`571-272-7822
`
`
`
`
` Paper 32
`Entered: June 11, 2014
`
`
`
` 1 RECORD OF ORAL HEARING
`
` 2 UNITED STATES PATENT AND TRADEMARK OFFICE
`
` 3
`
` 4 BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
` 5
`
` 6
`
` 7 U.S. BANCORP
`
` 8 Petitioner
`
` 9 vs.
`
` 10 RETIREMENT CAPITAL ACCESS MANAGEMENT COMPANY LLC
`
` 11 Patent Owner
`
` 12
`
` 13
`
` 14 Case CBM2013-00014
`
` 15 Patent 6,625,582
`
` 16
`
` 17
`
` 18
`
` 19 Oral Hearing Held: April 1, 2014
`
` 20
`
` 21 Before: THOMAS L. GIANNETTI, GLENN PERRY, TRENTON
`
` 22 WARD, Administrative Patent Judges.
`
` 23 The above-entitled matter came on for hearing on
`
` 24 Tuesday, April 1, 2014 at the U.S. Patent and Trademark
`
` 25 Office, 600 Dulany Street, Alexandria, Virginia.
`
` 1
`
`
`
`Case CBM2013-00014
`Patent 6,625,582
`
`
`
` 1 APPEARANCES:
`
` 2 ON BEHALF OF THE PETITIONER:
`
` 3 ANTHONY H. SON, ESQ.
`
` 4 MATTHEW J. DOWD, ESQ.
`
` 5 BRIAN H. PANDYA, ESQ.
`
` 6 RYAN M. CORBETT, ESQ.
`
` 7 Wiley Rein LLP
`
` 8 1776 K Street, N.W.
`
` 9 Washington, D.C. 20006
`
` 10 202-719-7492
`
` 11
`
` 12 ON BEHALF OF THE PATENT OWNER:
`
` 13 CASEY L. GRIFFITH, ESQ.
`
` 14 Klemchuk Kubasta LLP
`
` 15 8150 N Central Expressway, 10th Floor
`
` 16 Dallas, Texas 75206
`
` 17 214-367-6000
`
` 18
`
` 19
`
` 20
`
` 21
`
` 22
`
` 23
`
` 24
`
` 25
`
` 2
`
`
`
`Case CBM2013-00014
`Patent 6,625,582
`
`
`
` 1 P R O C E E D I N G S
`
` 2 (1:00 p.m.)
`
` 3 JUDGE GIANNETTI: So we have the final hearing
`
` 4 today in Case CBM 2013-00014. Let's start by getting
`
` 5 appearances of counsel. Let's start with the Petitioner.
`
` 6 Who is appearing today for the Petitioner?
`
` 7 MR. SON: Thank you, Your Honor. Anthony Son
`
` 8 on behalf of U.S. Bancorp, as lead counsel, joined here today
`
` 9 with Matthew Dowd, with backup counsel.
`
` 10 JUDGE GIANNETTI: Okay.
`
` 11 MR. SON: Mr. Dowd will be presenting the
`
` 12 argument for U.S. Bancorp.
`
` 13 JUDGE GIANNETTI: Okay. Fine. Welcome, Mr.
`
` 14 Son. Welcome, Mr. Dowd.
`
` 15 And for the Patent Owner?
`
` 16 MR. GRIFFITH: Casey Griffith, Your Honor.
`
` 17 JUDGE GIANNETTI: Anyone else?
`
` 18 MR. GRIFFITH: No one else will be arguing.
`
` 19 And I have no other attorneys here, Your Honor.
`
` 20 JUDGE GIANNETTI: Okay. So welcome, Mr.
`
` 21 Griffith.
`
` 22 So you have one hour per side. The Petitioner
`
` 23 may reserve time for rebuttal.
`
` 24 And are you ready to proceed, Petitioner?
`
` 25 MR. DOWD: Yes, Your Honor.
`
` 3
`
`
`
`Case CBM2013-00014
`Patent 6,625,582
`
`
`
` 1 JUDGE GIANNETTI: Okay. Mr. Dowd, proceed when
`
` 2 you are ready. We're starting a few minutes before 1:00.
`
` 3 Are you going to reserve any time for rebuttal?
`
` 4 MR. DOWD: Yes, Your Honor.
`
` 5 JUDGE GIANNETTI: How much time?
`
` 6 MR. DOWD: I would like to reserve 15 minutes.
`
` 7 JUDGE GIANNETTI: Okay. I will try to give you
`
` 8 five minutes warning when your time is expiring, your initial
`
` 9 time.
`
` 10 MR. DOWD: Thank you, Judge Giannetti.
`
` 11 Your Honors, we're here today for, as you said,
`
` 12 the final hearing for the CBM review of the '582 patent. And
`
` 13 as the Panel is well aware we have raised one issue with
`
` 14 respect to the challenged claims.
`
` 15 We have asserted that all of the challenged
`
` 16 claims are invalid under Section 35 U.S.C. 101 because none
`
` 17 of the claims claim patentable subject matter.
`
` 18 There are a few issues that had been raised,
`
` 19 one of which is the threshold issue that the Patent Owner has
`
` 20 raised and that goes to whether the Board has the authority
`
` 21 to rule on Section 101 subject matter patent eligibility in
`
` 22 the context of a CBM review.
`
` 23 We have addressed that in our brief. We have
`
` 24 -- we understand as well that the Board itself has ruled or
`
` 25 granted review in a number of separate CBM reviews based on
`
` 4
`
`
`
`Case CBM2013-00014
`Patent 6,625,582
`
`
`
` 1 Section 101.
`
` 2 So it is our understanding that it is a settled
`
` 3 issue at this point with respect to whether the Board has
`
` 4 authority to review Section 101 arguments in the CBM review.
`
` 5 I will add -- I won't address anything further
`
` 6 beyond what is in the brief, unless the Board has questions,
`
` 7 but I will add two -- well, one additional item, and that's
`
` 8 the fact that both the Director of the PTO, the former
`
` 9 Director of the PTO, Director Kappos, and the Solicitor
`
` 10 General in their amicus brief in the CLS Bank case, which was
`
` 11 argued yesterday, have both taken the view that the Board has
`
` 12 authority to review subject matter of patent eligibility
`
` 13 questions under Section 101 in the context of a CBM review.
`
` 14 So if there are no questions about that, I will
`
` 15 focus on the merits of our argument and I will feel free to
`
` 16 address any points that my opponent raises during his time
`
` 17 during my rebuttal.
`
` 18 As to whether the challenged claims are patent
`
` 19 eligible, as we have said in our brief, it is in our view
`
` 20 clear that these claims must fall under Section 101 because
`
` 21 they are directed to nothing more than business method
`
` 22 claims, abstract ideas, that in some instances may attach as
`
` 23 a post-solution activity, the use of a generalized computer.
`
` 24 We certainly acknowledge, and I think if anyone
`
` 25 has listened or reviewed the transcript of the CLS argument
`
` 5
`
`
`
`Case CBM2013-00014
`Patent 6,625,582
`
`
`
` 1 before the Supreme Court yesterday, there is a fair amount of
`
` 2 --
`
` 3 JUDGE GIANNETTI: We had two Judges from this panel that were
`
` 4 there.
`
` 5 MR. DOWD: Unfortunately I couldn't make it,
`
` 6 but I had some reports. And I have read the transcript. And
`
` 7 I think probably everyone in this room will agree that there
`
` 8 is a fair amount of uncertainty with respect to what types of
`
` 9 inventions fall within Section 101 and what types fall
`
` 10 without, particularly when it comes to software-related
`
` 11 patents.
`
` 12 But what we also think is relatively certain is
`
` 13 that when it comes to patenting a business method, so
`
` 14 something that is nothing more than human activity, that
`
` 15 claim is not patent eligible. That's Bilski, for example.
`
` 16 And the next extension from that is when you
`
` 17 attach the use of a general computer with no specific
`
` 18 technical programming, no specific software, no specific
`
` 19 code, to implement that human interaction, then that also is
`
` 20 subject matter ineligible.
`
` 21 Now, most recently we have had a number of
`
` 22 Federal Circuit decisions that have made this clear. And
`
` 23 what you see -- and I'm sure what the Board has done is
`
` 24 reviewed those cases, not only in this case but in other
`
` 25 cases before the Board, and before some of these members --
`
` 6
`
`
`
`Case CBM2013-00014
`Patent 6,625,582
`
`
`
` 1 is when you read the context of those cases, and I can go
`
` 2 through them this afternoon, you see a distinction as to what
`
` 3 types of computer-implemented claims might be patent eligible
`
` 4 and what types certainly are not.
`
` 5 JUDGE GIANNETTI: Mr. Dowd, let me just stop
`
` 6 you. Is your view that Bilski said that under no
`
` 7 circumstances would this patent's methods of doing
`
` 8 business be patentable? Is that your reading of the case?
`
` 9 MR. DOWD: No, Judge Giannetti. When you read
`
` 10 the opinion, the majority opinion, it is clear that the
`
` 11 Supreme Court wasn't saying that in no instance is a business
`
` 12 method not patentable.
`
` 13 But I think what comes through that opinion,
`
` 14 and also what comes through further development of Bilski
`
` 15 through either a Myriad, Mayo, and the Federal Circuit cases
`
` 16 of more recent years, is that a general business proposition,
`
` 17 a general business idea, for that to be patent eligible will
`
` 18 be the exception.
`
` 19 And there has to be more than just capturing an
`
` 20 abstract or a basic business context. And I think turning to
`
` 21 the claims --
`
` 22 JUDGE PERRY: Counsel, isn't this process that
`
` 23 is now claimed a bit more concrete in that you are moving
`
` 24 funds into an account? You are disbursing from an account.
`
` 25 It isn't just the raw abstract idea.
`
` 7
`
`
`
`Case CBM2013-00014
`Patent 6,625,582
`
`
`
` 1 MR. DOWD: Judge Perry, I would have to --
`
` 2 well, first, I disagree. And, second, I think I would direct
`
` 3 your attention to the patent itself.
`
` 4 And I have additional copies, and this is
`
` 5 Exhibit 1003. But it is column 8, line, around line 35. And
`
` 6 this is where the patentee or the two inventors themselves
`
` 7 explained the essence of what they are claiming.
`
` 8 And they write, and I quote: "In accordance
`
` 9 with the foregoing, the present invention provides a system
`
` 10 and method for enabling beneficiaries of retirement benefits
`
` 11 to convert future benefits into current resources to meet
`
` 12 current financial and other needs and objectives."
`
` 13 That, I will submit, is nothing more than
`
` 14 getting an advance on your future retirement benefits. And
`
` 15 in the briefing that I have seen, the Patent Owner doesn't
`
` 16 dispute that.
`
` 17 Now, what the Patent Owner does try to do is
`
` 18 they say, well, that might be an abstract idea but we're
`
` 19 claiming something else and something more than that. And so
`
` 20 we have narrowed it. So we have narrowed it, the field of
`
` 21 that abstract idea.
`
` 22 JUDGE WARD: Mr. Dowd, let me ask you, in Judge
`
` 23 Lourie's opinion in CLS, he stated that you must
`
` 24 unambiguously identify the abstract idea.
`
` 25 Give us your terms and how do you unambiguously
`
` 8
`
`
`
`Case CBM2013-00014
`Patent 6,625,582
`
`
`
` 1 identify this abstract idea?
`
` 2 MR. DOWD: Well, we set it forth in our brief,
`
` 3 but I think that that sentence that I just read captures it.
`
` 4 That's one way to phrase what the abstract idea is. We're
`
` 5 taking the inventor's own words.
`
` 6 But, second, another way to put it essentially
`
` 7 is that it is nothing more than getting an advance payment of
`
` 8 your future retirement benefits, whether they are Social
`
` 9 Security benefits or some other retirement benefit.
`
` 10 And the amount that you get is calculated to
`
` 11 some extent, as the patent itself says, to some extent on the
`
` 12 net present value. And the net present value is a standard
`
` 13 accounting term that no one will dispute is well-known.
`
` 14 But going back to my point earlier in terms of
`
` 15 what the Patent Owner says, how they have supposedly narrowed
`
` 16 from claiming an abstract idea in their response, both in
`
` 17 their preliminary response and their -- excuse me, in their
`
` 18 main response, they have said that they have narrowed it by
`
` 19 putting on this limitation -- and this is in the first claim
`
` 20 -- "without encumbering said beneficiary's rights to said
`
` 21 future retirement payments and without violating legislative
`
` 22 prescriptions in the United States against alienation of
`
` 23 future retirement benefits."
`
` 24 I will submit that that's nothing more than
`
` 25 saying that we're going to follow the law. All right? We're
`
` 9
`
`
`
`Case CBM2013-00014
`Patent 6,625,582
`
`
`
` 1 going to have a contract where I'm going to give you money in
`
` 2 advance, you are going to get it later from a retirement
`
` 3 benefit, and then you are going to pay me back, but I won't
`
` 4 encumber what you owe me or what you have if it is in
`
` 5 violation of U.S. law.
`
` 6 That addition doesn't add anything beyond the
`
` 7 abstract idea. Now, we can also argue that if you follow
`
` 8 some of the Supreme Court's language of how they address
`
` 9 abstractness in Mayo, you could see how the Supreme Court
`
` 10 incorporates concepts of novelty or obviousness into whether
`
` 11 something is preempting a field.
`
` 12 And just simply by adding an express limitation
`
` 13 of saying that you will comply with whatever the law is out
`
` 14 there, that doesn't narrow the field. So that's one thing.
`
` 15 And, second of all, and this is repeated in the
`
` 16 Mayo case, in the Mayo case, and also it goes back to Benson
`
` 17 and Flook, is that simply narrowing an abstract idea to one
`
` 18 particular field doesn't necessarily make it any more
`
` 19 abstract in the context of 101.
`
` 20 And that gets to the idea of what you are doing
`
` 21 is you are sort of adding an arbitrary limitation to the
`
` 22 claim. And adding an arbitrary limitation doesn't make it
`
` 23 any less abstract for purposes of 101. And we see that in
`
` 24 some of the Federal Circuit decisions in the past few years.
`
` 25 JUDGE GIANNETTI: Counsel, does your argument
`
` 10
`
`
`
`Case CBM2013-00014
`Patent 6,625,582
`
`
`
` 1 distinguish between the system and the method aspects of this
`
` 2 patent?
`
` 3 MR. DOWD: It does, although I don't think it
`
` 4 necessarily has to. If you look, for example, in the
`
` 5 Accenture case and the Bancorp case from the Federal Circuit
`
` 6 in the past couple of years, you can see language in those
`
` 7 cases where the Court has said, if there really is no
`
` 8 substantial difference between the system claim and the
`
` 9 method claim being claimed, the claims can rise and fall
`
` 10 together. All right?
`
` 11 So that's one argument where we could say that,
`
` 12 if you find the method claims here ineligible, simply
`
` 13 reciting the use of a computer in the preamble of the claim
`
` 14 doesn't make that method any less patent ineligible.
`
` 15 Now, the second aspect of it goes to, well, if
`
` 16 you want to look at how the Federal Circuit analyzed systems
`
` 17 claims in both CLS Bank, in Ultramercial versus Hulu, and
`
` 18 Sirf Technologies, what you look at is whether the computer
`
` 19 actually adds something to the claim.
`
` 20 And we will submit that, again, going back to
`
` 21 the way the inventors described their own invention, they
`
` 22 essentially -- and this is at column 5, the top of column
`
` 23 5 -- the inventors say that desirably, and where appropriate,
`
` 24 the system "utilizes existing computer capabilities, both
`
` 25 hardware and software, and electronic communication links,
`
` 11
`
`
`
`Case CBM2013-00014
`Patent 6,625,582
`
`
`
` 1 for example, to effect electronic funds transfer to and from
`
` 2 the beneficiary's individual deposit account."
`
` 3 So, again, what the Patent Owner is saying is
`
` 4 that, okay, we have a method. Our method is essentially a
`
` 5 way to advance money, and you will pay us back later on. But
`
` 6 if you don't want to do it in person, you could do it through
`
` 7 a computer. But, now, you don't need to have any special
`
` 8 expertise about the computer.
`
` 9 You don't have to have a special, you know,
`
` 10 silicon graphics or whatever the advanced computer is these
`
` 11 days, and you don't have to have any special code or
`
` 12 algorithm here. And, in fact, the patent itself doesn't
`
` 13 describe any particular code or algorithm with respect to the
`
` 14 means limitations that are in the claims.
`
` 15 So the understanding must be that all you do is
`
` 16 you take that generic abstract idea of advancing monies and
`
` 17 you put a computer in the preamble.
`
` 18 Now, I think that a fair reading of both Bilski
`
` 19 in combination with Mayo leads you to the conclusion that
`
` 20 simply appending the language "a computerized method" doesn't
`
` 21 make the method any less patent ineligible.
`
` 22 JUDGE GIANNETTI: What about a system, where it
`
` 23 talks about a system, just in the section that you were
`
` 24 reading: System 10 may be arranged and constructed without a
`
` 25 significant investment in system architecture, design, and
`
` 12
`
`
`
`Case CBM2013-00014
`Patent 6,625,582
`
`
`
` 1 software. And this is referring back to the previous
`
` 2 sentence which talked about hardware and software, electronic
`
` 3 communications link.
`
` 4 What is abstract about that?
`
` 5 MR. DOWD: Your Honor, the question goes -- and
`
` 6 this, I think, follows from the analysis that the split
`
` 7 decision in CLS Bank followed. All right? You had half the
`
` 8 Judges saying that the system claims failed there, they were
`
` 9 patent ineligible, simply because they are exactly like what
`
` 10 we have here.
`
` 11 Now, a number of the other Judges say, well,
`
` 12 the method claims will fail but the system claims are okay
`
` 13 because they are tied to a computer. But there are key
`
` 14 distinctions in that case.
`
` 15 And this is in Judge Rader's concurring opinion
`
` 16 where the Panel goes through in detail, or the plurality goes
`
` 17 through in detail describing the claim, and this is Claim 26
`
` 18 in the CLS Bank case, where -- and this is typical of the
`
` 19 "Alice's systems claims" but the system is described as a
`
` 20 data processing system.
`
` 21 And it goes: "A communications controller, a
`
` 22 first-party device, a data storage unit, a computer coupled
`
` 23 to said data storage unit, generating an instruction." So it
`
` 24 goes and it provides specific detail.
`
` 25 And even in that method, that method by far is
`
` 13
`
`
`
`Case CBM2013-00014
`Patent 6,625,582
`
`
`
` 1 arguably more complex than the method that's described here.
`
` 2 And I think that when you listened to Carter Phillips
`
` 3 describe it yesterday, you could hear his explanation of what
`
` 4 the method was there.
`
` 5 And they have a much stronger argument than the
`
` 6 Patent Owner does here that that method is something that
`
` 7 might be a patent-eligible business method under Bilski,
`
` 8 right, because that is something where, as I understand it,
`
` 9 it is this multi-party process for dealing with multiple,
`
` 10 multiple trades across different time zones done at
`
` 11 lightning-fast speed. In fact, it sounds like something that
`
` 12 could only be done by a computer.
`
` 13 And that's another distinction that you get in
`
` 14 a lot of the -- a number of the cases. I think if you look
`
` 15 at Sirf Technologies, for example, and this was a --
`
` 16 JUDGE WARD: Mr. Dowd, let me ask, before you
`
` 17 leave that point. I want to ask you about the
`
` 18 means-plus-function claims on 13 and Claim 30.
`
` 19 MR. DOWD: Yes.
`
` 20 JUDGE WARD: A number of means for limitations
`
` 21 are recited in those claims and, of course, we need to look
`
` 22 to the structure in the specification to provide support for
`
` 23 those means for limitations.
`
` 24 MR. DOWD: Yes.
`
` 25 JUDGE WARD: Why is that structure not
`
` 14
`
`
`
`Case CBM2013-00014
`Patent 6,625,582
`
`
`
` 1 sufficient enough for 101 eligibility?
`
` 2 MR. DOWD: Because, again, the analysis doesn't
`
` 3 change just because it is a means-plus-function. I think
`
` 4 there it gets into the question of, well, have you satisfied
`
` 5 the specificity required of 112(6) or 112(f) as it is now.
`
` 6 But in terms of a structure, simply because you
`
` 7 -- and this goes back to Benson and Flook and it goes back to
`
` 8 Mayo -- simply because you carry out a process using some
`
` 9 device, if you will, some general device, that doesn't make
`
` 10 an otherwise patent-ineligible method now eligible for
`
` 11 patentability.
`
` 12 And that gets to the whole point of Mayo. This
`
` 13 post-solution activity, post-solution appending of a
`
` 14 computer.
`
` 15 JUDGE PERRY: Why do you refer to it as
`
` 16 post-solution when the computer itself is carrying out the
`
` 17 steps of the method? It isn't as if the method happens and
`
` 18 then something else happens.
`
` 19 MR. DOWD: Well, I think in the Supreme Court's
`
` 20 use of the term, I think the idea gets to the point that
`
` 21 what's the essence of the invention?
`
` 22 The essence of this invention isn't some new
`
` 23 computer system. We get that from the language of the patent
`
` 24 itself.
`
` 25 The essence of the invention is actually just
`
` 15
`
`
`
`Case CBM2013-00014
`Patent 6,625,582
`
`
`
` 1 the payday advance or the advance of funds and promise to pay
`
` 2 back later on. And then once -- that's the solution. And
`
` 3 once you have that solution, anything that's added after that
`
` 4 is the post-solution addition.
`
` 5 JUDGE PERRY: Putting the computer aside for a
`
` 6 moment, can you imagine any level of complexity that this
`
` 7 invention might have talked about that would make it
`
` 8 sufficiently concrete that it is no longer claiming an
`
` 9 abstract idea?
`
` 10 Let's say the disbursement could only occur on
`
` 11 a Tuesday if it is raining and the sky was pink. You know,
`
` 12 how concrete does a business method claim have to get before
`
` 13 it is no longer abstract?
`
` 14 MR. DOWD: Judge Perry, that's a difficult
`
` 15 question, and I hate to answer that way, but I think that's
`
` 16 one of those areas right now that it is an unsettled area.
`
` 17 Right? How far do you have to go?
`
` 18 And I think the Solicitor General was pressed
`
` 19 to answer something similar to that yesterday. And he was --
`
` 20 I think his initial response was it's difficult for me to
`
` 21 give an answer.
`
` 22 So to the extent I'm following his footsteps,
`
` 23 you know, I feel a little safe, but I think he did answer
`
` 24 something to the effect that, well, if you are using some
`
` 25 method to address complex credit card transactions, and you
`
` 16
`
`
`
`Case CBM2013-00014
`Patent 6,625,582
`
`
`
` 1 are implementing a complex encryption technology, right, then
`
` 2 that might be a business method that satisfies it.
`
` 3 But underlying that -- and this is also what
`
` 4 underlines, I think, the decision or the outcome in
`
` 5 Ultramercial -- is the idea that for those business methods
`
` 6 it is almost as if you need the computer to accomplish what
`
` 7 the essence of the invention is, what the abstract idea is,
`
` 8 if you will.
`
` 9 And that also comes through in Sirf Technology,
`
` 10 which is an opinion written by or primarily authored by Judge
`
` 11 Dyk. And I think the Board will recognize that, at least at
`
` 12 the Federal Circuit, there is a split, you know, some Judges
`
` 13 are more willing to let a claim be patent eligible and other
`
` 14 Judges have different philosophical views on it.
`
` 15 Judge Dyk, as you see in some of the cases that
`
` 16 we have cited, he is generally on the view that business
`
` 17 methods shouldn't be patented generally. Right? I mean, he
`
` 18 might take the extreme view.
`
` 19 He was the author, for example, of In Re
`
` 20 Comiskey. In Re Comiskey is a similar case I think to ours,
`
` 21 right, because what was at issue in Comiskey? Comiskey dealt
`
` 22 with supposedly a method dealing with mandatory arbitration.
`
` 23 So that concept of just human interaction,
`
` 24 right, that's a general abstract idea that can't be patented.
`
` 25 Now, he made the distinction when he authored
`
` 17
`
`
`
`Case CBM2013-00014
`Patent 6,625,582
`
`
`
` 1 the decision in Sirf Technologies because that was an
`
` 2 invention dealing with GPS technology. And towards the end
`
` 3 of his opinion he writes, well, it is essentially something
`
` 4 that could not be done with the -- without the GPS devices
`
` 5 and without this system.
`
` 6 And so the distinction, although I don't think
`
` 7 cases say this expressly, but the underlying assumption or
`
` 8 understanding is that if you want to -- if you want to patent
`
` 9 some general human interaction, business interaction, it has
`
` 10 to involve something that's so complex that it has to be done
`
` 11 with computer t