Covered Business Method Patent Review
`United States Patent No. 5,191,573
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
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`§
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`§
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`Attorney Docket No.:
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` 104677-5005-801
`Customer No. 28120
`
`Petitioner: Apple Inc.
`
`
`
`
`Inventor: Hair
`United States Patent No.: 5,191,573
`Formerly Application No.: 586,391
`Issue Date: March 2, 1993
`Filing Date: September 18, 1990
`Former Group Art Unit: 2313
`Former Examiner: Hoa Nguyen
`
`For: Method for Transmitting a Desired Digital Video or Audio Signal
`
`MAIL STOP PATENT BOARD
`Patent Trial and Appeal Board
`United States Patent and Trademark Office
`Post Office Box 1450
`Alexandria, Virginia 22313-1450
`
`PETITION FOR COVERED BUSINESS METHOD PATENT REVIEW OF
`UNITED STATES PATENT NO. 5,191,573 PURSUANT TO 35 U.S.C. § 321,
`37 C.F.R. § 42.304
`
`
`
`Pursuant to 35 U.S.C. § 321 and 37 C.F.R. § 42.304, the undersigned, on behalf
`
`of and acting in a representative capacity for petitioner, Apple Inc. (“Petitioner” and
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`real party in interest), hereby petitions for review under the transitional program for
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`covered business method patents of claims 1, 2, 4, and 5 of U.S. Patent No. 5,191,573
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`(“the ’573 Patent”), issued to Arthur R. Hair and currently assigned to SightSound
`
`LLC (“SightSound,” also referred to as “Applicant,” “Patent Owner,” or “Patentee”).
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`Petitioner hereby asserts that it is more likely than not that at least one of the
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`challenged claims is unpatentable for the reasons set forth herein and respectfully
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`requests review of, and judgment against, claims 1, 2, 4 and 5 as unpatentable under
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`
`
`

`

`35 U.S.C. §§ 101 and 112.1
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` Covered Business Method Patent Review
`United States Patent No. 5,191,573
`
`
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`1 As discussed in Section I, infra, Petitioner has concurrently filed Petitions seeking
`covered business method review of the ’573 Patent requesting judgment against these
`same claims under §§ 102 and 103. Petitioner has additionally filed Petitions seeking
`covered business method reviews of the (related) ’440 Patent requesting judgment
`against claims in that patent under § 101 for claiming patent ineligible subject matter
`and for obviousness-type double patenting in one Petition, and under §§ 102 and 103
`in a second concurrent Petition. Petitioner notes that the Director, pursuant to Rule
`325(c), may determine at the proper time that merger or other coordination of these
`proceedings, including at minimum coordination of proceedings involving the same
`patent, is appropriate.
`
`ii
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`

`

`
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` Covered Business Method Patent Review
`United States Patent No. 5,191,573
`
`
`TABLE OF CONTENTS
`
`I. 
`INTRODUCTION ....................................................................................................... 1 
`II.  OVERVIEW OF FIELD OF THE CLAIMED INVENTION ......................... 5 
`III.  PETITIONER HAS STANDING .......................................................................... 10 
`A. 
`The ’573 Patent Is a Covered Business Method Patent ............................. 10 
`B. 
`Petitioner Is a Real Party In Interest Sued for and Charged With
`Infringement ..................................................................................................... 16 
`IV.  OVERVIEW OF SPECIFIC GROUNDS FOR WHICH IT IS MORE
`LIKELY THAN NOT THAT THE CHALLENGED CLAIMS (1, 2, 4 and 5)
`OF THE ’573 PATENT ARE UNPATENTABLE ............................................. 16 
`BACKGROUND INFORMATION FOR THE ’573 PATENT ...................... 17 
`A. 
`File History of the ‘573 Patent ....................................................................... 17 
`B. 
`Reexamination of the ’573 Patent ................................................................. 23 
`VI.  DETAILED EXPLANATION OF REASONS FOR RELIEF
`REQUESTED, SHOWING IT IS MORE LIKELY THAN NOT THAT AT
`LEAST ONE OF THE CHALLENGED CLAIMS IS UNPATENTABLE . 27 
`A. 
`Claim Construction .......................................................................................... 28 
`B. 
`The Challenged Claims Are Invalid Under § 101 ....................................... 32 
`1. 
`The Challenged Claims Are Directed To An Abstract Idea
`With No Inventive Concept ............................................................... 32 
`The Challenged Claims Are Directed to An Abstract Idea
`that Preempts the Field of Electronic Sale of Digital Music ......... 35 
`The Internet and General Purpose Computer Features in
`the Challenged Claims Do Not Render Them Patentable ............ 39 
`The Challenged Claims Do Not Satisfy the Machine or
`Transformation Test ............................................................................ 45 
`The Challenged Claims are Invalid Under § 112 ........................................ 47 
`C. 
`VII.  CONCLUSION........................................................................................................... 54 
`
`
`V. 
`
`2. 
`
`3. 
`
`4. 
`
`iii
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`

`

`
`
`EXHIBIT LIST
`Exhibit 1001
`
`Exhibit 1002
`
`Exhibit 1003
`
`Exhibit 1004
`
`Exhibit 1005
`
`Exhibit 1006
`
`Exhibit 1007
`
`Exhibit 1008
`
`Exhibit 1009
`
`Exhibit 1010
`
`Exhibit 1011
`
`Exhibit 1012
`
`Exhibit 1013
`
`Exhibit 1014
`
`Exhibit 1015
`
`Exhibit 1016
`
`Exhibit 1017
`
` Covered Business Method Patent Review
`United States Patent No. 5,191,573
`
`
`United States Patent No. 5,191,573
`
`United States Patent No. 5,191,573 File History
`
`Application No. 90/007,402 (’573 Patent Reexamination).
`
`United States Patent No. 5,675,734
`
`United States Patent No. 5,966,440
`
`United States Patent No. 5,966,440 File History
`
`David Needle, “From the News Desk: Audio/digital interface
`for the IBM PC?,” InfoWorld, vol. 6, no. 23, p. 9, June 4, 1984
`Excerpt from, Larry Israelite, “Home Computing Scenarios
`for Success,” Billboard Magazine Charts the Future (Dec.
`1984)
`Excerpt from, Steve Dupler, “Compusonics, AT&T Link,”
`Billboard Newspaper, vol. 97 no. 40 (Oct. 5, 1985)
`10/10/1985 CompuSonics Letter from David Schwartz to
`Shareholders
`International Patent Application WO85/02310, filed on Nov.
`14, 1984, and published on May 23, 1985 (“Softnet”)
`United States Patent No. 3,718,906, filed on June 1, 1971, and
`issued on Feb. 27, 1973 (“Lightner”)
`United States Patent No. 3,990,710, filed on Mar. 1, 1971, and
`published on Nov. 9, 1976 (“Hughes”)
`2/13/13 Order re Claim Construction (D.I. 175), SightSound
`Techs., LLC v. Apple Inc., No. 11-1292 (W.D. Pa.)
`11/19/12 Special Master’s Report and Recommendation on
`Claim Construction (D.I. 142), SightSound Techs., LLC v. Apple
`Inc., No. 11-1292 (W.D. Pa.)
`4/20/01 Markman Hearing Transcript, SightSound.com Inc., v.
`N2K, Inc., et al., No. 98-118 (W.D. Pa.)
`Excerpt from Webster’s II New Riverside University Dictionary
`
`iv
`
`

`

`EXHIBIT LIST
`
`Exhibit 1018
`
`Exhibit 1019
`
`Exhibit 1020
`
`Exhibit 1021
`
`Exhibit 1022
`
`Exhibit 1023
`
`Exhibit 1024
`
`Exhibit 1025
`
`Exhibit 1026
`
`Exhibit 1027
`
`Exhibit 1028
`
`Exhibit 1029
`
`Exhibit 1030
`
`Exhibit 1031
`
`Exhibit 1032
`
`Exhibit 1033
`
` Covered Business Method Patent Review
`United States Patent No. 5,191,573
`
`
`(1988)
`Deposition Transcript of Douglas Tygar, dated Oct. 8, 2012
`SightSound Techs., LLC v. Apple Inc., No. 11-1292 (W.D. Pa.)
`Jennifer Sullivan, “The Battle Over Online Music,” Wired.com
`(Jan. 29, 1999), available at
`http://www.wired.com/techbiz/media/news/1999/01/17609
`Declaration of Dr. John P.J. Kelly, dated Sept. 7, 2012
`
`Declaration of J.D. Tygar, dated Sept. 7, 2012
`
`Responsive Declaration of J.D. Tygar, dated Sept. 28, 2012
`
`Excerpt from Benjamin Krepack and Rod Firestone, Start Me
`Up! the music biz meets the personal computer, pages 126-127
`(Mediac Press May 1986)
`Plaintiff SightSound Techs., LLC’s Expert Report of Dr. J.
`Douglas Tygar Regarding Infringement, dated April 22, 2013
`Expert Report of Mark M. Gleason, CPA/ABV/CFF, CVA,
`CLP, dated April 22, 2013
`7/16/84 CompuSonics Letter from David Schwartz to
`Shareholders
`Deposition Transcript of Arthur Hair, dated Dec. 11, 2012,
`SightSound Techs., LLC v. Apple Inc., No. 11-1292 (W.D.
`Pa.)
`Deposition Transcript of Scott Sander, dated Dec. 18, 2012,
`SightSound Techs., LLC v. Apple Inc., No. 11-1292 (W.D.
`Pa.)
`Excerpt from Chambers Science and Technology Dictionary (1988)
`
`Don Crabb, “A Beginner’s Guide to the Ins and Outs of
`Appletalk LANs,” InfoWorld (April 10, 1989)
`“Inside Macintosh,” Volumes I, II, and III, Addison-Wesley
`Publishing Company, Inc. (1985)
`Craig Partridge, “The Technical Development of Internet
`Email,” BBN Technologies
`Excerpt from PC Magazine, Vol. 11 No. 9 (May 12, 1992)
`
`v
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`

`

`EXHIBIT LIST
`Exhibit 1034
`
`Exhibit 1035
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`Exhibit 1036
`
`Exhibit 1037
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`Exhibit 1038
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`Exhibit 1039
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`Exhibit 1040
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`Exhibit 1041
`
`Exhibit 1042
`
`Exhibit 1043
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`Exhibit 1044
`
`Exhibit 1045
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`Exhibit 1046
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`Exhibit 1047
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`Exhibit 1048
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`Exhibit 1049
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`Exhibit 1050
`
` Covered Business Method Patent Review
`United States Patent No. 5,191,573
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`
`United States Patent No. 4,124,773 filed on November 26,
`1976, issued on November 7,1978 (“Elkins”)
`United States Patent No. 4,667,088 filed on November 1,
`1982, issued on May 19, 1987 (“Kramer et al.”)
`United States Patent No. 4,528,643 filed on January 10, 1983,
`issued on July 9, 1985 (“Freeny”)
`Photo of CompuSonics equipment
`
`Excerpts from Dr. Sidnie Feit, “Wide Area High Speed
`Networks,” Macmillan Technical Publishing USA (1999)
`“The Ethernet- A Local Area Network Data Link Layer and
`Physical Layer Specifications V 2.0,” AA-K759B-TK
`(November, 1982)
`“Apple IIGS Owner’s Guide,” Apple Computer, Inc. (1988)
`
`Hyun Heinz Sohn, “A High Speed Telecommunications
`Interface for Digital Audio Transmission and Reception,”
`presented at the 76th AES Convention, October 8-11, 1984
`Excerpts of Lecture at Stanford by D. Schwartz and J.
`Stautner, 1987 (video)
`Second Declaration of Dr. John P.J. Kelly, dated 9/28/12
`
`United States Patent No. 4,682,248 filed on September 17,
`1985, issued on July 21, 1987 (“Schwartz Patent”)
`Excerpt of Plaintiff Sightsound Technologies, LLC’s Expert
`Report of John Snell dated April 22, 2013
`Declaration of Flora D. Elias-Mique In Support of Petition for
`Covered Business Method Patent Review
`Declaration of David Schwartz In Support of Petition for
`Covered Business Method Patent Review
`Declaration of Roberto J. Gonzalez In Support of Petition for
`Covered Business Method Patent Review
`Declaration of Megan F. Raymond In Support of Petition for
`Covered Business Method Patent Review
`Declaration of Ching-Lee Fukuda In Support of Petition for
`Covered Business Method Patent Review
`
`vi
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`

`

` Covered Business Method Patent Review
`United States Patent No. 5,191,573
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`
`EXHIBIT LIST
`Exhibit 1051
`
`Declaration of Dr. John P.J. Kelly In Support of Petition for
`Covered Business Method Patent Review
`
`vii
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`

`

` Covered Business Method Patent Review
`United States Patent No. 5,191,573
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`I.
`
`INTRODUCTION
`
`The four challenged claims of the ’573 Patent—all method claims—represent
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`nothing more than an attempt to patent a well-known and unpatentable abstract idea:
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`selling digital music electronically in a series of rudimentary steps between a buyer and
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`seller. The patent’s independent Claim 1, for example, recites (A) transferring money
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`electronically to the seller (who has a desired digital audio signal), (B) connecting the
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`seller’s memory with the buyer’s memory, (C) transmitting the desired audio signal
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`from the seller’s memory to the buyer’s memory, and (D) storing it there:
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`1. A method for transmitting a desired digital audio signal stored on a
`first memory of a first party to a second memory of a second party
`comprising the steps of:
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`[A] transferring money electronically via a telecommunication line to the
`first party at a location remote from the second memory and controlling
`use of the first memory from the second party financially distinct from
`the first party, said second party controlling use and in possession of the
`second memory;
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`[B] connecting electronically via a telecommunications line the first
`memory with the second memory such that the desired digital audio
`signal can pass therebetween;
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`[C] transmitting the desired digital audio signal from the first memory
`with a transmitter in control and possession of the first party to a
`receiver having the second memory at a location determined by the
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`
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` Covered Business Method Patent Review
`United States Patent No. 5,191,573
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`second party, said receiver in possession and control of the second party;
`and
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`[D] storing the digital signal in the second memory.2
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`Ex. 1001. It is hard to imagine a more basic description of selling music
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`electronically. Moreover, it is clear that broad control over this abstract principle is
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`precisely what was intended in these claims: in a 1999 article in Wired Magazine,
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`Patent Owner’s chief executive asserted that SightSound has “two US patents[3] that
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`control the sale of downloadable music.” Ex. 1019 (emphasis added). And in
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`litigation to enforce this patent, SightSound’s own expert asserted that “there was no
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`way to purchase digital music for download over telecommunications lines, including
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`the Internet that would not infringe the Patents-in-Suit.” Ex. 1025 ¶ 193. This is also
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`precisely the sort of preemption of a basic concept that is prohibited by 35 U.S.C.
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`§ 101—a prohibition that cannot be avoided by claiming the abstract idea with
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`multiple steps or by claiming performance by a general purpose computer. E.g.,
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`Gottschalk v. Benson, 409 U.S. 63, 64, 71-72 (1972) (claim for converting binary-coded
`
`
`2 Claim 2 simply adds the “steps of searching the first memory for the desired digital
`audio signal; and selecting the desired digital audio signal from the first memory.”
`And claims 4 and 5 parallel claims 1 and 2, respectively, but recite “digital video
`signals” rather than “digital audio signals.”
`3 In addition to the ’573 Patent, SightSound is the assignee of two patents claiming
`priority to the ’573’s application—a child patent, U.S. Pat. No. 5,675,734, which had
`issued when SightSound claimed it controlled the sale of downloadable music with
`“two” patents, and a grand-child patent, U.S. Pat. No. 5,966,440, which issued later
`(and which Petitioner is challenging in separate petitions). Exs. 1004 & 1005.
`
`2
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`

`

` Covered Business Method Patent Review
`United States Patent No. 5,191,573
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`decimals to binary through seven separate steps including storing, shifting, and adding
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`was invalid for claiming an unpatentable abstract idea); DealerTrack, Inc. v. Huber, 674
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`F.3d 1315, 1333 (Fed. Cir. 2012).
`
`
`
`The four challenged claims of the ’573 Patent all recite nothing more than the
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`abstract idea of selling music electronically, combined at most with conventional,
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`routine hardware that applicant Arthur Hair (“Applicant”) himself admitted was
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`already known and available
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`(“a first memory,” “a second memory,” a
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`“telecommunications line,” and a “transmitter” and “receiver”), and this hardware
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`appears in the claims only to perform rudimentary, extra-solution activities—storing
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`and transmitting electronic signals. See generally Ex. 1051 ¶¶ 43-57, 59. The patent
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`(with its short five-column specification) never describes, let alone claims, anything
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`special about this storage or transmission, and these cannot and do not lend
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`patentability to the unpatentable abstract idea Applicant has claimed. And even if the
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`claims at issue required a computer—they do not—the mere performance of
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`otherwise abstract methods by a general purpose computer cannot render the claims
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`patentable. Accordingly, each of the challenged claims is invalid under 35 U.S.C.
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`§ 101.
`
`3
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`

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` Covered Business Method Patent Review
`United States Patent No. 5,191,573
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`The claims at issue are also all invalid for a second, independent reason
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`
`
`addressed in this Petition:4 the broad category of “telecommunication[s] lines” recited
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`in every one of the challenged claims was not disclosed by the Applicant in the
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`originally-filed application leading to the ’573 Patent. Instead, the original application
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`disclosed only “telephone lines”—conceded by the Patent Owner (and found by the
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`District Court presiding over the litigation between Patent Owner and Petitioner) to
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`be narrower in scope. “Telecommunication[s] lines” never appeared in the claims or
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`the specification of the original application leading to the ’573 Patent, and references
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`to this broader category were added to both the specification and claims years later in
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`prosecution. Because 35 U.S.C. § 112 ¶ 1 requires that an Applicant convey with
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`reasonable clarity to those skilled in the art that the Applicant was in possession of the
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`claimed invention as of the filing date, each of the challenged claims is invalid for
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`violation of § 112.5
`
`
`4 As noted earlier, supra n.1, Petitioner is also demonstrating in a contemporaneous
`Petition that these claims are invalid as anticipated and obvious under 35 U.S.C.
`§§ 102 and 103. Petitioner is also demonstrating, in pending litigation with
`SightSound, that the challenged claims are invalid for numerous additional reasons.
`5 See 35 U.S.C. § 321(b) (2013) (“A petitioner in a post-grant review may request to
`cancel as unpatentable 1 or more claims of a patent on any ground that could be
`raised under paragraph (2) or (3) of section 282(b) (relating to invalidity of the patent
`or any claim)”); 35 U.S.C. § 282(b)(3)(a) (2013) (grounds include “any requirement of
`section 112, except . . . failure to disclose the best mode . . .”).
`
`4
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`

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` Covered Business Method Patent Review
`United States Patent No. 5,191,573
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`II. OVERVIEW OF FIELD OF THE CLAIMED INVENTION
`Applicant’s failure in the ’573 Patent to claim anything but an abstract idea,
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`accompanied by at most routine, well-known, commercially available hardware such
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`as memory, telephone lines, and a general purpose computer, is underscored by the
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`repeated appearance of that same idea (with the same generic hardware) throughout
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`the prior art leading to his so-called invention.6 The idea of selling and distributing
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`digital audio and video over telephone lines was well known long before the ’573
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`Patent’s claimed June 13, 1988 priority date—and, as noted above and detailed below
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`in Section V, the ’573 Patent’s Applicant disclosed no new technology for doing so.
`
`The commonplace notion of selling and transmitting digital audio over phone lines
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`from a seller to a buyer’s remote computer system—the sum and substance of what
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`the ’573 Patent Applicant would later seek to claim as his sole property—was
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`discussed, for example, in a May 1986 book, Start Me Up! The music biz meets the personal
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`computer: “We may see a dial-up service for home computers that we could use to
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`select the titles we want. The songs would be downloaded as digital information into
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`our home entertainment systems that could play them back in perfect fidelity.”7 See
`
`Ex. 1023 at 5.
`
`
`6 While Petitioner is separately addressing the anticipation and obviousness of these
`claims, Petitioner includes this information here to provide context for its
`demonstration in this proceeding that the challenged claims of this covered business
`method patent are invalid under § 101.
`7 See Ex. 1023.
`
`5
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` Covered Business Method Patent Review
`United States Patent No. 5,191,573
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`Indeed, this idea was well known far earlier. A May 1984 InfoWorld piece, for
`
`example, reported that CompuSonics was also considering commercializing this same
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`concept, “looking at potential electronic distribution of music whereby you would be
`
`able to download music onto your PC in the same manner as other digital
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`information. The CompuSonic system has a built-in communications device that
`
`receives information via an existing phone line.” See Ex. 1007 at 1. A few months
`
`later, a December 1984 Billboard article similarly described various scenarios for selling
`
`and distributing music over telephone and cable lines, and again discussed
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`commercialization of
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`the
`
`idea,
`
`including
`
`introduction of a “digital audio
`
`recording/playback system” that could be used to record digital data sent into the
`
`home.8 As the article outlined, such a device would provide for sale and distribution
`
`of digital audio over telephone and cable lines:
`
`One medium that is currently used for shipping digital data over long
`distances is telephone lines. Unfortunately, the speed at which data can
`be shipped over existing phone lines is relatively slow (1,200 single
`pieces of information per second), and the error rate is relatively high.
`This makes shipment of large amounts of data via this medium
`somewhat difficult. In the very near future, however, a service will be
`available that will allow the shipment of 144,000 pieces of information
`per second over telephone lines with an extremely low error rate. The
`expectation is that twelve cities will have access to this service by early
`1985. A second means of shipping digital data to the home is over cable
`
`8 See Ex. 1008 at 4.
`
`6
`
`

`

` Covered Business Method Patent Review
`United States Patent No. 5,191,573
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`
`television lines. With current cable technology, it should be possible to
`ship enough data to equal a 45-minute LP in less than 15 minutes.
`What does
`shipment of data have
`to do with a digital
`recording/playback device? The answer is simple. Assume that the cost
`of the DSP-1000 (currently projected to be around $1,200 when it is
`introduced) drops at the same rate as other computer-based electronic
`devices. It will cost $200 to $300 in a few years. Then assume that there
`are low-cost, high-speed techniques for shipping digital data into the
`home. Making these assumptions, in the not-too-distant future
`consumers will be able to buy music at home, over telephone lines or
`through cable television hookups, and play it back through an audio
`device resembling a microcomputer.
`
`See id. That article further explained these same scenarios would be available for other
`forms of digital data, such as digital video:
`
`First, although the scenarios presented above relate only to music, the
`same data-transmission techniques will be available for all digital data.
`Thus, as other forms of entertainment (e.g., video) are digitized, they,
`too, will become candidates for these scenarios. Very simply, music (and
`other home entertainment options) will become just another type of
`computer software.
`
`See id. Similarly, an October 5, 1985 Billboard article reported a proposed partnership
`
`between companies to sell and transmit digital audio to create an “electronic record
`
`store,” as well as a press demonstration, in which “CompuSonics made use of
`
`AT&T’s land-based telephone data transmission system to digitally transmit and
`
`receive music between Chicago and New York.” Ex. 1009 at 3.
`
`7
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`

`

` Covered Business Method Patent Review
`United States Patent No. 5,191,573
`
`
`As the article recognized, the “electronic record store” concept was well-
`
`known: “David Schwartz, the president of CompuSonics, is a strong proponent of the
`
`‘electronic record store’ concept, an idea that has been bandied about for some time,
`
`but which Schwartz says is now poised to ‘become a reality.’”9 This would “allow
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`music software dealers to receive an album master via a digital transmission from the
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`record company,” and “[t]he retailers would then be able, in turn to digitally transmit
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`the music to consumers who would use credit cards to charge their purchases over the
`
`phone lines.” The consumer digital audio recorder/player would record the
`
`purchased music onto disk.10 As Mr. Schwartz explained in 1984 and 1985 letters to
`
`CompuSonics shareholders:
`
`A successful test of the digital transmission of high fidelity music over
`telephone lines will be followed by a joint press conference of
`CompuSonics, CMI Labs, and AT&T, heralding the dawn of a new era
`in the music industry. In the not too distant future consumers will be
`able to purchase digital recordings of their favorite artists directly from
`the production studio’s dial-up data base and record them on blank
`SuperFloppies in a DSP-1000.[11]
`AT&T’s commitment to telerecording may hasten the arrival of that day,
`in the not too distant future, when the technology will filter down to the
`consumer level, allowing all-electronic purchases, transfers and digital
`
`
`9 See id.
`10 See id.
`11 See Ex. 1026.
`
`8
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` Covered Business Method Patent Review
`United States Patent No. 5,191,573
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`
`recording of high fidelity audio from any music dealer’s DSP-2000 to the
`DSP-1000 in your living room.[12]
`Moreover, the sale of digital products in general over telephone lines was also
`
`known in the art. For instance, WO85/02310, published May 23, 1985, discloses the
`
`sale of digital products—and in particular, software—over telephone lines. Ex. 1011.
`
`Softnet describes allowing a user to connect his or her computer, via a modem and
`
`telephone lines, to a host computer. Id. at 11-12. The user can then use a menu to
`
`select a software package for purchase. Id. After the host computer performs a credit
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`card authorization, the purchased software package is transmitted to the user’s
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`computer for storage to a disk. Id. The user’s computer can then execute the
`
`purchased software from the disk. Id. at 13-14.
`
`Other elements of the ’573 Patent claims, such as the transmitter and receiver,
`
`were similarly known in the art. For example, prior art cited during prosecution of
`
`the ’573 Patent, including U.S. Patent Nos. 3,718,906 (“Lightner”) and 3,990,710
`
`(“Hughes”) discloses transmitters and receivers. Exs. 1012 & 1013. Applicant
`
`himself acknowledged this when he argued distinctions based on who controlled the
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`receiver and where the receiver was located—referring to “the ‘receiver’” of
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`Lightner,13 and to “Hughes’ receiver” and “the transmitter” in Hughes.14
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`Thus, a range of companies was well aware of (and, indeed, was publicly
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`12 See Ex. 1010.
`13 Ex. 1002 (9/14/90 Preliminary Amendment at 6).
`14 Id. (12/09/91 Amendment at 9. (emphasis added)).
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` Covered Business Method Patent Review
`United States Patent No. 5,191,573
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`discussing strategies for commercializing) the same supposed “invention” now
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`memorialized in the challenged claims of the ’573 Patent. The prior art—long before
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`the ’573 Patent’s first purported priority date—was full of disclosures of the very
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`same abstract notion that Applicant later sought to claim as his exclusive property, as
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`well as disclosures of the very same conventional hardware Applicant would later
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`recite in the challenged claims. Although a full discussion of the invalidity of the
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`challenged claims under §§ 102 and 103 is reserved for the separate Petition filed
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`concurrently herewith, these prior art teachings certainly bar any claim by the Patent
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`Owner that the challenged claims of the ’573 Patent recite anything other than an
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`abstract idea with, at most, the addition of routine and conventional hardware, or that
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`the challenged claims recite anything remotely resembling a “technological invention.”
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`III. PETITIONER HAS STANDING
`A.
`The ’573 Patent is a “covered business method patent” under § 18(d)(1) of the
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`The ’573 Patent Is a Covered Business Method Patent
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`Leahy-Smith America Invents Act, Pub. L. 112-29 (“AIA”) and § 42.301. As
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`discussed above, the ’573 Patent is directed to activities that are financial in nature—
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`the electronic sale of digital music or video. See AIA § 18(d)(1); 37 C.F.R. § 42.301(a).
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`See also 77 Fed. Reg. 48,734, 48,735 (Aug. 14, 2012) (“[T]he definition of covered
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`business method patent was drafted to encompass patents ‘claiming activities that are
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`financial in nature, incidental to a financial activity or complementary to a financial
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`activity.’”) (citation omitted). The patent states, for example, that “it is an
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` Covered Business Method Patent Review
`United States Patent No. 5,191,573
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`objective . . . to provide a new and improved methodology/system to electronically
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`sell and distribute Digital Audio Music,” Ex. 1001 at 2:10-12, and explains that “[t]he
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`method comprises the step of transferring money via a telecommunications line to the
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`first party from the second party.” Id. at 5:33-35. 15 The inventor has elsewhere
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`described his supposed invention simply as “the electronic sale of digital video and
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`digital audio recordings via telecommunications.” Ex. 1027 at. 33:1-11. And
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`SightSound’s CEO similarly described the invention as nothing more than “a method
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`for selling a desired digital audio or digital video signal over networks versus the old
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`way of distributing hard media on trucks through stores.” Ex. 1028 at 36:23-37:5.16
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`SightSound’s own expert has similarly described the ’573 Patent in litigation as
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`pertaining to “selling or purchasing digital audio or video via telecommunications
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`lines.” Ex 1024 ¶ 22.17
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`15 While the specification also speaks vaguely of manipulation of digital music (sorting,
`selection, etc.) and protection from unauthorized copying (e.g., Ex. 1001 at 2:17-24),
`these functions do not appear in any of the challenged claims, and in any event were
`not inventive.
`16 Indeed, SightSound has taken the same view in seeking to enforce the ’573 Patent in
`litigation, with its own experts stating that the ’573 Patent “generally relate[s] to the
`field of electronic sale and distribution of digital audio or digital video. More
`specifically, the patented technology pertains to selling or purchasing digital audio or
`video via telecommunications lines.” Ex. 1024 ¶ 22. See also id. ¶ 24.
`17 SightSound’s expert similarly stated that the patent is directed to “sale and
`distribution of digital audio and video files” and that Claim 1 “is a method claim
`pertaining to the electronic sale and transmission of digital audio signals—which are
`digital representations of sound waves.” Id. ¶¶ 24 & 70.
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` Covered Business Method Patent Review
`United States Patent No. 5,191,573
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`While the claims at issue reference certain conventional components, the ’573
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`Patent is not a “technological invention” because it does not claim “subject matter as
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`a whole [that] recites a technological feature that is novel and unobvious over the
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`prior art[] and solves a technical problem using a technical solution.” § 42.301(b)
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`(emphasis added). First, no “technological feature” of the ’573 Patent is novel and
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`unobvious. Claim 1 is exemplary:
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`1. A method for transmitting a desired digital audio signal stored on a
`first memory of a first party to a second memory of a second party
`comprising the steps of:
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`[A] transferring money electronically via a telecommunication line to
`the first party at a location remote from the second memory and
`controlling use of the first memory from the second party financially
`distinct from the first party, said second party controlling use and in
`possession of the second memory;
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`[B] connecting electronically via a telecommunications line the first
`memory with the second memory such that the desired digital audio
`signal can pass therebetween;
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`[C] transmitting the desired digital audio signal from the first memory
`with a transmitter in control and possession of the first party to a
`receiver having the second memory at a location determined by the
`second party, said receiver in possession and control of the second
`party; and
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`[D] storing the digital signal in the second memory.
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` Covered Business Method Patent Review
`United States Patent No. 5,191,573
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`The PTO has confirmed that “[m]ere recitation of known technologies, such as
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`computer hardware, communication or computer networks, software, memory,
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`computer-readable storage medium, scanners, display devices or databases, or
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`specialized machines, such as an ATM or point of sale device,” or “[r]eciting the use
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`of kno