Covered Business Method Patent Review CBM2013-00021
`United States Patent No. 5,966,440
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`Petitioner: Apple Inc.
`
`Attorney Docket No.:
`
` 104677-5005-803
`Customer No. 28120
`
`§
`Inventor: Hair
`United States Patent No.: 5,966,440 §
`Formerly Application No.: 08/471,964 §
`Issue Date: October 12, 1999
`§
`Filing Date: June 6, 1995
`§
`Former Group Art Unit: 2785
`§
`Former Examiner: Hoa T. Nguyen
`§
`
`For: System and Method for Transmitting Desired Digital Video or Digital Audio
`Signals
`
`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. 5,966,440 PURSUANT TO 35 U.S.C. § 321,
`37 C.F.R. § 42.3041
`
`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
`
`the real party in interest), hereby petitions for review under the transitional program
`
`for covered business method patents of claims 1, 64, and 95 of U.S. Patent No.
`
`5,966,440 (“the ’440 Patent”), issued to Arthur R. Hair and currently assigned to
`
`SightSound LLC (“SightSound,” also referred to as “Applicant,” “Patent Owner,” or
`
`“Patentee”). Petitioner hereby asserts that it is more likely than not that at least one
`
`1 As directed by the Board in Paper No. 7, Petitioner hereby resubmits the Petition
`
`and accompanying Exhibits to address formality issues identified therein.
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`United States Patent No. 5,966,440
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`of the challenged claims is unpatentable for the reasons set forth herein and
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`respectfully requests review of, and judgment against, claims 1, 64, and 95 as
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`unpatentable under 35 U.S.C. § 101 and for obviousness-type double patenting.
`
`As discussed in Section I, infra, Petitioner has concurrently filed a Petition
`
`seeking covered business method review of the ‘440 Patent, requesting judgment
`
`against these same claims under §§ 102 and 103. Petitioner has additionally filed
`
`Petitions seeking covered business method reviews of the (related) ’573 Patent
`
`requesting judgment against claims in that patent under §§ 101 and 112 in one
`
`Petition, and under §§ 102 and 103 in a second concurrent Petition. Petitioner notes
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`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 – CBM2013-00021
`United States Patent No. 5,966,440
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`
`
`
`TABLE OF CONTENTS
`
`V. 
`
`B. 
`
`INTRODUCTION ....................................................................................................... 1 
`I. 
`II.  OVERVIEW OF FIELD OF THE CLAIMED INVENTION ......................... 4 
`III.  PETITIONER HAS STANDING ............................................................................ 8 
`A. 
`The ’440 Patent Is a Covered Business Method Patent ............................... 8 
`B. 
`Related Matters; Petitioner Is a Real Party In Interest Sued for and
`Charged With Infringement ........................................................................... 14 
`IV.  OVERVIEW OF SPECIFIC GROUNDS FOR WHICH IT IS MORE
`LIKELY THAN NOT THAT THE CHALLENGED CLAIMS
`(1, 64, and 95) OF THE ’440 PATENT ARE UNPATENTABLE .................. 15 
`BACKGROUND INFORMATION FOR THE ’440 PATENT ...................... 15 
`A. 
`The ’440 Patent and Its Prosecution History .............................................. 16 
`1. 
`The ’440 Patent Family ....................................................................... 16 
`2. 
`File History of the Parent ’573 Patent .............................................. 17 
`3. 
`File History of the ’440 Patent ........................................................... 20 
`Reexamination History of the ’440 Patent and Related Patents ............... 24 
`1. 
`Reexamination of the Parent ’573 Patent ......................................... 24 
`2. 
`Reexamination of the ’440 Patent...................................................... 27 
`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 ............................ 31 
`A. 
`Claim Construction .......................................................................................... 31 
`B. 
`The Challenged Claims Are Invalid Under § 101 ....................................... 37 
`1. 
`The Challenged Claims Are Directed To An Abstract Idea
`With No Inventive Concept ............................................................... 37 
`The Challenged Claims Are Directed to An Abstract Idea
`that Preempts the Field of Electronic Sale of Digital Music ......... 39 
`The Internet and General Purpose Computer Features in
`the Challenged Claims Do Not Render Them Patentable ............ 44 
`The Challenged Claims Do Not Satisfy the Machine or
`Transformation Test ............................................................................ 49 
`
`2. 
`
`3. 
`
`4. 
`
`iii
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`

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` Covered Business Method Patent Review – CBM2013-00021
`United States Patent No. 5,966,440
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`C.  Obviousness-Type Double Patenting ........................................................... 52 
`1. 
`Obviousness-Type Double Patenting May Be Raised Here .......... 52 
`2. 
`ODP Applies to the Challenged Claims ........................................... 54 
`3. 
`The Challenged Claims Are At Most Obvious Variants of
`Claim 3 of the ’573 Patent and of Claim 3 of the ’734
`Patent ..................................................................................................... 56 
`VII.  CONCLUSION........................................................................................................... 79 
`
`
`iv
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`

`
`
`EXHIBIT LIST
`Exhibit 1201
`
`Exhibit 1202
`
`Exhibit 1203
`
`Exhibit 1204
`
`Exhibit 1205
`
`Exhibit 1206
`
`Exhibit 1207
`
`Exhibit 1208
`
`Exhibit 1209
`
`Exhibit 1210
`
`Exhibit 1211
`
`Exhibit 1212
`
`Exhibit 1213
`
`Exhibit 1214
`
`Exhibit 1215
`
`Exhibit 1216
`
`Exhibit 1217
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` Covered Business Method Patent Review – CBM2013-00021
`United States Patent No. 5,966,440
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`
`United States Patent No. 5,966,440
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`United States Patent No. 5,966,440 File History
`
`Application No. 90/007,407 (’440 Patent Reexamination)
`
`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 File History
`
`Application No. 90/007,403 (’734 Patent Reexamination)
`
`United States Patent No. 5,675,734
`
`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. 4,506,387, filed on May 25, 1983,
`issued on Mar. 19, 1985 (“Walter”)
`United States Patent No. 4,124,773, filed on Nov. 26, 1976,
`issued on Nov. 7, 1978 (“Elkins”)
`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.)
`Excerpt from Benjamin Krepack and Rod Firestone, Start Me
`Up! the music biz meets the personal computer, pages 126-
`127 (Mediac Press May 1986)
`David Needle, “From the News Desk: Audio/digital interface
`for the IBM PC?,” InfoWorld, vol. 6, no. 23, p. 9, June 4,
`1984
`
`v
`
`

`
`EXHIBIT LIST
`Exhibit 1218
`
`Exhibit 1219
`
`Exhibit 1220
`
`Exhibit 1221
`
`Exhibit 1222
`
`Exhibit 1223
`
`Exhibit 1224
`
`Exhibit 1225
`
`Exhibit 1226
`
`Exhibit 1227
`
`Exhibit 1228
`
`Exhibit 1229
`
`Exhibit 1230
`
`Exhibit 1231
`
`Exhibit 1232
`
`Exhibit 1233
`
`Exhibit 1234
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` Covered Business Method Patent Review – CBM2013-00021
`United States Patent No. 5,966,440
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`
`Excerpt of Plaintiff SightSound Techs., LLC’s Expert Report
`of Dr. J. Douglas Tygar Regarding Infringement, dated April
`22, 2013
`Deposition Transcript of Arthur Hair, dated Dec. 11, 2012
`
`Deposition Transcript of Scott Sander, dated Dec. 18, 2012
`
`United States Patent No. 4,682,248, filed on Sept. 17, 1985,
`issued on July 21, 1987 (“Schwartz”)
`Excerpt of Expert Report of Mark M. Gleason,
`CPA/ABV/CFF, CVA, CLP, dated April 22, 2013
`Declaration of Dr. John P.J. Kelly, dated Sept. 7, 2012
`
`7/16/84 CompuSonics Letter from David Schwartz to
`Shareholders
`Excerpt from, Larry Israelite, “Home Computing Scenarios
`for Success,” Billboard Magazine Charts the Future (Dec.
`1984)
`Excerpt from Chambers Science and Technology Dictionary (1988)
`
`Excerpt from Webster’s II New Riverside University Dictionary
`(1988)
`Excerpt from, Steve Dupler, “Compusonics, AT&T Link,”
`Billboard Newspaper, vol. 97 no. 40 (Oct. 5, 1985)
`United States Patent No. 4,528, 643, filed on Jan. 10, 1983,
`issued on July 9,1985 (“Freeny”)
`United States Patent No. 4,789,863, filed on Jan. 13, 1988,
`issued on Dec. 6, 1988 (“Bush”)
`“Inside Macintosh,” Volumes I, II, and III, Addison-Wesley
`Publishing Company, Inc. (1985)
`Craig Partridge, “The Technical Development of Internet
`Email,” BBN Technologies
`United States Patent No. 4,667,088 filed on November 1,
`1982, issued on May 19, 1987 (“Kramer et al.”)
`Photo of CompuSonics Equipment
`
`vi
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`

`
`EXHIBIT LIST
`Exhibit 1235
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`Exhibit 1236
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`Exhibit 1237
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`Exhibit 1238
`
`Exhibit 1239
`
`Exhibit 1240
`
`Exhibit 1241
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`Exhibit 1242
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`Exhibit 1243
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`Exhibit 1244
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` Covered Business Method Patent Review – CBM2013-00021
`United States Patent No. 5,966,440
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`
`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)
`Jennifer Sullivan, “The Battle Over Online Music,”
`Wired.com (Jan. 29, 1999), available at
`http://www.wired.com/techbiz/media/news/1999/01/1760
`9
`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
`Declaration of Dr. John P.J. Kelly In Support of Petition for
`Covered Business Method Patent Review
`
`vii
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`

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` Covered Business Method Patent Review CBM2013-00021
`United States Patent No. 5,966,440
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`I.
`
`INTRODUCTION
`
`The three challenged claims of the ’440 Patent—all method claims—represent
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`nothing more than an attempt to patent a well-known and unpatentable abstract idea:
`
`selling digital music electronically in a series of rudimentary steps between a buyer and
`
`seller. Independent Claim 1, for example, requires (A) forming a connection between
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`the buyer’s device and seller’s device; (B) selling and charging electronically for the
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`desired digital video or audio signal; (C, D, F) transferring the desired signal from the
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`seller’s device to the buyer’s device (not a tape or CD); and (E) playing the signal
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`through speakers:
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`1. A method for transferring desired digital video or digital audio signals
`comprising the steps of:
`
`[A] forming a connection through telecommunications lines between a
`first memory of a first party and a second memory of a second party
`control unit of a second party, said first memory having said desired
`digital video or digital audio signals;
`
`[B] selling electronically by the first party to the second party through
`telecommunications lines, the desired digital video or digital audio
`signals in the first memory, the second party is at a second party location
`and the step of selling electronically includes the step of charging a fee
`via telecommunications lines by the first party to the second party at a
`first party location remote from the second party location, the second
`party has an account and the step of charging a fee includes the step of
`charging the account of the second party; and
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`[C] transferring the desired digital video or digital audio signals from the
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`United States Patent No. 5,966,440
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`first memory of the first party to the second memory of the second party
`control unit of the second party through telecommunications lines while
`the second party control unit with the second memory is in possession
`and control of the second party;
`
`[D] storing the desired digital video or digital audio signals in a non-
`volatile storage portion the second memory;
`
`[E] and playing through speakers of the second party control unit the
`digital video or digital audio signals stored in the second memory, said
`speakers of the second party control unit connected with the second
`memory of the second party control unit;
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`[F] wherein the non-volatile storage portion is not a tape or CD.2
`
`Ex. 1201. It is hard to imagine a more basic description of selling music electronically.
`
`Moreover, it is clear that broad control over this abstract principle is precisely what
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`was intended in these claims: in litigation to enforce this patent, SightSound’s own
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`expert asserted that “there was no way to purchase digital music for download over
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`telecommunications lines, including the Internet that would not infringe the Patents-
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`in-Suit.” Ex. 1222 ¶ 193. This is also precisely the sort of preemption of a basic
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`concept that is prohibited by 35 U.S.C. § 101—a prohibition that cannot be avoided
`
`by claiming the abstract idea with multiple steps or by claiming performance by a
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`general purpose computer. E.g., Gottschalk v. Benson, 409 U.S. 63, 64, 71-72 (1972)
`
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`2 As discussed below, Claims 64 and 95 are similar.
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`2
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`United States Patent No. 5,966,440
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`(claim for converting binary-coded decimals to binary through seven separate steps
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`including storing, shifting, and adding was invalid for claiming an unpatentable
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`abstract idea); DealerTrack, Inc. v. Huber, 674 F.3d 1315, 1333 (Fed. Cir. 2012).
`
`
`
`The three challenged claims of the ’440 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 (“a first memory” and “a second memory of a second
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`party control unit,” “telecommunications lines,” and “speakers”), and this hardware
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`appears in the claims only to perform rudimentary, extra-solution activities—storing,
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`transmitting and playing electronic signals. See generally Ex. 1244 ¶¶ 63-77, 79. The
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`patent never describes, let alone claims, anything special about this storage,
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`transmission or playing, and these cannot and do not lend patentability to the
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`unpatentable abstract idea Applicant has claimed. Nor does the “control unit”
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`mentioned in the claims as associated with the conventional “second” memory: this is
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`described as a functional feature that can be implemented with a general purpose
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`computer, and the mere performance of otherwise abstract methods by a general
`
`purpose computer cannot render the claims patentable. Accordingly, each challenged
`
`claim is invalid under 35 U.S.C. § 101.
`
`The claims at issue are also all invalid for a second, independent reason
`
`3
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`

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` Covered Business Method Patent Review – CBM2013-00021
`United States Patent No. 5,966,440
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`addressed in this Petition:3 the challenged claims of the ’440 Patent are all at most
`
`obvious variants of claims found in the ’440 Patent’s two expired predecessor patents,
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`and are therefore invalid for violating the prohibition on obviousness-type double
`
`patenting drawn by the courts from 35 U.S.C. § 101.4
`
`II. OVERVIEW OF FIELD OF THE CLAIMED INVENTION
`Applicant’s failure in the ’440 Patent to claim anything but an abstract idea,
`
`accompanied by at most routine, well-known, commercially available hardware such
`
`as memory, telephone lines, speakers and a general purpose computer, is underscored
`
`by the repeated appearance of that same idea (with the same generic hardware)
`
`throughout the prior art leading to his so-called invention.5 The idea of selling and
`
`distributing digital audio and video over telephone lines was well known long before
`
`the ’440 Patent’s claimed June 13, 1988 priority date—and, as noted above and
`
`detailed below in Sections III.A and VI.B, the ’440 Patent’s Applicant disclosed no
`
`3 As noted supra, Petitioner is demonstrating in a contemporaneous Petition that these
`
`claims are invalid under §§ 102 and 103. Petitioner is also demonstrating, in pending
`
`litigation, that these claims are invalid for numerous additional reasons.
`
`4 See infra n.30.
`
`5 While Petitioner is separately addressing the anticipation and obviousness of these
`
`claims, Petitioner includes this information here to provide context for its
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`demonstration that the challenged claims are invalid under § 101.
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`4
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`United States Patent No. 5,966,440
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`new technology for doing so. The commonplace notion of selling and transmitting
`
`digital audio over phone lines from a seller to a buyer’s remote computer system—the
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`sum and substance of what the ’440 Patent Applicant would later seek to claim as his
`
`sole property—was discussed, for example, in a May 1986 book, Start Me Up! The
`
`music biz meets the personal computer: “The way we purchase music may change, too. We
`
`may see a dial-up service for home computers that we could use to select the titles we
`
`want. The songs would be downloaded as digital information into our home
`
`entertainment systems that could play them back in perfect fidelity.” See Ex. 1216 at 5.
`
`Indeed, this idea was well known far earlier. A May 1984 InfoWorld piece, for
`
`example, reported that CompuSonics was also considering commercializing this same
`
`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
`
`information. The CompuSonic system has a built-in communications device that
`
`receives information via an existing phone line.” See Ex. 1217 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
`
`commercialization of
`
`the
`
`idea,
`
`including
`
`introduction of a “digital audio
`
`recording/playback system” that could be used to record digital data sent into the
`
`home and would provide for the sale and distribution of digital audio over telephone
`
`and cable lines. See Ex. 1225 at 4. That article further explained these same scenarios
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`5
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`United States Patent No. 5,966,440
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`would likewise 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
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`land-based telephone data transmission system to digitally transmit and receive music
`
`between Chicago and New York.” See Ex. 1228 at 3
`
`As the article recognized, the “electronic record store” concept was well-known:
`
`“David Schwartz, the president of CompuSonics, is a strong proponent of the
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`‘electronic record store’ concept, an idea that has been bandied about for some time,
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`but which Schwartz says is now poised to ‘become a reality.’” See id. This would
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`“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
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`over the phone lines.” The consumer digital audio recorder/player would record the
`
`purchased music onto disk. See id. As Mr. Schwartz explained in 1984 and 1985
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`letters to CompuSonics shareholders:
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`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. [ See Ex. 1224 at 1.]
`
`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. [ See Ex. 1210 at 1.]
`
`Moreover, the sale of digital products in general over telephone lines was also
`
`known in the art. For instance, WO85/02310 (“Softnet”), published May 23, 1985,
`
`discloses the sale of digital products—and in particular, software—over telephone
`
`lines. Ex. 1211. 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, and—after the host computer
`
`performs a credit card authorization—the purchased software package is transmitted
`
`to the user’s computer for storage to a disk. Id. The user’s computer can then
`
`execute the purchased software from the disk. Id. at 13.
`
`Other elements of the ’440 Patent claims, such as a speaker, were similarly
`
`known in the art, as the specification itself concedes. See, e.g., Ex. 1201 at 4:33-38
`
`7
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`(“Stereo Speakers” are “already commercially available”).
`
`Thus, a number of companies were well aware of (and, indeed, were publicly
`
`discussing strategies for commercializing) the same supposed “invention” now
`
`memorialized in the challenged claims of the ’440 Patent. The prior art—long before
`
`the ’440 Patent’s first purported priority date—was full of disclosures of the very
`
`same abstract notion that Applicant later sought to claim as his exclusive property, as
`
`well as disclosures of the very same conventional hardware Applicant would later
`
`recite in the challenged claims. Although a full discussion of the invalidity of the
`
`challenged claims under §§ 102 and 103 is reserved for the separate Petition filed
`
`concurrently herewith, these prior art teachings certainly bar any claim by the Patent
`
`Owner that the challenged claims of the ’440 Patent recite anything other than an
`
`abstract idea with, at most, the addition of routine and conventional hardware, or that
`
`the challenged claims recite anything remotely resembling a “technological invention.”
`
`III. PETITIONER HAS STANDING
`A.
`The ’440 Patent is a “covered business method patent” under § 18(d)(1) of the
`
`The ’440 Patent Is a Covered Business Method Patent
`
`Leahy-Smith America Invents Act, Pub. L. 112-29 (“AIA”) and § 42.301. As
`
`discussed above, the ’440 Patent is directed to activities that are financial in nature—
`
`the electronic sale of digital music or video. See AIA § 18(d)(1); 37 C.F.R. § 42.301(a).
`
`See also 77 Fed. Reg. 48,734, 48,735 (Aug. 14, 2012) (“[T]he definition of covered
`
`8
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`business method patent was drafted to encompass patents ‘claiming activities that are
`
`financial in nature, incidental to a financial activity or complementary to a financial
`
`activity.’”) (citation omitted). The patent states, for example, that “it is an
`
`objective . . . to provide a new and improved methodology/system to electronically
`
`sell and distribute Digital Audio Music or digital video,” Ex. 1201 at 2:22-25, and
`
`explains that “[t]he method comprises the steps of transferring money via
`
`telecommunications lines to the first party from the second party or electronically
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`selling to the second party by the first party.” Id. at 5:46-49. 6 Applicant confirmed
`
`again during prosecution that the invention relates to a “method for the electronic
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`sales and distribution of digital audio or video signals . . . [in] which a user may
`
`purchase and receive digital audio or video signal from any location which the user
`
`has access to telecommunications lines.” Ex. 1202 (6/11/98 Petition at 33). See also
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`Ex. 1219 at 33:1-11. Another SightSound executive similarly described the invention
`
`as nothing more than “a method for selling a desired digital audio or digital video
`
`signal over networks versus the old way of distributing hard media on trucks through
`
`stores.” Ex. 1220 at 36:23-37:5. Indeed, SightSound has taken the same view in
`
`seeking to enforce the ’440 Patent in litigation, with its own experts stating that
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`6 While the specification also speaks vaguely of manipulation of digital music (sorting,
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`selection, etc.) and protection from unauthorized copying (e.g., Ex. 1201 at 2:17-24),
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`these do not appear in any challenged claim, and in any event were not inventive.
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`the ’440 Patent “generally relate[s] to the field of electronic sale and distribution of
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`digital audio or digital video. More specifically, the patented technology pertains to
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`selling or purchasing digital audio or video via telecommunications lines.” Ex. 1218 ¶
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`22. See also id. ¶ 24.
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`While the claims at issue reference certain conventional components, the ’440
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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).7
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`First, no “technological feature” of the ’440 Patent is novel and unobvious. Claim 1 is
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`exemplary:
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`1. A method for transferring desired digital video or digital audio signals
`comprising the steps of:
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`[A] forming a connection through telecommunications lines between a
`first memory of a first party and a second memory of a second party
`control unit of a second party, said first memory having said desired
`digital video or digital audio signals;
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`[B] selling electronically by the first party to the second party through
`telecommunications lines, the desired digital video or digital audio
`signals in the first memory, the second party is at a second party location
`and the step of selling electronically includes the step of charging a fee
`via telecommunications lines by the first party to the second party at a
`first party location remote from the second party location, the second
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`7 All emphasis herein added unless otherwise noted.
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`party has an account and the step of charging a fee includes the step of
`charging the account of the second party; and
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`[C] transferring the desired digital video or digital audio signals from the
`first memory of the first party to the second memory of the second party
`control unit of the second party through telecommunications lines while
`the second party control unit with the second memory is in possession
`and control of the second party;
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`[D] storing the desired digital video or digital audio signals in a non-
`volatile storage portion the second memory;
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`[E] and playing through speakers of the second party control unit the
`digital video or digital audio signals stored in the second memory, said
`speakers of the second party control unit connected with the second
`memory of the second party control unit;
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`[F] wherein the non-volatile storage portion is not a tape or CD.
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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 known prior art technology to accomplish a process or method, even if that
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`process or method is novel and non-obvious” will “not typically render a patent a
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`technological invention.” See, e.g., 77 Fed. Reg. 48,756 48,764 (Aug. 14, 2012).
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`Indeed, as its language makes clear, Claim 1 involves no “technology” at all
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`other than “a first memory” and “a second memory of a second party control unit,”
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`“telecommunications lines,” and “speakers.” And the patent itself concedes these
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`were all well known and entirely commonplace at the time, stating that the first and
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`second parties’ memories
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`(“agent’s Hard Disk” and “user’s Hard Disk”),
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`telecommunication lines (“Telephone Lines”) and speakers (“Stereo Speakers”) are
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`“already commercially available.”8 Ex. 1201 at 4:33-38. Further, the “control unit”
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`mentioned in the claims as associated with the conventional “second” memory is
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`described as a functional feature that can be implemented with a general purpose
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`computer: the patent provides no disclosure of specific algorithms, and expressly
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`states that the specification’s description of such a “unit” does not indicate any
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`particular requirements—it “is not restrictive with respect to the exact number of
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`components and/or its actual design.” Ex. 1201 at 4:65-67; Ex. 1215 at 19-20.
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`Indeed, during prosecution of the ’440 Patent Applicant himself equated the control
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`unit in the claims to a generic computer, arguing that Napster and N2K copied the
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`claimed invention when they enabled a generic computer (equated by Applicant to the
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`second control unit) to access a website and purchase digital audio signals. Ex. 1202
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`(1/08/98 Decl. at 2-3). Thus, as the intrinsic record reflects, Claim 1 recites nothing
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`more than a method for electronically selling digital audio or video between a seller
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`8 A SightSound executive has similarly admitted that Applicant did not invent
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`computers, computer networks, the Internet, telephone lines, or telecommunications
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`lines. Ex. 1220 at 42:12-44:5.
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`and buyer, using conventional, commercially available hardware and a general purpose
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`computer with no specific algorithm. 9 The generic level at which this hardware is
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`disclosed is further illustrated in the patent’s Figure 1 (Ex. 1201):
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`The subject matter as a whole also solves no “technical problem” because there
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`was no technical problem to begin with: those of ordinary skill certainly already knew
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`how to sell digital products over telephone line