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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`EBAY INC. AND
`PAYPAL, INC.,
`Petitioners,
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`v.
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`XPRT VENTURES, LLC,
`Patent Owner
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`Case CBM No. 2017-00024
`U.S. Patent No. 7,610,244
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`PETITIONERS’ REPLY TO PATENT OWNER’S RESPONSE
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`Mail Stop “PATENT BOARD”
`Patent Trial and Appeal Board
`U.S. Patent and Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
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`I.
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`II.
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`TABLE OF CONTENTS
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`Page
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`INTRODUCTION .......................................................................................... 1
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`THE CHALLENGED CLAIMS ARE CBM CLAIMS .................................. 2
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`III. THE CHALLENGED CLAIMS DO NOT RECITE PATENT
`ELIGIBLE SUBJECT MATTER .................................................................... 4
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`IV. CONCLUSION ................................................................................................ 7
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`i
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`TABLE OF AUTHORITIES
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`Page(s)
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`Cases
`Alice Corp. Pty. Ltd. v. CLS Bank Intern.,
`134 S. Ct. 2347 (2014) .................................................................................. 4, 5, 6
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`Chicago Mercantile Exchange, Inc. v. 5th Market, Inc.,
`CBM2013-00027, 2013 WL 8538874 (PTAB Dec. 18, 2013) .............................. 3
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`Google Inc. v. Performance Price Holdings, LLC,
`CBM2016-00049, 2016 WL 5787365 (PTAB Sep. 21, 2016) .............................. 3
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`Icon Health & Fitness, Inc. v. Strava, Inc.,
`849 F.3d 1034 (Fed. Cir. 2017) .............................................................................. 6
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`MCM Portfolio LLC v. Hewlett-Packard Co.,
`812 F.3d 1284 (Fed. Cir. 2015) .............................................................................. 1
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`Oil States Energy Servs., LLC v. Green’s Energy Group, LLC,
`No. 16-712 .............................................................................................................. 1
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`SightSound Techs. LLC v. Apple Inc.,
`809 F.3d 1307 (Fed. Cir. 2015) .............................................................................. 3
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`Thunder Basin Coal Co. v. Reich,
`510 U.S. 200 (1994) ............................................................................................... 1
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`Statutes and Regulations
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`35 U.S.C. § 101 ......................................................................................................5, 7
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`35 U.S.C. § 102 .......................................................................................................... 2
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`35 U.S.C. § 103 .......................................................................................................... 2
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`ii
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`I.
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`INTRODUCTION
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`Rather than responding substantively to the instituted invalidity grounds set
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`forth in the Petition, Patent Owner devotes nearly all of its Patent Owner Response
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`to attacking the constitutionality of the AIA’s post-grant review system. This
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`argument was previously addressed by the Federal Circuit, see, e.g., MCM
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`Portfolio LLC v. Hewlett-Packard Co., 812 F.3d 1284, 1293 (Fed. Cir. 2015), is
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`already pending before the United States Supreme Court in Oil States Energy
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`Servs., LLC v. Green’s Energy Group, LLC, No. 16-712, and in any case, would
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`not be within the Board’s statutory authority to adjudicate. See, e.g., Thunder
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`Basin Coal Co. v. Reich, 510 U.S. 200, 215 (1994) (“[a]djudication of the
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`constitutionality of congressional enactments has generally been thought beyond
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`the jurisdiction of administrative agencies”). As such, Petitioners do not address
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`these arguments in this Reply, but reserve all rights to make rebuttal arguments
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`should Patent Owner renew its constitutional argument on appeal.
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`Patent Owner’s only challenges to the grounds consist of unsupported,
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`conclusory assertions that the challenged claims are not CBM claims and are
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`patent eligible. For the reasons set forth below, Patent Owner’s assertions are
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`without merit, and the Board should find the challenged claims unpatentable.
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`1
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`II. THE CHALLENGED CLAIMS ARE CBM CLAIMS
`As set forth in Section IV of the Petition, challenged claims 1, 2, 15, 19,
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`20, 34, 40, 47, 48, 52 and 53 are directed to a covered business method and not
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`a technological invention. Patent Owner raises two arguments in its Response:
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`(1) that the Examiner’s decision to allow the claims demonstrates that they are
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`directed to novel and unobvious technological inventions (Patent Owner
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`Response at 7-9); and (2) that the claims allegedly provide technological
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`solutions to the drawbacks of prior art systems set forth in the patent
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`specification (id.). Both of these arguments are without merit.
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`Patent Owner’s first argument is patently unsound on its face. The
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`Board and the courts routinely invalidate patent claims that were previously
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`allowed by an examiner; indeed, the only patent claims that are eligible for
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`review in inter partes review, CBM review, post-grant review proceedings, or
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`federal court litigation are claims of issued patents. If an Examiner’s decision
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`to issue a challenged claim were dispositive of whether the claim is novel and
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`nonobvious, then no claim in an issued patent would ever be eligible for CBM
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`review, nor would the Board ever find an issued claim unpatentable as anticipated
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`or obvious under § 102 or § 103.
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`Patent Owner’s second argument similarly does not withstand scrutiny.
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`Patent Owner cites the patent’s description of purported drawbacks of prior art
`2
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`payment systems and methods, and concludes, without more, that “the subject
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`matter of the challenged claims provide technological solutions to the drawbacks
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`set forth in the specification and/or recite patentable technological features.”
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`Patent Owner Response at 8-9. As Petitioners explained in the Petition, the claims
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`merely recite a generic “computing device” in an “electronic auction system” that
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`is “linked” to a plurality of “payment accounts” to carry out the well-known
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`financial practices recited in the patent without in any way arranging these
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`conventional elements to provide a technical solution to the purported drawbacks.
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`See Petition at 7-10; Ex.1005 at ¶¶ 17-23. To point, Patent Owner does not
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`provide any evidence or analysis that establishes how the challenged claims
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`purportedly address these drawbacks in a “technological” way. It is well-
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`established that using generic computer technology to perform known financial
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`practices, without more, recites neither a novel and unobvious technical feature nor
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`a technical solution that solves a technical problem. See, e.g., SightSound Techs.
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`LLC v. Apple Inc., 809 F.3d 1307, 1315 (Fed. Cir. 2015); Google Inc. v.
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`Performance Price Holdings, LLC, CBM2016-00049, 2016 WL 5787365, at *5
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`(PTAB Sep. 21, 2016); Chicago Mercantile Exchange, Inc. v. 5th Market, Inc.,
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`CBM2013-00027, 2013 WL 8538874 at *5 (PTAB Dec. 18, 2013).
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`Accordingly, Petitioners have demonstrated that the challenged claims are
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`CBM claims.
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`3
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`III. THE CHALLENGED CLAIMS DO NOT RECITE PATENT
`ELIGIBLE SUBJECT MATTER
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`Patent Owner’s arguments regarding the patent-eligibility of the challenged
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`claims are similarly conclusory and lacking in evidentiary support.
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`Patent Owner first asserts that the challenged claims are directed to payment
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`systems and methods, and that the Patent Office has issued other patents directed
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`to payment systems and methods. Patent Owner Response at 5-6. The fact that
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`some payment systems and methods are patent-eligible, however, does not
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`demonstrate that Patent Owner’s claims are patent-eligible. Indeed, as set forth in
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`the Petition, the challenged claims here fail both prongs of the Alice test. Patent
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`Owner has provided no evidence that the claims at issue here—which were
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`allowed nearly 5 years prior to the Supreme Court’s landmark decision in Alice—
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`bear any similarity to any claims of the patents that Patent Owner identified in the
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`Patent Owner Response other than that the patents are related to payment systems.
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`Patent Owner’s highly abstracted analysis, lacking any consideration of the
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`specifics, is not sufficient to demonstrate the patentability of the challenged claims.
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`4
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`At Step 1 of the Alice test1, Patent Owner makes no attempt to rebut the
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`Petition’s showing that the challenged claims are directed to the fundamental
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`economic concepts of making payments in electronic auctions by debiting from a
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`previously-funded payment account, and providing a loan to a person with
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`insufficient funds in his or her payment account. Patent Owner’s only argument
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`with respect to Alice Step 1 is a conclusory statement that “the challenged claims
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`are not directed to a law of nature, natural phenomenon or abstract idea based on
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`the 2014 Guidance, the 2016 update, and recent Federal Circuit opinions, see, e.g.,
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`Enfish and McRO.” Patent Owner Response at 7. Patent Owner provides no
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`evidence, expert testimony, or other analysis to support this bare assertion, which
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`1 Patent Owner refers to Alice Step 1 as “Step 2(a)” and Alice Step 2 as “Step 2(b)”
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`To avoid confusion, Petitioners use the numbering set forth in the Petition, which
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`is based on the Supreme Court’s formulation of the standard:
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`The Supreme Court has held that a claim falls outside of § 101 where
`(1) it is directed to a patent-ineligible concept, i.e., a law of nature,
`natural phenomenon, or abstract idea, and (2), if so, the particular
`elements of the claim, considered both individually and as an ordered
`combination, do not add enough to transform the nature of the claim
`into a patent-eligible application. Alice, 134 S. Ct. at 2355. Petition at
`22.
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`5
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`by itself is not evidence. See Icon Health & Fitness, Inc. v. Strava, Inc., 849 F.3d
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`1034, 1043 (Fed. Cir. 2017). This unsupported attorney argument cannot rebut the
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`Petition’s clear showing, supported by qualified expert testimony and cited
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`evidence, that the challenged claims recite abstract ideas and are distinguishable
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`from the claims in Enfish and McRO because the claims here merely recite generic
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`computer components that are used as tools to implement a patent-ineligible
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`economic practice. See Petition at 28-33; Ex.1005 at ¶¶ 17-23. Accordingly,
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`Patent Owner has failed to rebut Petitioners’ showing that the challenged claims
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`fail Step 1 of the Alice test.
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`As to Alice Step 2, Patent Owner makes no argument at all, essentially
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`conceding that the claims rise or fall based upon the resolution of Alice Step 1. See
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`Patent Owner Response at 7 (“The Patent Owner respectfully submits that the
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`challenged claims are not directed to a law of nature, natural phenomenon, or
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`abstract idea . . . . Therefore, the claims do not require further analysis of whether
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`they recite significantly more than a judicial exception”). As set forth above, the
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`challenged claims clearly recite an abstract idea, which is not patentable under
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`Alice Step 1. Moreover, as set forth in limitation-by-limitation detail in the
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`Petition and supported by Petitioners’ expert, Dr. Neuman, and the prior art, the
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`claim elements—whether individually or as an ordered combination—do not recite
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`6
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`an “inventive concept” sufficient to transform the abstract idea into patent-eligible
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`subject matter. See Petition at 33-76; Ex.1005 at ¶¶ 24-104.
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`Accordingly, Petitioners have demonstrated by a preponderance of the
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`evidence that the challenged claims are unpatentable under § 101.
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`IV. CONCLUSION
`For the reasons set forth above and in the Petition, Petitioners respectfully
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`request that the Board cancel challenged claims 1, 2, 15 ,19, 20, 34, 40, 47, 48,
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`52 and 53 as unpatentable under 35 U.S.C. § 101.
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`7
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`Dated: January 25, 2017
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`Respectfully submitted
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`By: /s/ Adrian Percer
`Adrian Percer
`Lead Counsel for Petitioners
`Registration No. 46,986
`Weil, Gotshal & Manges LLP
`201 Redwood Shores Parkway
`Redwood Shores, CA 94065
`Telephone: 650-802-3000
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`8
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`CERTIFICATE OF COMPLIANCE
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`1.
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`The undersigned certifies that this brief complies with the type
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`volume limitations of 37 CFR § 42.24(a)(1)(i). This brief contains 1,388 words
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`(excluding the table of contents, the table of authorities, mandatory notices under
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`37 CFR § 42.8, the certificate of service, certificate of compliance, and appendix of
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`exhibits), as calculated by the “Word Count” feature of Microsoft Word 2010, the
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`word processing program used to create it.
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`2.
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`The undersigned further certifies that this brief complies with the
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`typeface requirements of 37 CFR § 42.6(a)(2)(ii) and typestyle requirements of
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`37 CFR § 42.6(a)(2)(iii). This brief has been prepared in a proportionally spaced
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`typeface using Microsoft Word 2010 in Times New Roman 14 point font.
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`Dated: January 25, 2017
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`Respectfully submitted,
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`WEIL, GOTSHAL AND MANGES LLP
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`
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`By: /s/ Adrian Percer
`Adrian Percer
`Lead Counsel for Petitioners
`Registration No. 46,986
`Weil, Gotshal & Manges LLP
`201 Redwood Shores Parkway
`Redwood Shores, CA 94065
`Telephone: 650-802-3000
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`9
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`CERTIFICATE OF SERVICE
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`The undersigned certifies, in accordance with [37 C.F.R. § 42.6(e) and
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`§ 42.105(a)], that service was made on the Patent Owner as detailed below.
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`Date of service
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`January 25, 2017
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`Manner of service
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`EXPRESS MAIL
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`Documents served
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`Petitioners’ Reply To Patent Owner’s Response
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`Persons served
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`Patent Owner’s Address of Record:
`George Likourezos, Esq.
`261 Washington Ave.
`St. James NY 11780
`g.likourezos@verizon.net
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`Dated: January 25, 2017
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` /s/ Adrian Percer
`Adrian Percer
`Lead Counsel for Petitioners
`Registration No. 46,986
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`10
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