trials@uspto.gov
`571-272-7822
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`CBM2015-00040, Paper No. 33
`March 22,2016
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`RECORD OF ORAL RECORD
`UNITED STATES PATENT AND TRADEMARK OFFICE
`------
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`------
`GOOGLE, INC. and APPLE, INC.,
`Petitioners,
`v.
`CONTENTGUARD HOLDINGS, INC.,
`Patent Owner.
`------
`
`Case CBM2015-000401
`Patent 7,774,280 B2
`
`------
`Oral Hearing Held: February 24, 2016
`
`
`Before MICHAEL R. ZECHER, BENJAMIN D. M. WOOD, and
`GEORGIANNA W. BRADEN, Administrative Patent Judges.
`
`The above-entitled matter came on for hearing on Wednesday,
`February 24, 2016, at Southern Methodist University Dedman School of
`Law, Hillcrest Classroom -Underwood Law Library, 6550 Hillcrest Avenue,
`Dallas, Texas at 1:21 p.m.
`
`
`1 Case CBM2015-00160 has been joined with this proceeding.
`
`
`571-272-7822
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`CBM2015-00040, Paper No. 33
`March 22,2016
`
`RECORD OF ORAL RECORD
`UNITED STATES PATENT AND TRADEMARK OFFICE
`------
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`------
`GOOGLE, INC. and APPLE, INC.,
`Petitioners,
`v.
`CONTENTGUARD HOLDINGS, INC.,
`Patent Owner.
`------
`
`Case CBM2015-000401
`Patent 7,774,280 B2
`
`------
`Oral Hearing Held: February 24, 2016
`
`
`Before MICHAEL R. ZECHER, BENJAMIN D. M. WOOD, and
`GEORGIANNA W. BRADEN, Administrative Patent Judges.
`
`The above-entitled matter came on for hearing on Wednesday,
`February 24, 2016, at Southern Methodist University Dedman School of
`Law, Hillcrest Classroom -Underwood Law Library, 6550 Hillcrest Avenue,
`Dallas, Texas at 1:21 p.m.
`
`
`1 Case CBM2015-00160 has been joined with this proceeding.
`
`
`
`APPEARANCES:
`FOR THE PETITIONERS:
`
`
`
` Kaye Scholer, LLP
` By: ROBERT R. LAURENZI
` robert.laurenzi@kayescholer.com
` 250 West 55th Street
` New York, New York 10019-9710
` 212.836.7235
`
`
`
` Sidley Austin, LLP
` By: JEFFREY P. KUSHAN
` jkushan@sidley.com
` By: MICHAEL FRANZINGER
` 1501 K Street, N.W.
` Washington, DC 20005
` 202.736.8914
`
`FOR THE PATENT OWNER:
`
`
`
` Fitch, Even, Tabin & Flannery, LLP
` BY: TIMOTHY P. MALONEY
` tpmalo@fitcheven.com
` BY: PAUL B. HENKELMANN
` phenkelmann@fitcheven.com
` 120 South LaSalle Street, Suite 1600
` Chicago, Illinois 60603-3402
` 312.577.7000
`
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`CBM2015-00040
`Patent 7,774,280 B2
`
`
`P R O C E E D I N G S
`
` (1:21 p.m.)
`JUDGE ZECHER: All right. We're ready, so
`we're going to turn the floor over to Petitioner's
`Counsel. Since we didn't get the introductions on the
`record, if you can just go ahead and state your name and
`who you represent. One thing I would ask the Petitioner,
`it was a great overview of the case that the law student
`gave us, but if you could maybe just give the audience a
`brief summary of the technology involved. Possibly a
`practical real world example would be helpful.
`MR. KUSHAN: Sure. So starting, my name
`is Jeff Kushan with Sidney Austin representing
`Petitioner Apple. With me is Mike Franzinger also from
`Sidney Austin. Also, our Co- Petitioner is represented by
`Rob Laurenzi with Kaye Scholer for Petitioner Google.
`COURT REPORTER: Please speak up.
`MR. KUSHAN: Sure.
`I'd like to also just go over a logistical point.
`We're going to split up the topics. I'll begin on
`invalidity, and Mr. Laurenzi will be addressing CBM
`eligibility. For the purpose of efficiency, I think our
`plan is to address invalidity in our case-in-chief.
`Our papers obviously set out our case on
`CBM eligibility, and then Mr. Laurenzi will address the
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`Patent 7,774,280 B2
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`CBM eligibility issues that are in our rebuttal period to
`the extent there are issues and questions you have along
`with whatever residual issues are needing to be
`addressed. And I'll take care of that after he's finished
`his CBM section. The only reason I mention that is if
`you have a question regarding CBM eligibility, I would
`just ask to have Mr. Laurenzi address that to the Panel in
`our opening.
`And as you requested, we believe this is a
`case that concerns technology which involves
`distribution of rights from an entity to a consumer. We'll
`get into this in the claim language as well. It involves
`the procedures that are followed according to the passage
`for creating rights that would allow a consumer, for
`example, to ultimately exercise a variety of actions on a
`piece of content.
`But this particular patent focuses on the
`meta-rights that they have called them to create or use to
`create these usage rights, and you instituted this
`proceeding on two grounds. One was based on invalidity
`as anticipated by the Stefik patent, the '012 patent you
`just heard, which is on Slide 14.
`One other quick question: Are you working
`off the paper slides for --
`JUDGE ZECHER: Yes.
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`Patent 7,774,280 B2
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`MR. KUSHAN: Okay. I don't want to go too
`fast. The second ground was on obviousness, and I'd
`direct you to Slide 14, which just summarizes these two
`grounds, separate bases of institution.
`Now, we believe the claims are unpatentable
`because they can't really be distinguished from the
`disclosure found in the Stefik '012 patent, and that's not
`surprising because the '280 patent, the patent at issue,
`points to the Stefik patent, the Stefik '012 patent, not
`only to show how you can implement the scheme, but
`also, it relies on its teachings to enable this scheme.
`And if you want to go to Slide 77, which is at the back
`end of the deck, you'll see throughout the patent these
`are just some excerpts from the patent, which are
`pointing back to the teachings, the disclosure in the '012
`patent for implementation of the meta-rights scheme.
`And we think that's probative when we start
`to look at some of the supposed differences that have
`been identified in the briefing between the claim it
`mentioned and the prior argument we're using against it.
`And critically, we think that tells you that there's no
`technological addition in the '280 patent relative to that
`earlier disclosure of Stefik that you need to actually put
`this practice -- this method into practice.
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`CBM2015-00040
`Patent 7,774,280 B2
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`
`If you could go to Slide 16, this is Claim 1 of
`the '280 patent and is the subject of the proceeding. And
`you'll see this is a method for transferring rights adapted
`to be associated with items from a rights supplier to a
`rights consumer, and you see there are three steps recited
`in the method. The first step concerns obtaining a set of
`rights that includes a meta-right. The second step
`concerns determining by a repository whether the rights
`consumer is entitled to the right specified in that meta-
`right, and the last step concerns exercising the meta-
`right to create the right that's specified by the meta-
`right.
`
`Now, it's very important throughout this
`evaluation of the claims to really look at what the claims
`are specifying, what they have in them, what they
`require, and more importantly, what they don't require,
`so we note that that's important in this case because a lot
`of the emphasis in the briefing has come about features
`that we think are not actually into claims or supported by
`the description or meaning of the terms in these claims.
`And if you go to Slide 44, let's first get into
`the issue of meta-rights. In your institution decision you
`turn to the patent specification. You found an explicit
`definition of what a meta- right is, and that was correct.
`A meta-right is a right that one has to generate,
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`CBM2015-00040
`Patent 7,774,280 B2
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`manipulate, modify, dispose of or otherwise derive other
`rights. That definitional language in the specification
`ends the discussion about what a meta-right is, what it
`requires, what it's not.
`These are the things that you'll see
`throughout the briefing, but your finding that this is a
`term that was explicitly defined in the specification
`causes the same outcome. The claims as this term has
`been defined in the specification is going to be the terms
`that you found in your institution decision. That's the
`meaning of meta-right.
`And what you can see is that the meta-right
`really only requires two things. First, it specifies the
`right to be created when a meta-right is exercised; and
`second, that the meta-right results in creation of the
`specified right. And this is something we found to be --
`JUDGE BRADEN: I'm sorry.
`MR. KUSHAN: Sure.
`JUDGE BRADEN: Go back. What was your
`first statement about meta-rights are . . . ?
`MR. KUSHAN: I said meta-rights specify the
`right that is going to be created when the meta-right is
`exercised.
`
`JUDGE BRADEN: So they specify the right
`that is created when the right is exercised?
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`Patent 7,774,280 B2
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`MR. KUSHAN: Correct.
`JUDGE BRADEN: Okay. And where is your
`support for that?
`MR. KUSHAN: So in the definition that you
`used in your institution decision, you point to the rights
`that one has to generate, manipulate, modify, dispose of
`or otherwise derive other rights. And that's telling us
`that the meta-right is giving you the right to create these
`other rights.
`JUDGE BRADEN: Are there any specific
`embodiments in either Stefik or the challenged patent
`that you're using?
`MR. KUSHAN: Yes. In fact, it's probably
`easiest to go through the Stefik disclosure because we
`found a number of instances where there's one element
`we've identified in Stefik called the next-set-of-rights.
`And what that does is act on -- when you act on and
`exercise that next- set-of-right value, you create usage
`rights. You don't create actions to content.
`And that's the critical issue that has been
`engaged by the briefing, whether there is a description of
`something in Stefik that when you exercise it results in
`action to a usage right, such as creating usage right or
`deleting or modifying usage right. And that element is
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`CBM2015-00040
`Patent 7,774,280 B2
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`found in the Stefik patent in the form of the next- set-of-
`rights.
`
`JUDGE WOOD: Is there a way we can find --
`these are difficult conceptual ideas. Is there any real
`world example that we can use, for example, you know,
`downloading an E-book on an E-reader from the internet
`or that would -- if I purchase an E-book, I'm purchasing
`user rights, or usage rights; is that right?
`MR. KUSHAN: Yes. So I guess to kind of
`respond to that question, which is a good way of framing
`the distinction between the meta-right and the usage
`right, the usage right will be something that the device is
`going to act on or use to determine if it can do things
`like reading or transferring or copying the digital work.
`The meta- right is a different right, and that's going to be
`used by the device to figure out if it can create a right to
`use or read or transfer the book, and so the meta-right is
`focusing on creation or removal of the usage rights that
`are then going to be used to control what you do with the
`content.
`
`JUDGE WOOD: So if I want to distribute to
`people, if I want to put it on a server and sell copies, I
`would need a meta-right to do that?
`MR. KUSHAN: Not necessarily. So what the
`patent describes, both the Stefik patent and the '280
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`Patent 7,774,280 B2
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`patent, they describe a number of actions of the transfer
`usage right, so if I wanted to move a copy of a work
`from one device to another, that might be mediated by a
`usage right, transfer right, which doesn't necessarily
`indicate a meta- right until you consider whether you're
`going to place additional restrictions on whether the
`recipient of that book might be able to do something
`with it.
`
`So in the scheme of the Stefik pattern, for
`example, they have an illustration where if you don't
`include a next-set-of-right elements, all the rights that
`are currently associated with the first instance of that
`book will go to the recipient device and will be
`available.
`
`JUDGE WOOD: So if I purchase the book
`and put it on the server and want to sell copies, when I
`sell a copy to a downstream purchaser, I am selling
`rights. I'm granting rights, so I would need the right to
`grant those rights.
`MR. KUSHAN: Correct.
`JUDGE WOOD: So the right to grant those
`rights is a meta-right.
`MR. KUSHAN: Yes. And what Stefik
`teaches is that it gives the distributor some degree of
`control over whether they want to restrict or narrow the
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`CBM2015-00040
`Patent 7,774,280 B2
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`scope of rights that they start with or whether they want
`to just convey the exact same set of rights to the next
`entity downstream.
`JUDGE WOOD: So if they don't have the
`right simply to change the downstream rights, they do
`not have the meta-right.
`MR. KUSHAN: Correct. Or the meta-right
`would essentially be a null value because it's not being
`used for any purpose in relation to creation of these
`derivative or narrowing the rights.
`JUDGE WOOD: Okay. Thank you.
`JUDGE BRADEN: So next-set-of-rights
`could either be a meta-right or not necessarily a meta-
`right.
`
`MR. KUSHAN: I think the best way to think
`about it is the next-set- of-right is a meta-right, and
`whether it has a value or has any effect in its use is
`where you get a different outcome. If you can go to
`Slide 24, this is actually a helpful point to follow
`through with this discussion.
`So what you see here on the top quote is an
`explanation that the next-set-of-rights in the Stefik
`scheme is going to be conveyed along with the other
`rights. And if you recall the claim language, there is a
`reference to the meta-right being provided as a set of
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`CBM2015-00040
`Patent 7,774,280 B2
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`rights. This is tracking that model, but then in the next
`quote that we've got, you see essentially the language of
`this data element.
`And what you see in this list are a number of
`actions that could be associated or values that are in the
`meta-right, and as you parse them, you see there are
`different types of things that are being specified, so if
`you see the add or delete, these are things which are
`values that would be in the meta-right. And when meta-
`right is exercised, those will cause either the addition of
`a usage right or deletion or modification of the usage
`right, so this is the precise concept that's at issue in the
`meta-right patent.
`It's this authority to create, or mechanism to
`create, these usage rights, which are acting on their
`consequences or actions on the usage rights. They're not
`dealing with actions under content. Those would be
`things like play or transfer or copy.
`JUDGE BRADEN: So it's your position then
`that Stefik at Column 21 basically describes the meta-
`rights that are in the '280 patent.
`MR. KUSHAN: Correct. And as I said at the
`outset, your construction went to the specification. You
`found a very broad definition of what a meta-right is.
`When you look -- again, if you go to Slide 16, just to
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`Patent 7,774,280 B2
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`have the claim language up, I think it's important to
`appreciate that there are no restrictions placed in the
`claim language on what a meta- right is or when it can be
`exercised.
`
`For example, the most critical point is that
`there's nothing in this claim language which says that
`you may not exercise a meta-right along with exercising
`a usage right, so you can exercise it at the same time.
`You can exercise it at a different time. There's no
`restrictions from the definitional language or from the
`patent claim language that puts that kind of restriction
`into the claims.
`JUDGE ZECHER: And speaking of
`construction of meta-right, I'm sure you're aware that
`patent owner is advocating a construction that was
`presented in the district court case.
`MR. KUSHAN: Correct.
`JUDGE ZECHER: Phillips Construction.
`MR. KUSHAN: Yes.
`JUDGE ZECHER: And they seem to be okay
`with what we've pointed out to be the special definition,
`but then we're moving on two columns over, and they
`seem to be implying that it's further defined there. Do
`you believe that to be the case? And if so, why not? If
`so, you know, why or why not?
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`MR. KUSHAN: Okay. So I think your
`definitional statement you found disposes of the issue. I
`think the additional terminology that's been at issue that
`they point to essentially has no consequence in this case
`because it still doesn't do anything which is not already
`shown in Stefik, so we have not viewed that additional
`language. I think when you look at a role of language
`and construction that was provided for a jury, sometimes
`they'll put in explanations or explications that help the
`jury understand the boundaries of the claims.
`You're obviously in a different position. As
`judges, you can look at that definitional language and
`apply it without that kind of assistance and illumination
`of what that language means, so we don't think that
`additional phraseology actually matters. It doesn't do
`anything to change the meaning of the meta-right in a
`way that is relevant to the Stefik patent.
`JUDGE ZECHER: So just so I understand
`your position, you're saying if we were to somehow
`change our claim construction and adopt what they're
`proposing, would Stefik still account for that
`construction?
`MR. KUSHAN: Absolutely. We think even
`under their construction we have anticipation by Stefik,
`and Stefik renders that claim obvious.
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`Patent 7,774,280 B2
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`
`So we've talked through a number of things.
`I think it would be helpful if you could go to 47 for a
`minute. One of the things we did in our -- asked our
`expert to do is make sure we all saw what the effect of
`the meta-right is.
`And to your question, Judge Wood, this is an
`area in Paragraphs 9 to 11 of the expert declaration,
`which was Exhibit 1032, just illustrating how the usage
`right is going to be different than the meta-right.
`I want to emphasize that, you know, there is
`no meta-right in the scheme, the next-set- of-right
`scheme, and the Stefik scheme. Then, as I said, the same
`set of rights that you started with are in the final copy,
`but if there is a value in that next- set-of-right, that will
`influence what rights, what usage rights, are going to be
`in that next copy, and that's the role of the next- set-of-
`rights.
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`JUDGE WOOD: So the next-set-of-rights
`isn't the use of -- isn't the meta-right itself. It's just the
`evidence that there must be a meta- right?
`MR. KUSHAN: I think the next-set-of-rights
`is the meta-right, and there are values that we put in that
`meta-right that get acted on. That's the exercising act
`that results in the action to the usage right.
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`Patent 7,774,280 B2
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`
`So as I said, the main issue around meta-right
`in this case from the briefing is that ContentGuard is
`arguing that the language requires that or prohibits that
`the meta-right be exercised essentially at the same time
`or in conjunction with the exercise of the usage rights.
`So if there's a loan transaction, the loan right would be
`the usage right, and there would be a meta-right along
`beside being exercised with it.
`Their position is essentially that doesn't
`count. You have to have a separate action essentially
`following the meta-right. I think it's important to see
`through that because actually when you look at the
`operation of the Stefik patent, when you exercise the
`meta-right, it uses the value that's been set in the meta-
`right, and that is a discrete action which creates the
`usage right, which is exactly consistent with what we
`were saying.
`So I want to just touch on the other claim
`element that I think has been in dispute, which is the
`determining step. If you go back to 16 for a second, this
`is the middle element, and there is some lead over into
`the final element, so basically, the determining step is
`determining by a repository whether the rights' consumer
`is entitled to the rights specified by the meta-right. And
`again, the claim language is very broad.
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`Patent 7,774,280 B2
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`Here, there is no definitional text, and it's
`basically saying this is telling you that any way of
`making this determination whether the rights' consumers
`is entitled to the right is going to meet this element.
`And again, that's shown in Stefik. If you would go to
`Slide 27, this is Figure 1 from the Stefik '012 patent, and
`what we've highlighted is the step that is corresponding
`to the determining step where in this scenario a second
`repository, Repository 2, has contacted Repository 1 and
`requested access to the work.
`And in response to that, Repository 1 will
`then evaluate whether it's entitled to do that, whether the
`second repository is entitled to have the access that's
`been requested. And this is determining whether or not
`that's going to be permitted.
`If you go to Slide 28, what's very important
`to appreciate is that according to the Stefik disclosure,
`they say very explicitly here -- and this is Exhibit 1002
`at Column 7:23- 31. They're emphasizing that before that
`second repository gets the access it's requested, all the
`conditions have to be complied with, and that's a
`determination being made by the first repository. And
`so just under the plain language of the claim and the way
`that the Stefik scheme is working, this will show the
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`CBM2015-00040
`Patent 7,774,280 B2
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`determination that's going to be made in that scenario
`we've been talking about where there's a meta-right and a
`next-set- of-right in that bundle of rights.
`It means before those rights are exercised, all
`these conditions must be made, and that's a
`determination that meets the claim language of the
`second element, and as we've set out in our briefs, what
`we basically just kind of, I think, end up with is a very
`simple equation which is under the claim language,
`under the meaning of the terms in the claims. Those
`claims encompass this next- set-of-rights element in
`Stefik.
`
`We have one other ground that was at issue in
`this case, which was obviousness, and we put -- this
`issue essentially is engaged by the question that's been
`presented by ContentGuard. And that is, if there is a
`requirement for a separate exercise of the meta-right,
`would that have been obvious from the Stefik disclosure?
`And the answer to that is yes, as you have found.
`One thing to keep in mind if you go to Slide
`60, this is simply an explanation from our expert where
`he's basically said, well, there's really two ways you can
`approach exercising a meta-right in relation to when you
`exercise the usage right. You can exercise it as a single
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`CBM2015-00040
`Patent 7,774,280 B2
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`transaction or you can exercise it as a separate
`transaction.
`We saw before that the '280 patent relies on
`the Stefik patent for the teachings. It's going to use the
`Stefik scheme to implement the meta-right scheme, so
`there's nothing technologically new about how you make
`meta-rights work. You use the old system and what a
`skilled person would have available to them, so if you
`take the fact that there's really two ways of doing it and
`you can see that Stefik disclosure shows one of them and
`the other way where there's an obvious, that kind of falls
`directly into the paradigm of KSR.
`This other way is going to give you the same
`result. It's a well-known technique. It's essentially -- it
`has to be enabled and taught by the Stefik '012 patent in
`order for these claims to be valid for enablement
`purposes because, again, the '280 patent is relying on
`that teaching to show how to make it work. And that in
`our view puts you directly into the situation that was
`envisioned in KSR. Well, this is simply an obvious
`alternative that would have been known and expected.
`The last point I'll leave on obviousness is
`that Stefik is a patent which tells you that there are a lot
`of different ways of implementing its schemes, and so
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`CBM2015-00040
`Patent 7,774,280 B2
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`when a person reads that type of description, they're
`going to immediately come up with the idea that there
`will be variations made which include when you exercise
`the meta-right in relation to when you exercise the next-
`set-of-rights, or the usage right.
`So I think we'll stop at that point. I didn't
`specify. I think we wanted to reserve enough time for
`our rebuttal and to cover the other topics, and so I'd like
`to stop now. If you have any other questions...
`JUDGE WOOD: Can I ask a question? And I
`apologize if you've covered this already. We've talked
`about what meta-rights are. Can you point me where in
`Stefik is it disclosed the limitation of obtaining a set of
`rights, including the meta-right, or obtaining a meta -
`right?
`
`MR. KUSHAN: Sure. Let's go to 24. This is
`the slide we had before. We'll start there, and what I
`want to make sure you appreciate about this quote is that
`in the Stefik patent, there's a language concept at issue
`where they say, you can use this language and use the
`elements of rights and other features, conditions,
`variables, et cetera, to devise whatever you want. It's
`kind of a model that says we're going to equip you to
`design any particular implementation.
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`CBM2015-00040
`Patent 7,774,280 B2
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`
`So when you see a description here of one of
`the variables of that scheme, this variable is saying if
`you want a scheme which allows control or creation,
`deletion of usage rights, use this element within that
`scheme. If you go to Slide 21, for example, on the right
`side is the Figure 1 of Stefik where you're obtaining the
`usage rights along with the work that is going to be
`regulated by those usage rights.And in that context in
`this step of the flow of Stefik is where you will get the -
`- you will obtain the set of rights that includes the meta-
`right. So to be precise, if you have set up as one of these
`rights, which includes the next-set-of-right as a part of
`that, you will obtain that together in that first step.
`JUDGE WOOD: So if you get the work, you
`get the meta-right.
`MR. KUSHAN: If you get a work and it has a
`loan right which includes a next-set-of-rights restriction
`on it, yes, you will get the meta-right by that step.
`JUDGE ZECHER: You guys have twenty
`minutes left for rebuttal.
`MR. KUSHAN: Thank you very much.
`JUDGE ZECHER: Just so the record's clear,
`you may want to introduce yourself once again, and that
`way we have a clear record.
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`CBM2015-00040
`Patent 7,774,280 B2
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`MR. MALONEY: Sure. Tim Maloney for
`ContentGuard, the patent owner.
`Can we have a minute to switch the slides,
`Your Honor?
`JUDGE ZECHER: Absolutely.
`MR. MALONEY: And while he's doing that,
`may I raise an administrative point? I wasn't expecting
`them to reserve their argument on jurisdiction for
`rebuttal because they do have the burden of proof. Since
`you've allowed that, I would ask that opportunity in my
`rebuttal to also respond to anything they say on that
`issue as well as to address rebuttal on the Motion to
`Amend.
`
`JUDGE ZECHER: So I take it you are going
`to raise the issue so you --
`MR. MALONEY: Yes, I am. That's my first
`
`issue.
`
`JUDGE ZECHER: They do carry the burden.
`They just didn't say anything about it, so we're aware of
`that, but why don't we just proceed as we discussed
`previously in the trial order. And at this time we're not
`going to give you additional rebuttal to address
`jurisdiction .
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`MR. MALONEY: With that in mind, I'd like
`to reserve three minutes for my rebuttal. At least that's
`my goal.
`
`I appreciate the opportunity to be heard. The
`'280 patent that's at issue here acknowledges in its own
`specification the Stefik patent and discusses the digital
`rights management scheme of Stefik, which is a usage
`rights based scheme. The invention of the '280 patent is
`essentially an improvement upon the system disclosed in
`Stefik.
`
`And in a nutshell, the concept behind the
`improvement is that the meta-right scheme in the '280
`patent decouples the functions of creating and
`transferring new rights from the function of distributing
`content of a digital order that those rights are associated
`with. And what the '280 patent discloses is a mechanism
`that allows specifying new rights that can be created, a
`mechanism for controlling which recipients are entitled
`to receive that right, a mechanism for determining if a
`particular recipient is entitled to a specified right, and
`then and only then creating the new right for that
`recipient.
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`All of this is done without any actions to the
`content of the digital work. These claims were allowed
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`CBM2015-00040
`Patent 7,774,280 B2
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`by the patent office initially over Stefik, and these
`claims are patentable, and they have not carried their
`burden to show otherwise.
`I want to start with the jurisdiction issue.
`Then I'm going to talk about the claim construction, if I
`might, and then I would address the limited issues. So
`I'm on Slide 2 of our exhibits, and here, this is from the
`Board's decision which is setting forth the standard, the
`definition of covered business method.
`And our position is that the '280 patent does
`not meet the definition of a covered business method
`patent, and this is because the claims as well as the
`specification made clear that this is a context neutral
`invention. There are no limitations in the claim that
`limit its scope to any financial activity, and the
`specification clearly discloses that this method of
`controlling digital rights can be implemented in financial
`contexts as well as nonfinancial contexts.
`There are a number of PTAB decisions that
`we have cited in our papers that are on all fours with our
`argument acknowledging that similar patents that are
`context neutral could -- that could be implied in a
`financial setting or other settings do not meet the
`definition. And what I want to talk about in my --
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`JUDGE ZECHER: Are any of those cases
`precedential?
`MR. MALONEY: I recognize that they're not
`precedential nor are the cases that Google and Apple are
`relying on, but what I'd like to really focus in on is the
`difference between these two groups of cases. And the
`difference in my view is really the way they're
`interpreting Congress' intent as evidenced by the
`legislative history.
`As the Board recognized in their decision, in
`the decision on Page 3 of -- I'm on Slide 3. The
`legislative history explains that the definition of covered
`business method was drafted to encompass patents
`claiming activities that are financial in nature, incidental
`financial activity or complementary to a financial
`activity.
`
`And when you look at the various PTAB
`cases that have dealt with this language, there seems to
`be some confusion of whether this claiming means the
`financial activity has to be expressly recited in the claim
`or, alternatively, whether the claim simply needs to be
`broad enough to encompass an activity that would be
`financial in nature. And the statement that the decision
`is citing here on my Slide 3 is from Senator Schumer
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