Case 2:19-cv-00118-JRG Document 44 Filed 08/14/19 Page 1 of 14 PageID #: 530
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`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`
`
`QUEST NETTECH CORPORATION,
`
`
`Plaintiff,
`
`
`Case No. 2:19-cv-00118-JRG
`
`
`JURY TRIAL DEMANDED
`
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`
`QUEST NETTECH CORPORATION’S SUR-REPLY IN FURTHER OPPOSITION
`TO APPLE INC.’S MOTION TO DISMISS UNDER
`FEDERAL RULE OF CIVIL PROCEDURE 12(b)(6) (DKT. NO. 19)
`
`v.
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`
`APPLE INC.,
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`
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`
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`
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`
`
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`Defendant.
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`

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`Case 2:19-cv-00118-JRG Document 44 Filed 08/14/19 Page 2 of 14 PageID #: 531
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`
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`TABLE OF CONTENTS
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`Page(s)
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`I.
`
`II.
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`INTRODUCTION .............................................................................................................. 1
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`ARGUMENT ...................................................................................................................... 2
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`A.
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`The ’137 Patent Is Patent Eligible Under 35 U.S.C. § 101 ..................................... 2
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`1.
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`2.
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`Apple’s Position Is Untenable in Light of Its Own Patent Portfolio .......... 2
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`Alice Step 1: The Claims Are Not Directed to an Abstract Idea ................ 3
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`(a)
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`The Claims of the ’137 Patent as Construed Are Not
`Directed to the Abstract Concept of “Conducting Financial
`Transactions” .................................................................................. 5
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`3.
`
`Alice Step 2: The Claims Disclose a Patent-Eligible Application .............. 7
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`B.
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`NetTech Consents to the Dismissal of Its Claims for Indirect and Willful
`Infringement Without Prejudice ............................................................................. 9
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`III.
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`CONCLUSION ................................................................................................................... 9
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`
`
`i
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`

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`Case 2:19-cv-00118-JRG Document 44 Filed 08/14/19 Page 3 of 14 PageID #: 532
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`
`
`Cases
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`TABLE OF AUTHORITIES
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`
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`Page(s)
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`Affinity Labs of Texas, LLC v. DIRECTV, LLC,
`838 F.3d 1253 (Fed. Cir. 2016)..................................................................................................7
`
`BASCOM Global Internet Servs., Inc. v. AT&T Mobility LLC,
`827 F.3d 1341 (Fed. Cir. 2016)..............................................................................................7, 8
`
`Constellation Techs. LLC v. Time Warner Cable Inc.,
`2:13-CV-1079, 2:13-CV-1080, 2014 WL 12622451
`(E.D. Tex. Sept. 29, 2014) .........................................................................................................9
`
`Enfish LLC v. Microsoft Corp.,
`822 F.3d 1327 (Fed. Cir. 2016)..............................................................................................4, 6
`
`Internet Patents Corp. v. Active Network, Inc.,
`790 F.3d 1343 (Fed. Cir. 2015)..................................................................................................4
`
`Morrison v. Walker,
`1:13-CV-327, 2015 WL 11102144 (E.D. Tex. Sept. 24, 2015) .................................................9
`
`In re TLI Commc’ns LLC v. AV Automotive, L.L.C.,
`823 F.3d 607 (Fed. Cir. 2016)....................................................................................................8
`
`Statutes
`
`35 U.S.C. § 101 ........................................................................................................................2, 4, 9
`
`
`
`ii
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`

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`Case 2:19-cv-00118-JRG Document 44 Filed 08/14/19 Page 4 of 14 PageID #: 533
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`Plaintiff, Quest NetTech Corporation (“NetTech” or “Plaintiff”), submits this sur-reply
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`brief in further opposition to Defendant Apple Inc.’s (“Apple” or “Defendant”) Motion to
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`Dismiss Under Federal Rule of Civil Procedure 12(b)(6) (Dkt. No. 19).
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`I.
`
`INTRODUCTION
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`NetTech’s response to Apple’s motion proposes constructions for two limitations of the
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`claims that capture the essence of the innovative concept embodied by the claims, and also relies
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`in part on the specification of the ’137 Patent to demonstrate that the claims are innovative.
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`Rather than address the merits of NetTech’s proposed constructions or dispute the accuracy of
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`the specification’s discussion of innovation, Apple assails NetTech’s reliance on the
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`specification for these purposes without citing any legal support for its arguments—while at the
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`same time relying extensively on the specification to allege the claimed hardware components
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`are generic. NetTech’s analysis is supported by Federal Circuit case law and compels denial of
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`Apple’s motion.
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`Apple’s reply also offers no substantive response to NetTech’s contention that the
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`abstract concept of “storing financial transaction records in a portable and organized manner”
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`does not support Apple’s argument under Alice step 1 because it relates only to a single feature
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`of the claimed invention and not the claimed invention as a whole. Apple instead compounds its
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`error by arguing that the claims as construed by NetTech embody not one but two abstract
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`concepts—the second being “conducting financial transactions” or “using a credit card”
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`(depending on which portion of Apple’s reply brief one refers to). Not only do these two abstract
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`concepts fail to characterize the claimed invention as a whole, they confirm that Apple has failed
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`to identify a single abstract concept that meets Apple’s burden under Alice step 1.
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`Apple’s argument under Alice step 2 relies on the straw man argument that NetTech has
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`supposedly argued that using a credit card was innovative in 1995. As to NetTech’s actual
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`Case 2:19-cv-00118-JRG Document 44 Filed 08/14/19 Page 5 of 14 PageID #: 534
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`argument that a “multiple account electronic credit card” was innovative in 1995, Apple has no
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`rebuttal except to argue in essence that since processors and memory were known in 1995,
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`nothing that uses these components can survive Alice step 2. This ignores that a novel
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`arrangement of known components can be inventive and non-abstract under Alice and
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`demonstrates that Apple has not met its burden under Alice step 2.
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`II.
`
`ARGUMENT
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`A.
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`The ’137 Patent Is Patent Eligible Under 35 U.S.C. § 101
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`Apple’s reply brief confirms that the claims of the ’137 Patent are patent-eligible under
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`Section 101. Apple offers no rebuttal to NetTech’s argument that the claims are not directed to
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`the abstract concept of “storing financial transaction records in a portable and organized
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`manner,” as Apple originally contended in its opening brief. Moreover, Apple’s Alice step 2
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`analysis merely repeats the fallacious argument that claims cannot be innovative if they use
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`known computer components regardless of whether those components are implemented in an
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`innovative way. Apple’s motion should be denied.
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`1.
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`Apple’s Position Is Untenable in Light of Its Own Patent Portfolio
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`Apple tried to dismiss the dilemma it has placed itself in by filing a motion contending
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`that the subject matter of the ’137 Patent is patent ineligible even though Apple owns many
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`patents which are also directed to mobile payment devices. Instead of arguing why the ’137
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`Patent is distinguishable from the patents listed in NetTech’s response and therefore
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`unpatentable, Apple asks this Court to ignore the issue altogether. See Dkt. 37 at 61. It should
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`not.
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`
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`1 The page numbers in citations to docketed documents refer to the page numbers assigned by the ECF system.
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`2
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`Case 2:19-cv-00118-JRG Document 44 Filed 08/14/19 Page 6 of 14 PageID #: 535
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`For example, Apple’s U.S. Patent No. 9,864,984 (the “’984 Patent”) claims methods for
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`operating a device to perform mobile payment transactions, as well as a device for performing
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`those transactions. See, e.g., Ex. 1 (’984 Patent), claim 1. The specification depicts Apple’s
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`iPhone as the claimed apparatus and the device used to perform the claimed methods. See, e.g.
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`Ex. 1, Fig. 2A. As of 2014, the priority date of the ’984 Patent, it is indisputable that the iPhone
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`was a known device which had been released seven years earlier and was comprised of known
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`hardware components, such as processors, memory, a battery and a wireless interface. Thus,
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`under the very same arguments that Apple has made in this motion, the ’984 Patent is patent
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`ineligible because (1) it claims methods and apparatuses for “conducting financial transactions,”
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`which Apple contends is abstract, see Dkt. 37 at 9; and (2) the claimed apparatus and the device
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`used to perform the claimed method are not inventive because the iPhone was a conventional
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`device comprised of known, generic components, id. at 5. As such, Apple must admit either that
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`the ’137 Patent is patent eligible, or that its own portfolio directed to mobile payments is patent
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`ineligible.
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`2.
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`Alice Step 1: The Claims Are Not Directed to an Abstract Idea
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`Apple’s reply does not address NetTech’s argument that the ’137 Patent claims are not
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`directed as a whole to the abstract concept advanced by Defendant, “storing financial transaction
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`records in a portable and organized manner,” because the storage of financial transaction records
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`is but one limitation of the claims. See Dkt. 28 at 12-14. Rather, Apple argues that the claims of
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`the ’137 Patent should not be construed as directed to a novel multiple account electronic credit
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`card—even though every claim in the patent expressly clams a “multiple account electronic
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`credit card”—because NetTech’s constructions are an “attempt to incorporate large swaths of the
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`specification into the claims.” Dkt. 37 at 8. But, Apple does not rebut NetTech’s argument that
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`“multiple account electronic credit card” and “operation of the [credit] card” should be construed
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`3
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`prior to deciding this motion, nor does it challenge the merits of the proposed constructions
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`themselves. Instead, Apple cites to Internet Patents Corp. v. Active Network, Inc., 790 F.3d
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`1343, 1348 (Fed. Cir. 2015), which merely held that the challenged claims were abstract because
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`they lacked any limitation as to how a result is achieved. See Dkt. 37 at 8. The court in Internet
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`Patents said nothing about the issues relevant here, i.e., whether limitations in the claims should
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`be construed and, if so, whether the claims as construed were patent eligible.
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`Apple also complains that NetTech improperly relied on the specification of the ’137
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`Patent as evidence that the claims are directed to a beneficial innovation, see Dkt. 37 at 7, but
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`Apple cites to no authority holding that analyzing the claims in light of the specification in a
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`Section 101 analysis is improper. To the contrary, the Federal Circuit has explicitly approved of
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`consulting the specification as evidence of a patent-eligible innovation. In Enfish LLC v.
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`Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016), the Federal Circuit held that the Alice
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`step 1 inquiry is performed by evaluating the claims in light of the specification. That court then
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`concluded that the claims were directed to a beneficial improvement over existing database
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`technology based in large part on its analysis of the specification. See id. at 1337. NetTech
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`followed this approach when arguing that the claims of the ’137 Patent are directed to an
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`innovative new multiple account electronic credit card that improves on existing technology by
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`providing several benefits explicitly identified in the specification. See, e.g., Dkt. 28 at 9.
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`Apple’s argument that NetTech should not be permitted to rely on the specification for
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`support of its arguments is undermined by its own reliance on the specification to argue that the
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`claims include only conventional hardware components. See Dkt. 37 at 11-12. Apple cannot
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`have it both ways.
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`4
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`Case 2:19-cv-00118-JRG Document 44 Filed 08/14/19 Page 8 of 14 PageID #: 537
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`
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`(a)
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`The Claims of the ’137 Patent as Construed Are Not Directed
`to
`the Abstract Concept of “Conducting Financial
`Transactions”
`
`Apple argues that even if “multiple account electronic credit card” and “operation of the
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`[credit] card” were construed to ensure that the claims fully embody the inventive concept, the
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`claims would still be patent ineligible under Alice step 1 because the constructions add nothing
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`more than the abstract concept of “conducting financial transactions,” see Dkt. 37 at 9, or, as
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`Apple argued later in its reply, “a credit card purchase,” see id. at 12. This argument ignores the
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`substance of the proposed constructions.
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`The claims as construed are directed to much more than conducting financial transactions
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`or credit card purchases. The constructions require that the multiple account electronic credit
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`card is a device that (1) stores information concerning multiple accounts; (2) permits the user to
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`conduct financial transactions, including the purchase of goods and services, concerning one or
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`more of those accounts; (3) authenticates that a user is authorized to conduct those transactions;
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`and (4) receives and stores financial transaction records relating to the purchases using one or
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`more of the multiple accounts. See Dkt. 28 at 9-11. As discussed at length in NetTech’s
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`response, this functionality implemented in the claimed structure gives rise to an inventive
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`device that does far more than “buying something with a credit card” as Apple argues, see Dkt.
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`37 at 9, where a conventional credit card permits transactions in only a single account, does not
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`authenticate a user, and does not receive and store financial information relative to each of
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`multiple accounts. Apple’s latest attempt to articulate an abstract concept suffers from the same
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`flaw as its first attempt in its opening brief: it ignores the inventive concept embodied by the
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`multiple account electronic credit card as a whole by characterizing one feature of the novel
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`device as embodying an abstract concept.
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`The error in Apple’s argument is highlighted by the following argument:
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`5
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`Case 2:19-cv-00118-JRG Document 44 Filed 08/14/19 Page 9 of 14 PageID #: 538
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`The ’137 patent claims are not directed to a new type of credit card at all.
`Even under NetTech’s proposed constructions, NetTech merely attempts
`to limit the claims to an “electronic device” that has the conventional
`functionality of more than one credit card, which operate normally to
`practice the abstract concept of intermediated settlement.
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`Dkt. 37 at 11 (emphasis in original). This argument begins with a straw man because it implies
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`that NetTech has argued that the ’137 Patent is directed to a new type of “credit card,” but
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`NetTech actually argued that the “multiple account electronic credit card” is a new type of
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`“device” with novel features and benefits already discussed ad nauseum. See Dkt. 28 at 15.
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`Moreover, even Apple must concede that the novel multiple account electronic credit card has
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`more than the “conventional functionality of more than one credit card” at least because it
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`provides for the secure and automatic receipt and storage of financial transaction information by
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`the device itself—which no conventional credit card can do. Finally, it is unclear why Apple
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`believes that credit cards perform the abstract concept of “intermediated settlement.” See Dkt.
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`37 at 11.
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`Apple’s pivot to characterizing the claims (as construed in the manner proposed by
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`NetTech) as embodying two abstract ideas, “storing financial records in a portable and organized
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`manner” and “conducting financial transactions,” see id. at 8-9, is an admission that Alice step 1
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`is not met. As discussed above, the inquiry in Alice step 1 into whether the claims are “directed
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`to” an abstract concept asks whether the claims as a whole are directed to that concept. Enfish,
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`822 F.3d at 1335. Arguing that the claims embody at least two different concepts admits that
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`there is no single abstract concept that characterizes the claims as a whole and, therefore, that the
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`claims do not meet the Alice step 1 inquiry. Indeed, if Alice step 1 can be satisfied by
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`characterizing each limitation in the claims as embodying a different abstract concept, then every
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`claim would run afoul of Alice step 1. Apple’s application of Alice step 1 must be improper.
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`6
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`Case 2:19-cv-00118-JRG Document 44 Filed 08/14/19 Page 10 of 14 PageID #: 539
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`
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`Apple’s argument that this case is indistinguishable from Affinity Labs of Texas, LLC v.
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`DIRECTV, LLC, 838 F.3d 1253, 1259-1260 (Fed. Cir. 2016), because the specification of the
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`’137 Patent lacks “any details regarding the manner in which the invention accomplishes the
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`recited function” is meritless. Dkt. 37 at 10 (citing Affinity Labs of Texas, 838 F.3d at 1260).
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`Apple cites no support in the specification for this argument because none exists. Various
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`embodiments of the structure of the multiple account electronic credit card are shown in Figures
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`2 through 5 and described in the corresponding portions of the specification. See ’137 Patent,
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`6:66-10:21. Specific data structures implemented in the invention to receive and store financial
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`transaction records are illustrated in Figures 6 through 9 and described in detail in Tables 1
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`through 4 in the specification and the surrounding description. See id., 10:22-18:65. The
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`operation of the processor is depicted in the algorithms presented as flowcharts in Figures 11
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`through 21. See id., 18:66-20:2. This disclosure is significantly more detailed than the high-level
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`figure and flow chart cited in the Affinity Labs decision, see Affinity Labs, 838 F.3d 1259-1260,
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`and provides sufficient detail regarding how the invention accomplishes the required functions.
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`For these reasons, Apple has not shown that the claims are directed to an abstract idea.
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`3.
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`Alice Step 2: The Claims Disclose a Patent-Eligible Application
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`Apple’s reply regarding Alice step 2 doubles down on the flawed argument that claims
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`cannot be inventive unless they contain a novel hardware component. According to Apple, if the
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`hardware components of a claim are “conventional, generic computer components that are basic
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`in the art,” Dkt. 37 at 11, the claims fail Alice step 2 even if they are arranged in a non-
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`conventional, non-generic way. This is wrong as a matter of law.
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`As NetTech argued in its response, the Federal Circuit held in BASCOM Global Internet
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`Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1350 (Fed. Cir. 2016), that “an inventive
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`concept can be found in the non-conventional and non-generic arrangement of known,
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`7
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`Case 2:19-cv-00118-JRG Document 44 Filed 08/14/19 Page 11 of 14 PageID #: 540
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`
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`conventional pieces.” See also Dkt. 28 at 18-19. Apple does not respond to or even acknowledge
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`this argument, thereby conceding that the ’137 Patent does not fail Alice step 2 solely because
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`the multiple account electronic credit card allegedly contains only known hardware components.
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`Apple’s argument that “NetTech does not even contest that the claimed components are,
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`or do anything, unconventional,” Dkt. 37 at 12, misrepresents NetTech’s argument and
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`misconstrues the legal standard. The issue is not whether any specific component of the claimed
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`invention performs anything unconventional, but whether the arrangement of the components
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`results in an inventive apparatus. See BASCOM, 827 F.3d at 1350. To that end, and contrary to
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`Apple’s argument, NetTech has argued that the claimed multiple account electronic credit card is
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`inventive because the combination of hardware components and software features results in a
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`novel device that improves on the prior art in several ways discussed in the specification. As
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`discussed in NetTech’s opposition brief, the inventive multiple account electronic credit card
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`“serves as a portable cash substitute” because it is capable of storing information regarding
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`multiple accounts “[t]o reduce the number of cards a user has to carry,” ’137 Patent, 1:61-67;
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`authenticates the user to ensure that he is authorized to use the card prior to making a purchase,
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`id., 5:67-6:30; and “has the intelligence to gather transaction data as transactions occur to update
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`its accounts.” id., 1:61-63 (emphasis added). Unlike the claims in In re TLI Commc’ns LLC v. AV
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`Automotive, L.L.C., 823 F.3d 607, 613-615 (Fed. Cir. 2016), which involved method claims
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`performed in a generic computer environment with no technical details of that environment
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`disclosed in the specification, Apple does not dispute that the ’137 Patent specification discloses
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`the implementation details for a novel and inventive multiple account electronic credit card.
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`Accordingly, when considered as an arrangement of hardware and software components, the
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`claims of the ’137 Patent meet the requirements of Alice step 2 and are patent eligible.
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`8
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`Case 2:19-cv-00118-JRG Document 44 Filed 08/14/19 Page 12 of 14 PageID #: 541
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`B.
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`NetTech Consents to the Dismissal of Its Claims for Indirect and Willful
`Infringement Without Prejudice
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`Apple argues that the dismissal of NetTech’s indirect and willful infringement claims
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`should be with prejudice because NetTech has consented to their dismissal. The case cited on
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`reply, Morrison v. Walker, 1:13-CV-327, 2015 WL 11102144 (E.D. Tex. Sept. 24, 2015), does
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`not address a situation where the plaintiff, as here, consents to a dismissal. Under that
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`circumstance, the proper resolution is not to dismiss the challenged claims with prejudice, but to
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`deny the motion to dismiss as moot. See, e.g., Constellation Techs. LLC v. Time Warner Cable
`
`Inc., 2:13-CV-1079, 2:13-CV-1080, 2014 WL 12622451, at *1 (E.D. Tex. Sept. 29, 2014)
`
`(denying a motion to dismiss indirect infringement claims as moot where that aspect of the
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`motion was uncontested). Accordingly, Apple’s motion to dismiss the indirect and willful
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`infringement claims should be denied as moot, and the claims should be deemed dismissed
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`without prejudice by consent.
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`III. CONCLUSION
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`For the foregoing reasons, NetTech requests that the Court deny Defendant’s Motion to
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`Dismiss under 35 U.S.C. § 101, and deny Defendant’s Motion to Dismiss the indirect and willful
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`infringement claims as moot.
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`9
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`Case 2:19-cv-00118-JRG Document 44 Filed 08/14/19 Page 13 of 14 PageID #: 542
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`Dated: August 14, 2019
`
`Respectfully submitted,
`
` /s/ Alfred R. Fabricant
`Alfred R. Fabricant
`NY Bar No. 2219392
`Email: afabricant@brownrudnick.com
`Peter Lambrianakos
`NY Bar No. 2894392
`Email: plambrianakos@brownrudnick.com
`Vincent J. Rubino, III
`NY Bar No. 4557435
`Email: vrubino@brownrudnick.com
`BROWN RUDNICK LLP
`7 Times Square
`New York, NY 10036
`Telephone: (212) 209-4800
`Facsimile: (212) 209-4801
`
`Justin Kurt Truelove
`Texas Bar No. 24013653
`Email: kurt@truelovelawfirm.com
`TRUELOVE LAW FIRM, PLLC
`100 West Houston
`Marshall, Texas 75670
`Telephone: (903) 938-8321
`Facsimile: (903) 215-8510
`
`ATTORNEYS FOR PLAINTIFF
`QUEST NETTECH CORPORATION
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`Case 2:19-cv-00118-JRG Document 44 Filed 08/14/19 Page 14 of 14 PageID #: 543
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that, on August 14, 2019, all counsel of record who are
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`deemed to have consented to electronic service are being served with a copy of this document via
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`the Court’s CM/ECF system per Local Rule CV-5(a)(3).
`
` /s/ Alfred R. Fabricant
` Alfred R. Fabricant
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