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`IPR2015- 01264, Paper No. 41
`IPR2015- 01268, Paper No. 43
`IPR2015- 01269, Paper No. 41
`IPR2015- 01319, Paper No. 41
`IPR2015- 01321, Paper No. 41
`IPR2015- 01325, Paper No. 41
`September 12, 2016
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`RECORD OF ORAL HEARING
`UNITED STATES PATENT AND TRADEMARK OFFICE
`- - - - - -
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`- - - - - -
`BUNGIE, INC.,
`Petitioner,
`
`vs.
`
`WORLDS INC.,
`Patent Owner.
`- - - - - -
`Case IPR2015-01264 (Patent 7,945,856)
`Case IPR2015-01268 (Patent 7,181,690)
`Case IPR2015-01269 (Patent 7,493,558)
`Case IPR2015-01319 (Patent 8,082,501)
`Case IPR2015-01321 (Patent 8,145,998)
`Case IPR2015-01325 (Patent 8,145,998)
`
`
`
`BEFORE: KARL D. EASTHOM, KERRY BEGLEY, and
`JASON J. CHUNG, Administrative Patent Judges.
`
`The above-entitled matter came on for hearing on Wednesday,
`August 17, 2016, at 10:00 a.m., Hearing Room A, taken at the U.S. Patent
`and Trademark Office, 600 Dulany Street, Alexandria, Virginia.
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`REPORTED BY: RAYMOND G. BRYNTESON, RMR,
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`CRR, RDR
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`APPEARANCES:
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`ON BEHALF OF THE PETITIONER:
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`ON BEHALF OF THE PATENT OWNER:
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`WAYNE HELGE, ESQ.
`ALAN A. WRIGHT, ESQ.
`Davidson Berquist Jackson & Gowdey, LLP
`8300 Greensboro Drive
`Suite 500
`McLean, Virginia 22102
`571-765-7700
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`MICHAEL T. ROSATO, ESQ.
`ANDREW S. BROWN, ESQ.
`Wilson Sonsini Goodrich & Rosati, P.C.
`701 Fifth Avenue, Suite 5100
`Seattle, Washington 98104-7036
`206-883-2500
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`MATTHEW A. ARGENTI, ESQ.
`Wilson Sonsini Goodrich & Rosati, P.C.
`650 Page Mill Road
`Palo Alto, California 94304-1050
`650-493-9300
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`Case Nos. IPR2015-01264, 01268, 01269, 01319, 01321, and 01325
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`P R O C E E D I N G S
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`
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`(10:00 a.m.)
`JUDGE CHUNG: Please be seated. This is the
`hearing for IPR2015- 01264, 01268, 01269, 01319, 01321 and
`01325.
`
`Who do we have for Petitioner?
`MR. ROSATO: Thank you, Your Honor. Michael
`Rosato for Petitioner. I have at counsel table with me
`Mr. Argenti as well as Mr. Brown, who are both co-counsel in
`this case.
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`JUDGE CHUNG: Who do we have for Patent
`
`Owner?
`
`MR. HELGE: Good morning, Your Honor. Wayne
`Helge here for Patent Owner, Worlds Inc. At my table here I
`have Alan Wright, who is not attorney of record, he will not
`be presenting this morning, but he is here from my firm.
`JUDGE CHUNG: Each side will have two and a
`half hours to present their arguments. Petitioner can reserve
`rebuttal time.
`Would the Petitioner like to reserve any rebuttal
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`time?
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`MR. ROSATO: Yes, we would, Your Honor. I
`will reserve an hour as of now.
`JUDGE CHUNG: An hour rebuttal time?
`MR. ROSATO: Yes.
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`JUDGE CHUNG: Okay. At the conclusion of
`Petitioner's presentation, not including their rebuttal time, we
`will take a break for lunch.
`At this time the Panel also respectfully requests
`each party to speak clearly into the microphone. One of the
`Panel members is sitting remotely. And when discussing the
`slides, please refer to the slide number and, last but not least,
`I would like to introduce the Panel members.
`With me today are Judges Karl Easthom and Kerry
`Begley, and myself, Jason Chung.
`And I would also like to add that if any of the
`parties would like to have -- would like to get up in the
`middle of the presentation to use the facilities, please do so
`quietly at around 11 o'clock to minimize disturbances.
`At this time Petitioner may proceed.
`MR. ARGENTI: May I approach?
`JUDGE CHUNG: You may.
`MR. ROSATO: As a housecleaning issue, Your
`Honor, would the Panel prefer any objections made during the
`hearing be held in reserve until the end or during the
`presentation? I have had panels request the former, but just a
`question.
`
`JUDGE CHUNG: If I understand your question
`correctly, you are asking whether or not to reserve objections
`until the end or --
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`MR. ROSATO: Exactly, just so counsel is not -- I
`wouldn't want to interrupt counsel. I'm happy to wait until
`the end of their speaking to note any objections that may
`arise. If that's acceptable to the Panel, I will take that
`approach.
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`JUDGE CHUNG: I would prefer not to have
`objections during the proceedings.
`MR. ROSATO: I would, too, Your Honor, but if
`any come up.
`JUDGE CHUNG: Okay.
`MR. ROSATO: Okay. Well, as an initial matter
`before we get started I just want to thank both the Panel and
`the Patent Owner for their time today and throughout this
`proceeding.
`I'm going to be referring to the demonstrative
`exhibits. And in order to try to address the issues, primarily
`address the issues that are in dispute between the parties, I
`may move among the slide deck and, Judge Begley, I will
`make a point of referencing the slides so it is easy for you to
`follow along.
`I'm going to start with reference to slide 2. And
`as everyone knows, there are five patents being challenged
`here, six IPRs. The identification of those patents, the IPR
`docket numbers and the corresponding instituted grounds of
`challenge are presented in the slides at slides 2 through 6.
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`And as I indicated, there is some measure of
`efficiency. There is a fair degree of overlap in the content,
`the claim content and the issues in dispute, such that I plan to
`address some particular items subject, of course, to questions
`from the Panel.
`The approach I'm going to take just for an
`overview is first to provide a brief overview of the subject
`matter of the patents and then briefly address the two primary
`references of Funkhouser and Durward, and then move to
`focus on the issues that appear to be primarily in dispute
`between the parties.
`These include addressing the meaning of the
`so-called determining steps of the challenged claims, also
`addressing the meaning of the claim term avatar, as well as
`the different claim term three-dimensional avatar.
`And we will have a discussion of how those
`different claim constructions may affect the prior art
`application, if at all. We will also address Patent Owner's
`attempt to swear behind the Funkhouser reference.
`And finally there is some miscellaneous issues that
`will be addressed with regard to the dependent claims.
`I will jump to slide 7, starting with a brief
`overview of the challenged claims. Each of the challenged
`patents shares an identical specification and each patent
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`issued from a continuation application following from a
`common initial application.
`As far as content is concerned, the patents are
`directed to interaction between users in a virtual world. And
`management of the data in that virtual world includes two
`main aspects. First, a server process receives positional
`information updates regarding users present in the virtual
`world and sends positional updates to individual client
`computers.
`Second, as stated in the abstract of the patent, the
`user can execute a client process to view the virtual world
`from the perspective of the user. Such a view or perspective
`is determined taking into account positional updates received
`from the server. And such client processing can include, of
`course, a field of view determination.
`Slide 8.
`JUDGE BEGLEY: Before you switch that slide, I
`just have a question that relates to the field of view
`determination.
`In the patent at issue here, you haven't discussed N
`and N prime yet, but if N and N prime are greater than the
`avatars in a particular avatar's field of view, does the
`rendering engine show only the avatars in the viewpoint of the
`avatar?
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`MR. ROSATO: So we are absolutely going to talk
`about the claim construction issue, Your Honor, with regard to
`the determining step. And the construction that we advanced,
`and we think is appropriate, is that the broad and generic term
`of determining would encompass a field of view
`determination. It would also encompass this N, N prime,
`so-called client side crowd control.
`I believe that that is -- I will have to go look at
`that in the specification -- but I believe it is described as
`separate from the field of view determination.
`JUDGE BEGLEY: That wasn't the question,
`though. If those variables N and N prime are higher than what
`is in view, what does the rendering engine show?
`What shows to the avatar? Is it N and N prime,
`that many avatars, or is it only those that are in the field -- in
`the viewpoint of the avatar?
`MR. ROSATO: I see. So what shows is what is in
`the viewpoint of the avatar.
`JUDGE BEGLEY: Okay. Do you have any
`support in the specification for that?
`MR. ROSATO: I mean, I can look for it. I
`remember the provision where the N, N prime embodiment is
`discussed. It doesn't make sense that this pre-rendering, if it
`is a pre-rendering step that, you know, a limitation of the
`number of avatars that can be displayed is only -- it would
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`make sense that it would be separate from a pure field of view
`determination.
`But I would have to look at that disclosure. I will
`take another look at it and follow up with that.
`And my understanding, we will get to this, but to
`follow-up on that, my understanding from the Patent Owner's
`argument is that they are arguing that those two things are
`separate. At the end of the day, our position is that both of
`those processes would fall within the scope of the
`determining.
`So at the end of the day, I don't believe that the
`distinction impacts our application of the prior art but,
`nevertheless, I will take another look at that and make sure I
`follow up with you on it.
`JUDGE BEGLEY: Thank you.
`MR. ROSATO: Okay. So we are on slide 8. And
`this illustrates claim 1, which is a representative claim of the
`'856 patent. And as is common with many of the claims of the
`challenged patents, these claims recite the central concept of
`the patents.
`That central concept is represented by step A,
`including the step of server filtering by which the server
`filters information sent to a client so the client will receive
`positional information on a subset of users in the virtual
`world.
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`And then step B, which addresses determining
`from the received positions what is then to be displayed to the
`user. And this can be a client process.
`I can move quickly through the remaining slides
`addressing or illustrating some of the representative claims,
`but briefly turning to slide 9, this illustrates claim 1 of the
`'690 patent and illustrates that the subject matter is claimed in
`a similar fashion with the two steps of server filtering, and
`then step B of determining from the server filtered
`information avatars that are to be displayed.
`Slide 10. Claim 4 of the '558 patent represents the
`same type of subject matter. Claim 4 is written as a
`Beauregard style claim where the program includes similar
`server filtering and client determining steps.
`Turning be to slide 11, the remaining two patents
`offer slight variations to the same theme. What is illustrated
`here is claim 1 of the '501 patent. It includes a first step of
`customizing the user's avatar, followed by the same central
`concept that we see in the previous claims. That includes
`server filtering, followed by determining from the received
`positions user avatars that are to be displayed.
`And then finally turning to slide 12, it illustrates
`claim 1 of the '998 patent which offers a slightly different
`spin on the same subject matter. There is receiving the server
`filter information, generating a remote avatar on a graphic
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`display, and then further includes aspects of switching
`rendering between a perspective of a remote user and a view
`that allows the local user to view their avatar in a virtual
`environment.
`I would like to turn to slide 13. But following a
`brief review of the claim subject matter what we see in the
`prior art is that each of the challenged -- each of the aspects
`of the challenged claims can be traced to the prior art. And
`that is particularly true for the central concept that dominates
`the subject matter claimed and, that is, server processing or
`filtering followed by a client determination of what to
`display.
`
`So starting with the Funkhouser reference, this
`was submitted as Exhibit 1005, and, very briefly, Funkhouser
`describes a virtual world in which multiple users can navigate
`the world and interact.
`Just like the claimed subject matter, Funkhouser
`discloses server-based filtering or culling followed by a
`determination from the server-filtered information what is to
`be displayed to the user.
`Slide 14 briefly illustrates how the message
`reduction is accomplished. It is accomplished in Funkhouser
`by sending avatar update information only to workstations
`with entities that can potentially perceive a change in
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`positional information or a change in the location of a remote
`avatar.
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`As claimed in the Worlds' patents, Funkhouser
`discloses server-based filtering where the Funkhouser system
`filters distribution of positional update messages only to the
`users to which the updates are potentially relevant, and then
`upon receiving the server-filtered update information, the
`client workstations process the updated messages and also
`make a determination of which users should be displayed.
`Turning to slide 15, I will briefly address the
`Durward reference. This is the second primary reference that
`is cited and relied on throughout the petition. And Durward,
`like the claimed subject matter, addresses a 3-D virtual world
`in which users interact.
`And Durward discloses selective distribution and
`updating of data for the purpose of reducing the bandwidth
`processing requirements and more efficiently managing the
`data.
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`As shown in slide 16, Durward discloses the same
`type of server filtering as claimed in the various Worlds
`patents. In particular Durward discloses that the users are
`assigned a visual relevant space within the virtual world and
`that relevant space is used to determine which state changes
`are communicated to the user.
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`This is illustrated in figure 5 of Durward. It is
`discussed in the petition materials and shown here as well.
`Durward also discloses client processing in the
`manner claimed in the various Worlds patents. In particular
`Durward discloses the system displays a portion of the visual
`relevant space viewed from the perspective of the virtual
`being. And that includes other virtual beings and objects
`within its perspective or field of vision.
`Durward discloses that the field of view or vision
`may be narrower than the relevant space, as illustrated in
`figure 5, or it could be broader. So in sum both Funkhouser
`and Durward disclose the primary concept that is central to
`the Worlds patents.
`I will turn to some of the issues that are
`particularly in dispute between the parties, starting with slide
`23. One of the central issues in dispute is the scope or
`meaning of the so-called determining limitations of the
`challenged claims. And some of those limitations are
`illustrated here and certainly representative of what is at the
`heart of the dispute.
`'856, for example, claim 1 of '856 --
`JUDGE CHUNG: Excuse me, counselor, before we
`get into the claim construction, Patent Owner did file a
`supplemental response indicating the expiration dates of the
`patents.
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`Are you in agreement with those expiration dates?
`MR. ROSATO: I think those expiration dates are
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`correct.
`
`JUDGE CHUNG: Okay, because there would be a
`potential issue of whether or not we would be using the
`Phillips standard versus broadest reasonable interpretation.
`Okay. I just wanted to clarify that.
`JUDGE BEGLEY: Sorry to interrupt.
`JUDGE CHUNG: That's all right. Go ahead.
`JUDGE BEGLEY: But I am not sure I am content
`with that. You think that they are right. We need a little bit
`more than that. We need a confirmation that you agree with
`that and, if you don't, then you need to let us know because
`the expiration dates are critical to your case.
`MR. ROSATO: I don't challenge their stated
`expiration dates.
`As far as the claim construction standard, I would
`add that at the end of the day, I don't think it matters which
`construction standard is applied. The same outcome is
`warranted in either case and our petitions were written in that
`manner, specifically stating --
`JUDGE BEGLEY: Sorry to interrupt again. Do
`you dispute that if the patents do expire before the final
`written decision is issued that we should be applying Phillips
`instead of the BRI standard?
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`MR. ROSATO: I believe that is what the Federal
`Circuit has told you, yes.
`JUDGE BEGLEY: I was asking because there was
`a statement in your brief about Patent Owner not filing a
`motion that Phillips applies. So I wasn't sure whether that
`was something you were disputing.
`MR. ROSATO: Well, not -- okay. So the Board is
`in control here in the sense of when the final written decision
`comes out. So I want to be clear. As Petitioners we
`recognize that. We have written and constructed our cases in
`a manner such that it doesn't matter what claim construction
`applies.
`
`It is hard for me to say when the Board is going to
`issue a final written decision because the dates of expiration
`and the statutory period for issuing a final written decision
`come in fairly close proximity.
`We believe we have not restricted the Board or
`made your job any more difficult. In fact, tried to make it
`more streamlined by addressing both -- by proffering
`constructions that would be applicable under either standard.
`So at the end of the day, we just don't think it
`matters. Okay?
`JUDGE BEGLEY: I understand. We just need
`your position as to when the patents are expiring and whether
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`that expiration impacts the standard. So you have given us
`that so we have what we need. Thank you.
`MR. ROSATO: Great.
`JUDGE CHUNG: And while we are on the subject
`of dates, we noticed that there is a provisional priority date
`for these patents, and we were wondering what your position
`is on whether or not those patents are entitled to the
`provisional priority date with respect to the challenged
`claims?
`
`MR. ROSATO: If I remember correctly, we
`assumed that they are entitled to that provisional date, and
`that does, I think -- may I see a copy of the patent? I don't
`believe that that affects the prior art application. Okay.
`The one I'm looking at simply lists the
`continuation, so let me at the intermission here look at the
`exact priority claim and what we stated in our petition. But
`my recollection is that we are assuming for prior art
`application purposes that they are entitled to their earliest
`priority date.
`So we will take a look at that and confirm the
`position on that. Okay?
`JUDGE CHUNG: Thanks.
`JUDGE BEGLEY: Just for your purposes of when
`you are checking, again, I don't believe that an assumption is
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`enough, but that we need your position as to whether the
`patents are entitled to the priority date.
`MR. ROSATO: The provisional priority date?
`JUDGE BEGLEY: Yes.
`MR. ROSATO: Okay.
`Okay. I was talking about the determining step
`and the claim construction dispute. The construction for the
`determining steps that was proposed in Bungie's petitions
`were such that executing a client process to determine from
`the user positions that are received from the server, other user
`avatars located in the point of view of perspective of the first
`user would fall within the scope of the determining step of
`each of these claims.
`Now, Patent Owner has challenged that
`construction and in particular challenged whether such a field
`of view determination would fall within the scope of the
`claimed determining step. We certainly believe that the
`proposed construction is supported for a number of reasons.
`It is supported by a plain reading of the claims
`and, that is, they simply recite generically that a
`determination is made. There is no qualification in the claims
`about crowd control or graphics pipelines or any type of
`negative limitation regarding field of view determinations.
`They simply generically recite determining a displayable set
`or a set of other users' avatars.
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`Looking at the specification of each of the patents,
`there is no special definition or any definition that is
`advanced in the specifications and there is nothing in the
`specifications that indicates that field of view should be
`excluded from a determination of what to display.
`In fact, just the opposite. The abstract, for
`example, states that "each user executes a client process to
`view a virtual world from the perspective of that user." And
`there is similar discussion throughout the specification.
`To the extent there are embodiments that describe
`ways to affect what gets displayed, such as the so-called N
`prime crowd control embodiment, those embodiments are
`examples. They are not exclusive disclosures of the
`displaying step.
`And that is something that has been expressly
`acknowledged by the Patent Owner. That can be found, for
`example, in the Patent Owner responses in footnote 7, for
`example, of the 01268 case on page 17.
`Slide 24.
`JUDGE BEGLEY: Sorry, what does that footnote
`
`say?
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`MR. ROSATO: The footnote states -- I can read it
`in part -- it states: "Patent Owner does not contend that
`selecting N prime avatars is the sole disclosed mechanism of
`client side crowd control."
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`There is more to the quote there, but --
`JUDGE BEGLEY: Thank you.
`MR. ROSATO: Sure. So returning to slide 24,
`looking at -- one of the issues to note with the Patent Owner's
`proposed construction is that they advance their argument that
`the determining step does not include a field of view
`determination for only a subset of the patents.
`Specifically they advance that argument in the
`context of the '856 patent, the '690 patent, the '558 patent. It
`is noteworthy that they don't advance that argument for the
`'501 patent. Instead, in that, in the Patent Owner response
`filed in that case, they simply say that no construction is
`required and that Bungie's construction should be rejected.
`If one looks at the claims that are presented in the
`'501 patent, it is clear that those claims make more express
`that a field of view determination falls within the scope of the
`determining step.
`Claim 1 of the '501 patent recites determining
`from the received positions a set of other users' avatars that
`are to be displayed to the first user, much like the determining
`step in every other one of the patents that includes the step.
`Claim 2 of the '501 further refines the determining
`step by clarifying that wherein the step of determining
`comprises filtering the other users' avatars based on the
`orientation of the first user avatar.
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`So that is an orientation field of view
`determination. That is in contrast and contradicts the
`arguments that the Patent Owner has advanced that
`determining is mutually exclusive to a field of view
`determination.
`Of course, the '856, '690, '558 and '501 patents all
`share the identical specification. As such, claims should be
`construed consistently across those patents.
`Slide 25. Patent Owner also advances an argument
`essentially stating that the determining step of the claims
`must be performed in advance of the display, and that fact, as
`it is argued by Patent Owner, would contradict or undermine
`Bungie's proposed construction.
`But that's not the case. Bungie's proposed
`construction is not inconsistent with that argument. A client
`can determine a set of avatars to display and then a client can
`then display that set of avatars.
`Dr. Zyda provided testimony along these lines, and
`presumably in the event that a computer monitor becomes
`unplugged, for example, the computer is still going to perform
`a determination without displaying it. Once the monitor is
`plugged in the display occurs. So this is not a real
`meaningful distinction that's being advanced here.
`The second aspect of this argument that Patent
`Owner advances relates to the concept of a graphics pipeline.
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`This argument really also fails to make a meaningful
`distinction. As I interpret the argument or as I understand it,
`the Patent Owner is arguing that the act of displaying or the
`display aspect is part of the graphics pipeline.
`Their argument continues that a field of view
`determination is also part of the graphics pipeline, and then
`jumps to the conclusion that the entire graphics pipeline must,
`therefore, be outside the scope of a determining step.
`That doesn't actually make sense when one
`considers what constitutes a graphics pipeline, including the
`characterization provided by their expert. Mr. Pesce, he
`testified that characterizing the -- sorry, I'm looking at the
`slide here -- Mr. Pesce testified that even looking at this
`concept of graphics pipeline, a field of view determination
`would be the very first step of that multi-step process and the
`display would be the very last step of that process.
`So there is no reason why different steps in a
`rendering process or graphics pipeline or whatever you want
`to call it, there is no reason and no requirement in the claims
`that the entire process be treated as one continuous or single
`unit.
`
`So at the end of the day where does that leave us
`with regard to the prior art that is being asserted? So with
`regard to Funkhouser, the Funkhouser reference, the dispute
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`over whether Funkhouser discloses the determining steps is
`entirely based on the claim construction dispute.
`In other words, if the Board adopts Bungie's
`construction, the Patent Owner does not dispute that
`Funkhouser's disclosure of determining meets the claim
`limitations.
`Funkhouser also discloses the determining
`limitations even under the Patent Owner's proposed
`construction. In particular, Funkhouser discloses client
`processing that takes place before the graphics pipeline and
`impacts which remote users will be displayed by determining
`their positions. This is the simulation that is discussed in
`Funkhouser.
`JUDGE BEGLEY: Does it just impact the -- sorry,
`does it just impact which avatars will be displayed or does it
`determine which avatars will be displayed?
`MR. ROSATO: It determines their position or
`simulates their position, and if a determination of what is
`going to display it is based on positional information, then it
`would in turn determine what is to be displayed. And that
`simulation would occur prior to the so-called graphics
`pipeline theory that Patent Owner advances.
`So this was addressed, this disclosure of
`Funkhouser was addressed in the petition. It was addressed in
`detail in the Board's Institution Decision, and there was no
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`rebuttal to that point in Patent Owner's response. So it does
`not -- it is not clear that they are contesting that.
`With regard to Durward, again, the dispute over
`whether Durward meets the determining step of the claims is
`based entirely on the claim construction dispute. So, again,
`like as with Funkhouser, if the Board adopts Bungie's
`construction or rejects the distinction that Patent Owner
`attempts to make, then there is really no dispute as to whether
`Durward meets the determining steps of the claims.
`I want to turn to slide 35 and address Patent
`Owner's attempt to swear behind or antedate the Funkhouser
`reference.
`
`JUDGE BEGLEY: Before we leave the
`determining step, for the 1264 case, the '856 patent, can you
`address the Board's construction in the Institution Decision
`which held that the determining step is broad enough to
`include determining that takes place at the client, the server,
`or both?
`
`MR. ROSATO: Sure. So it is not an unreasonable
`construction. The approach that we took in our petition, and
`this also relates somewhat back to the question that was posed
`to me regarding the different standards, we took a
`conservative approach in proposing claim constructions,
`essentially focusing on what -- the most conservative
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`construction that might be advanced for the claim, and that's
`true with the '856.
`So the Board is correct that step B doesn't
`specifically require the client process to perform that step.
`The Board was also correct that, whether the narrower
`construction is applied or the broader construction that the
`Board identified, it really doesn't -- it doesn't affect the prior
`art application that Bungie had advanced.
`So it was, you know, a good and astute observation
`by the Board in the Institution Decision. I don't necessarily
`think it is wrong, but it is not necessary to our prior art
`position.
`
`JUDGE BEGLEY: So you don't dispute it?
`MR. ROSATO: Well, I know Patent Owner
`disputes it. We are making a showing that, even if it is
`performed on a client process, the prior art clearly discloses
`that.
`
`JUDGE BEGLEY: Okay.
`MR. ROSATO: Turning to the issue of antedating
`Funkhouser. Patent Owner has