Case CBM2015-00098
`Patent 5,940,510
`Attorney Docket No. 150326-001USCBM
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`AMERICAN EXPRESS COMPANY, AMERICAN EXPRESS TRAVEL
`RELATED SERVICES COMPANY, INC., COMPASS BANK,
`DISCOVER FINANCIAL SERVICES, DISCOVER BANK,
`DISCOVER PRODUCTS INC., and
`STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY,
`Petitioners,
`
`v.
`
`MAXIM INTEGRATED PRODUCTS, INC.,
`Patent Owner.
`____________
`
`Case CBM2015-00098
`Patent 5,940,510
`____________
`
`PATENT OWNER’S
`REQUEST FOR REHEARING OF DECISION INSTITUTING
`COVERED BUSINESS METHOD PATENT REVIEW
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`

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` Case CBM2015-00098
`Patent 5,940,510
`Attorney Docket No. 150326-001USCBM
`
`TABLE OF CONTENTS
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`
`
`
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`THE DECISION MISAPPREHENDED AIA § 18’S REQUIREMENT
`THAT A CBM PATENT IS “A PATENT THAT CLAIMS A METHOD
`OR CORRESPONDING APPARATUS FOR PERFORMING . . .
`OPERATIONS USED IN THE PRACTICE, ADMINISTRATION, OR
`MANAGEMENT OF A FINANCIAL PRODUCT OR SERVICE”. ................. 3 
`
`A.  The Board Relied On The Specification, Rather Than The Claims. ............ 4 
`
`B.  The Statute Requires That The Patent Claim An Invention
`“For” Operations “Used In . . . Financial Products Or Services,” Not
`Merely “Encompassing” Such Operations. ................................................... 6 
`
`C.  The Board Improperly Rejected The “Technological Invention”
`Exception To Institution Based On Extrinsic Trial Evidence. ................... 12 
`
`1.  The “technological” exception is a threshold determination. .............. 13 
`
`2.  The exception cannot be decided based on trial testimony. ................. 13 
`
`CONCLUSION .................................................................................................. 15 
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` Case CBM2015-00098
`Patent 5,940,510
`Attorney Docket No. 150326-001USCBM
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`TABLE OF AUTHORITIES
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`
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`Cases
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`Achates Reference Publ., Inc. v. Apple Inc., --- F.3d ----, 2015 U.S. App.
`LEXIS 17183 (Fed. Cir. Sep. 30, 2015) ................................................................ 2
`
`Pall Corp. v. Hemasure, Inc., 181 F.3d 1305 (Fed. Cir. 1999) ............................... 11
`
`Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc) ......................... 14
`
`Versata Dev. Group, Inc. v. SAP Am., Inc., 793 F.3d 1306 (Fed. Cir. 2015) ............ 2
`
`Wilson Sporting Goods Co. v. Hillerich & Bradsby Co., 442 F.3d 1322
`(Fed. Cir. 2006) .................................................................................................... 11
`
`Administrative Determinations
`
`Fairchild Semiconductor Corp. v. In-Depth Test LLC, CBM2015-00060,
`Paper 11 (PTAB Aug. 3, 2015) ............................................................................ 11
`
`Liberty Mut. Ins. Co. v. Progressive Cas. Ins. Co., CBM2012-00003,
`Paper 15 (PTAB Feb. 12, 2013)........................................................................... 14
`
`Motorola Mobility LLC v. Intellectual Ventures I LLC, CBM2014-00083,
`Paper 17 (PTAB Aug. 6, 2014) ............................................................................ 15
`
`Sony Corp. of Am. v. Network-1 Techs., CBM2015-00078, Paper 7
`(PTAB Jul. 1, 2015) ........................................................................................ 8, 11
`
`Statutes
`
`Leahy-Smith America Invents Act of 2011, Pub. L. No. 112-29,
`125 Stat. 284, 327, § 14 .....................................................................................8, 9
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`Leahy-Smith America Invents Act of 2011, Pub. L. No. 112-29,
`125 Stat. 284, 327, § 14(a) .............................................................................. 8, 10
`
`Leahy-Smith America Invents Act of 2011, Pub. L. No. 112-29,
`125 Stat. 284, 330, § 18 .............................................................................. 2, 8, 13
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` Case CBM2015-00098
`Patent 5,940,510
`Attorney Docket No. 150326-001USCBM
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`Leahy-Smith America Invents Act of 2011, Pub. L. No. 112-29,
`125 Stat. 284, 330, § 18(a)(1)(E) ......................................................................... 13
`
`Leahy-Smith America Invents Act of 2011, Pub. L. No. 112-29,
`125 Stat. 284, 331, § 18(d)(1) ...................................................................... passim
`
`Regulations and Rulemaking
`
`37 C.F.R. § 42.207(c) ............................................................................................... 14
`
`USPTO Guidance Document, “Tax Strategies Training Examples,”
`www.uspto.gov “Patents Examination Area”
`(http://www.uspto.gov/sites/default/files/aia_implementation/tax-strategies-
`training-examples.pdf) (last visited Oct. 6, 2015) ................................................. 9
`
`USPTO Patent And Trademark Appeal Board, Standard Operating
`Procedure No. 1 (rev. 14) ...................................................................................2, 3
`
`USPTO, Amendments to the Rules of Practice; Proposed Rules, 80 Fed. Reg.
`50,719 et seq. (Aug. 20, 2015) ............................................................................... 2
`
`USPTO, Manual of Patent Examining Procedure
`(9th Ed. Mar. 2014) § 2124.01 ............................................................................... 9
`
`Legislative History
`
`157 Cong. Rec. H4421 (June 22, 2011) (Statement of Rep. Smith) ....................... 10
`
`157 Cong. Rec. S1053, 1053 (Mar. 1, 2011) (Statement of Sen. Schumer)............ 10
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`157 Cong. Rec. S1363 (daily ed. Mar. 8, 2011) (statement of Sen. Schumer) ....... 15
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`EXHIBIT LIST
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`Exhibit 2001
`
`Exhibit 2002
`
`Exhibit 2003
`
` Case CBM2015-00098
`Patent 5,940,510
`Attorney Docket No. 150326-001USCBM
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`Order of Dismissal With Prejudice, Maxim Integrated
`Prods., Inc. v. Navy Fed. Credit Union, Civil Action
`No. 5:14-cv 01032-XR (W.D. Tex. May. 18, 2015)
`
`Confidential Settlement Agreement between Maxim
`Integrated Products and Navy Federal Credit Union
`
`Disclaimer in Patent Under 37 CFR 1.321(a), U.S. Pat.
`No. 5,940,510, cl. 2 (08/594,975 Jun. 19, 2015)
`
`Exhibit 2004
`
`U.S. Patent No. 5,805,702 to Curry et al.
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` Case CBM2015-00098
`Patent 5,940,510
`Attorney Docket No. 150326-001USCBM
`
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`Patent Owner respectfully petitions for rehearing of the Board’s September
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`22, 2015 decision instituting covered business method (“CBM”) patent review.
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`Paper 17 (“Institution Decision,” “Decision” or “ID”).
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`The Decision found that the Petition showed that claim 1 demonstrates that
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`the Patent is a CBM patent, and on that basis found standing for institution of
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`review under the CBM standing statute, AIA § 18(d)(1). ID 8-9.
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`Rehearing is sought based on two errors, each dispositive of CBM standing.
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` First, the ruling misapprehended § 18(d)(1)’s “claims” requirement, by
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`interpreting it to require merely that CBM patents have a claim that
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`“encompasses” operations used in practicing, administering, or managing
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`financial products or services, and specification disclosure that the invention is
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`“intended” for such operations; rather than requiring that it claim, by explicit or
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`implicit claim limitations, an invention for performing such operations.
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` Second, the ruling misapprehended § 18(d)(1)’s “technological inventions”
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`standing exception, effectively nullifying that exception, by rejecting it on the
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`basis of extrinsic trial evidence to which Patent Owner could not fairly respond.
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`“A request for rehearing is an opportunity to address whether a panel
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`misapprehended or overlooked a matter in rendering its opinion, which may
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`include identification of conflicting Board or court decisions[.]” USPTO,
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`1
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` Case CBM2015-00098
`Patent 5,940,510
`Attorney Docket No. 150326-001USCBM
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`to
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`the
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`Rules
`
`of
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`Practice;
`
`Proposed
`
`Rules,
`
`
`Amendments
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`80 Fed. Reg. 50,719, 50,740 (Aug. 20, 2015). The Office has issued many CBM
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`standing decisions that are in striking tension with this Decision. POPR 5-7, 9-12,
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`15-17. It thus appears that “a substantial difference of opinion among judges
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`exists” on the Board with respect to the scope of CBM standing. PTAB Standard
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`Operating Procedure No. 1 (rev. 14) § III-A-2. This Office’s reviewing Court has
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`addressed the scope of CBM standing in only one case, which shed little light on
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`that scope, except to clarify that the determination is reviewable on appeal.
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`Versata Dev. Group, Inc. v. SAP Am., Inc., 793 F.3d 1306, 1319 (Fed. Cir. 2015).
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`Therefore, since the AIA’s passage in 2011, a settled interpretation of § 18’s CBM
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`standing provisions has yet to develop.
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`The scope of statutory standing under § 18 is an important question. It
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`concerns “the fundamental limitation of the Board’s . . . ultimate authority to
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`invalidate only CBM patents in a CBMR proceeding.” Achates Reference Publ.,
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`Inc. v. Apple Inc., --- F.3d ----, 2015 U.S. App. LEXIS 17183, *11-12 (Fed. Cir.
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`Sep. 30, 2015) (citations omitted). Because the decision on institution in this case
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`so clearly turns on how AIA § 18 should be interpreted, it is an appropriate case for
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`the Office to reconcile its past decisions on the subject of CBM standing, and set
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`forth a reasonable, consistent, and supported interpretation of Section 18.
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` Case CBM2015-00098
`Patent 5,940,510
`Attorney Docket No. 150326-001USCBM
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`An expanded panel on rehearing is respectfully suggested. SOP 1 § III-C.
`
`THE DECISION MISAPPREHENDED AIA § 18’S REQUIREMENT THAT
`A CBM PATENT IS “A PATENT THAT CLAIMS A METHOD OR
`CORRESPONDING APPARATUS FOR PERFORMING . . . OPERATIONS
`USED IN THE PRACTICE, ADMINISTRATION, OR MANAGEMENT OF
`A FINANCIAL PRODUCT OR SERVICE”
`
`AIA § 18(d)(1) requires that a CBM patent be “a patent that claims a method
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`or corresponding apparatus for performing . . . operations used in the practice,
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`administration, or management of a financial product or service.” This provision
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`should be interpreted to require that a CBM patent have one or more claims limited
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`to an invention that is, at least, an invention “for performing . . . operations used in
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`the practice, administration, or management of a financial product or service.”
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`Under a valid interpretation, standing is absent. POPR 18-25.
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`The Institution Decision found standing under an unreasonably broad
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`interpretation of this provision. Contrary to the statutory text, and the Office’s
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`positions elsewhere, the Decision interpreted this provision to require only a claim
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`that “encompasses” operations used in the practice, administration, or management
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`of a financial product or service and is described in the specification as “intended”
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`to be used in such operations. ID 9-12. This interpretation, which effectively
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`rewrites the “claims” requirement into a “reads on and mentions” requirement, is
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`unreasonably broad. AIA § 18(d)(1) uses the word “claims” for a reason. It limits
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` Case CBM2015-00098
`Patent 5,940,510
`Attorney Docket No. 150326-001USCBM
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`CBM standing based on what the patent “claims”—not based on unclaimed
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`examples or aspirational intentions in the specification.
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` The Decision’s
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`interpretation would permit the Office to find CBM standing whenever operations
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`used in financial services are mentioned anywhere in the patent, regardless of what
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`the patent claims. If that were so, a claim reciting simply “a ball-point pen” could
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`suffice for CBM standing—so long as the patent specification lauded the use of
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`such pens for bookkeeping, and banks using them were sued for infringement.
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`Such an interpretation is not only inconsistent with other Office determinations; it
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`would be hiding a regulatory elephant in a statutory mousehole, for it would grant
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`the Board CBM jurisdiction over wide swaths of patents bearing no resemblance to
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`conventional “business methods”—like the Patent here, which even the Decision
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`admits has claims laden with “technological” limitations. ID 14; POPR 22, 36-40.
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`A. The Board Relied On The Specification, Rather Than The Claims.
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`In finding standing, the Institution Decision quite candidly finds “that the
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`[P]atent meets the financial product or service requirement . . . as evidenced by the
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`financial embodiments disclosed in the specification.” ID 9.1 It then quotes a
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`series of statements from the written description, which it says “show[] that the
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`system recited in independent claim 1 encompasses financial products and services
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`1 All emphases are added unless otherwise stated.
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` Case CBM2015-00098
`Patent 5,940,510
`Attorney Docket No. 150326-001USCBM
`
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`and is intended to be used for such products and services,” and that “embodiments
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`involving secure financial transactions, including payments and deposits, are the
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`central focus of the specification.” ID 10. During this analysis, the Decision does
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`not quote the claims—either claim 1 or any other. ID 9-10; POPR 6-7, 19. Nor
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`does it specify how the “central focus” of a specification might be determined—or
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`how it can affect what the patent claims if it does not affect the claims’ limitations.
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`The closest the Institution Decision comes to finding anything financial in
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`the claims comes next, when it says that “the relationship between the portions of
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`the specification cited in the Petition and the claim language—particularly the
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`‘system,’ ‘data,’ and ‘first portable module’ of claim 1—is evident from the
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`Petition.” ID 10. And just what is that “relationship”? The Decision explains that
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`[t]he cited portions of the specification, outlined above, make clear
`that the “system for communicating data securely” recited in claim 1
`is intended to be used for secure financial transactions. As part of this
`system, the recited “data” may encompass a cash equivalent or
`monetary value. . . . A claimed system that transfers a cash equivalent
`or monetary value is a financial product, and providing such transfers
`is a financial service.
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`Id. However, a “claimed system” can only be said to “transfer” something if the
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`claims require that it be transferred. Otherwise, that is merely unclaimed
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`additional activity. Patent Owner could agree with the Board’s last sentence
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` Case CBM2015-00098
`Patent 5,940,510
`Attorney Docket No. 150326-001USCBM
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`quoted above if the claims contained limitations limiting the invention to being
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`“used for secure financial transactions,” or requiring that the recited “data”
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`“encompass ‘a cash equivalent or monetary value.’” Such limitations would make
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`the claim that “claims [an invention] for . . . operations used in the practice,
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`administration, or management of a financial products or service,” just as AIA
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`§ 18(d)(1) requires. However, the Board never even purports to construe claim 1
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`to have any such limitations. And it does not have any. POPR 19-25.2
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`B.
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`The Statute Requires That The Patent Claim An Invention “For”
`Operations “Used In . . . Financial Products And Services,” Not
`Merely “Encompassing” Such Operations.
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`The Institution Decision recognizes that it has not identified any financial
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`limitations in claim 1. ID 11. Nevertheless, it finds CBM standing, by announcing
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`that it is interpreting AIA § 18(d)(1) to not require any such claim limitations.
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`The Decision holds that it would “overstate the financial product or service
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`requirement” of AIA § 18(d)(1) to require that the claims be “limited to,
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`specifically directed to, or specific to financial products or services.” Id. Instead:
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`2 To be sure, had the Board construed the claims to have such implicit
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`financial limitations, it would have had to address Patent Owner’s explanations and
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`evidence of why any such constructions would have been erroneous. Id.
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` Case CBM2015-00098
`Patent 5,940,510
`Attorney Docket No. 150326-001USCBM
`
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`[t]o satisfy the definition of a covered business method patent in
`§ 18(d)(1) of the AIA, the patent need only “claim[] 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). Thus, the express
`statutory language does not mandate that a claim be specific or limited
`to a financial product or service. Instead, it requires only that a claim
`be “used in the practice, administration, or management” of such a
`product or service.
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`Id. (emphasis by Board). In an attempt to support this surprising interpretation, the
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`Decision points to statements by individual Senators in the AIA legislative history,
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`which it says “indicate[] that to meet the [CBM standing] requirement, the patent
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`must be ‘intended to be used in the practice, administration, or management of
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`financial services or products,’ but ‘need not recite a specific financial product or
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`service’” and may “‘encompass not only patents claiming the financial product or
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`service itself, but also patents claiming activities that are financial in nature,
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`incidental to a financial activity or complementary to a financial activity.’” Id. at
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`11 (citations and internal markings omitted) (quoting Sens. Schumer and Leahy).
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`This interpretation of AIA § 18(d)(1) is unreasonably broad. As already
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`noted, under this interpretation a claim to “a ball-point pen” can straightforwardly
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`suffice to generate CBM standing, so long as the patent specification lauds the use
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` Case CBM2015-00098
`Patent 5,940,510
`Attorney Docket No. 150326-001USCBM
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`of such pens for bookkeeping (and banks using them have been sued). See POPR
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`22. In another CBM case, in a decision filed just days after Patent Owner filed its
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`POPR here, the Board squarely rejected just such a broad interpretation of AIA
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`§ 18(d)(1), noting that it “would mean that any patent claiming something that can
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`be used in connection with a financial service (e.g., an Ethernet cable, a generic
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`computer monitor, or even a ballpoint pen) would be eligible for covered business
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`method patent review, regardless of what the patent claims,” and insisting instead
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`that “language [in the claims] relating to a financial product or service” is required.
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`Sony Corp. of Am. v. Network-1 Techs., CBM2015-00078, Paper 7 (PTAB Jul. 1,
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`2015), at 9, 12. That decision is in close accord many other earlier Board
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`decisions, which have also insisted that CBM standing must rest on the language of
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`the claims. POPR 5-7, 9-12, 15-17 (quoting numerous Board decisions).
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`This interpretation does not merely contradict earlier Board interpretations
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`of AIA § 18. It also bears no resemblance to Office interpretations of other,
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`similar AIA provisions—in particular AIA § 14, which limits the patentability of
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`tax preparation methods. AIA § 14(a) specifies that “any strategy for reducing,
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`avoiding, or deferring tax liability . . . shall be deemed insufficient to differentiate
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`a claimed invention from the prior art.” It is instructive to see how the Office has
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`interpreted AIA § 14(a)’s requirement that a tax strategy patent is one claiming a
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` Case CBM2015-00098
`Patent 5,940,510
`Attorney Docket No. 150326-001USCBM
`
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`“strategy for reducing, avoiding, or deferring tax liability,” for it stands in sharp
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`contrast to the Decision’s interpretation of the provisions of AIA § 18(d)(1).
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`When it applies AIA § 14, the Office determines whether a claim is a tax
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`strategy claim by looking to the claims’ recited limitations. The Office instructs
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`examiners to apply § 14 by “[i]dentify[ing] any limitations relating to a tax
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`strategy,” and that such “claim limitations directed to a tax strategy should not be
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`given patentable weight.” M.P.E.P. § 2124.01. Its official training guide reads:
`
`Issues under Section 14 arise where the claim recites a plan for
`reducing, avoiding, or deferring a tax liability. The determination of
`whether a tax strategy is involved is not only a claim-by-claim
`analysis, but also a limitation-by-limitation analysis . . . . [If a]
`determining step does not explicitly or inherently require the
`performance of any action towards reducing, avoiding, or deterring
`tax liability, the determining step would not be considered to be
`within the prior art per Section 14. . . . [If] no limitations in the claim
`are directed to a tax strategy for reducing, avoiding or deferring a tax
`liability as no steps are taken that explicitly or implicitly change any
`such liability, . . . the method does not limit the use of any tax
`strategy by any taxpayer or tax advisor and Sec. 14 does not apply.
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`USPTO Guidance Document,
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`“Tax Strategies Training Examples,”
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`www.uspto.gov “Patents Examination Area” (last visited Oct. 6, 2015). Thus,
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`under AIA § 14, the Office determines whether a patent claims a strategy “for
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` Case CBM2015-00098
`Patent 5,940,510
`Attorney Docket No. 150326-001USCBM
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`reducing, avoiding or deferring a tax liability” based on the claim’s limitations that
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`“require” such actions—not based on whether the claims “encompass” such
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`actions, or the specification has a “focus” on such actions, or the invention is
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`“intended” for such actions. In other words, the Office’s interpretation of claimed
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`“strategies for” affecting liability under AIA § 14(a) contrasts sharply with the
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`Institution Decision’s interpretation of the “claims” requirement of § 18(d)(1).
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`As for the legislative history, these statements of individual Senators must
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`be weighed in balance with other legislative assurances—including statements by
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`the same Senators—that the scope of the CBM statute was narrow. E.g., 157
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`Cong. Rec. S1053, 1053 (Mar. 1, 2011) (Statement of Sen. Schumer) (“In response
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`to concerns that earlier versions of the [CBM] amendment were too broad, we have
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`modified it so it is narrowly targeted. We want to make sure to capture the
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`business method patents which are at the heart of the problem and avoid any
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`collateral circumstances.”); 157 Cong. Rec. H4421 (June 22, 2011) (Statement of
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`Rep. Smith) (CBM statute is “a pilot program to review a limited group of
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`business method patents”). Even taken literally, the legislative history cited by the
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`Decision would still require that the patent “claim”—not merely “encompass”—
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`incidental or complementary activities. See POPR 6, 48. And once again, in other
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`cases the Board has interpreted the legislative history very differently. See Sony,
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` Case CBM2015-00098
`Patent 5,940,510
`Attorney Docket No. 150326-001USCBM
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`CBM2015-00078, Paper 7 at 12; Fairchild Semiconductor Corp. v. In-Depth Test
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`LLC, CBM2015-00060, Paper 11 (PTAB Aug. 3, 2015) at 9 (same).
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`Finally, the Board cites “Patent Owner’s assertion of the [Patent] against
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`numerous financial institutions and banks” as “a factor weighing in favor of a
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`conclusion that the [Patent] is ‘used in’ financial products or services.” ID 12.
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`Again, Patent Owner would agree—but only if such evidence supported a
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`construction of the claims to include financial limitations. “Although the
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`construction of the claim is independent of the device charged with infringement,”
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`Pall Corp. v. Hemasure, Inc., 181 F.3d 1305, 1308 (Fed. Cir. 1999), “knowledge
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`of [the accused] product or process provides meaningful context for . . . claim
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`construction,” Wilson Sporting Goods Co. v. Hillerich & Bradsby Co.,
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`442 F.3d 1322, 1326 (Fed. Cir. 2006). But although the Patent has been asserted
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`against banks’ activities, the Board “may not use the accused product or process as
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`a form of extrinsic evidence to supply limitations for patent claim language.”
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`Wilson, 442. F.3d at 1331. Moreover, once more the Institution Decision is
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`inconsistent with other Board decisions, which have squarely rejected the argument
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`that the assertion of generally-applicable claims against financial operations can
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`transform a patent into a CBMP. POPR 15.
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` Case CBM2015-00098
`Patent 5,940,510
`Attorney Docket No. 150326-001USCBM
`
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`A reasonable interpretation of AIA § 18(d)(1) would require that the patent
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`have a claim with limitations restricting it to a method or corresponding apparatus
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`for performing data processing or other operations used in the practice,
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`administration, or management of a financial product or service—not merely that
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`its scope encompass such an invention. And litigation activity should not affect
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`CBM standing except as it affects how the claims must be construed.
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`C. The Board Improperly Rejected The “Technological Invention”
`Exception To Institution Based On Extrinsic Trial Evidence.
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`The Institution Decision adopts Petitioner’s position that the Patent is not a
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`“patent[] for technological inventions,” which is a category of patents expressly
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`“except[ed]” from CBM standing under AIA § 18(d)(1). ID 13-17. The Decision
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`holds that “at this stage,” Petitioners’ “showing” is sufficiently “supported by”
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`“testimony from Dr. Alexander,” Petitioner’s expert declarant. ID 13-16.
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`The Board misapprehends this exception. It is unreasonable to interpret an
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`express exception to institution to depend on a record to be developed at trial.
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`Moreover, Patent Owner was barred from submitting its own testimony and had no
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`right to cross-examine Petitioners’ expert. Thus, rejecting this exception based on
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`Dr. Alexander’s testimony was unreasonable, as well as unfair. POPR 32.
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`12
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`

`
` Case CBM2015-00098
`Patent 5,940,510
`Attorney Docket No. 150326-001USCBM
`
`1.
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`The “technological” exception is a threshold determination.
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`
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`The Decision inexplicably asserts that the “technological” exception does
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`not bar institution “on this record” and “at this stage of the proceeding.” ID 13, 16.
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`This fundamentally misapprehends the exception. AIA § 18(a)(1)(E) says that
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`“[t]he Director may institute a transitional proceeding only for a patent that is a
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`covered business method patent.” AIA § 18(d)(1) grants “patents for technological
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`inventions” an express “except[ion]” from such “institut[ion].” Therefore, the
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`determination in the Institution Decision whether or not the technological
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`exception applies cannot ordinarily be made on an “at that stage” basis, awaiting
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`further development of the record. If that were so, AIA § 18’s express
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`“except[ion]” of “technological inventions” from “institution” would not be an
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`exception to institution. It would be just another question to be developed at trial.
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`2.
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`The exception cannot be decided based on trial testimony.
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`The Decision’s process in rejecting the technological exception was
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`fundamentally improper for a second reason. In determining that the exception did
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`not apply, the Decision relied heavily on the expert testimony submitted with the
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`Petition. Such expert testimony is paradigmatic “extrinsic evidence . . . generated
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`at the time of and for the purpose of litigation” that “can suffer from bias that is not
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`present in intrinsic evidence” and is a particular poor basis for ascertaining the
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`13
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`

`
` Case CBM2015-00098
`Patent 5,940,510
`Attorney Docket No. 150326-001USCBM
`
`
`scope of the patent when “the expert’s opinion is offered in a form that is not
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`subject to cross-examination.” Phillips v. AWH Corp., 415 F.3d 1303, 1318
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`(Fed. Cir. 2005) (en banc). Yet at the time of the Institution Decision, that was
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`exactly the situation with respect to this testimony. Before institution, patent
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`owners have no right to cross-examine Petitioner’s expert, and are barred from
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`submitting rebuttal testimony. 37 C.F.R. § 42.207(c). For these reasons, it would
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`be fundamentally inappropriate for the Board to rely upon petitioners’ litigation
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`testimony to reject the “technological” exception to institution. POPR 32.
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`Yet that is exactly what the Institution Decision did. In finding that the
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`technological invention exception did not apply, and rejecting Patent Owner’s
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`arguments that it did, the Decision relied heavily on Dr. Alexander. In fact, in its
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`four pages of analysis the Decision cites Dr. Alexander’s testimony twenty-one
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`times. This reliance on his testimony, when Patent Owner could not submit its
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`own testimony and had no right of cross-examination, was manifestly unfair.
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`The technological-invention exception should be interpreted to turn, not on
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`untestable, asymmetric, preliminary extrinsic evidence, but on the intrinsic
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`evidence of whether the Office determined at the time of issuance that the claims’
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`novelty turned on a technological innovation. That is the process suggested by
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`numerous other Board decisions. See, e.g., Liberty Mut. Ins. Co. v. Progressive
`
`
`
`14
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`
`
`

`
` Case CBM2015-00098
`Patent 5,940,510
`Attorney Docket No. 150326-001USCBM
`
`
`Cas. Ins. Co., CBM2012-00003, Paper 15 (PTAB Feb. 12, 2013) at 11-14;
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`Motorola Mobility LLC v. Intellectual Ventures I LLC, CBM2014-00083, Paper 17
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`(PTAB Aug. 6, 2014) at 4-5. And it is the process supported by the legislative
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`history. See 157 Cong. Rec. S1363, S1364 (daily ed. Mar. 8, 2011) (statement of
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`Sen. Schumer) (indicating that test for when a patent is for a technology invention
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`should be whether the Examiner’s determination of novelty for the claims
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`“turn[ed] on a technological innovation over the prior art”).
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`In any event, under a reasonable interpretation of the technological
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`exception, and a fair process for deciding the question, Petitioners’ rudimentary
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`attempts to show that it does not apply were clearly insufficient. POPR 33-41.
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`For the above reasons, the Board should grant rehearing and find that the
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`“technological” exception to CBM institution was not shown to be inapplicable.
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`CONCLUSION
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`The Institution Decision’s interpretation of the CBM standing statute, AIA
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`§ 18(d)(1), would gut both its “claim[ing]” requirement and its “technological”
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`exception and goes further than the statute fairly allows. Rehearing should be
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`granted to address the appropriate interpretation of CBM standing requirements.
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`Date: October 6, 2015
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` Respectfully submitted,
`______/Kenneth J. Weatherwax/_______
`Kenneth J. Weatherwax, Reg. No. 54,528
` Lowenstein & Weatherwax LLP
`15