`
`
`
`Paper No. 5
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`CALLIDUS SOFTWARE INC.
`Petitioner
`
`v.
`
`VERSATA SOFTWARE, INC. AND VERSATA DEVELOPMENT
`GROUP, INC.
`Patent Owner
`____________
`
`Case CBM2013-00053
`Patent 7,958,024
`____________
`
`Filed: September 17, 2013
`
`
`Before PATRICK E. BAKER, Trial Paralegal
`
`
`
`
`
`PETITION FOR COVERED BUSINESS METHOD PATENT
`REVIEW UNDER 35 U.S.C. § 321 AND §18 OF THE
`LEAHY-SMITH AMERICA INVENTS ACT1
`
`
`Pursuant to 35 U.S.C. § 321 and § 18 of the Leahy-Smith America Invents
`
`Act (“AIA”) and pursuant to 37 C.F.R. § 42.300 et seq., the undersigned hereby
`
`
`1 As directed by the Board in Paper No. 3, Petitioner hereby resubmits its Petition
`to incorporate mandatory notice information.
`
`
`
`i
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`DOCSLA#112133
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`

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`
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`requests covered business method (“CBM”) patent review of claims 1, 2, and 35-
`
` Petition for Covered Business Method Review
`U.S. Patent No. 7,958,024
`
`47 of U.S. Patent 7,958,024 (“the ‘024 patent,” attached as Petition Exhibit 1001),
`
`which issued to David Chao et al. on June 7, 2011.
`
`An electronic payment in the amount of $30,000.00 for the covered business
`
`method review fee specified by 37 C.F.R. § 42.15(b)(1) is being paid at the time of
`
`filing this petition, charged to deposit account No. 041073.
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`ii
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` Petition for Covered Business Method Review
`U.S. Patent No. 7,958,024
`
`TABLE OF CONTENTS
`
`Page No.
`
`PRELIMINARY STATEMENT ..................................................................... 1
`I.
`II. MANDATORY NOTICES ............................................................................. 4
`A. ...... Real Party-in-Interest ............................................................................ 4
`B. ...... Related Matters ...................................................................................... 4
`C. ...... Lead and Back-Up Counsel ................................................................... 4
`D. ...... Service Information ............................................................................... 5
`III. GROUNDS FOR STANDING ........................................................................ 6
`A. ...... Petitioner has Been Sued for Infringement of the ‘024 Patent and
`is Not Estopped ..................................................................................... 6
`B. ...... At Least One Challenged Claim is Unpatentable ................................. 6
`C. ...... The ‘024 Patent is a CBM Patent .......................................................... 6
`1. ...... Claims 1, 2, and 35-47 are Directed to Financial Products or
`Services ....................................................................................... 7
`2. ...... Claims 1, 2, and 35-47 are Not Directed to a “Technological
`Invention” .................................................................................. 10
`IV. STATEMENT OF PRECISE RELIEF REQUESTED FOR EACH CLAIM
`CHALLENGED ............................................................................................ 18
`A. ...... Claims for which Review is Requested .............................................. 18
`B. ...... Statutory Grounds of Challenge .......................................................... 19
`CLAIM CONSTRUCTION .......................................................................... 19
`A. ...... Broadest Reasonable Interpretation .................................................... 19
`B. ...... Support for Petitioner’s Broadest Reasonable Interpretation ............. 23
`1. ...... “Distributer Management System” ........................................... 23
`2. ...... “Regulatory Conditions Applicable to Said Sales” /
`“Regulatory Conditions Associated with Said Sales” .............. 25
`3. ...... “Executing a Payment Process” / “Execute a Payment
`Process” ..................................................................................... 27
`
`V.
`
`
`
`iii
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`

` Petition for Covered Business Method Review
`U.S. Patent No. 7,958,024
`
`TABLE OF CONTENTS (con't)
`
`Page No.
`
`
`
`
`
`4. ...... “Generating a Selling Agreement” / “Generate a Selling
`Agreement” ............................................................................... 28
`5. ...... Means-Plus-Function Claim Terms .......................................... 29
`VI. CLAIMS 1, 2, AND 35-47 OF THE ‘024 PATENT ARE DIRECTED TO
`NON-PATENTABLE SUBJECT MATTER ................................................ 30
`A. ...... Inventions Covering Abstract Ideas are Not Eligible for Patent
`Protections, Regardless of their Form ................................................. 30
`B. ...... Claim 1 of the ‘024 Patent is Directed to an Abstract Idea ................. 32
`1. ...... Any Computer System Used to Implement the Claimed
`Method is No More than a General Purpose Computer ........... 37
`2. ...... Computing Compensation for Sales Representatives that
`Conforms with a Set of Regulatory Conditions Can Be
`Accomplished by Hand ............................................................. 41
`3. ...... Claim 1 Fails the Machine-or-Transformation Test ................. 45
`C. ...... Claim 40 of the ‘024 Patent is Directed to an Abstract Idea............... 50
`D. ...... Claim 42 of the ‘024 Patent is Directed to an Abstract Idea............... 53
`E. ...... Claim 45 of the ‘024 Patent is Directed to an Abstract Idea............... 55
`F. ...... Dependent Claims 2, 35-39, 41, 43, 44, 46, and 47 also Define
`Abstract Ideas that Fail to Tie Down the Claimed Abstract Idea ....... 58
`1. ...... Dependent Claims 2, 41, 44, and 47 Add Nothing More
`Than Insignificant Post-Solution Activity to the Abstract
`Idea of Independent Claims 1, 40, 42, and 45. ......................... 59
`2. ...... The Generating Reports Limitations of Dependent Claims
`35/38 and 36/ 39 are Also Insignificant Post-Solution
`Activity ...................................................................................... 61
`3. ...... Dependent Claims 37, 43, and 46 Merely Limit the Claims
`to a Particular Species or Field of Use ...................................... 62
`VII. CONCLUSION .............................................................................................. 64 
`
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` Petition for Covered Business Method Review
`U.S. Patent No. 7,958,024
`
`TABLE OF AUTHORITIES
`
`Page No.
`
`Cases
`Aristocrat Techs. Austl. Pty. Ltd. v. Int’l Game Tech.,
`521 F.3d 1328 (Fed. Cir. 2008) ............................................................................ 30
`Bancorp Servs., L.L.C. v. Sun Life Assurance Co. of Can. (U.S.),
`687 F.3d 1266 (Fed. Cir. 2012) .................................................................... passim
`Bilski v. Kappos,
`130 S. Ct. 3218, 3230 (2010) ....................................................................... passim
`Blackboard, Inc. v. Desire2Learn Inc.,
`574 F.3d 1371 (Fed. Cir. 2009) ............................................................................ 30
`Clearstream Wastewater Sys., Inc. v. Hydro-Action, Inc.,
`206 F.3d 1440, 1446 (Fed. Cir. 2000) .................................................................. 26
`CLS Bank Int’l v. Alice Corp. Pty.,
`717 F.3d 1341 (Fed. Cir. 2012) .................................................................... passim
`CyberSource Corp. v. Retail Decisions, Inc.,
`654 F.3d 1366 (Fed. Cir. 2011) .................................................................... passim
`Diamond v. Diehr,
`450 U.S. 175 (1981) ............................................................................................. 61
`Fort Props., Inc. v. Am. Master Lease, LLC,
`671 F.3d 1317 (Fed. Cir. 2012) ............................................................... 31, 37, 49
`Gottschalk v. Benson,
`409 U.S. 63 (1972) ....................................................................................... passim
`In re Am. Acad. of Sci. Tech Ctr.,
`367 F.3d 1359 (Fed. Cir. 2004) ..................................................................... 19, 20
`In re Grams,
`888 F.2d 835 (Fed. Cir. 1989) ....................................................................... 53, 57
`In re Zletz,
`893 F.2d 319 (Fed. Cir. 1989) .............................................................................. 20
`Inventio AG v. ThyssenKrupp Elevator Ams. Corp.,
`649 F.3d 1350 (Fed. Cir. 2011) ............................................................................ 21
`Mayo Collaboration Servs. v. Prometheus Labs., Inc.,
`132 S. Ct. 1289 (2012) ................................................................................. passim
`
`
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`v
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`DOCSLA#112133
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`
`
` Petition for Covered Business Method Review
`U.S. Patent No. 7,958,024
`
`TABLE OF AUTHORITIES (con't)
`
`Page No.
`
`Parker v. Flook,
`437 U.S. 584 (1978) .......................................................................... 31, 35, 37, 52
`Phillips v. AWH Corp.,
`415 F.3d 1303 (Fed. Cir. 2005) ............................................................................ 20
`Ultramercial, Inc. v. Hulu, LLC, No. 2010-1544,
`2013 U.S. App. LEXIS 12715 (Fed. Cir. June 21, 2013) ....................... 31, 47, 58
`Statutes
`35 U.S.C. § 101 ................................................................................................ passim
`35 U.S.C. § 112 ........................................................................................... 21, 29, 30
`35 U.S.C. § 321 .............................................................................................. i, 18, 66
`35 U.S.C. § 324 ................................................................................................... 6, 64
`AIA, § 18 .......................................................................................................... passim
`MPEP 2106 .............................................................................................................. 38
`Rules
`37 C.F.R. § 1.114 ..................................................................................................... 14
`37 C.F.R. § 42 .................................................................................................. passim
`
`
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`vi
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` Petition for Covered Business Method Review
`U.S. Patent No. 7,958,024
`
`LIST OF EXHIBITS
`
`Petition Exhibit 1001: U.S. Patent No. 7,958,024
`
`Petition Exhibit 1002: U.S. Patent No. 7,958,024 File History.
`
`Petition Exhibit 1003: Complaint, Versata Software, Inc. v. Callidus Software
`Inc. Litigation, Case No. 1:12-cv-00931-SLR (D. Del.
`July 19, 2012), D.N. 1
`
`Petition Exhibit 1004: Decision to Institute in SAP v. Versata, CBM2012-
`00001, Paper No. 36 (PTAB Jan. 9, 2013)
`
`Petition Exhibit 1005: United States Patent and Trademark Office –
`Classification Definitions, Class 705
`
`Petition Exhibit 1006: Transitional Program for Covered Business Method
`Patents—Definitions of Covered Business Method Patent
`and Technological Invention, 77 Fed. Reg. 48734 (Aug.
`14, 2012)
`
`Petition Exhibit 1007:
`
`Patent Owner’s Preliminary Response in SAP v. Versata,
`CBM2012-00001, Paper No. 29 (PTAB Nov. 30, 2012)
`
`Petition Exhibit 1008: Official Patent Trial Practice Guide, 77 Fed. Reg. 48756
`(Aug. 14, 2012)
`
`Petition Exhibit 1009:
`
`Final Written Decision in SAP v. Versata, CBM2012-
`00001, Paper No. 70 (PTAB June 11, 2013).
`
`Petition Exhibit 1010: Changes to Implement Inter Partes Review Proceedings,
`Post-Grant Review Proceedings, and Transitional
`Program for Covered Business Method Patents, 77 Fed.
`Reg. 48680 (Aug. 14, 2012)
`
`Petition Exhibit 1011: Declaration of Joseph E. DeHaven in Support of Petition
`for Covered Business Method Patent Review of U.S.
`Patent No. 7,904,326
`
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` Petition for Covered Business Method Review
`U.S. Patent No. 7,958,024
`
`
`
`Petition Exhibit 1012: Declaration of Janis McGuffey in Support of Petition for
`Covered Business Method Patent Review of U.S. Patent
`No. 7,904,326
`
`
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`
`
`I.
`
`PRELIMINARY STATEMENT
`
`The ‘024 patent claims nothing more than the abstract idea of compensating
`
`sales representatives for their sales transactions if they conform to regulatory
`
`conditions. But ensuring sales representatives conform to regulatory conditions
`
`before compensating them has been done in the absence of a “computer system”
`
`for decades either in the human mind or by hand with pencil and paper. Indeed,
`
`this has been a pre-requisite to receiving compensation in the insurance and
`
`financial services industries for many years. And for good reason — compliance
`
`with regulatory constraints was and is required by law. Exh. 1001, 1:34-36
`
`(“There are regulatory constraints on the sales force in that all distributors who sell
`
`products must be licensed and appointed, or authorized, to sell those products.”);
`
`3:24-33 (“Credential management is a critical issue for many firms . . . This need is
`
`made more acute by constantly changing government rules and regulations, as well
`
`as by different regulations imposed by the different jurisdictions in which a firm
`
`operates.”)
`
`Claim 1 is representative of each of the four independent claims of the ‘024
`
`patent:
`
`
`
`1
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`DOCSLA#112133
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`

`

` Petition for Covered Business Method Review
`U.S. Patent No. 7,958,024
`
`
`
`
`1. A method for processing sales transaction data comprising:
`using a distributer management system to perform:
`capturing transaction data associated with sales
`performed by a plurality of sales
`representatives;
`determining if said sales representatives associated
`with said transaction data are in conformity
`with a set of regulatory conditions
`applicable to said sales;
`computing a plurality of compensation amounts
`based on said sale transactions data and said
`set of regulatory conditions; and
`executing a payment process to compensate said
`plurality of sales representatives for said
`sales in accordance with said compensation
`amounts. Id., 26:19-32.
`The “capturing,” “determining,” “computing,” and “executing” of data do not
`
`meaningfully limit the abstract idea. The recited capturing step merely collects
`
`data associated with sales transactions to be used in the determining and computing
`
`steps. The determining and computing steps are nothing more than the abstract
`
`idea of compensating sales representatives for their sales transactions if they
`
`conform to regulatory conditions. The final step, executing a payment process, is
`
`nothing more than distributing payment to the sales representatives. These are
`
`steps that can, and have been, historically done by hand, and any general purpose
`
`
`
`2
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`DOCSLA#112133
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`
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`computer involvement in claim 1 is merely incidental to the abstract idea. Claim 1
`
` Petition for Covered Business Method Review
`U.S. Patent No. 7,958,024
`
`is not tied to a particular machine and does not transform an article.
`
`The other three independent claims recite very similar limitations but rewrite
`
`the method of claim 1 in one of several software forms: a computer readable
`
`medium (claim 42), a computer with code in its memory (claim 45), and a
`
`processing system employing certain software engines and modules (claim 40).
`
`Here, the claimed methods do nothing more than add a general purpose
`
`computer to a decades-old method of doing business, i.e., the recited computer
`
`media and computer systems use conventional and routine computer processing
`
`functionality to implement an abstract idea. General purpose computers are
`
`conventional, widely-used tools to manage and process data in the information age.
`
`Neither the recited “distributor management system,” “system,” “computer
`
`readable medium,” nor “system comprising: a processor; and a memory” in the
`
`independent claims provide any meaningful limit on the patent’s coverage of the
`
`abstract idea. They are not tied to any particular machine nor do they transform or
`
`reduce any article into a different state or thing. Accordingly, independent claims
`
`1, 40, 42, and 45 of the ‘024 patent are patent-ineligible under 35 U.S.C. § 101
`
`because they are directed to an abstract idea. Because dependent claims 2, 35-39,
`
`41, 43, 44, 46, and 47 do not add any meaningful limitations to the independent
`
`
`
`3
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`claims of the ‘024 patent, they fail to tie down the abstract idea of the claimed
`
` Petition for Covered Business Method Review
`U.S. Patent No. 7,958,024
`
`subject matter and are also unpatentable under 35 U.S.C. § 101.
`
`II. MANDATORY NOTICES
`A. Real Party-in-Interest
`In accordance with 37 C.F.R. § 42.8(b)(1), Petitioners identify the real party-
`
`in-interest as Callidus Software Inc.
`
`B. Related Matters
`
`In accordance with 37 C.F.R. § 42.8(b)(2), Petitioners identify the following
`
`district court and PTAB proceedings:
`
`Versata Software, Inc. v. Callidus Software, Inc., No. 1:12-cv-
`931-SLR (D. Del.)
`
`Callidus Software, Inc. v. Versata Software, Inc. and Versata
`Development Group, Inc., CBM2013-00052 (PTAB)
`
`Callidus Software, Inc. v. Versata Software, Inc. and Versata
`Development Group, Inc., CBM2013-00054 (PTAB)
`C. Lead and Back-Up Counsel
`
`In accordance with 37 C.F.R. § 42.8(b)(3) and § 42.10(a), Petitioners
`
`identify undersigned Deborah E. Fishman (Reg. No. 48,621) of Dickstein Shapiro
`
`LLP as lead counsel and Michael S. Tonkinson of Dickstein Shapiro LLP, as back-
`
`
`
`4
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`
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`up counsel; Petitioner identifies Assad H. Rajani and Jeffrey A. Miller of Dickstein
`
` Petition for Covered Business Method Review
`U.S. Patent No. 7,958,024
`
`Shapiro as further back-up counsel.2
`
`Deborah E. Fishman (Reg. No. 48,621)
`Jeffrey A. Miller (Reg. No. 35,287)
`Assad H. Rajani (pro hac vice pending)
`Michael S. Tonkinson (pro hac vice pending)
`DICKSTEIN SHAPIRO LLP
`1841 Page Mill Road, Suite 150
`Palo Alto, CA 94304
`Phone: (650) 690-9500
`Fax: (650) 690-9501
`Email: fishmand@dicksteinshapiro.com
` millerj@dicksteinshapiro.com
` rajania@dicksteinshapiro.com
` tonkinsonm@dicksteinshapiro.com
`
`D.
`
`Service Information
`
`In accordance with 37 C.F.R. § 42.8(b)(4), Petitioners identify the following
`
`service information:
`
`Deborah E. Fishman
`DICKSTEIN SHAPIRO LLP
`1841 Page Mill Road, Suite 150
`Palo Alto, CA 94304
`Phone: (650) 690-9500
`Fax: (650) 690-9501
`Email: VERSATA-CBM@dicksteinshapiro.com
`
`
`2 Petitioner is filing concurrently herewith a motion pursuant to 37 C.F.R.
`§ 42.10(c) for both Assad H. Rajani and Michael S. Tonkinson to appear pro hac
`vice, as Mr. Rajani and Mr. Tonkinson are experienced patent litigation attorneys,
`and are counsel for Callidus Software Inc. in the above-referenced litigation in the
`District of Delaware, and as such have an established familiarity with the subject
`matter at issue in this proceeding.
`
`
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` Petition for Covered Business Method Review
`U.S. Patent No. 7,958,024
`
`
`
`III. GROUNDS FOR STANDING
`A.
`Petitioner has Been Sued for Infringement of the ‘024 Patent and
`is Not Estopped
`
`Petitioner has standing to file this petition because Petitioner has been sued
`
`for infringement of the ‘024 Patent in Versata Software, Inc. v. Callidus Software,
`
`Inc., No. 1:12-cv-931-SLR (D. Del.). Exh. 1003; AIA, § 18(a)(1)(B); 37 C.F.R.
`
`42.302(a). Versata Software, Inc. and Versata Development Group, Inc.
`
`(collectively “Versata” or “Patent Owner”) purport to hold all right, title, and
`
`interest in the ‘024 Patent. Id., ¶ 8.
`
`Petitioner is not estopped from challenging the claims on the grounds
`
`identified in the petition.3 37 C.F.R. § 42.302(b). Petitioner has not been party to
`
`any other post-grant review of the challenged claims.
`
`B. At Least One Challenged Claim is Unpatentable
`As detailed further below, claims 1, 2, and 35-47 of the ‘024 Patent are
`
`unpatentable under 35 U.S.C. § 101 and it is “more likely than not that at least one
`
`of the claims challenged” of the ‘024 Patent is unpatentable. 35 U.S.C. § 324(a).
`
`C. The ‘024 Patent is a CBM Patent
`A “covered business method patent” (“CBM patent”) is defined as “a patent
`
`that claims a method or corresponding apparatus for performing data processing or
`
`
`3 The Board previously held that § 101 is a permissible grounds for challenging
`claims in a CBM review. Exh. 1004, at 32-36.
`
`
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`
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`other operation used in the practice, administration, or management of a financial
`
` Petition for Covered Business Method Review
`U.S. Patent No. 7,958,024
`
`product or service, except that the term does not include patents for technological
`
`inventions.” AIA, § 18(d)(1); see also 37 C.F.R. § 42.301(a). “The term financial
`
`is an adjective that simply means relating to monetary matters.” Exh. 1004, at 23.
`
`The ‘024 Patent easily meets the definition of a CBM patent.
`
`1.
`
`Claims 1, 2, and 35-47 are Directed to Financial Products or
`Services
`
`The claims and specification show that the claimed methods of the ‘024
`
`patent are directed to financial products or services, i.e. monetary matters. Claim 1
`
`is directed to computing compensation for sales representatives that conform to a
`
`set of regulatory conditions. Exh. 1001, 26:19-32. The process of calculating
`
`compensation amounts and paying sales representatives clearly relates to monetary
`
`matters.
`
`Furthermore, the claimed subject matter is obviously directed to the financial
`
`industry, and its products and services. The first line of the Abstract states: “A
`
`system provides a way to manage agreements that institutions such as financial
`
`services companies have with distributors who sell their products.” Id., Abstract
`
`(emphasis added); see also id., 3:1-4 (“Another need of firms in financial services
`
`is an ability to manages sales producer payment accounts”). Similarly, the
`
`Summary of the Invention states that “systems embodying the invention provide a
`
`
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`way to manage the agreements that financial services companies have with the
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` Petition for Covered Business Method Review
`U.S. Patent No. 7,958,024
`
`distributors who sell their products.” Id., 4:47-50 (emphasis added). In total, the
`
`‘024 patent states “financial services” or “financial products” no less than 38 times
`
`throughout the disclosure. See, e.g., Id., 14:27-34 (“provider of financial
`
`products”), 1:23 (“financial services providers”), 4:20 (“a product, which may
`
`include financial services”), 6:47 (“financial services institutions”). Financial
`
`services and insurance companies paying sales representatives for their sales of
`
`financial products, and checking their credentials to ensure that they are eligible for
`
`compensation is squarely within the “practice, administration, or management of a
`
`financial product or service.” AIA, § 18(d)(1). During prosecution, the applicant
`
`confirmed the connection to financial products and services. Applicant attempted
`
`to distinguish prior art references on the grounds that the prior art “is directed
`
`towards ensuring compliance with regulations of products and not with ‘sales
`
`representatives’ conformity with regulatory conditions. . . . ‘Products’ can be the
`
`subject of a sale. Clearly, ‘sales representatives,’ are not the subject of a sale.”
`
`Exh. 1002, 3/16/2009 Response to Non-Final Office Action at 14.
`
`The ‘024 Patent is classified in both 705/35 and 705/40. Exh. 1001, INID
`
`Code 52. Class 705 is entitled “Data Processing: Financial, Business Practice,
`
`Management, or Cost/Price Determination.” Exh. 1005 at 1. While classification
`
`in class 705 is not determinative, it suggests that the claims of the ‘024 Patent are
`
`
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`directed to financial products and services. Exh. 1006 at 48739 (“patents subject to
`
` Petition for Covered Business Method Review
`U.S. Patent No. 7,958,024
`
`covered business method patent review are anticipated to be typically classifiable
`
`in class 705”).
`
`Patent Owner Versata, in its Preliminary Response to SAP America, Inc.’s
`
`Petition For Post-Grant Review in CBM2012-00001, cited several sources that it
`
`argued provide a definition for “financial product” and “financial service,” many
`
`of which apply the claims of the ‘024 Patent. For “financial product” its various
`
`definitions included “an insurance product,” “insurance contracts,” and all manner
`
`of financial instruments, including bank deposits, credit lines, bonds, mortgages,
`
`leases, and so on. Exh. 1007, at 33, 35. Versata defined “financial services” as “a
`
`business activity whose primary purpose is the development or provision of
`
`financial products, or facilitating the use of financial products.” Id., at 35
`
`(emphasis added). As discussed above, the specification of the ‘024 Patent states
`
`that “the invention” relates to systems to “manage the agreements that financial
`
`services companies have with the distributors who sell their products.” Exh. 1001,
`
`4:47-50. The ‘024 patent also discloses that “organizations such as life insurances
`
`companies may utilize embodiments of the invention to manage the sale and
`
`distribution of life insurance plans in a way that coincides with the regulatory
`
`constraints of government organizations.” Id., 6:16-19; see also id., 7:21-23
`
`(“Each transaction represents a physical sales transaction, such as distributor
`
`
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`
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`selling a life insurance policy.”). Because these examples relate to the provision of
`
` Petition for Covered Business Method Review
`U.S. Patent No. 7,958,024
`
`financial products, under Patent Owner Versata’s own admitted definitions, the
`
`‘024 Patent claims a method used in the “practice, administration, or management
`
`of a financial product or service.”
`
`Thus, the ‘024 Patent meets the USPTO’s definition of a CBM patent.
`
`2.
`
`Claims 1, 2, and 35-47 are Not Directed to a “Technological
`Invention”
`A CBM patent does not cover “patents for technological inventions.” AIA,
`
`§ 18(d)(1). A technological invention exists only where “the claimed subject
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`matter as a whole recites a technological feature that is novel and unobvious over
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`the prior art; and solves a technical problem using a technical solution.” 37 C.F.R.
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`42.301(b) (emphasis added). The claim must meet both prongs of the definition
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`for the “technological invention” exception to apply. See Exh. 1006, at 48735
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`(quoting statement of Sen. Coburn, 157 Cong. Rec. S5428 (daily ed. Sept. 8,
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`2011)). The determination of whether a patent is a technological invention is
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`based on the invention as claimed. Id., at 48736. To institute CBM review, it is
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`only necessary that one claim of the ‘024 Patent is directed to a CBM that is not a
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`technological invention. Id., at 48736.
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`Here, the ‘024 Patent claims fail both prongs and, thus, they are not directed
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`to a technological invention.
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` Petition for Covered Business Method Review
`U.S. Patent No. 7,958,024
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`i.
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`Any Allegedly Novel and Unobvious Features of the
`‘024 Patent are Not Technological
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`The ‘‘024 patent does not recite a technological feature that is novel and
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`unobvious over the prior art. The USPTO provides guidance as to claim drafting
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`techniques that would not typically render a patent a technological invention under
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`37 C.F.R. 42.301(b):
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`(a) Mere recitation of known technologies, such as
`computer hardware, communication or computer
`networks, software, memory, computer readable storage
`medium, scanners, display devices or databases, or
`specialized machines, such as an ATM or point of sale
`device.
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`(b) Reciting the use of known prior art technology to
`accomplish a process or method, even if that process or
`method is novel and non-obvious.
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`(c) Combining prior art structures to achieve the normal,
`expected, or predictable result of that combination.
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`Exh. 1008, at 48763-64. The only vaguely technological feature recited in claim 1
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`is “using a distributor management system.” Exh. 26:21. This is a mere recitation
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`of a known technology, i.e. software, to accomplish the recited method, falling
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`squarely into those inadequate claim drafting techniques. The ‘024 specification
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`makes plain that a distributor management system is simply a collection of
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`software applications that perform the recited method steps. Ex. 1001, 6:25-27
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` Petition for Covered Business Method Review
`U.S. Patent No. 7,958,024
`
`(“[T]he system referred to hereinafter as Distributor Management System Suite
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`(DMSS) comprises a suite of applications ….”). The ‘024 patent does not assert
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`that the use of software to manage distributers is anything other than prior art. See,
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`e.g., Id., 2:26-30 (“In the prior art, the creation and distribution of incentive plans
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`is a slow process that is prone to error. It can take months to implement a new
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`compensation plan, and dependencies on computer software can frustrate sales
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`managers who want to make even simple changes.” (emphasis added)). The
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`Background section of the ‘024 patent essentially concedes that the use of software
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`to manage distributers was known to be required in the prior art. Id., 4:11-13
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`(“Computer software is necessary to implement the solution to these problems and
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`fulfill the perceived needs just described.” (emphasis added)). Software written to
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`run on a general purpose computer system was well-known in the prior art, as was
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`capturing data, checking data for conformity with conditions, and computing
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`amounts from sets of data and conditions.
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`According to the applicant, the claimed subject matter can be implemented
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`without requiring any specific technology. The applicant stated broadly that
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`“numerous specific details are set forth in order to provide a more thorough
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`understanding of the present invention,” but “the present invention may be
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`practiced without these specific details.” Id., 5:65-6:3. While the specification
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`notes that the “invention relates to the field of computer technology,” Exh. 1001,
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` Petition for Covered Business Method Review
`U.S. Patent No. 7,958,024
`
`1:6, it fails to disclose any particular computer system, or even a general purpose
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`computer. See generally, id., Figs. 1-7. Likewise, the specification discloses
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`“computer software” and “implemented on a computer,” but only as a passing
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`reference. Id., 4:11, 17-18. In fact, after the Background section, the ‘024 patent
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`only mentions a “computer” once. Id., 4:61-62 (“One or more embodiments of the
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`invention comprise a system executing with a computer.”). Thus, according to the
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`applicant, it is not any particular software or hardware configurations, i.e. the
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`technological features, that are key to the claimed subject matter. Rather, it is
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`merely the recited functionality for determining conformity with regulatory
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`conditions that is allegedly novel over the prior art. As the Board previously
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`recognized in its Decision to Institute in CBM2012-00001, where a patent states
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`that the claimed invention “may be implemented in any type of computer system or
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`programming or processing environment . . . [the claim] lacks a novel and
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`unobvious technical feature.” Exh. 1004, at 27-28.
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`The prosecution history demonstrates that any allegedly novel and
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`unobvious features of the inventions claimed in the ‘024 patent pertain to
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`computing compensation for sales representatives that conform to a set of
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`regulatory conditions, not the use of a technological feature to accomplish this
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`task. During prosecution, the applicant repeatedly attempted to distinguish prior
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`art based on the fact that the claimed invention involves determining sales
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` Petition for Covered Business Method Review
`U.S. Patent No. 7,958,024
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`representatives’ conformity with regulatory conditions and computing
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`compensation based on sales representatives’ conformity with those regulatory
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`conditions. In total, the applicant attempted to distinguish three pieces of prior art
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`based on the fact that the “determining” and “computing” steps required sales
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`representatives’ conformity with a set of regulatory conditions in order to receive
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`compensation. Exh. 1002, 7/9/2008 37 C.F.R. § 1.114 RCE Submission, at 11-14
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`(arguing that Carrott does not te