IPR2014-00403
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`Paper No. 44
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`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 No. CBM2015-000401
`U.S. Patent No. 7,774,280
`__________________________________________________________________
`
`Petitioners’ Joint Brief on CBM Eligibility
`
`
`
`
`
`1 Case No. CBM2015-00160
`
`
`
`
`
`Paper No. 44
`
`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 No. CBM2015-000401
`U.S. Patent No. 7,774,280
`__________________________________________________________________
`
`Petitioners’ Joint Brief on CBM Eligibility
`
`
`
`
`
`1 Case No. CBM2015-00160
`
`
`
`
`
`I.
`
`Applicable Law
`
`A “covered business method patent” is a patent that “claims a method or
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`corresponding apparatus for performing data processing or other operations used in
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`the practice, administration, or management of a financial product or service,
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`except that the term does not include patents for technological inventions.” Leahy-
`
`Smith America Invents Act, Pub. L. No. 112-29, 125 Stat. 284, 329–31 (2011)
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`(“AIA”) § 18(d)(1). This definition “covers a wide range of finance-related
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`activities,” and is “not limited to products and services of only the financial
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`industry, or to patents owned by or directly affecting the activities of financial
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`institutions.” Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306, 1325 (Fed.
`
`Cir. 2015).
`
`Patent claims that are “financial in nature” are subject to CBM review. Blue
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`Calypso, LLC v. Groupon, Inc., 815 F.3d 1331, 1340 (Fed. Cir. 2016). See
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`Unwired Planet, LLC v. Google, Inc., 841 F.3d 1376, 1380 n.5 (Fed. Cir. 2016)
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`(“[W]e endorsed the ‘financial in nature’ portion of the standard as consistent with
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`the statutory definition of ‘covered business method patent[.]’”).2
`
`
`2 In its remand decision, the Federal Circuit observed that Secure Axcess, LLC v.
`PNC Bank National Ass’n, 848 F.3d 1370, 1381 (Fed. Cir. 2017), which stated “the
`statutory definition of a CBM patent requires that the patent have a claim that
`contains, however phrased, a financial activity element,” was vacated as moot by
`the Supreme Court. See PNC Bank Nat. Ass’n v. Secure Axcess, LLC, 138 S. Ct.
`1982 (2018).
`
`2
`
`
`
`
`
`
`Whether a patent is for a “technological invention” requires considering
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`“whether the claimed subject matter as a whole [(1)] recites a technological feature
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`that is novel and unobvious over the prior art; and [(2)] solves a technical problem
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`using a technical solution.” 37 C.F.R. § 42.301(b). Recitation of known
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`technology to accomplish a method (even if the method itself may be novel) does
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`not render a patent a “technological invention.” Office Patent Trial Practice Guide
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`(“Practice Guide”), 77 Fed. Reg. 48,756, 48,763-64 (Aug. 14, 2012).
`
`II. The ’280 Patent Is Eligible for CBM Review
`
`A. The ’280 Patent Claims Are “Financial in Nature”
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`Digital rights management (DRM) systems specify, verify, and enforce
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`usage rights for digital content, and also address “accounting, payment and
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`financial clearing.” Ex. 1001 (’280 patent) at 1:36-39. The ’280 patent purports to
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`provide a solution for a particular DRM “business model”, involving “multi-tier”
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`or “multi-party” distribution models. Id. at 2:24-48. The ’280 patent describes the
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`use of “meta-rights”—the allegedly novel part of the invention—as “particularly
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`useful to companies in the digital content business.” Id. at 6:1-4. Meta-rights also
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`support “entities that are not creators or owners of digital content, but are in the
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`business of manipulating the rights associated with the content.” Id. at 6:1-4
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`(emphasis added). Accordingly, claim 1 of the ’280 patent describes the purported
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`invention in economic terms, reciting the use of meta-rights to facilitate the
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`3
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`
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`
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`transfer of rights between a rights “supplier” and a rights “consumer.” Ex. 1001 at
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`15:7-8 (“[a] computer-implemented method for transferring rights adapted to be
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`associated with items from a rights supplier to a rights consumer”). By requiring a
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`rights “supplier” and rights “consumer”, rather than a “provider” and “user” more
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`generally, claim 1 makes clear that it is directed to “typical business models of
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`distributing digital content includ[ing] plural parties, such as owners, publishers,
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`distributors and users. Each of these parties can act as a supplier granting rights to
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`a consumer downstream in the distribution channel.” Id.at 5:39-43 (emphasis
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`added); see also 6:1-13 (explaining that meta-rights are useful for entities who “are
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`in the business of manipulating rights associated with the content” (emphasis
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`added), and then defining such entities as “supplier” and “consumer”).
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`Consistent with the claim language, the specification is replete with
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`references to the financial nature of this claimed exchange between suppliers and
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`consumers.3 For example, it describes the use of licenses providing rights for a
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`recipient to view content in exchange for paying a fee. Ex. 1001 at 4:3-14. See
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`also id. at 2:18-19 (“Usage rights can be contingent on payment”), 4:39-43
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`(exercising a specified right may require payment of a fee), 5:3-11 (steps may
`
`include “a fee transaction (as in the sale of content)”), 5:35-37 (use of a
`
`
`3 A member of the Federal Circuit panel made similar observations at the oral
`argument. See http://oralarguments.cafc.uscourts.gov/default.aspx?fl=2016-
`2548.mp3 at 23:00-:25, 24:41-25:01.
`
`4
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`
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`
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`clearinghouse to process payment transactions and verify payment prior to issuing
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`a license), 8:17-24 (“[T]he distributor pays $1 to the provider each time the
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`distributor issues a license for an end user.”), 14:5-10 (use of variables to track
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`whether “an appropriate fee has been paid”). The specification describes the use of
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`the XrML language to encode licenses, and Figure 4 illustrates the structure of the
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`license, which contains a dedicated “fee” substructure:
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`
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`Id. at Fig. 4 (highlighting added). Claims 11 and 22 explicitly require such
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`licenses. See id. at 15:48-50, 16:27-29.
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`The specification also repeatedly describes the intermediate entities in the
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`“multi-tier” business model as “resellers” and “retailers” who “sell content.” E.g.,
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`Ex. 1001 at 6:8-10 (“reseller”), 6:21 (“retailers”), 6:50-53 (“retailer”). Figure 2
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`“schematically illustrates an example of a multi-tier business model” involving a
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`publisher, distributor, and retailer who “sells content to users”:
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`5
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`
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`Ex. 1001 at Fig. 2 (excerpted), 6:18-27. The specification describes variants of this
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`business model, stating that the distributors may “sell directly to the public,” or
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`that sales of content may take place entirely within “different personnel or different
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`business units within [an] enterprise.” Id. at 6:43-44, 6:63-65.
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`The ’012 Patent, which is incorporated by reference into the ’280 Patent, is
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`similarly replete with references to financial activities inherent to the commercial
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`distribution of digital content, including “accounting, payment [and] financial
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`clearing” as well “rights specification, rights verification [and] rights
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`enforcement.” Id. at 1:37-43; see also id. at 5:43-46. These incorporated portions
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`of the ’012 Patent are further evidence the purported invention is financial in
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`nature. See 37 C.F.R. § 1.57(b)(1); In re Lund, 376 F.2d 982, 989 (C.C.P.A. 1967)
`
`For example, the ’012 Patent describes financial products and services
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`relating to licenses for claimed “rights” for digital content such as credit servers
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`that process “the recording and reporting of . . . fees . . . associating fees with
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`rights.” Ex. 1002 at 17:51-55. These allow for a “wide range of charging modes”
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`whereby “the credit server would store the fee transactions and periodically
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`communicate via a network with billing clearinghouse for reconciliation.” Id. at
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`6
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`
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`17:53-54, 18:15-19, 17:46-18:51, Fig. 4b. Likewise, the ’012 Patent states “the
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`billing for use of a digital work is fundamental to a commercial distribution
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`system” (id. at 24:48-49) and provides a usage rights language with a particular
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`grammar element defining a “range of options for billing the use of digital works”:
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`“Fee-Spec:={Scheduled-Discount} Regular-Fee-Spec|Scheduled-Fee-
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`Spec|Markup-Spec.” Id. at 24:48-52. See also id. at 24:48-26:13, Fig. 15 at
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`Elements 1517-1525. The ’012 Patent then provides multiple examples that use
`
`these fee-based grammar elements, and provides a detailed example of a billing
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`transaction, all in the context of the processing and use of “usage rights.” Id. at
`
`27:15-41, 31:1-47. The ’012 Patent also discloses the use of state variables
`
`relating to fee-based usage rights. Table 1 of the ’012 Patent specification, for
`
`example, describes “Digital Work State Information” and includes a property
`
`called “Revenue-Owner” which identifies “a revenue owner for a digital work. . .
`
`used for reporting usage fees.” Id. at 10:46-47; 10:65-11:7.
`
`B. Claim 1 Is Financial in Nature Regardless of Whether It
`Encompasses Embodiments Permitting Transactions Without an
`Assessed Fee
`
`Independent claim 1 of the ’280 patent defines the purported invention in
`
`economic terms (“consumer” and “supplier”) to support a “business model,” and
`
`the specification makes clear that financial transactions are expected and necessary
`
`to enable that business model. But even if the claims could be read in a way that,
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`7
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`in certain transactions, requires no payment or fee, the claims are still “financial in
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`nature.” That is because the ’280 patent does not describe an alternative scheme
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`for such “fee free” transactions relative to that described in the specification. To
`
`the contrary, it makes clear that the invention simply accommodates these “fee
`
`free” transactions within its singular design. Moreover, the possibility that a
`
`particular transaction might be executed without an explicit financial payment
`
`cannot save a business method patent from CBM review. For example, while the
`
`Blue Calypso patent claims had “subsidy” limitations which the patentee argued
`
`could take the form of “coupons” or “reward codes” instead of currency, the
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`Federal Circuit still found the claims “financial in nature.” 815 F.3d at 1340 & n.3.
`
`Indeed, the few transactions described in the specification that do not
`
`explicitly require a fee payment during a rights transfer transaction are still
`
`financial in nature. One example is where “a commercial must be viewed before
`
`free content can be accessed.” Ex. 1001 at 13:60-62; see id. at 14:8-10 (state
`
`variable used to track “whether a commercial has been watched”). This transaction
`
`simply shifts the fee collection from a consumer to an advertiser – it envisions
`
`tracking the number of consumers who view a commercial using “state variables”
`
`and recovering fees from the advertiser based on that collective activity. Cf. Blue
`
`Calypso, 815 F.3d at 1340 n. 3 (claims still financial in nature notwithstanding
`
`possible use of “coupons” or “reward codes” instead of a financial subsidy).
`
`8
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`Another example is a “site license” issued to a university, in which fees are not
`
`collected during individual transactions by students accessing digital content.
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`Again, this simply shifts fee collection to the university – it permits “fee free”
`
`individual transactions “as long as such usage is tracked by a state variable” which
`
`defines the amount of fees to be paid by the university. Ex. 1001 at 12:41-50, Fig.
`
`11. These examples only confirm that the claims are financial in nature.
`
`The few other embodiments ContentGuard previously identified do not
`
`change this conclusion. The use of the purported invention within “a larger
`
`enterprise” concerns an enterprise that “might create, distribute, and sell content”
`
`using “different personnel or different business units.” Id. at 6:63-65 (emphasis
`
`added). Internal sales transactions within an enterprise are still “financial in
`
`nature.” ContentGuard has also pointed to a single paragraph in which the
`
`specification discusses management of medical records or a will “in digital form.”
`
`See id. at 7:6-22. Transfer of medical records between hospitals (id. at 7:10-13)
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`and distribution of a will (id. at 19-22) are inherently financial in nature. But even
`
`if they were not, the fact that the multi-tier business model purportedly enabled by
`
`the ’280 patent could be implemented in a limited set of non-financial
`
`embodiments does not prevent the claims from being financial in nature.
`
`9
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`
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`C. The ’280 Patent Is Not a “Technological Invention”
`
`In its original Decision, the Board determined that the only feature recited in
`
`claim 1 of the ’280 patent even resembling a technological feature is the
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`“repository.” That finding was undisturbed by the Federal Circuit in its remand
`
`decision. But the use of a “repository” in a DRM system was not novel or
`
`unobvious as of the earliest effective filing date of the ’280 patent – the
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`“repository” was one of the admittedly prior art features incorporated by reference
`
`from the ‘012 Patent. See Ex. 1002, 12:42-13:41, 54:24-27.4 The recitation of this
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`prior art “repository” element in claim 1 cannot transform the claimed methods
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`into a “technological invention.” See Practice Guide, 77 Fed. Reg. at 48,763-64.
`
`The specification also confirms that the purported invention is not tied to any
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`particular hardware, but “can be implemented through any type of devices,” Ex.
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`1001 at 14:50-51, and the claimed “functions can be accomplished in any manner
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`through hardware and/or software,” id. at 14:58-59.
`
`The ’280 patent’s discussion of a “rights language,” XrML, likewise does
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`not make it a “technological invention” either. The XrML language for specifying
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`rights and conditions (including fees) is simply a description of rights implemented
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`in XML (extensible markup language) (Exs. 1015; 1014 at ¶ 40), and was
`
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`4 Like “repository,” the claimed “state variables” in the ’280 patent are also
`disclosed in the prior art ’012 patent. See Ex. 1002 at 32:8-18, 32:37-51, 32:61-
`33:33, Fig. 18.
`
`10
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`
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`admittedly in the prior art by the priority date of the ’280 patent (Ex. 1001 at 8:24-
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`25). Moreover, XrML could not make the ’280 patent a “technological invention”
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`because the specification states that “the rights can be specified in any manner” –
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`XrML does not even need to be used. Id. at 4:53-55.
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`That the ’280 patent does not recite a novel or unobvious technological
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`feature is sufficient to determine that the “technological invention” exception does
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`not apply—and ContentGuard’s Federal Circuit appeal did not argue that the Board
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`erred in so finding. But the ’280 patent also fails the second prong of the
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`“technological invention” analysis, because it does not solve a technical problem
`
`using a technical solution. 32 C.F.R. § 42.301(b); Zuili v. Google LLC, 722 F.
`
`App’x 1027, 1029 (Fed. Cir. 2018). First, the problem being addressed is not a
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`technical one—it is inherently a financial one; the patent purports to enable a
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`multi-tiered business model that allows content owners to retain control over how
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`their works are used downstream. See Ex. 1001 at 2:24-39, 2:53:64; see also
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`§ II.A, supra. Second, the proposed solution is not a technical one—the idea of
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`meta-rights (essentially, sublicensing) is not technical and has been previously
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`implemented by hand, using pen and paper. State variables merely provide
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`bookkeeping in digital form. In short, the ’280 patent purports to solve a business
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`problem with a business solution. The use of well-known prior art technologies to
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`implement that solution does not make the ’280 patent a “technological invention.”
`
`11
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`Dated:
`
`October 19, 2018
`
`
`
`Respectfully Submitted,
`
`/ Robert R. Laurenzi /
`Robert R. Laurenzi
`Registration No. 45,557
`
`
`Attorney for Petitioner Google LLC
`
`
`/ Jeffrey P. Kushan /
`Jeffrey P. Kushan
`Registration No. 43,401
`Sidley Austin LLP
`1501 K Street NW
`Washington, DC 20005
`jkushan@sidley.com
`
`Attorney for Petitioner Apple Inc.
`
`
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`12
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`
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`Certificate of Service
`
`I hereby certify that on this 19th day of February, 2018, a copy of this
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`Petitioners’ Joint Request for Oral Argument has been served in its entirety by
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`email on the following counsel of record for Patent Owner:
`
`Timothy Maloney (tpmalo@fitcheven.com)
`Nicholas T. Peters (ntpete@fitcheven.com)
`Robert A. Cote (rcote@mckoolsmith.com)
`
`
`
`Dated:
`
`October 19, 2018
`
`
`
`Respectfully submitted,
`
`/Jeffrey P. Kushan/
`Jeffrey P. Kushan
`Attorney for Petitioner Apple
`
`13
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