UNITED STATES PATENT AND TRADEMARK OFFICE
`
`_______________
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`_______________
`
`
`SAP AMERICA, INC. ET AL.
`Petitioner
`v.
`
`Patent of VERSATA DEVELOPMENT GROUP, INC.
`Patent Owner
`_______________
`
`
`Case CBM2012-00001
`Patent 6,553,350
`
`_______________
`
`
`PATENT OWNER VERSATA DEVELOPMENT GROUP, INC.’S
`PRELIMINARY RESPONSE
`
`
`FILED UNDER SEAL
`CONTAINS CONFIDENTIAL ATTORNEYS’
`EYES ONLY MATERIAL
`
`
`
`
`
`
`
`Mail Stop PATENT BOARD
`Patent Trial and Appeal Board
`U.S. Patent & Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
` 
`
` 
`
`Ex. 1007 01/92
`
`

`

`
`
`Case CBM2012-00001
`Patent 6,553,350
`Attorney Docket No: 4117-101
`
`
`TABLE OF CONTENTS
`
`A. 
`
`1. 
`
`a. 
`
`b. 
`
`2. 
`
`TABLE OF AUTHORITIES ................................................................................... iv 
`EXHIBIT LIST .......................................................................................................... x 
`I. 
`PRELIMINARY STATEMENT ................................................................ 1 
`II. 
`STATEMENT OF THE PRECISE RELIEF REQUESTED ..................... 9 
`III. 
`STATEMENT OF REASONS WHY NO POST-GRANT REVIEW
`SHOULD BE INSTITUTED UNDER 35 U.S.C. § 324 .......................... 10 
`The ‘350 Patent Is Not A “Covered Business Method Patent” .......... 10 
`The ‘350 Patent is for a Technological Invention .......................... 11 
`The subject matter of each of the challenged claims of the
`‘350 patent as a whole recites a technological feature that is
`novel and unobvious ................................................................. 16 
`The subject matter of each of the challenged claims of the
`‘350 patent as a whole solves a technical problem using a
`technical solution ...................................................................... 30 
`The ‘350 Patent Claims Do Not Fall Within the Scope of
`Section 18(d)(1) of the AIA ........................................................... 31 
`The plain meanings of “financial product” and “financial
`service” does not include the pricing technology claimed in
`the ‘350 patent ........................................................................... 33 
`The challenged claims are not directed to a method or
`apparatus for performing data processing or other
`operations used in the practice, administration or
`management of a financial product or service .......................... 37 
`Senator Schumer’s remarks cannot provide a scope for
`“financial products or services” that omits statutory
`language .................................................................................... 42 
`The Petition Fails To Demonstrate That It Is More Likely Than
`Not That The Challenged Claims Are Unpatentable Under 35
`U.S.C. § 102 ........................................................................................ 45 
`
`a. 
`
`b. 
`
`c. 
`
`B. 
`
` 
`
`ii
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`Ex. 1007 02/92
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`

`

`Case CBM2012-00001
`Patent 6,553,350
`Attorney Docket No: 4117-101
`
`
`1. 
`
`2. 
`
`3. 
`
`4. 
`
`All of the Challenged Claims Require “Denormalized
`Numbers” ....................................................................................... 46 
`SAP in the District Court Case Took the Position That the R/3
`Prior Art System Described in the R/3 Prior Art System
`Documentation Does Not Use “Denormalized Numbers” ............ 50 
`The District Court, After Considering SAP’s Evidence,
`Determined that the R/3 Prior Art System Was Not Even
`Material to the Patentability of the ‘350 Patent Claims ................. 52 
`Contrary to SAP’s Position, Evidence that the R/3 Prior Art
`System Does Not Use Denormalized Numbers, Is Highly
`Relevant to Analyzing the R/3 Prior Art System
`Documentation ............................................................................... 54 
`The Petition Fails to Show that the Challenged Claims are more
`likely than not Unpatentable under 35 U.S.C. § 112 .......................... 57 
`Petitioner Should Not Be Permitted to Challenge the ‘350 Patent
`Based On the Same Validity Issues That Failed In the District
`Court Case and On Which a Final Judgment Has Been Rendered ..... 61 
`The Relief Requested In The Petition Challenging Validity Of The
`Claims Under 35 U.S.C. § 101 Is Not Available ................................ 68 
`IV.  CONCLUSION ........................................................................................ 80 
`
`C. 
`
`D. 
`
`E. 
`
` 
`
` 
`
` 
`
`iii
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`Ex. 1007 03/92
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`

`

`Case CBM2012-00001
`Patent 6,553,350
`Attorney Docket No: 4117-101
`
`
`TABLE OF AUTHORITIES
`
`Cases 
`
`Advanced Display Sys., Inc. v. Kent State Univ.,
`2002 WL 1489555 (N.D. Tex. July 10, 2002) ...................................................... 67
`Amcast Indus. Corp. v. Dextrex Corp.,
`45 F.3d 155 (7th Cir. 1995) .................................................................................. 63
`Ammex, Inc. v. United States,
`334 F.3d 1052 (Fed. Cir. 2003) ............................................................................ 66
`Aristocrat Techs. Austl. Pty Ltd. v. Int’l Game Tech.,
`543 F.3d 657 (Fed. Cir. 2008) ................................................................. 77, 78, 79
`Astrazeneca UK Ltd. v. Watson Labs., Inc.,
`No. 10-915, slip op. (D. Del. Nov. 21, 2012) ....................................................... 67
`Bhd. Of R.R. Trainmen v. Baltimore & Ohio R.R. Co.,
`331 U.S. 519 (1947) .............................................................................................. 70
`Blonder-Tongue Lab. v. Univ. of Ill. Found.,
`402 U.S. 313 (1971) .............................................................................................. 76
`Bowers Inv. Co. v. United States,
`695 F.3d 1380 (Fed. Cir. 2012) ............................................................................ 66
`Burlington N. R.R. v. Hyundai Merch. Marine Co.,
`63 F.3d 1227 (3d Cir. 1995) ................................................................................. 67
`Classen Immunotherapies, Inc. v. Biogen IDEC,
`659 F.3d 1057 (Fed. Cir. 2011) ............................................................................ 73
`Coalition for Clean Air v. United States EPA,
`971 F.2d 219 (9th Cir. 1992) ................................................................................ 44
`Crossroads Sys. (Texas), Inc. v. Dot Hill Sys. Corp.,
`2006 WL 1544621 (W.D. Tex. May 31, 2006) .................................................... 67
`DealerTrack, Inc. v. Huber,
`674 F.3d 1315 (Fed. Cir. 2012) ..................................................................... 77, 79
`Diamond v. Diehr,
`450 U.S. 175 (1981) ...................................................................................... passim
`
` 
`
`iv
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`Ex. 1007 04/92
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`Case CBM2012-00001
`Patent 6,553,350
`Attorney Docket No: 4117-101
`
`
`Duncan v. Walker,
`533 U.S. 167 (2001) .............................................................................................. 44
`Ethicon, Inc. v. Quigg,
`849 F.2d 1422 (Fed. Cir. 1988) ............................................................................ 64
`Garcia v. United States,
`469 U.S. 70 (1984) ......................................................................................... 44, 79
`Graham v. John Deere Co.,
`383 U.S. 1 (1966) ............................................................................... 75, 76, 77, 78
`Huron Holding Corp. v. Lincoln Mine Operating Co.,
`312 U.S. 183 (1941) .............................................................................................. 63
`In re Baxter Int’l, Inc.,
`678 F.3d 1357 (Fed. Cir. 2012) ............................................................................ 64
`In re Baxter Travenol Labs.,
` 952 F.2d 388 (Fed. Cir. 1991) ............................................................................. 55
`In re Bergy,
`596 F.2d 952 (C.C.P.A. 1979)
`vacated as moot, 444 U.S. 1028 (1980) ........................................................ passim
`In re Construction Equip. Co.,
`665 F.3d 1254 (Fed. Cir. 2011) ............................................................................ 64
`In re Freeman,
`30 F.3d 1459 (Fed. Cir. 1994) .............................................................................. 67
`In re Moore,
`439 F.2d 1232 (C.C.P.A. 1971) ............................................................................ 59
`In re Swanson,
`540 F.3d 1368 (Fed. Cir. 2008) ..................................................................... 64, 65
`Kewanee Oil Co. v. Bicron Corp.,
`416 U.S. 470 (1974) .............................................................................................. 76
`Mars Inc., v. Nippon Conlux Kabushiki-Kaisha¸
`58 F.3d 616 (Fed. Cir. 1995) ................................................................................ 65
`Meritor Transmission Corp. v. Eaton Corp.,
`2006 WL 3951711 (W.D.N.C. Setp. 26, 2006) .................................................... 67
`MySpace, Inc. v. Graphon Corp.,
`672 F.3d 1250 (Fed. Cir. 2012) ............................................................................ 71
`v
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`Ex. 1007 05/92
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`Case CBM2012-00001
`Patent 6,553,350
`Attorney Docket No: 4117-101
`
`
`Nasalok Coating Corp. v. Nylok Corp.,
`522 F.3d 1320 (Fed. Cir. 2008) ............................................................................ 65
`Nickola v. Peterson,
`580 F.2d 898 (6th Cir. 1978) ................................................................................ 74
`Pall Corp. v. Fisher Scientific Co.,
`962 F. Supp. 210 (D. Mass. 1997) ........................................................................ 67
`Pennsylvania Dept. of Corrections v. Yeskey,
`524 U.S. 206 (1998) .............................................................................................. 69
`Ratzlaf v. United States,
`510 U.S. 135 (1994) .............................................................................................. 43
`Reiter v. Sonotone Corp.,
`442 U.S. 330 (1979) .............................................................................................. 41
`Roche Palo Alto LLC v. Apotex, Inc.,
`526 F. Supp. 2d 985 (N.D. Cal. 2007) .................................................................. 67
`Russello v. United States,
`464 U.S. 16 (1983) ................................................................................................ 70
`Schwegmann Bros. v. Calvert Distillers Corp.,
`341 U.S. 384 (1951) .............................................................................................. 43
`Servs. v. Prometheus Labs., Inc.,
`132 S. Ct. 1289 (2012) .......................................................................................... 76
`Taylor v. Sturgell,
`553 U.S. 880 (2008) .............................................................................................. 66
`United States v. Price,
`361 U.S. 304 (1960) .............................................................................................. 80
`United States v. Saybolt,
`577 F.3d 195 (3d Cir. 2009) ................................................................................. 41
`United States v. Wong Kim Bo,
`472 F.2d 720 (5th Cir. 1972) ................................................................................ 70
`Versata Software, Inc. v. SAP Am., Inc.,
`758 F. Supp. 2d 389 (E.D. Tex. 2010). ......................................................... passim
`Versata Software, Inc. v. SAP Am., Inc.,
`No. 2:07-cv-153, 2011 U.S. Dist. LEXIS 102333, 102339, 102267 (E.D. Tex.
`Sept. 9, 2011) .......................................................................................................... 7
`vi
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`Ex. 1007 06/92
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`Case CBM2012-00001
`Patent 6,553,350
`Attorney Docket No: 4117-101
`
`
`Williams v. Taylor,
`529 U.S. 362 (2000) .............................................................................................. 44
`Wright v. United States,
`302 U.S. 583 (1938) .............................................................................................. 77
`Young Eng’rs, Inc., v. U.S. Int’l Trade Comm’n,
`721 F.2d 1305 (Fed. Cir. 1983) ............................................................................ 64
`Zip Dee, Inc. v. Domestic Corp.,
`905 F. Supp. 535, (N.D. Ill. 1995) ........................................................................ 67
`Statutes 
`
`12 U.S.C. § 1843(k) ................................................................................................. 33
`12 U.S.C. § 5481(15) ............................................................................................... 33
`12 U.S.C. § 5537(a)(2) ............................................................................................. 33
`35 U.S.C. § 101 ................................................................................................ passim
`35 U.S.C. § 102 ................................................................................................ passim
`35 U.S.C. § 103 ................................................................................................ passim
`35 U.S.C. § 112 ............................................................................................. 9, 57, 68
`35 U.S.C. § 251 ........................................................................................................ 68
`35 U.S.C. § 282 ........................................................................................................ 76
`35 U.S.C. § 282(b) ................................................................................................... 68
`35 U.S.C. § 282(b)(2)....................................................................................... passim
`35 U.S.C. § 282(b)(3)............................................................................................... 68
`35 U.S.C. § 282(b)(4)............................................................................................... 77
`35 U.S.C. § 321(b) ................................................................................................... 68
`35 U.S.C. § 323 ........................................................................................................ 10
`35 U.S.C. § 324 ........................................................................................... 10, 46, 80
`35 U.S.C. § 326(e) ................................................................................................... 64
`37 C.F.R. § 42.302(a) ........................................................................................ 62, 63
`America Invents Act Section 18 ...................................................................... passim
`America Invents Act Section 18(a)(1)(B) ................................................................ 61
`vii
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`Case CBM2012-00001
`Patent 6,553,350
`Attorney Docket No: 4117-101
`
`America Invents Act Section 18(d) .......................................................................... 43
`America Invents Act Section 18(d)(1) ............................................................. passim
`Dodd-Frank Wall Street Reform and Consumer Protection Act,
`Pub. L. No. 111-203 .............................................................................................. 33
`Investment Company Act of 1940 ........................................................................... 34
`Investment Company Act of 1940 Subsection (c)(13) ............................................ 34
`Other Authorities 
`
`Manual of Patent Examining Procedure
`§ 2131.01 ............................................................................................................... 55
`Rules 
`
`12 C.F.R. § 216.3(l) ................................................................................................. 35
`16 C.F.R. § 313.3(l) ................................................................................................. 33
`37 C.F.R. § 42.207(a) ................................................................................................. 1
`37 C.F.R. § 42.301 ................................................................................................... 10
`37 C.F.R. § 42.301(a) ............................................................................................... 11
`37 C.F.R. § 42.301(b) ...................................................................................... passim
`Legislative Materials 
`
`112 CONG. REC. S1363
`(daily ed. Mar. 8, 2011)(statement of Sen. Leahy, D-Vermont) .......................... 64
`157 Cong. Rec. S1379
`(daily ed. Mar. 8, 2011) (statement of Sen. Kyl) ........................................... 12, 13
`157 Cong. Rec. S5431
`(daily ed. Sep. 8, 2011) (statement of Sen. Kyl) ............................................ 11, 12
`157 Cong. Rec. S5433
`(daily ed. Sep. 8, 2011) (statement of Sen. Durbin) ...................................... 11, 13
`Office Patent Trial Practice Guide,
`77 Fed. Reg. 48,756 (Aug. 14, 2012) ................................................................... 46
`Patent Act of 1952,
`H.R. Rep. No. 1923 at 6-7, 82d Cong., 2d Sess. (1952) ............................... passim
`
` 
`
`viii
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`Case CBM2012-00001
`Patent 6,553,350
`Attorney Docket No: 4117-101
`
`
`Privacy of Consumer Financial Information, 65 Fed. Reg. 33,546, 33,656
`(May 24, 2000) (to be codified at 10 C.F.R. pt. 313) .............................. 41, 42, 45
`S. Rep. No. 1979, 82d Cong. 2d Sess. (1952) ......................................................... 74
`
`
` 
`
` 
`
`ix
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`Ex. 1007 09/92
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`

` 
`
`EXHIBIT LIST
`
`The Exhibits referenced in Patent Owner Versata’s Preliminary Response
`
`are listed in the Exhibit List being filed concurrently herewith.
`
` 
`
` 
`
`x
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`Ex. 1007 10/92
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`

`

`Pursuant to 37 C.F.R. § 42.207(a), Patent Owner, Versata Development
`
`Group, Inc. (“Versata”), submits this Preliminary Response in response to the
`
`Petition for Post-Grant Review of U.S. Patent No. 6,553,350 (“’350 patent”) filed
`
`by SAP America, Inc. and SAP AG (“SAP”).
`
`I.
`
`PRELIMINARY STATEMENT
`
`In the mid-1990s, Tom Carter, Versata’s co-founder and named inventor of
`
`the ‘350 patent, met with hundreds of corporate information-technology specialists
`
`across the country. Based on what he learned from the specialists, he perceived a
`
`widespread need for improved software to manage and execute the complex
`
`product-pricing strategies of large companies. Exh. 2006, Excerpts of Trial
`
`Transcript (“ETT”), pp. 70-78. The conventional thinking was that different types
`
`of data -- involving configurable products, dispersed customers, variable prices,
`
`bulk and geographic discounts, and the like -- should be segregated and stored in
`
`different tables, which appears orderly from a human perspective. But this
`
`structure caused an explosion in the number of pricing tables required, each of
`
`which had to be separately accessed and searched for potentially relevant
`
`information. Exh. 1001, ‘350 patent, col. 1-4. This burdensome search-and-retrieve
`
`system, repeated for innumerable pricing tables, was slow; inflexible; and difficult
`
`to maintain. Exh. 2008, ETT, pp. 71-77; Exh. 2009, ETT, pp. 84-90; Exh. 2006,
`
`ETT , pp. 90-97; Exh. 2010, ETT, pp. 110-116. Using prior-art pricing engines
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`was like fishing for a particular price, in a sea of prices, with a single pole. Exh.
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`Case CBM2012-00001
`Patent 6,553,350
`Attorney Docket No: 4117-101
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`2011, ETT, pp. 24-31.
`
`Carter realized that changing the conventional thinking could lead to vast
`
`improvement, and he invented a pricing engine that leveraged the hierarchical data
`
`structures used by large companies to organize pricing information. Exh. 1001,
`
`col. 3, 4; Exh. 2012, ETT, pp. 95-96. By representing these ubiquitous customer
`
`and product hierarchies within the pricing tables themselves, and then retrieving
`
`and processing multiple potentially applicable price adjustments in as little as one
`
`access, Carter’s pricing engine provided a solution to the prior art problems
`
`described above. It offered a 10-100 times improvement in performance; greater
`
`flexibility; and easier maintenance. Exh. 2008, pp. 71-77; Exh. 2009, pp. 84-90;
`
`Exh. 2006, pp. 90-97; Exh. 2010, pp. 110-116. Using this engine was like fishing
`
`for a price, in a sea of prices, with a wide net. Exh. 2011, pp. 32-39.
`
`In 1996, Versata filed a patent application covering the pricing technology
`
`developed by Carter, and a subsequently filed continuation application issued as
`
`the ‘350 patent. Exh. 1001. Versata introduced a software product named “Pricer”
`
`embodying the claimed subject matter of the ‘350 patent. Pricer was hailed as “a
`
`breakthrough. It was very innovative.” Exh. 2010, p. 137. Analysts praised it as
`
`“the Rolls Royce of the industry.” Exh. 2006, pp. 82-88; Exh. 2013, ETT, pp. 128-
`
` 
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`Ex. 1007 12/92
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`31; Exh. 2014, “Software Pioneers Take the Pain out of Pricing” USA TODAY
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`Case CBM2012-00001
`Patent 6,553,350
`Attorney Docket No: 4117-101
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`
`(Feb. 24, 1998) (PX 1283); Exh. 2015, Excerpts of Product Profile: Trilogy’s
`
`Selling Chain Pricer (Nov. 24, 1997) (PX 581); Exh. 2016, Excerpts of
`
`Distribution Pricing to the Extended Selling Enterprise (Nov. 24, 1997) (PX 582);
`
`Exh. 2017, SAP’s CRM Field Sales Strategy (Oct. 13, 1998) (PX 665).
`
`SAP itself viewed Versata as a “market leader” with a “visionary product.”
`
`Exh. 2018, Excerpts of SAP Strategic Sales Initiatives - Applications Business
`
`Plan: Sales Configuration Engine (PX 493), p.10. The reaction of companies
`
`implementing Pricer -- many of whom had previously implemented SAP’s pricing
`
`software -- ranged “[s]omewhere between excitement and disbelief … it just hadn’t
`
`occurred to them that technology, software, and hardware at the time could do
`
`things that well.” Exh. 2006 at p. 80.
`
`This industry praise was matched by Pricer’s “meteoric” rise in sales from
`
`1995 to 1998, when Versata sold Pricer to scores of companies, including tech
`
`giants such as IBM, Lucent, Motorola, and Hewlett-Packard. Exh. 2009 pp. 107-
`
`108; Exh. 2008, pp. 84-90; Exh. 2012, p. 9; Exh, 2019, Exhibit 14: Trilogy
`
`Revenue Pricer Customers FY 1996-FY2010 (DX 2644). Versata experienced
`
`tremendous commercial success with Pricer, and in early 1998 the future was
`
`bright—quick and accurate pricing was a core need for the many hundreds of large
`
` 
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`3
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`companies running SAP’s enterprise systems, and Pricer had wide, industry-
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`Case CBM2012-00001
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`crossing appeal. Exh. 2008, p. 108; Exh. 2018, p.9.
`
`SAP also offered pricing software -- bundled into its enterprise systems --
`
`but that software suffered from the problems that the ‘350 patent solved: it was
`
`slow; inflexible; and difficult to maintain. Exh. 2020, Excerpts of Email from B.
`
`Neumann to J. Biddle, et al. (Aug. 17, 1997) (PX 70); Exh. 2007, col. 1-2; Exh.
`
`2021, Gartner Analysis (PX 736); Exh. 2022, Research Note (PX 1132). A 1997
`
`survey that “shed light on the incredible demand for … Pricer” revealed that the
`
`great majority of SAP customers needed pricing speed and flexibility that SAP’s
`
`software could not provide. Exh. 2023, Email from K. Fairbairn to Sapphire re
`
`Media Alert Quotes (Sep. 2, 1997) (PX 1996). SAP began advising customers to
`
`“reduce their pricing procedure’s complexity to improve performance.” Exh.
`
`2020, p. 2. SAP’s own sales force eventually took to recommending Pricer over
`
`SAP’s bundled pricing functionality. Exh. 2024, Email from B. Neumann to B.
`
`Neumann, et al. (Oct. 15, 1997) (PX 1134). As an SAP witness conceded at trial,
`
`its prior-art software simply “couldn’t compete.” Exh. 2025, ETT, p. 114.
`
`This reality was reflected in the numerous SAP customers—who had already
`
`paid for SAP’s pricing functionality—that purchased Pricer as a bolt-on to their
`
`SAP enterprise platforms:
`
` 
`
`4
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`Ex. 1007 14/92
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`Case CBM2012-00001
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`Attorney Docket No: 4117-101
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`
`these large Fortune 500 companies, very smart folks, looked at
`[Pricer], knew that they had a free alternative with SAP and still wrote
`… purchase orders … worth millions of dollars. And companies don’t
`part with millions of dollars, unless there’s real value there.
`
`Exh. 2010, pp. 120, 134-137; Exh. 2006, p. 115; Exh. 2026, ETT, p. 31. Large
`
`customers began “turning off the pricing functionality in their [SAP] ERP systems
`
`and deciding to use [Versata’s] [P]ricer as the sole pricing repository for their
`
`enterprise.” Exh. 2006, pp. 84-86, 113-114; Exh. 2016.
`
`SAP was keenly sensitive to Pricer’s competitive threat, and complained
`
`internally that Versata “dominate[d] the market” and was “attacking our
`
`functionality” and “pricing maintenance,” “tapping into our Customer Base,” and
`
`“raking in the cash.” Exh. 2027, Excerpt of Email from B. Neumann to W. Merkel
`
`(May 13, 1998) (PX1082); Exh. 2028, Excerpts of email from E. Reeves to J.
`
`Arck, et al. (Oct. 02, 1997) (PX 28); Exh. 2029, Email from B. Neumann to M.
`
`Daban, et al. (Jan. 09, 1998) (PX 89); Exh. 2030, Email from B. Neumann to P.
`
`Zencke, et al. (Aug. 21, 1997) (PX 1088). This created significant pressure within
`
`SAP. Exh. 2029; Exh. 2031, Email from G. Murray to E. Reeves (Nov. 21, 1997)
`
`(PX 7); Exh. 2024; Exh. 2013, pp. 123-28; Exh. 2032, ETT, pp. 36-37. It
`
`considered purchasing Pricer’s source code, Exh. 2033, Email from B. Neumann to
`
`P. Lorenz, et al. (May 14, 1997) (PX 1089); Exh. 2034, ETT, pp. 71-73; Exh.
`
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`2032, pp. 42-46, but ultimately rejected that idea, choosing instead to learn what it
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`Case CBM2012-00001
`Patent 6,553,350
`Attorney Docket No: 4117-101
`
`
`could about the software and then develop a new pricing engine that would work
`
`“just like … Pricer, but as a SAP product!” Exh. 2035, Email from B. Neumann to
`
`L. Cahoon (May 23, 1997) (PX150); Exh. 2034, p. 86; Exh. 2025, p. 121.
`
`In October 1998, SAP launched its new hierarchical-access pricing engine,
`
`bundled into its enterprise platforms. Exh. 2012, p. 94. Like Pricer, this engine was
`
`designed for hierarchical accesses to hierarchical arrangements of customer and
`
`product data. Exh. 2036, Excerpts of Pricing and Conditions (SD-BF-PR) (PX 19),
`
`p. 120, (“especially for hierarchical data such as that representing a product
`
`hierarchy or a customer hierarchy”); Exh. 2037, Amended Permanent Injunction
`
`(Sep. 26, 2011) (Dkt. 586), p. 2. No longer would SAP require users to fish for
`
`prices with a pole. Exh. 2011, pp. 24-31. As SAP explained, that prior-art process
`
`“not only [took] a great deal of time, but … also reduce[d] system performance and
`
`force[d] the system to use a rigidly fixed sequence of accesses.” Exh. 2036, p. 120.
`
`The new engine, in contrast, allowed users to fish for prices with a net—just like
`
`Pricer. Exh. 2036, p. 120; Exh. 2007, col. 1 & 2. SAP’s launch had its intended
`
`effect: the principal market for Versata’s software was destroyed, and Pricer was
`
`“marginalized.” Exh. 2038, Email from A. Steiner to W. Nieswand (Nov. 26, 2003
`
`(PX 2105).
`
` 
`
`6
`
`Ex. 1007 16/92
`
`

`

`In 2007, Versata sued SAP for infringement of, inter alia, the ‘350 patent.
`
`Case CBM2012-00001
`Patent 6,553,350
`Attorney Docket No: 4117-101
`
`
`The case proceeded to trial and the jury found infringement, awarding $139 million
`
`in damages. Exh. 2039, Jury Verdict (Aug. 26, 2009) (Dkt. 318). The district court
`
`confirmed the infringement judgment for the ‘350 patent, but reversed other
`
`rulings unrelated to the ‘350 patent, resulting in a new trial on damages. Exh. 2040,
`
`Order Granting-in-Part and Denying-in-Part SAP’s Motions for Judgment as a
`
`Matter of Law on Liability Issues (Dec. 21, 2010) (Dkt. 409); Exh. 2041,
`
`Memorandum Opinion and Order Granting SAP’s Motion to Exclude the Expert
`
`Testimony of Neeraj Gupta, Christopher Bakewell and Roy Weinstein (Sept. 9,
`
`2011) (Dkt. 570), pp. 2-3; Exh. 2042, Order Granting-in-Part and Denying-in-Part
`
`SAP’s Motion for Judgment as a Matter of Law, Remittitur, or New Trial (Jan. 6,
`
`2011) (Dkt. 412). Following the first trial, SAP issued a software patch that, it
`
`alleged, eliminated future infringement. Exh. 2043, ETT, pp. 87-88. In the second
`
`trial, the jury found that SAP’s post-patch software continued to infringe, and
`
`awarded $260 million in lost-profits damages and $85 million in reasonable-
`
`royalty damages. The district court upheld those awards, and issued an injunction
`
`to protect Versata from future harm. Versata Software, Inc. v. SAP Am., Inc., No.
`
`2:07-cv-153, 2011 U.S. Dist. LEXIS 102333, 102339, 102267 (E.D. Tex. Sept. 9,
`
`2011).
`
` 
`
`7
`
`Ex. 1007 17/92
`
`

`

`SAP appealed the district court’s Final Judgment to the U.S. Court of
`
`Case CBM2012-00001
`Patent 6,553,350
`Attorney Docket No: 4117-101
`
`
`Appeals for the Federal Circuit on October 11, 2011. Versata Software, Inc. v.
`
`SAP America, Inc., Nos. 2012-1029, -1049. The appeals have been fully briefed
`
`and are currently pending. SAP did not appeal the district court’s claim
`
`construction, and there are no issues on appeal relating to the validity of the ‘350
`
`patent.
`
`Notably, in spite of the high stakes, the only invalidity defense that SAP
`
`pursued in the district court case was a best mode defense. Indeed, Judge
`
`Everingham observed:
`
`SAP, with the benefit of complete knowledge of the prior art R/3
`system, hindsight and incentive to invalidate, did not assert its prior
`art R/3 2.2 system against the … ‘350 patent…. If R/3 system were
`non-cumulative and material to patentability, the Court would expect
`SAP to argue for invalidity by anticipation and obviousness. Instead,
`SAP made no summary judgment challenge to the validity of the
`…’350 patent … and only advanced a best mode attack at trial. When
`the stakes were highest, SAP did not believe its prior art system was
`material to patentability. … SAP, with complete knowledge of its
`prior art system, hindsight, and incentive to find anticipatory
`references did not deem its system material to the validity of the …
`‘350 patent ….
`
`Versata Software, Inc. v. SAP Am., Inc. 758 F. Supp. 2d 389, 396 (E.D. Tex. 2010).
`
` 
`
`8
`
`Ex. 1007 18/92
`
`

`

`STATEMENT OF THE PRECISE RELIEF REQUESTED
`
`Case CBM2012-00001
`Patent 6,553,350
`Attorney Docket No: 4117-101
`
`
`II.
`
`Patent Owner respectfully requests that the PTAB deny Petitioner’s petition
`
`for post-grant review of claims 17 and 26-29 of the ‘350 patent under § 18 of the
`
`America Invents Act (“AIA”) because:
`
`(1) the ‘350 patent is not a covered business method patent, but rather one
`
`directed to a technological invention unrelated to any financial product or service;
`
`(2) the petition fails to demonstrate it is more likely than not the claims are
`
`unpatentable under 35 U.S.C. § 102 based on the R/3 Prior Art System
`
`Documentation because (a) the Petitioner has admitted the system itself clearly
`
`lacks denormalized numbers, (b) the district court judge determined the system
`
`was not even material to patentability, and (c) Petitioner initially asserted the R/3
`
`system as prior art, but withdrew that assertion before the trial;
`
`(3) the petition fails to demonstrate it is more likely than not the claims are
`
`unpatentable under 35 U.S.C. § 112 based on arguments that either failed in the
`
`district court, or were initially raised but were abandoned before the trial;
`
`(4) after two trials, the district court entered a judgment against Petitioner –
`
`a judgment that is final with respect to the validity issues raised here; and
`
`(5) Petitioner’s 35 U.S.C. § 101 bases for unpatentability do not fall within
`
`the available grounds for challenging patentability in a § 18 trial, and would fail
`
` 
`
`9
`
`Ex. 1007 19/92
`
`

`

`nonetheless for at least the same reasons that the ‘350 patent is directed to a
`
`Case CBM2012-00001
`Patent 6,553,350
`Attorney Docket No: 4117-101
`
`
`technological invention.
`
`III. STATEMENT OF REASONS WHY NO POST-GRANT REVIEW
`SHOULD BE INSTITUTED UNDER 35 U.S.C. § 3241
`A. The ‘350 Patent Is Not A “Covered Business Method Patent”
`Petitioner’s request for post-grant review of the ‘350 patent under § 18 of the
`
`AIA must be denied because § 18 applies only to covered business method (CBM)
`
`patents and the ‘350 patent is not a CBM patent. A CBM patent is “a patent [for a
`
`non-technological invention] that claims a method or corresponding apparatus for
`
`performing data processing or other operations used in the practice, administration,
`
`or management of a financial product or service...” AIA § 18(d)(1) (emphasis
`