP's objections.
` HON. TIERNEY: Let's start off,
` I think authenticity should be
` hopefully straight forward. SAP, do
` you have any objection to the
` authenticity?
` MR. PALYS: This is Joe Palys
` for SAP, Your Honor. Off the cup, I
` would say no generally, but we just
` got the copies of the documents this
` morning, so we have to go off of what
` Versata's counsel has told us that all
` these documents have been
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` authenticated. So we still have to
` confirm that, but assuming that is the
` case, I don't think we will have an
` argument with just authentication. I
` think it's going to be more towards
` admissibility.
` THE HEARING OFFICER: We are
` going to go ahead and assume today
` that there is no objection to
` authenticity. If there is, it better
` be very clear in why documents that
` have already been publically available
` in ligation previously, why we need to
` have authentication.
` Going back to Versata on
` admissibility, they haven't put the
` evidence into record yet and shown why
` they are using it, et cetera. Why
` should they already admit that it is
` admissible if they don't have the
` brief to go with it?
` MR. ZOLTICK: The documents in
` any case, your Honor, are all SAP
` business records. They are
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` presentations and e-mails as such. We
` just didn't see there would be an
` issue with respect to -- We wanted the
` ability to be able to use them in
` cross-examination because we think
` they are inconsistent with the
` position that the witness is taking,
` number one. And number two, we want
` to be able to use them in support of
` our patent owner response.
` HON. TIERNEY: Okay. Let's take
` this very simply. At least on the
` first part, you want to use them in
` your complete response that you are
` filing. As to admissibility on that,
` I see no reason at this time where we
` have to have anyone agree or disagree.
` They are there for you to use. If SAP
` believes that for some reason they are
` not admissible, they will let us know
` in their reply.
` Now, the next issue you are
` saying you want to cross-examine
` people, that is a separate issue. So
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` please explain why we would need
` cross-examination of witnesses from a
` district court litigation where they
` are testifying years ago on claim
` construction under a different
` standard and under prebuilt to 101 and
` how that is relevant to this
` proceeding where you can have your own
` expert and bring an expert to testify
` specifically to the law in this case,
` rather not the law, rather the
` underlying facts that apply to the
` specific law that applies to this
` case?
` MR. ZOLTICK: I think, Your
` Honor, it really does go to the facts
` and the position that in particular
` for one that SAP has taken that the
` steps in our claim method, for
` example, are just, you know, routine
` and conventional activities applied to
` an abstract idea. We think that these
` documents, for example, are
` inconsistent with that, that they show
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` that, for example, referring to the
` prior art system that they have, that
` it did not have these features, these
` specific features, these things they
` are alleging now are routine and
` conventional activities and that they
` made a change after our patent
` application was filed in 1998, they
` made a change to the system, described
` that in these presentations and that
` is exactly the system that is covered
` by the claims of the patent or at
` least that the court found was
` infringing and is covered by the
` claims of the patent. The way they
` have described in these documents the
` change that was made, we think bears
` on the issue of whether or not there
` is in fact routine and conventional
` activities being applied to an
` abstract idea.
` HON. TIERNEY: Let's back up.
` You are bringing a lot of issues that
` are not clear or relevant to this
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` proceeding. The fact that let's
` hypothetically say you have a very
` broad claim, an abstract claim, the
` fact that you put in a commercial
` product that touches upon that and
` that they made some changes to it,
` that does not necessarily demonstrate
` that the claim itself is not abstract.
` So, I'm having trouble understanding
` how you are needing their testimony
` about a commercial product to show
` whether or not this is 101 statutorily
` eligible or not?
` MR. ZOLTICK: For example, and
` this is an SAP document that refers to
` their prior system which is
` specifically the one that was
` described by Dr. Siegel, the R32.2
` system and it specifically refers to
` what they call now hierarchy assesses,
` it goes to these condition tables, the
` specific information that Dr. Siegel
` relied on in his declaration, and it
` talks about how in the prior system
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` the way that the condition tables were
` used was different than the way they
` are used in this new system which came
` out in 1998 and specifically the way
` that it's described it goes right to
` the claimed features.
` HON. TIERNEY: Let's stop here.
` You are going to be able to
` cross-examine Dr. Siegel, so what
` additional testimony or additional
` discovery are you seeking? Are you
` seeking to depose someone other than
` Dr. Siegel?
` MR. ZOLTICK: No, Your Honor.
` All I want the ability to be able to
` do is to use these documents that we
` have with Dr. Siegel to the extent we
` decide we want to because we think
` what he is saying is inconsistent with
` what is in those documents. They can
` make their objections during the
` deposition if they want to and then
` afterwards --
` HON. TIERNEY: All you are
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` asking right now to make it clear is
` you have documents, you want to
` present them to Dr. Siegel and ask him
` to opine what his basis is for
` reaching his conclusion based on those
` documents?
` MR. ZOLTICK: Yes, Your Honor,
` that is part of it.
` HON. TIERNEY: Okay. What is
` missing in this equation then? If
` he's already relied upon the document,
` if SAP does object to him actually
` asking questions relating to the
` documents underlying his testimony,
` let's assume I think a call would be
` needed in that instance, and I would
` have a discussion with SAP as to why
` they would not allow him to testify
` about document underlying his
` testimony.
` MR. ZOLTICK: These are not
` documents that he has relied on.
` These are documents that we have that
` are in the public record in the
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` district court case that are SAP
` documents that we believe are
` inconsistent with the position that
` Dr. Siegel is taking, and we want to
` be able to use them just as you would
` in any cross-examination and trial to
` impeach his testimony.
` HON. TIERNEY: Well, let's stop
` here. Versata, I have your position.
` You want to do a regular deposition,
` cross-examination. You have some
` documents you want to ask him about.
` MR. ZOLTICK: That's right.
` HON. TIERNEY: SAP, they are
` telling me in advance that I have to
` authorize it. Why wouldn't I just say
` allow the depositions to occur the way
` we normally expect? They are going to
` have documents, they are going to ask
` some questions. He can answer. If
` it's related to his testimony, he's
` going to have answers. If it's not
` related to his testimony and he
` doesn't have a answer, he's going to
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` say he doesn't have an answer. What
` do I need to do here, SAP?
` MR. PALYS: Thank you, Your
` Honor. This is Joe Palys again. I
` will answer your question. I just
` think I need to clarify what the issue
` is here. The documents that they are
` talking about like Versata's counsel
` mentioned were not documents that
` Dr. Siegel relied upon and in fact
` they are trial documents from a trial
` relating to infringement. They have
` nothing to do with validity.
` So to address your question, if
` this Board is going to allow Versata's
` counsel to present these documents to
` Dr. Siegel and ask him to, and I don't
` know how they plan on impeaching
` Dr. Siegel on documents that weren't
` his own statements, if they are going
` to put them in front of him and
` Dr. Siegel has not seen these
` documents and has no opinion on them
` or testimony on these documents then
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` if that is the way the deposition will
` go, that is the way it's going to go.
` We think these documents at a top
` level are not relevant because they
` all relate to systems that have
` nothing to do with even the 102
` positions in this case that were
` withdrawn much less the 101 positions.
` HON. TIERNEY: Let's just stop.
` If they want to ask questions which
` you don't think are relevant and they
` think are relevant and your witness
` basica
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