`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`______________
`
`APPLE INC.
`Petitioner
`
`v.
`
`SIGHTSOUND TECHNOLOGIES, LLC
`Patent Owner
`______________
`
`Case CBM2013-00020
`Patent 5,191,573
`______________
`
`
`
`Before the Honorable MICHAEL P. TIERNEY, JUSTIN T. ARBES, and
`GEORGIANNA W. BRADEN,
`Administrative Patent Judges.
`
`SECOND DECLARATION OF DR. JOHN P. J. KELLY IN SUPPORT OF
`APPLE INC.’S 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
`
`
`
`
`
`
`
`Apple Exhibit 4262
`Apple v. SightSound Technologies
`CBM2013-00020
`Page 00001
`
`
`
`Case CBM2013‐00020
`Patent 5,191,573
`
`I, John Kelly, hereby declare as follows:
`
`I.
`
`INTRODUCTION
`
`1.
`
`I have been retained to provide assistance regarding U.S. Patent No.
`
`5,191,573 (“’573 patent”). I have previously submitted a declaration to this matter:
`
`“Declaration of Dr. John P. J. Kelly In Support of Apple Inc.’s 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” (the “Kelly Decl.”). I have
`
`described my background and experience, previous testimony and my
`
`compensation in the Kelly Decl. I have personal knowledge of the facts and
`
`opinions set forth in this declaration, and, if called upon to do so, I would testify
`
`competently thereto.
`
`2.
`
`In preparing my opinions, I have considered the following materials:
`
`• Materials cited in the Kelly Decl.,
`
`• Declaration of John Snell in Support of Patent Owner SightSound
`
`Technologies, LLC’s Response to Petition (the “Snell Decl.”) [Ex. 2153],
`
`• John Snell Mar. 6, 2014 Dep. Tr. [Ex. 4165] and associated exhibits,
`
`• Schwartz Dec. 9-10, 2013 Dep. Tr. [Ex. 2124] and associated exhibits,
`
`• And the other documents cited herein.
`
` 2
`
`
`
`Page 00002
`
`
`
`Case CBM2013‐00020
`Patent 5,191,573
`
`II.
`
`CLAIM CONSTRUCTION
`
`3.
`
`For the Kelly Decl., I was asked to assume constructions for certain
`
`claim terms. [See, Ex. 4132 (Kelly Decl.) at § III.] For convenience I have also
`
`included those constructions in the following table. As in the Kelly Decl., for all
`
`Claim Construction
`
`a first entity, whether a corporation or a real
`person
`a second entity, whether a corporation or a real
`person
`an electronic medium for communicating between
`computers.
`through the flow of electrons.
`connecting through devices or systems which
`depend on the flow of electrons.
`transferring through devices or systems which
`depend on the flow of electrons.
`providing payment electronically (i.e., through
`devices or systems which depend on the flow of
`electrons).
`digital representations of sound waves
`
` 3
`
`
`
`remaining claim terms, I have assumed their plain and ordinary meaning.
`
`Term
`
`First Party
`Second Party
`Telecommunication
`Lines
`Electronically
`“Connecting
`Electronically” Terms
`“Transferring
`Electronically” Terms
`“Transferring Money
`Electronically” Terms
`Digital Audio Signal
`
`
`Page 00003
`
`
`
`Case CBM2013‐00020
`Patent 5,191,573
`
`III.
`
`“SECOND MEMORY”
`
`A.
`
`THE ’573 PATENT DOES NOT LIMIT THE “SECOND MEMORY” TO
`“NON-REMOVABLE MEMORY”
`
`4. Mr. Snell asserts that the claimed “second memory” encompasses
`
`only “non-removable media.”
`
`“[T]he patented technology pertains to business methods associated
`with
`the
`transmission of digital audio or digital video via
`telecommunications lines to non-removable memory storage owned
`by a customer.” [Ex. 2153 (Snell Decl.) at ¶ 19.]
`
`invention
`the
`that
`“The specification makes abundantly clear
`precluded removable physical storage media as a second memory.”
`[Ex. 2153 (Snell Decl.) at ¶ 27.]
`
`Mr. Snell bases this opinion on the inventors’ discussion of the limitations of the
`
`“prior modes of distributing and selling music.” [See, e.g., Ex. 2153 (Snell Decl.)
`
`at ¶¶ 27, 31-42.] Mr. Snell’s analysis is incorrect for the following reasons.
`
`5.
`
`First, Mr. Snell, Mr. Snell confuses the means of distributing music
`
`with the means of storing music after it has been distributed. The ’573 patent says
`
`that “[t]he three basic mediums (hardware units) of music: records, tapes, and
`
`compact discs, greatly restricts the transferability of music.” [See Ex. 4101 (’573
`
`patent) at 1:17-19 (emphasis added).] Since, according to the ’573 patent, the prior
`
` 4
`
`
`
`Page 00004
`
`
`
`Case CBM2013‐00020
`Patent 5,191,573
`
`art music distributer sells music recorded on hardware units, distribution of music
`
`requires warehousing and transportation of the hardware units. [See, e.g., Ex. 4101
`
`(’573 patent) at 1:39-49.] Therefore, the ’573 patent proposes the electronic
`
`distribution of digital audio/video over telecommunications lines as opposed to the
`
`physical distribution of hardware units. [See, e.g., Ex. 4101 (’573 patent) at
`
`Abstract, 2:10-12.] Mr. Snell admitted during his deposition that this is the key
`
`distinction between the patent and the prior art. Mr. Snell was asked about an
`
`earlier answer in which he commented that a removable (Winchester1 cartridge2)
`
`hard drive cannot be transferred over telecommunication lines.
`
`
`
`1 As I noted in my deposition, there were both removable and non-removable
`
`Winchester disks. [See, e.g., Ex 2126 (John Kelly Dec. 12, 2013 Dep. Tr.) at
`
`135:5-24.]
`
`2 Mr. Snell admitted that Winchester disk cartridges were commercially available
`
`in May 1988 and that a person of ordinary skill in the art would have known of
`
`Winchester disk cartridges. [See, e.g., Ex. 4165 (John Snell Mar. 6, 2014 Dep. Tr.)
`
`109:1-17, 124:13-15.] For example, in 1983, SyQuest produced a removable
`
`cartridge hard drive with a capacity of about 6 megabytes and was working on
`
` 5
`
`
`
`larger capacity drives. [See Ex. 4208 (Byte magazine, March 1983) at p.115.]
`
`Page 00005
`
`
`
`Case CBM2013‐00020
`Patent 5,191,573
`
`“Q. You mentioned that you -- you can't push a Winchester cartridge
`through telecommunication lines. Is that what you meant to say?
`A. Well, I was being a little facetious. I apologize for my sarcasm,
`but that's the -- that's the point of the patent, is to not distribute
`physical media, instead to distribute the signals across
`telecommunication lines. So once it's recorded on the Winchester
`cartridge, how do you -- how do you get that Winchester cartridge to
`the consumer, to the user?” [Ex. 4165 (John Snell Mar. 6, 2014 Dep.
`Tr.) at 114:3-10 (emphasis added).]
`
`Mr. Snell’s concern about physically distributing the removable media – in this
`
`case a Winchester cartridge – is misleading. There is no need for a seller to
`
`physically distribute the removable media containing the digital signals because
`
`the buyer can download the digital signals over telecommunication lines and then
`
`store the digital signals on removable media (such as a removable hard drive) as
`
`disclosed, for example, by the CompuSonics System. [See, e.g., Ex. 4132 (Kelly
`
`Decl.).] The particular storage device utilized by the purchaser to store the digital
`
`audio/video after it has been electronically transferred over telecommunications
`
`lines from the seller to the purchaser is irrelevant to the mode of distribution.
`
`Furthermore, the use of floppy disks, instead of hard disks, to store the
`
`electronically purchased and also downloaded music provides the benefit of
`
`eliminating inventory and distribution delays associated with the traditional
`
` 6
`
`
`
`Page 00006
`
`
`
`Case CBM2013‐00020
`Patent 5,191,573
`
`distribution and sale of CDs and tapes.
`
`6.
`
`Second, Mr. Snell asserts that a user would have to organize, search,
`
`sort and cue removable media (presumably because the user’s music library is too
`
`large to fit on a single unit of the removable media) whereas the user could
`
`electronically organize all songs using a hard disk (presumably because the user’s
`
`music library is small enough to fit on the hard disk). [See, e.g., Ex. 2153 (Snell
`
`Decl.) at ¶ 70; Ex. 4165 (John Snell Mar. 6, 2014 Dep. Tr.) at 112:11-24.] Mr.
`
`Snell then incorrectly concludes that “[o]nly the use of non-removable memory
`
`such as a hard disk accomplishes an objective of the ’573 patent to easily and
`
`electronically sort stored music based on many different criteria.” [See Ex. 2153
`
`(Snell Decl.) at ¶ 70.] As an initial matter, claims 1, 2, 4 and 5 of the ’573 patent
`
`do not include limitations that require sorting of digital audio/video stored on the
`
`purchaser’s system (or other special manipulations such as randomly playing
`
`selections). More fundamentally, Mr. Snell’s argument is that certain storage
`
`devices (such as floppy disks) are too small to store a sufficiently large library of
`
`songs although Mr. Snell never provides an opinion on what would be a sufficient
`
`amount of storage to accomplish this objective of the ’573 patent. Likewise, the
`
`specification of the ’573 patent never says how many songs or videos the
`
`purchaser’s storage device must be able to store, and claims 1, 2, 4 and 5, on their
`
` 7
`
`
`
`Page 00007
`
`
`
`Case CBM2013‐00020
`Patent 5,191,573
`
`face, only require storing the one desired digital video or digital audio signal. Mr.
`
`Snell is also wrong because all storage media are limited in the amount of data that
`
`they can store. Mr. Snell admitted that disk drives, in general, were limited in
`
`capacity. [See, e.g., Ex. 4165 (John Snell Mar. 6, 2014 Dep. Tr.) at 114:19-23.]
`
`Mr. Snell also admitted that a thumb drive3 may or may not be able to store a
`
`user’s music library depending on the size of the thumb drive and music library.
`
`[See, e.g., Ex. 4165 (John Snell Mar. 6, 2014 Dep. Tr.) at 216:20-218:8.] Of
`
`course, this is true of any storage device whether it be a hard drive or not a hard
`
`drive, removable media or non-removable media. In addition, in 1988 removable
`
`media storage devices could have larger capacity than non-removable media
`
`storage devices. For example, the 466 MB magneto-optical disk used in some of
`
`the DSP-1000 devices provided more storage capacity than a common consumer
`
`hard drive from 1988. [See, e.g., Ex. 2124 (Schwartz Dec. 10, 2013 Dep. Tr.) at
`
`pp. 45, 94, 98-99; Ex. 4132 (Kelly Decl.) at ¶ 31.] In 1988, a person of ordinary
`
`skill in the art would have also expected the observed trend of increased capacity
`
`and lower prices for memory devices to continue and would have expected
`
`improved memory devices to be incorporated into consumer devices.
`
`
`
`3 Mr. Snell has opined that thumb drives are removable. [See, e.g., Ex. 4165 (John
`
` 8
`
`
`
`Snell Mar. 6, 2014 Dep. Tr.) at 106:8-107:4.]
`
`Page 00008
`
`
`
`Case CBM2013‐00020
`Patent 5,191,573
`
`7.
`
`Third, Mr. Snell’s argues that “the concern about copyright protection
`
`disclosed in the '573 patent specification would be no better with floppy disks than
`
`with existing media at the time” and that the use of non-removable storage medium
`
`rendered the problem of copyright infringement moot. [See Ex. 2153 (Snell Decl.)
`
`at ¶¶ 27, 71.] Again, Mr. Snell is incorrect. Claims 1, 2, 4 and 5 of the ’573 patent
`
`do not include limitations directed toward copyright protection of digital
`
`audio/video stored on the purchaser’s system. Therefore, a copy protection
`
`mechanism is not required of the “second memory” in claims 1, 2, 4 and 5. In
`
`addition, non-removable media and removable media are both susceptible to
`
`copying of copyrighted data as recognized in the specification of the ’573 patent
`
`and by Mr. Snell. [See, e.g., Ex. 4101 (’573 patent) at 2:8-9; Ex. 2153 (Snell
`
`Decl.) at ¶ 71; Ex. 4165 (John Snell Mar. 6, 2014 Dep. Tr.) at 229:3-12, 230:14-
`
`17.]
`
`8.
`
`Fourth, Mr. Snell opines that quality was another inefficiency
`
`associated with removable media that was rendered moot by the use of a non-
`
`removable storage medium. [See, e.g., Ex. 2153 (Snell Decl.) at ¶¶ 27, 33-36.]
`
`This is also incorrect. Mr. Snell discusses quality issues with analog media (audio
`
`tapes and LPs) as if they were comparable to removable digital media (floppy disk,
`
`magneto-optical disk and removable hard drives). They are not comparable and
`
` 9
`
`
`
`Page 00009
`
`
`
`Case CBM2013‐00020
`Patent 5,191,573
`
`this discussion is misleading. Mr. Snell also suggests that all removable media
`
`would have lower quality because the media is not protected. [See, e.g., Ex. 2153
`
`(Snell Decl.) at ¶ 33.] On the contrary, floppy disks, cartridge hard disks and
`
`magneto-optical disks were constructed with protective jackets to protect the
`
`storage medium while the disk was outside of the drive. Such media have been
`
`used quite successfully for storing digital data. Finally, even non-removable hard
`
`drives suffer failures that result in the loss of the entire contents of the drive or
`
`particular files on the drive.
`
`9.
`
`For all of these reasons, the removable/non-removable distinction is a
`
`false dichotomy in assessing whether a system will derive the benefits described in
`
`the ‘573 patent. Indeed, this is reinforced by the fact that the only example of non-
`
`removable memory named specifically in the related ‘440 patent – a hard disk –
`
`itself has a removable counterpart, and did so in the prior art time period, as
`
`admitted by Mr. Snell. [See, e.g., Ex. 4165 (John Snell Mar. 6, 2014 Dep. Tr.) at
`
`107:20-109:17.]
`
`10. Mr. Snell’s opinions are also at odds with the prosecution history of
`
`the SightSound patents. For example, during prosecution of the ’391 application,
`
`SightSound emphasized its broad interpretation of “second memory” when
`
`distinguishing over the Hughes reference.
`
`
`
`10
`
`Page 00010
`
`
`
`Case CBM2013‐00020
`Patent 5,191,573
`
`“A second clear distinction between the applicant's method and
`Hughes' teachings is that the applicant's method in no manner
`necessitates the need for a receiver which is controlled by the
`controller of the transmitter. Any suitable memory device controlled
`and in possession of the second party can be used to record the
`incoming digital signals. Accordingly, the second party's own stereo
`system can be coupled to the incoming signals for recording. In this
`manner, the second party is not limited to a predesigned receiver of
`the first party controlling the transmitter, but instead can alter the
`recording components, change recording media, equalize the signal
`and many other parameters of the system.” [See Ex. 4103 (June 25,
`1992 Amendment of Application No. 07/586,391) at p. 18 (emphasis
`added).]
`
`11. Mr. Snell’s opinions are also at odds with positions taken by the
`
`inventors as they attempted to commercialize the method of the SightSound
`
`patents. As a first example, a SightSound business plan describes the ’573 patent
`
`by way of a modification of Fig. 2 from the ’573 and ’440 patent. [See Ex. 4161
`
`(Business Plan for Digital Sight/Sound, Inc.) at p. 5.]
`
`
`
`11
`
`Page 00011
`
`
`
`Case CBM2013‐00020
`Patent 5,191,573
`
`
`
`
`
`The second memory is labeled “Memory Storage Device.” It is not restricted to a
`
`hard drive or to a non-removable storage device. As a second example, the
`
`SightSound.com web site required a minimum of a 700 MB hard drive but
`
`suggested the MaxOptix optical4 disk jukebox with a capacity of 26 to 180
`
`gigabytes. [See, e.g., Ex. 4161 (Business Plan for Digital Sight/Sound, Inc.) at p.
`
`37.] Mr. Snell has stated that optical drives were (and are) considered removable.
`
`[Ex. 4165 (John Snell Mar. 6, 2014 Dep. Tr.) at 115:24-118:19.]
`
`12. Claims 1, 2, 4 and 5 of the ’573 patent recite “a second memory of a
`
`second party.” If the inventors had desired to exclude all removable media from
`
`the scope of the term “a second memory of a second party,” the inventors could
`
`
`
`4 Mr. Snell has opined that optical disks would not be considered as hard disks, and
`
`that one of skill in the art would consider optical disks as removable. [Ex. 4165
`
`
`
`12
`
`(John Snell Mar. 6, 2014 Dep. Tr.) at 109:18-110:18, 115:24-117:12.]
`
`Page 00012
`
`
`
`Case CBM2013‐00020
`Patent 5,191,573
`
`have done so, but they did not. Removable cartridge hard drives, floppy disks and
`
`writable optical discs (including magneto-optical disks) were known technologies
`
`in 1988 and are “a memory.”
`
`13. Contrary to Mr. Snell’s assertion [see, e.g., Ex. 2153 at 73],
`
`CompuSonics does not teach away from using non-removable media. For
`
`example, CompuSonics produced and sold a version of the DSP-1000 (called the
`
`DSP-1800) that contained a hard disk5. [See Ex. 2124 (Schwartz Dec. 9-10, 2013
`
`Dep. Tr.) at 41:4-6, 114:9-12, 173:14-21, 177:5-16, 188:25-189:18.]
`
`CompuSonics also produced and sold a version of the DSP-1000 that used solid
`
`state memory for storage. [See Ex. 2124 (Schwartz Dec. 9-10, 2013 Dep. Tr.) at
`
`173:14-21, 177:17-178:14, 188:25-189:18.]
`
`IV. CHARGING PURCHASES USING A CREDIT CARD OVER PHONE
`LINES WAS KNOWN
`
`14. Contrary to the arguments put forward by SightSound and Mr. Snell,
`
`one of ordinary skill in the art would have understood the CompuSonics System to
`
`
`
`disclose charging a credit card over telecommunication lines.
`
`5 Mr. Snell was unaware that a version of the DSP-1000 was produced and sold
`
`that included a hard disk. [Ex. 4165 (John Snell Mar. 6, 2014 Dep. Tr.) at 233:5-
`
`
`
`13
`
`12]
`
`Page 00013
`
`
`
`Case CBM2013‐00020
`Patent 5,191,573
`
`15.
`
`In his declaration regarding the ’573 Patent, Mr. Snell does not
`
`dispute that Exhibit 4106 discloses charging a credit card over telephone lines [See
`
`Ex. 2153 (Snell Decl.) at ¶ 45]. Exhibit 4106 includes the following excerpt:
`
`“[Telerecording would] allow music software dealers to receive an
`album master via a digital transmission from the record company,”
`and “[t]he retailers would then be able, in turn to digitally transmit the
`music to consumers who would use credit cards to charge their
`purchases over the phone lines.” [Ex. 4106 at p.3.]
`
`In particular, Mr. Snell does not provide a counter argument to Exhibit 4106
`
`disclosing “transferring money electronically via a telecommunication line.”
`
`16. Additionally, Mr. Snell does not unequivocally dispute the disclosure
`
`of “transferring money electronically via a telecommunication line” in Exhibit
`
`4115. The excerpt from Exhibit 4115 is shown below:
`
`“Audio recording and production facilities will be able to digitally
`transmit and receive music using special telephone lines. At present,
`high priority audio material is either physically transferred by courier,
`or encode onto high bandwidth satellite channels. The cost of those
`methods is much higher than telerecording for most applications.
`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 recording of high fidelity audio from any music dealer’s DSP-
`2000 to the DSP-1000 in your living room.” [Ex. 4115 at p.1.]
`
`
`
`14
`
`Page 00014
`
`
`
`Case CBM2013‐00020
`Patent 5,191,573
`
`The most Mr. Snell can say is that “[e]ven if the single, cryptic reference to ‘all-
`
`electronic purchases’ taught ‘transferring money electronically,’ Exhibit 4115 fails
`
`to anticipate claim ” for other reasons. [See Ex. 2153 (Snell Decl.) at ¶ 51.] In
`
`particular, Mr. Snell does not provide an alternate theory for how the purchases
`
`were performed if it does not disclose “transferring money electronically.”
`
`17. An analogous issue arose during prosecution of the ’391 application
`
`regarding whether the step of “transferring money” had basis in the specification.
`
`[Ex. 4103 (1992-02-24 Non-Final Rejection for the ’391 Application) at pp. 5-6.]
`
`The Applicant pointed to the presence of terms “electronically sell,” “electronic
`
`sales” and “electronically sold” in the specification [Ex. 4103 (1992-06-25
`
`Amendment/Req. Reconsideration After Non-final Rejection for the ’391
`
`Application) at p.11-12] and argued that “Electronic sales via telephone lines
`
`inherently assumes a transferring of money. Any ‘sale’ by definition assumes a
`
`transference of money for a desired commodity, in this instance, digital audio or
`
`video signals.” [Ex. 4103 (1992-06-25 Amendment/Req. Reconsideration After
`
`Non-final Rejection for the ’391 Application) at p.13.] Additionally, Mr. Hair, the
`
`named inventor of the ’573 patent, declared during prosecution of the ’391
`
`application that:
`
`“One skilled in the art would know that an electronic sale inherently
`assumes a transferring of money by providing a credit or debit card
`
`
`
`15
`
`Page 00015
`
`
`
`Case CBM2013‐00020
`Patent 5,191,573
`
`number (since this is the only way for electronic sales to occur)
`coupled with a transferring of a service or product.” [See Ex. 4103
`(Hair Declaration dated May 12, 1992 attached to the June 25, 1992
`Amendment of Application No. 07/586,391) at p. 2.]
`
`Similarly, during the prosecution of the ’398 application, Mr. Hair declared:
`
`“One skilled in the art would know that an electronic sale inherently
`assumes a transferring of money by providing an account number or a
`credit or debit card number which then allows for access to or a
`transferring of a service or product through telecommunications lines.
`
`One skilled in the art would know that an electronic sale inherently
`assumes' a charging of a fee to an account which then allows for
`access to or a transferring of a product or service through
`telecommunications lines.
`
`The use of transferring money across telecommunication connections,
`such as by telephoning over the phone lines the agent who has a first
`party’s hard disk, or charging a fee to a purchaser or “second party”
`preferably at a location remote from a purchaser or “second party”, for
`obtaining data on
`the
`first party's hard disk
`through
`telecommunications lines is well known to one skilled in the art to be
`part of electronic sales.” [See Ex. 4136 (Hair Declaration dated Dec.
`30, 1993 attached to the Jan. 3, 1994 Amendment of Application
`No.08/023,398) at pp. 109-110.]
`
`The difference between an “electronic purchase” and an “electronic sale” is a
`
`
`
`16
`
`Page 00016
`
`
`
`Case CBM2013‐00020
`Patent 5,191,573
`
`simply a matter of perspective i.e. whether one is the buyer or the seller, the
`
`underlying transaction is the same. In particular, to the extent6 that an electronic
`
`sale inherently assumes a transferring of money, then mutatis mutandis so too does
`
`an electronic purchase.
`
`18. With regard to the other references, as will be discussed in detail
`
`below, Mr. Snell goes to great lengths to suggest how one of ordinary skill in the
`
`art would fail to understand that the purchase is being performed using a credit
`
`card over the telephone lines. However, Mr. Snell does not consider that making a
`
`purchase over the telephone with a credit card had been practiced for quite some
`
`time by 1988 and so one of ordinary skill in the art would have considered it.
`
`Further, Mr. Snell does not consider how one of ordinary skill in the art would read
`
`the disclosures in light of the unchallenged disclosure given in Exhibit 4106.
`
`Finally, Mr. Snell’s characterization of how subscription services (such as cable
`
`television) bill purchases is incorrect.
`
`19. Mr. Snell presents the following argument:
`
`
`
`6 Mr. Snell does not agree with this and opines that “electronic sale” is a “vague
`
`term” and “has to be defined.” [Ex. 4165 (John Snell Mar. 6, 2014 Dep. Tr.) at
`
`
`
`17
`
`82:7-84:3]
`
`Page 00017
`
`
`
`Case CBM2013‐00020
`Patent 5,191,573
`
`“In addition, Exhibit 4119 speaks of selling ‘over the telephone,’ but a
`person of skill in the art would understand that this could mean
`placing an order by telephone to be invoiced on a monthly bill. The
`reference to ‘symphonies ordered by credit card’ also suggests that a
`credit card payment would be made in writing in advance of purchase,
`for instance by writing down a code for a recording and a credit card
`number and mailing it to the seller.” [See Ex. 2153 (Snell Decl.) at
`¶ 55 (emphasis in original).]
`
`The full excerpt from which Mr. Snell quotes is the following:
`
`“Compusonics is talking to AT&T about setting up a service that
`would enable record companies to sell direct to consumers over the
`telephone. Symphonies ordered by credit card, could travel digitally
`over phone lines into homes to be recorded by Compusonics’
`machine.” [Ex. 4119 at p.2.]
`
`When the above excerpt is read in context, i.e., one sentence after the other, one of
`
`ordinary skill in the art would understand that the customer would call the record
`
`company, provide their credit card number, have it charged and have the
`
`symphony be transmitted via phone lines to the customer’s home to be recorded.
`
`There are other ways to make purchases and one of ordinary skill in the art would
`
`have been aware of this. However, given this passage’s phrases “sell direct over
`
`the telephone” and “Symphonies, ordered by credit card, could travel digitally over
`
`
`
`18
`
`phone lines…,” one of ordinary skill in the art would not have interpreted this
`
`Page 00018
`
`
`
`Case CBM2013‐00020
`Patent 5,191,573
`
`passage, as Mr. Snell urges, to involve “writing down a code for a recording and a
`
`credit card number and mailing it to the seller.” Furthermore, Mr. Snell’s
`
`interpretation is again inconsistent with claims made during prosecution of the
`
`’391 application. The Applicant states:
`
`“In a similar argument, ‘electronic sales’ over ‘telephone lines 30’ are
`terms which encompass the well known process of ‘providing a credit
`card number’ over a telephone line and ‘telephoning’ to make the
`connection.”
`
`[Ex.
`4103
`(1992-06-25 Amendment/Req.
`Reconsideration After Non-final Rejection) at p. 13.]
`
`Under the Applicant’s own statements, one of ordinary skill in the art would reach
`
`a similar conclusion regarding “sell direct to consumers over the telephone.
`
`Symphonies ordered by credit card, could travel digitally over phone lines…”
`
`20. Contrary to Mr. Snell’s assertions, credit card sales could be achieved
`
`by means other than being in a retail store [see Ex. 2153 at 23] or by writing down
`
`and mailing in the credit card number [see Ex. 2153 at 47, 52, 55]. In particular,
`
`by the 1970s there were patents describing ways to increase the efficiency of credit
`
`card sales transactions over the telephone. For example, Exhibit 4192 ( U.S. Patent
`
`No. 3,920,908) published November 18, 1975 and titled “Buyer credit service for a
`
`telephone system” describes a pay by phone system where the seller is provided with
`
`
`
`19
`
`Page 00019
`
`
`
`Case CBM2013‐00020
`Patent 5,191,573
`
`the buyer’s credit information, including their credit card number, and the buyer’s
`
`credit is verified prior to the call being connected to the seller.
`
`“Modern merchandising techniques are designed to permit a person to
`obtain a copy of an item, purchase an article or a personal service or
`the like on credit in a simple manner in a face-to-face transaction by
`merely exhibiting a validated credit card in place of cash. In situations
`where the buyer and seller are geographically separated as in a
`telephone system, a problem heretofore has been to provide the called
`seller at the moment with adequate information regarding the credit
`integrity of the calling buyer attempting to make a purchase on credit.
`…
`
`Therefore, it is contemplated by the present invention to provide a
`credit center for expeditiously retrieving therefrom credit intelligence
`including credit card information pertinent to a calling buyer and
`thereafter displaying such intelligence to a called seller before the
`calling buyer is connected with the called seller for the purpose of
`tendering an offer to purchase a service on credit in a telephone
`system. This visual credit intelligence display enables the called seller
`to make a quick determination at the moment whether to accept or
`reject such credit purchase before the offer is actually tendered by the
`calling buyer to the called seller.
`
`Accordingly, it is a principal object of the present invention to provide
`a called seller with substantially instant credit intelligence pertinent to
`
`
`
`20
`
`Page 00020
`
`
`
`Case CBM2013‐00020
`Patent 5,191,573
`
`a calling buyer wishing to obtain credit in a sales transaction handled
`in a telephone system.”
`
`[Ex. 4192 (U.S. Patent No. 3,920,908) at 1:13-49.]
`
`21. By the mid-1980s the use of credit cards for phone purchases was
`
`common. For example, one could watch HBO using a descrambler by providing a
`
`credit card number and the serial number of the descrambler. [See Ex. 4177
`
`(Compute Issue 82 1987) pp. 4-5.] One could have groceries delivered. [See Ex.
`
`4179 (“How Telephone Orders Deliver The Goods,” New York Times, 3/4/1987).]
`
`It was during this period that home shopping channels, such as Home Shopping
`
`Network, rose to prominence. [See Ex. 4180 (“Like To Shop At Home? This Is For
`
`You All You Need Is A TV, Phone And Credit Card Or Checks That Don’t
`
`Bounce,” Anchorage Daily News, 9/13/87).] To purchase goods from such
`
`networks the customer either had to provide a credit card number or mail in a
`
`check:
`
`“All shop shows operate the same way: Items are displayed, described
`and often demonstrated, and viewers may order by calling toll-free
`numbers and using credit cards or checks as payment.
`
`…
`
`In a recent look at the trend, ABC’s news feature show 20/20 found a
`number of viewers who have run up huge credit-card bills. Some
`
`
`
`21
`
`Page 00021
`
`
`
`Case CBM2013‐00020
`Patent 5,191,573
`
`shoppers admitted to being addicted, spending hours glued to the tube,
`plastic cards ready.”
`
`[Ex. 4181 (“Shopping By TV A Big Turn-on For Many Buyers,”
`Akron Beacon Journal, 1/25/87).]
`
`In addition, CompuServe allowed billing by credit card through its online service.
`
`For example, Antic, a vendor of Atari software, sold software through
`
`CompuServe.
`
`“When you use Softex, your online software purchases will simply be
`added to your monthly CompuServe bill. Your Electric Mall
`purchases and subscriptions will be fulfilled directly by Antic and
`charged to your credit card.” [See Ex. 4176 (ANTIC, April 1988) at
`p.6.]
`
`Purchases of Antic products through the CompuServe Softex electronic sales and
`
`delivery system were added to the CompuServe bill; however, purchases of Antic
`
`products through the CompuServe Electronic Mall were charged to the customer’s
`
`credit card. In general, to purchase an item through the Electronic Mall the
`
`purchaser provided a credit card number online:
`
`list
`“Other services (such as CompuServe’s Electronic Mall)
`individual retailers, such as Waldenbooks or Record World, and their
`offerings. To place an order, you select an item and then complete an
`online order form detailing payment (usually credit card, sometimes
`
`
`
`22
`
`Page 00022
`
`
`
`Case CBM2013‐00020
`Patent 5,191,573
`
`check) and shipping information.” [Ex. 4175 (Family Computing,
`Nov. 1985) at p. 16.]
`
`22. As described in ¶¶ 20-21 above, the technology required for charging
`
`a credit card over the phone in order to make a purchase was well understood, had
`
`been around for many years and had been successfully implemented in a number of
`
`different situations. Mr. Snell himself acknowledges that in the time period prior
`
`to the priority date, one of ordinary skill in the art would have known that
`
`providing a credit card number over the telephone by voice or by entering it via the
`
`keypad of the telephone were both mechanisms by which money could be
`
`transferred. [Ex. 4165 (John Snell Mar. 6, 2014 Dep. Tr.) at 59:13-60:2; 60:12-
`
`61:11.] Further, one of ordinary skill would have known that providing a credit
`
`card number via a computer keyboard was another mechanism by which money
`
`could be transferred, for example when filling out the online order form when
`
`making a purchase using the CompuServe Electronic Mall. [See, e.g., Ex. 4175
`
`(Family Computing, Nov. 1985) at p. 16.]. Therefore, contrary to the positions of
`
`SightSound and Mr. Snell, one of ordinary skill in the art would interpret the
`
`excerpt in paragraph ¶ 19 to simply mean that a credit card purchase was made
`
`over the telephone. At a minimum, it would have been obvious to a perso
Accessing this document will incur an additional charge of $.
After purchase, you can access this document again without charge.
Accept $ Charge
Still Working On It
This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.
Give it another minute or two to complete, and then try the refresh button.
A few More Minutes ... Still Working
It can take up to 5 minutes for us to download a document if the court servers are running slowly.
Thank you for your continued patience.
This document could not be displayed.
We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.
Your account does not support viewing this document.
You need a Paid Account to view this document. Click here to change your account type.
Your account does not support viewing this document.
Set your membership
status to view this document.
With a Docket Alarm membership, you'll
get a whole lot more, including:
- Up-to-date information for this case.
- Email alerts whenever there is an update.
- Full text search for other cases.
- Get email alerts whenever a new case matches your search.
One Moment Please
The filing “” is large (MB) and is being downloaded.
Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.
Your document is on its way!
If you do not receive the document in five minutes, contact support at support@docketalarm.com.
Sealed Document
We are unable to display this document, it may be under a court ordered seal.
If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.
Access Government Site
