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`Trials@uspto.gov
`Tel: 571-272-7822 Entered: December 16, 2014
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`RECORD OF ORAL HEARING
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`UNITED STATES PATENT AND TRADEMARK OFFICE
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`- - - - - -
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`- - - - - -
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`CALLIDUS SOFTWARE, INC.
`Petitioner
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`v.
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`VERSATA SOFTWARE, INC.
`AND VERSATA DEVELOPMENT GROUP, INC.
`Patent Owner
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`- - - - - - - -
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`Cases CBM2013-00052 (Patent 7,904,326)
`CBM2013-00053 (Patent 7,958,024)
`CBM2013-00054 (Patent 7,908,304)
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`Oral Hearing Held: Wednesday, October 29, 2014
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`Before: SALLY C. MEDLEY, HOWARD B. BLANKENSHIP, and
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`KEVIN F. TURNER (via video link), Administrative Patent Judges.
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`The above-entitled matter came on for hearing on Wednesday,
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`October 29, 2014, at 1:00 p.m., in Hearing Room A, taken at the U.S. Patent
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`and Trademark Office, 600 Dulany Street, Alexandria, Virginia.
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`APPEARANCES:
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`ON BEHALF OF THE PETITIONER:
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`DEBORAH E. FISHMAN, ESQ.
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`MICHAEL S. TONKINSON, ESQ.
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`Dickstein Shapiro LLP
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`1841 Page Mill Road
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`Suite 150
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`Palo Alto, California 94304
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`650-690-9500
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`ON BEHALF OF THE PATENT OWNER:
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`RAGHAV BAJAJ, ESQ.
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`Haynes and Boone, LLP
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`600 Congress Avenue
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`Suite 1300
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`Austin, Texas 78701-3285
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`512-867-8520
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`KENT B. CHAMBERS, ESQ.
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`Terrile, Cannatti, Chambers & Holland, LLP
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`8911 N. Capital of Texas Highway
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`Westech Center, Suite 3150
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`Austin, Texas 78759
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`512-338-9100
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`2
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`CBM2013-0052; CBM2013-0053; and CBM2013-0054
`Patent Nos. 7,904,326; 7,958,024; and 7,908,304
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`P R O C E E D I N G S
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`(1:00 p.m.)
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`JUDGE MEDLEY: Please be seated. Good
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`afternoon. This is the hearing for CBM2013 -00052, 53 and 54
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`between Petitioner, Callidus Software, and Patent Owner,
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`Versata Software and Versata Development Group.
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`At this time we would like the parties to please
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`introduce counsel beginning with Petitioner.
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`MS. FISHMAN: Good afternoon, Your Honor.
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`Deborah Fishman of Dickstein Shapiro on behalf of Petitioner
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`Callidus Software.
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`And with me today is my colleague, Michae l
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`Tonkinson, also from Dickstein Shapiro.
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`JUDGE MEDLEY: Thank you. And for Patent
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`Owner?
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`MR. BAJAJ: Raghav Bajaj, Haynes and Boone, for
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`Patent Owner Versata Development Group.
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`MR. CHAMBERS: And Kent Chambers for Patent
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`Owner.
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`JUDGE MEDLEY: Thank y ou. Per the September
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`24th order, each party will have 30 minutes of total time per case
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`to present arguments for the three cases, with the exception that
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`for the 52 case the parties agree on an additional 10 minutes each
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`in connection with the 325(a) iss ues.
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`CBM2013-0052; CBM2013-0053; and CBM2013-0054
`Patent Nos. 7,904,326; 7,958,024; and 7,908,304
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`Petitioner will proceed first to present its case with
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`respect to the challenged claims and grounds for which the Board
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`instituted trial for CBM2013 -0052.
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`Petitioner, you may reserve some of your argument
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`time for rebuttal. Thereafter, Patent Own er will respond. The
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`same process then will be repeated for the 53 and 54 case s.
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`Any questions before we get started?
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`MR. BAJAJ: I do have a question, Your Honor. It
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`is our understanding that Petitioner bears the burden on all
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`issues. What we are n ot clear about is whether that includes the
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`standing issue.
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`And if the Patent Owner bears that burden of
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`establishing a lack of standing, then we would request rebuttal
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`time at least on that point at the end of the 52 CBM. I am
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`looking for some guidance on that point.
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`JUDGE MEDLEY: Okay. That's fine. If you want
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`to have some rebuttal time, that's fine, if that's okay with
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`Petitioner.
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`proceed.
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`MR. BAJAJ: Thank you, Your Honor.
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`JUDGE MEDLEY: On that issue. Okay. You may
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`MS. FISHMAN: Thank you, Your Honor. May it
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`please the Board. With respect to CBM2013 -0052 regarding
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`Versata's U.S. Patent Number 7,904,326, Petitioners contend that
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`Alice, the Supreme Court's decision in Alice only confirms,
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`CBM2013-0052; CBM2013-0053; and CBM2013-0054
`Patent Nos. 7,904,326; 7,958,024; and 7,908,304
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`further confirms, that the '326 patent claim 1 is un patentably
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`abstract.
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`If we could look at slide 1.
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`JUDGE MEDLEY: I'm sorry, I didn't ask you. Did
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`you want to reserve rebuttal time, and how much? I can kind of
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`keep an eye on the clock for you.
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`MS. FISHMAN: Thank you, Your Honor. I would
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`like to reserve at least 15 minutes rebuttal time on the main of
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`the argument, and then I would like to reserve all of my time on
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`standing.
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`JUDGE MEDLEY: Okay. So you want to talk
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`about standing in the second part of your argument?
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`MS. FISHMAN: Depending on what -- right. So I
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`will certainly address it in a cursory fashion, but I will reserve
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`most of my time on standing for after Patent Owner has had an
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`opportunity to be heard.
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`JUDGE MEDLEY: Okay. That's fine.
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`MS. FISHMAN: May I proceed?
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`JUDGE MEDLEY: Yes. I'm sorry.
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`MS. FISHMAN: So, Your Honors, it is Petitioner's
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`contention that claim construction is not necessary in order to
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`determine whether or not the claims of the '326 patent are
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`unpatentably abstract.
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`CBM2013-0052; CBM2013-0053; and CBM2013-0054
`Patent Nos. 7,904,326; 7,958,024; and 7,908,304
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`As was noted in our initial petiti on, claim
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`construction is not an inviolable prerequisite to a validity
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`determination under Section 101.
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`And while Versata does challenge the Board's
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`claim construction of the term denormalizing, this claim
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`construction argument, as we will see and discus s, in the context
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`of the dependent claims, it really conflates into a Section 101
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`argument.
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`So with respect to the only independent claim of
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`the '326 patent, claim 1, there is no claim construction argument
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`that is required necessary in order to determin e whether or not
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`claim 1 recites eligible subject matter.
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`As I have mentioned, the legal framework has long
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`been recognized that abstract ideas are exempted from the
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`categories of patent-eligible subject matter. If I can have slide
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`1.
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`It is cited in Bilski v. Kappos but there is more
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`than 150 years of Federal Circuit and Supreme Court precedent
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`to this effect. And in July when the Supreme Court issued its
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`Alice v. CLS Bank decision, it simply provided a streamlined
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`framework for this analysis.
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`Slide 2. In Alice, the Supreme Court says there is
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`a two-part inquiry to determining whether or not claims are
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`directed to patent-eligible subject matter.
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`CBM2013-0052; CBM2013-0053; and CBM2013-0054
`Patent Nos. 7,904,326; 7,958,024; and 7,908,304
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`First we look at the claim as a whole and ask, is it
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`directed to patent-eligible subject matter? And i f the answer is
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`yes, then we look to what else in the claim adds meaningfully to
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`the abstract idea. In other words, whether the balance of the
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`claim adds significantly more.
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`Borrowing from Mayo, the Alice court tells us that
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`step 2 is whether the claim contains an inventive concept
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`sufficient to transform the claimed abstract idea into
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`patent-eligible application. And for claim 1 of the '326 patent,
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`clearly the answer is it does not.
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`As set forth in our petition, slide 9, claim 1 is
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`directed to the abstract idea of generating compensation data
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`using validated transactions and validated distributor credentials.
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`Even Patent Owner's characterization of the '326 patent reveals a
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`fundamentally abstract idea.
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`Patent Owner says in their Patent Owner respon se
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`that the '326 patent describes and claims, and it characterizes it
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`as a specific method, but at the bottom it is the validation of
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`distributor credentials and transactions to ensure proper
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`compensation of a distributor.
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`This does nothing to improve on the fundamentally
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`abstract idea that claim 1 recites. Notably, the '326 patent does
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`not disclose any particular way or algorithm for performing this
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`validation. Patent Owner in its response points to none.
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`CBM2013-0052; CBM2013-0053; and CBM2013-0054
`Patent Nos. 7,904,326; 7,958,024; and 7,908,304
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`There are no specific hardware or software
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`elements recited or required by claim 1, and the '326 patent
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`specification makes clear that there are no such limits on the
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`application here, as taken from our petition, Petitioner's petition.
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`These are various statements from the specification that disclos e
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`that the invention contemplates any component or set of
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`components that implements the functionality described therein,
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`and makes it clear that the claims are not limited to any
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`particular software or hardware configurations.
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`Moreover, in our petition Petitioner set forth
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`declarant testimony by Mr. Joe DeHaven and Ms. Janice
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`McGuffey that demonstrated that the recited method could and
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`had been performed by hand or in the human mind by insurance
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`companies for many years before the filing of the '326 pate nt.
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`And as Cybersource tells us, while there is nothing
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`inherently wrong with things being performed in the human mind
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`or by hand, it is highly suggestive that it touches on the
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`fundamental nature of an abstract idea and threatens to foreclose
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`or preempt the use of those ideas by others.
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`So the testimony of Petitioner's declarants remain
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`unrebutted and, as the Board recognized in its institution
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`decision, the obtaining, processing and generating steps of the
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`method claims are demonstrated by those decla rants to have
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`existed and been performed by hand.
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`CBM2013-0052; CBM2013-0053; and CBM2013-0054
`Patent Nos. 7,904,326; 7,958,024; and 7,908,304
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`So looking at claim 1, which is slide 6, the issue
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`then is --
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`JUDGE TURNER: Before you move on, could I
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`just ask you a quick question?
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`MS. FISHMAN: Yes.
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`JUDGE TURNER: You were sort of finishing up
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`with Alice and I just wanted to ask you a question before you
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`went on to the claim.
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`Patent Owner makes an argument saying that, you
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`know, this notion really isn't a preexisting fundamental truth and
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`that this really isn't a fundamental economic practice. I t was
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`long prevalent.
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`So they are saying, you know, there is really
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`nothing here that even if the claim covered the whole thing there
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`really wouldn't, you know, it is not like a mathematical formula
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`or a target with nature or something that it would prec lude others
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`from doing this and this really isn't fundamental.
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`And I guess, before you go on to the claim, I want
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`you to respond to that, please.
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`MS. FISHMAN: Absolutely. So I would
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`characterize that argument, Patent Owner's argument as
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`essentially saying that the claim is to the wrong kind of abstract
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`idea. In other words, it is not that it doesn't recite or isn't
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`directed to an abstract idea but that it is not a fundamental
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`CBM2013-0052; CBM2013-0053; and CBM2013-0054
`Patent Nos. 7,904,326; 7,958,024; and 7,908,304
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`economic practice. It is not fundamental in nature. It is not, as
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`you say, a preexisting fundamental true.
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`And as set forth in our reply, that doesn't salvage a
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`claim from its inherent abstractness.
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`And precisely this sort of argument was made in
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`the Alice court, and where the Petitioner argued that the claims
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`at issue in Alice should not be considered to be foreclosed
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`because the methods there and the Beauregard claim there
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`basically did not constitute preexisting fundamental truths.
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`To quote Alice, this is the argument by Petitioner:
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`Drawing on the presence of mathematic al formulas in some of
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`our abstract ideas precedent, Petitioner contends that the abstract
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`ideas category is confined to preexisting fundamental truths that
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`exist in principle apart from any human action.
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`And Alice rejects that. The Supreme Co urt rejects
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`the idea that you can have a particular kind or it has to be
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`exulted and only fundamental truths are foreclosed.
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`The Alice court goes on to say: If Bilski belies
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`Petitioner's assertion, the concept of risk catching that was in
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`Bilski that we identified as an abstract idea in that case cannot
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`be described as a preexisting fundamental truth.
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`In any event, the Alice court goes on to say, it is
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`still an abstract idea. And just as a matter of logic, why would it
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`be that a less significant abstr act idea is more entitled to
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`protection than a more significant one.
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`CBM2013-0052; CBM2013-0053; and CBM2013-0054
`Patent Nos. 7,904,326; 7,958,024; and 7,908,304
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`Here the issue is that the prohibition is against the
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`mental process, is against the abstract idea. And in effect Patent
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`Owner's argument in this regard is a tacit concession that the
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`claim of the '326 patent, claim 1, is abstract. And actually their
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`principal argument is that it is the wrong kind of abstract idea.
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`And while there are certainly findings in a couple
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`of the cases, I believe it was Alice and Bilski regarding whether
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`or not it was fundamental in nature, Cybersource and Bancorp,
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`there are no such findings, at least none that we are aware of nor
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`have Patent Owners pointed it out.
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`It is really difficult to understand why it is that the
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`claims at issue in this case, the 52 case, are fundamentally
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`different in nature from the claims at issue in Bancorp and
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`Cyberspace -- Cybersource, pardon me, and we submit that they
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`are not.
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`Another argument the Patent Owner makes is they
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`argue that there are too many abstract ideas, that the formulation
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`of the abstract ideas in Petitioner's petition has six different,
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`slightly different formulation.
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`Again, we contend that this really exalts form over
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`substance. There may be slightly different ways of expressing
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`the same abstract idea, but at bottom it is an abstract idea and
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`there is nothing more in the claim to salvage it.
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`Finally, Patent Owner argues that the claimed
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`method is adequately limited by its application to a computer.
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`CBM2013-0052; CBM2013-0053; and CBM2013-0054
`Patent Nos. 7,904,326; 7,958,024; and 7,908,304
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`But as we mentioned, there is no specific softw are or hardware
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`required by the claims or provided by the specification.
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`And Alice and the other precedents that we have
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`cited in our papers make clear that the ancillary use of the
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`computer is not enough to tie down the abstract idea.
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`Finally, dependent claims 2 through 22 do not add
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`meaningfully more to the abstract idea of claim 1. Versata
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`concedes this fact with respect to most of the dependent claims,
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`claims 3 through 8, 10, 13 through 16, and 18 to 22.
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`However, with respect to dependent claims 2, 9, 11,
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`12 and 17, Versata makes a claim construction argument
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`regarding denormalizing in an attempt to salvage its abstract
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`claims.
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`And what it does is it tries to read into its claim
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`construction of the term denormalizing the fact that
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`denormalizing requires specific programming.
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`Now, there are several problems with this
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`argument. But most fundamentally, simply saying that a claim
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`requires specific programming without the specific programming
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`being recited or disclosed anywhere in the patent is not enough
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`to salvage an abstract claim.
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`It is much like claiming a nonabstract idea.
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`Without more, there is nothing to tie it down. And we would
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`propose an end run around claim amendment, but if they had
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`tried to make a claim amendment there would be no support in
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`CBM2013-0052; CBM2013-0053; and CBM2013-0054
`Patent Nos. 7,904,326; 7,958,024; and 7,908,304
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`the specification, since there is no algorithm and there is no
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`structure disclosed.
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`Finally, with respect to the claim construction
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`argument, Versata does concede that the term denormalizing is a
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`term of art. Its position on construction has no support in the
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`intrinsic record. Versata offers no expert or declarant testimony
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`to support its argument. Much of what it says would be
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`nonconventional. It is sheer speculation.
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`And, in fact, the very extrinsic evidence that
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`Versata relies on actua lly demonstrates that denormalizing was a
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`conventional programming routine.
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`So regardless of whether the Board finds it is
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`necessary to construe this term or not -- we submit it is not -- the
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`most fundamental point is simply calling something specific
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`programming or special programming or saying that it requires
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`complex programming doesn't make it so unless it is recited in
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`the claims and disclosed in the specification.
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`Finally, just briefly, on the issue of standing, we
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`submit this issue has been fully briefed, twice considered and
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`twice rejected by the Board. There were no new arguments
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`presented by Patent Owners in its response.
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`And so while we have detailed that we believe
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`there are multiple reasons for why the standing argument fails, it
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`is enough that the Board has found and the Federal Circuit has
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`CBM2013-0052; CBM2013-0053; and CBM2013-0054
`Patent Nos. 7,904,326; 7,958,024; and 7,908,304
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`consistently interpreted the effect of a voluntary dismissal as
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`leaving the parties as though the action had never been brought.
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`There are reams of Federal Circuit decisions that
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`stand for this proposition and many of them are cited in the
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`Board's prior decisions. This outcome is consistent with
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`legislative history. It gives Petitioners a choice. It prevents
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`re-litigation and there was no re -litigation here.
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`So with that I will stop and reserve t he rest of my
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`time for rebuttal, unless there are questions by the Board. Okay.
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`Thank you.
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`MR. BAJAJ: Your Honor, do you need a copy of
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`the slides from Patent Owner?
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`JUDGE MEDLEY: Sure. You may approach the
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`Bench.
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`MR. BAJAJ: Thank you, Your Hono rs. I would
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`like to reserve five minutes for rebuttal on the standing issue, if
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`possible.
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`Turning to slide 2, the statute is clear on its face.
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`Section 325(a)(1) contains no exceptions, no exclusions. If a
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`party files a civil action challenging validi ty, post-grant review,
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`and the transitional program under it for Covered Business
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`Method review is barred. And that's exactly the case here.
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`Turning to slide 3, Petitioner clearly filed a
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`complaint challenging the validity of the '326 patent. There is
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`no dispute on this point. And not that it affects the
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`CBM2013-0052; CBM2013-0053; and CBM2013-0054
`Patent Nos. 7,904,326; 7,958,024; and 7,908,304
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`determination, but the complaint challenged validity on Section
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`101, the very same grounds it alleges in the petition.
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`The legislative history of 325(a)(1) and similar
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`draft statutes don't include an y intent to allow a Petitioner to
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`effectively gain the system and file a declaratory judgment
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`action, dismiss it, and still be permitted to file for post -grant
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`review.
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`The legislative history -- Judge Turner, did you
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`have something?
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`JUDGE TURNER: No, I'm sorry.
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`MR. BAJAJ: The legislative history indicates an
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`intent to limit the Petitioner to one window one time. And this
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`Petitioner had its one window and its one time, the declaratory
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`judgment action.
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`The reasoning here allows the Petitioner a sec ond
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`window, a second time. Indeed, a second bite at the Section 101
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`unpatentability apple, contrary to the statute and legislative
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`history.
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`And it is not as if the Petitioner is without remedy.
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`They have and continue to have a number of options to chal lenge
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`the validity of these patents. It could have maintained the
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`declaratory judgment action. It could have pursued invalidity in
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`the Delaware action as a counterclaim, which it did once the
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`California action terminated, or it could have filed its post -grant
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`review petitions first. But for better or worse, it did none of
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`15
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`CBM2013-0052; CBM2013-0053; and CBM2013-0054
`Patent Nos. 7,904,326; 7,958,024; and 7,908,304
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`those things. That should have barred it from the instant
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`reviews.
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`And there is no active requirement in 325(a)(1) nor
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`is there in the legislative history, nor is there any provision for
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`unfiling an action. And the dismissal without prejudice in this
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`case didn't just leave the parties as if it hadn't been filed.
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`Indeed, Petitioner's answer in the Delaware action
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`wasn't filed until the California action was dismissed. And so
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`the declaratory judgment action of invalidity in the District
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`Court still exists effectively in Delaware.
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`Turning to slide 6, I would like to talk about the
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`patent at issue in this case, the '326 patent. Claim 1 is
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`reproduced here. And as noted in the patent -- Judge Turner? I
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`think it is delaying. I thought I heard a question. I'm sorry then.
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`The '326 patent describes and claims a specific
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`method for performing transaction processing in an efficient
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`manner that minimizes the use of computing resources i n
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`computationally expensive processes.
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`And contrary to Petitioner's allegations, the claims
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`of the patent are more than a mere abstraction, more than merely
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`directed to an abstract idea. The abstract idea analysis is a
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`narrow exception to the otherwise broad reach of Section 101.
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`And at no point does the Petitioner provide any sufficient
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`evidence that these claims in their fully recited language
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`CBM2013-0052; CBM2013-0053; and CBM2013-0054
`Patent Nos. 7,904,326; 7,958,024; and 7,908,304
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`considered as a whole are no more than mere abstractions,
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`because they simply are far more than that.
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`Turning to slide 7, the Alice court made clear that
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`the first step in the analysis is to determine whether the claims at
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`issue are directed to a patent -ineligible concept. As the court
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`determined, there are certain categories of abstract ideas or
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`patent-ineligible concepts.
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`Fundamental economic practices, preexisting
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`fundamental truths, mathematical formulas and ideas by
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`themselves. But the Petitioners proposed abstract ideas fall into
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`none of these categories.
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`JUDGE MEDLEY: I will follow up with Judge
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`Turner's question.
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`MR. BAJAJ: Absolutely.
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`JUDGE MEDLEY: What in Alice would lead us to
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`think that this is an exhaustive list, that if you have an abstract
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`idea that doesn't fall within per se one of these four categories,
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`then you are good to go?
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`MR. BAJAJ: I don't think that's necessarily true
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`but at least under the precedence that exists, these are the
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`categories that have been established over the 150 years of
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`precedence that Petitioner mentioned.
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`JUDGE MEDLEY: So you read Alice as saying
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`this is it, this is an exhaustive list?
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`CBM2013-0052; CBM2013-0053; and CBM2013-0054
`Patent Nos. 7,904,326; 7,958,024; and 7,908,304
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`MR. BAJAJ: Certainly for now. It is a
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`characterization, but the point is that the Petitioner's abstract
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`ideas wouldn't be characterized by any of these four options.
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`If there is a future option, I can't speak to that, b ut
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`at least under the current precedent it is not the case.
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`JUDGE MEDLEY: Thank you.
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`MR. BAJAJ: Turning to slide 8 --
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`JUDGE BLANKENSHIP: Before you leave that,
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`the idea can be expressed a lot of different ways maybe, but
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`wouldn't that be within, like , within a species of fundamental
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`economic practice because you are determining how much to pay
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`for a service, wouldn't that be a fundamental economic practice?
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`MR. BAJAJ: There is no evidence of record on
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`that point, Your Honor. And so if that is a fu ndamental
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`economic practice that would be, you know, at issue, there would
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`be evidence on that point. But there is no evidence on that point.
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`JUDGE BLANKENSHIP: People have been paid
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`for a lot of years, haven't they?
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`MR. BAJAJ: Certainly. But do the claims recite
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`only that abstract idea? I would submit that they do not. They
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`recite significantly more than that very broad, abstract idea.
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`JUDGE BLANKENSHIP: Proceed.
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`MR. BAJAJ: Turning to slide 8, under the
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`statutory threshold required by Section 326(e), the Petitioner
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`must prove unpatentability by a preponderance of the evidence.
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`18
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`CBM2013-0052; CBM2013-0053; and CBM2013-0054
`Patent Nos. 7,904,326; 7,958,024; and 7,908,304
`
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`But Judge Turner started to make this point for me.
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`There is no evidence to support any theory that generating
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`compensation data using validated transactions and valid ated
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`distributor’s credentials is a fundamental economic practice or in
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`any of the other categories from the Alice court's reasoning.
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`Calling something a fundamentally abstract idea
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`does not mean it is a fundamental economic practice. And it is
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`not a preexisting fundamental truth, it is not a mathematical
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`relationship or formula and not an idea of itself.
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`The Petitioner's proposed abstract ideas are just
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`conjured from the claims in an attempt to fit their analysis. And
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`just to be clear, Patent Owner d oesn't contend that only
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`fundamental economic practices are abstract ideas. But based on
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`the Petitioner's petition it seems that's the focus of the challenge
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`here.
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`Another concern that the Petitioner has brought up
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`is that preemption is not a test for pa tent eligibility. But the
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`Alice court stated that the preemption concern undergirds or
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`provides the very support for the Section 101 analysis. And
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`there is no preemption analysis in the petition and certainly none
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`in the reply either.
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`So what is a fundamental economic practice?
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`Again, Alice and Bilski cited treatises, learned books, that
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`establish that the concepts in those cases were long -known
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`CBM2013-0052; CBM2013-0053; and CBM2013-0054
`Patent Nos. 7,904,326; 7,958,024; and 7,908,304
`
`building blocks of this economy. And that evidence was
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`unquestioned and explicitly on the record.
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`That simply does not exist here. There is no
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`evidence that the Petitioner's abstract ideas fall into any of the
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`Alice court examples. The declaratory evidence is not sufficient
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`on this point. It was not cited in the petition as establishing an
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`abstract idea.
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`It was cited in the petition to establish that
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`allegedly these claims could have been performed by hand or
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`mentally. But on the fundamental economic practice point, these
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`declarations provide no evidence.
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`Addressing the Cybersource and Bancorp case, bo th
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`of those cases were before Alice and there is no indication that
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`the analysis in those cases is consistent with the Alice court.
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`And in Cybersource the court considered the actual
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`language, the claim language of the method claims and not the
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`computer-readable medium claim or any other claims in
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`Cybersource. It found that the limitations in the method claim
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`did not require the use of a computer.
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`But here if you turn to slide 6 again and take a look
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`at claim 1, finding that the claim language itself does not require
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`the use of a computer would be erroneous.
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`For example, if you look at the second limitation:
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`Storing the set of credential information in the computer system.
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`Patent Owner does not submit that the bare recitation of a
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`20
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`CBM2013-0052; CBM2013-0053; and CBM2013-0054
`Patent Nos. 7,904,326; 7,958,024; and 7,908,304
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`computer system me ans that the claim is not an abstract idea.
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`But at least the positive recitation of a computer system takes it
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`out of the Cybersource analysis.
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`What the Petitioner did in the petition is to reduce
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`the claim functions to their functions, to obtaining, to storing, to
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`loading. That's not proper. That is not considering the claim as
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`a whole, as Alice and the Diehr court instruct the analysis.
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`The claims can't be reduced to just their functions
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`and then invalidated on the basis that those functions are
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`unpatentable mental processes.
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`I would submit that loading from at least one data
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`source a set of credential validation data or credential
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`information stored in a form that is processed by a computer
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`system, is simply not a mental process.
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`So what the Petitioner's argument boils down to is
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`that the abstract idea can be performed mentally and, therefore,
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`the claim is ineligible.
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`Again, that's what the Supreme Court and Federal
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`Circuit had cautioned against. It is a tempting trap, but one that
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`should not be fallen into.
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`And, again, the declaratory evidence was only cited
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`that the stripped-down claims, according to Petitioner's analysis,
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`was performed manually. But that's not supported by the
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`evidence either.
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`CBM2013-0052; CBM2013-0053; and CBM2013-0054
`Patent Nos. 7,904,326; 7,958,024; and 7,908,304
`
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`On cross-examination both declarants confi rmed
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`that the processes of determining compensation included
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`computer generation of some data.
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`Because Petitioner's allegations that claim 1 recites
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`an abstract idea are without any evidence, the challenge of
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`unpatentability under Section 101 must fail. There is no reason
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`to go to Alice, step 2, which is to find whether there is
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`significantly more. The Petitioner's challenge fails on Alice,
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`step 1.
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`Turning to the dependent claims, and I would turn
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`you to slide 9, please, all of the dependent claims re cite statutory
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`subject matter as well. And that fact is emphasized by the
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`language on these slides.
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`Certain dependent claims reciting the terms
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`denormalizing and joining are reproduced. The construction of
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`these terms is disputed and the Board construe d neither claim
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`term in the institution decision.
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`And having attempted to construe denormalizing in
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`a manner inconsistent with the understanding of a person of skill
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`in the art, Petitioner now seeks to allege that claim construction
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`is not necessary.
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`But it is almost as if the petition is saying one
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`thing, that claim construction construing denormalizing as
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`creating a redundant copy is necessary on one end, but now that
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`it is not.
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`22
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`CBM2013-0052; CBM2013-0053; and CBM2013-0054
`Patent Nos. 7,904,326; 7,958,024; and 7,908,304
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`And Bancorp, indeed, confirms that it will
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`ordinarily be desirable and necessary to resolve