throbber
7ULDO#XVSWRJRY 3DSHU 1R 
` (QWHUHG -DQXDU\  
`
`
`
`
`81,7(' 67$7(6 3$7(17 $1' 75$'(0$5. 2)),&(
`BBBBBBBBBBBB
`
`%()25( 7+( 3$7(17 75,$/ $1' $33($/ %2$5'
`BBBBBBBBBBBB
`
`,17(57+,1; ,1&
`3HWLWLRQHU
`
`Y
`
`&25(/2*,& 62/87,216 //&
`3DWHQW 2ZQHU
`BBBBBBBBBBBB
`
`&DVH &%0
`3DWHQW 
`BBBBBBBBBBBB
`
`HIRUH 0,&+$(/ 3 7,(51(< -21, < &+$1* DQG
`%5,$1 - 0F1$0$5$ Administrative Patent Judges
`F1$0$5$ Administrative Patent Judge
`
`DECISION
`Institution of Covered Business Method Review
`37 C.F.R. § 42.208
`
`
`
` %
`
` 0
`
`
`
`
`
`
`
`Petitioner Exhibit 1012 p.1
`
`

`

`&DVH &%0
`3DWHQW 
`
`
`%$&.*5281'
`
`3XUVXDQW WR  86 & †  DQG †  RI WKH $PHULFD ,QYHQWV $FW $,$

`
`,QWHUWKLQ[ 3HWLWLRQHU
UHTXHVWV WKDW WKH 3DWHQW 7ULDO DQG $SSHDO %RDUG LQLWLDWH D
`
`7UDQVLWLRQDO 3RVW*UDQW 5HYLHZ 3URFHHGLQJ IRU D &RYHUHG %XVLQHVV 0HWKRG
`
`3DWHQW WR UHYLHZ RI FODLPV     DQG  WKH FKDOOHQJHG FODLPV
RI 86
`
`3DWHQW  WKH µ 3DWHQW
 :H KDYH MXULVGLFWLRQ XQGHU  86&
`
`††  E

DQG  7KH VWDQGDUG IRU LQVWLWXWLQJ D 7UDQVLWLRQDO &RYHUHG %XVLQHVV
`
`0HWKRG 3URFHHGLQJ LV WKH VDPH DV WKDW IRU D 3RVW*UDQW 5HYLHZ †  D

RI WKH
`
`$,$
 7KH VWDQGDUG IRU LQVWLWXWLQJ 3RVW*UDQW 5HYLHZ LV VHW IRUWK LQ  86&
`
`†  D
 ZKLFK SURYLGHV
`
`7+5(6+2/' ± 7KH 'LUHFWRU PD\ QRW DXWKRUL]H D SRVWJUDQW UHYLHZ WR EH
`LQVWLWXWHG XQOHVV WKH 'LUHFWRU GHWHUPLQHV WKDW WKH LQIRUPDWLRQ SUHVHQWHG LQ
`WKH SHWLWLRQ ILOHG XQGHU > 86& †@  LI VXFK LQIRUPDWLRQ LV QRW
`UHEXWWHG ZRXOG GHPRQVWUDWH WKDW LW LV PRUH OLNHO\ WKDQ QRW WKDW DW OHDVW  RI
`WKH FODLPV FKDOOHQJHG LQ WKH SHWLWLRQ LV XQSDWHQWDEOH
`
`:H FRQFOXGH WKDW 3HWLWLRQHU KDV VDWLVILHG WKLV WKUHVKROG
`
`3HWLWLRQHU FRQWHQGV WKDW SXUVXDQW WR  &)5 ††  DQG  D
WKH
`
`µ 3DWHQW PHHWV WKH GHILQLWLRQ RI D FRYHUHG EXVLQHVV PHWKRG SDWHQW DQG GRHV QRW
`
`TXDOLI\ DV D WHFKQRORJLFDO LQYHQWLRQ 3HW 
 3HWLWLRQHU IXUWKHU FRQWHQGV WKDW
`
`FODLPV     DQG  DOO IDLO WR FRPSO\ ZLWK WKH SDWHQWDEOH VXEMHFW PDWWHU
`
`UHTXLUHPHQWV RI  86& †  3HW 
DQG WKDW WKH FKDOOHQJHG FODLPV DUH
`
`
`
`
`
`Petitioner Exhibit 1012 p.2
`
`

`

`&DVH &%0
`3DWHQW 
`
`LQYDOLG XQGHU  86& ††    IRU WKH IROORZLQJ UHDVRQV RXWOLQHG LQ WKH
`
`3HWLWLRQ 3HW 

`
` &ODLPV    DQG  VKRXOG EH FDQFHOOHG XQGHU  86& †  D

`IRU DQWLFLSDWLRQ E\ 7D\ HW DO ³$UWLILFLDO ,QWHOOLJHQFH DQG WKH 0DVV
`$SSUDLVDO RI 5HVLGHQWLDO $SDUWPHQWV´  -RXUQDO RI 3URSHUW\
`9DOXDWLRQ DQG ,QYHVWPHQW ,VVXH  RI 
 

` ,QWHUWKLQ[ ([KLELW  ³7D\´

`
` &ODLP  DQG WR WKH H[WHQW WKDW WKH\ DUH QRW FDQFHOOHG IRU DQWLFLSDWLRQ
`E\ 7D\ FODLPV   DQG  VKRXOG EH FDQFHOOHG XQGHU  86& † 
`DV REYLRXV LQ YLHZ RI 7D\
`
` &ODLPV     DQG  VKRXOG EH FDQFHOOHG XQGHU  86& †  D

`DV DQWLFLSDWHG E\ /X HW DO ³1HXURFRPSXWLQJ $SSURDFK WR 5HVLGHQWLDO
`3URSHUW\ 9DOXDWLRQ´  -RXUQDO RI 0LFURFRPSXWHU 6\VWHPV
`0DQDJHPHQW  6SULQJ 
,QWHUWKLQ[ ([KLELW  ³/X´

`
` 7R WKH H[WHQW WKDW WKH\ DUH QRW FDQFHOOHG IRU DQWLFLSDWLRQ E\ /X
`&ODLPV    DQG  VKRXOG EH FDQFHOOHG XQGHU  86& †  D
DV
`REYLRXV LQ YLHZ RI /X
`
` &ODLPV    DQG  VKRXOG EH FDQFHOOHG XQGHU  86& †  E

`DV DQWLFLSDWHG E\ %R\OH ³$Q ([SHUW 6\VWHP IRU 9DOXDWLRQ RI
`5HVLGHQWLDO 3URSHUWLHV´  -RXUQDO RI 3URSHUW\ 9DOXDWLRQ DQG
`,QYHVWPHQW  ±  
³%R\OH´
,QWHUWKLQ[ ([KLELW 
`³%R\OH´

`
` &ODLP  DQG WR WKH H[WHQW WKDW WKH\ DUH QRW FDQFHOOHG IRU DQWLFLSDWLRQ
`E\ %R\OH FODLPV   DQG  VKRXOG EH FDQFHOOHG XQGHU  86&
`†  D
DV REYLRXV LQ YLHZ RI %R\OH
`
` &ODLPV    DQG  VKRXOG EH FDQFHOOHG XQGHU  86& †  E

`DV DQWLFLSDWHG E\ -HQVHQ ³$UWLILFLDO ,QWHOOLJHQFH LQ &RPSXWHU$VVLVWHG
`0DVV $SSUDLVDO´  3URSHUW\ 7D[ -RXUQDO  
,QWHUWKLQ[
`([KLELW  ³-HQVHQ´

`
`
`
`
`
`
`Petitioner Exhibit 1012 p.3
`
`

`

`&DVH &%0
`3DWHQW 
`
`
` &ODLP  DQG WR WKH H[WHQW WKDW WKH\ DUH QRW FDQFHOOHG IRU DQWLFLSDWLRQ
`E\ -HQVHQ FODLPV   DQG  VKRXOG EH FDQFHOOHG XQGHU  86&
`†  D
DV REYLRXV LQ YLHZ RI -HQVHQ DORQH
`
` &ODLPV    DQG  VKRXOG EH FDQFHOOHG XQGHU  86& †  E

`IRU DQWLFLSDWLRQ E\ &DUERQH HW DO ³$ )HHGEDFN 0RGHO IRU $XWRPDWHG
`5HDO (VWDWH $VVHVVPHQW´  0DQDJHPHQW 6FLHQFH  

` ,QWHUWKLQ[ ([KLELW  ³&DUERQH´

`
` &ODLP  DQG WR WKH H[WHQW WKDW WKH\ DUH QRW FDQFHOOHG IRU DQWLFLSDWLRQ
`E\ &DUERQH FODLPV   DQG  VKRXOG EH FDQFHOOHG XQGHU  86&
`†  D
DV REYLRXV LQ YLHZ RI &DUERQH
`
` &ODLPV    DQG  VKRXOG EH FDQFHOOHG XQGHU  86& †  D

`DV DQWLFLSDWHG E\ 'HV 5RVLHUV HW DO ³,QWHJUDWLQJ *HRJUDSKLF
`,QIRUPDWLRQ 6\VWHPV WR +HGRQLF 3ULFH 0RGHOLQJ $Q DSSOLFDWLRQ WR
`WKH 4XHEHF 5HJLRQ´  3URSHUW\ 7D[ -RXUQDO  0DUFK 

` ,QWHUWKLQ[ ([KLELW  ³'HV 5RVLHUV´

`
` &ODLP  DQG WR WKH H[WHQW WKDW WKH\ DUH QRW FDQFHOOHG IRU DQWLFLSDWLRQ
`E\ 'HV 5RVLHUV FODLPV   DQG  VKRXOG EH FDQFHOOHG XQGHU 
`86& †  D
DV REYLRXV LQ YLHZ RI 'HV 5RVLHUV
`
` &ODLPV    DQG  VKRXOG EH FDQFHOOHG XQGHU  86& †  E

`DV DQWLFLSDWHG E\ (FNHUW HW DO ³3URSHUW\ $SSUDLVDO DQG $VVHVVPHQW
`$GPLQLVWUDWLRQ´ 7KH ,QWHUQDWLRQDO $VVRFLDWLRQ RI $VVHVVLQJ 2IILFHUV
` -XQH 
,QWHUWKLQ[ ([KLELW  ³(FNHUW´

`
` &ODLP  DQG WR WKH H[WHQW WKDW WKH\ DUH QRW FDQFHOOHG IRU DQWLFLSDWLRQ
`E\ (FNHUW FODLPV   DQG  VKRXOG EH FDQFHOOHG XQGHU  86&
`†  D
DV REYLRXV LQ YLHZ RI (FNHUW
`
` &ODLPV     DQG  VKRXOG EH FDQFHOOHG XQGHU  86& †
` E
DV DQWLFLSDWHG E\ -HQVHQ ³$OWHUQDWLYH 0RGHOLQJ 7HFKQLTXHV LQ
`&RPSXWHU$VVLVWHG 0DVV $SSUDLVDO´  3URSHUW\ 7D[ -RXUQDO 
` 
,QWHUWKLQ[ ([KLELW  ³-HQVHQ ´

`
`
`
`
`
`
`Petitioner Exhibit 1012 p.4
`
`

`

`&DVH &%0
`3DWHQW 
`
`
`
`
` 7R WKH H[WHQW WKDW WKH\ DUH QRW FDQFHOOHG IRU DQWLFLSDWLRQ E\ -HQVHQ
`FODLPV    DQG  VKRXOG EH FDQFHOOHG XQGHU  86& †  D
DV
`REYLRXV LQ YLHZ RI -HQVHQ
`
`&RUH/RJLF 6ROXWLRQV //& WKH 3DWHQW 2ZQHU
ZDV SUHYLRXVO\ NQRZQ DV
`
`&RUHORJLF ,QIRUPDWLRQ 6ROXWLRQV ,QF 3HW  ([  S 
 *HQHUDOO\ WKH
`
`3UHOLPLQDU\ 5HVSRQVH RI WKH 3DWHQW 2ZQHU 5HVSRQVH
 WLPHO\ ILOHG RQ
`
`-DQXDU\   FRQWHQGV WKDW WKH µ 3DWHQW LV QRW D FRYHUHG EXVLQHVV PHWKRG
`
`SDWHQW LV QRW LQYDOLG XQGHU  86& †  WKDW 3HWLWLRQHU KDV DSSOLHG WKH ZURQJ
`
`FODLP FRQVWUXFWLRQ VWDQGDUG EHFDXVH WKH µ SDWHQW H[SLUHG RQ 2FWREHU  
`
`DQG WKDW WKH DVVHUWLRQV LQ WKH 3HWLWLRQ )RU 3RVW*UDQW 5HYLHZ XQGHU  86&
`
`††  DQG  RI WKH $,$ WKH 3HWLWLRQ
DUH QRW VXSSRUWHG E\ HYLGHQFH 5HVSRQVH
`
`

`
`3(1',1* /,7,*$7,21
`
`$ SHUVRQ PD\ QRW ILOH D SHWLWLRQ IRU D 7UDQVLWLRQDO 3URJUDP IRU &RYHUHG
`
`%XVLQHVV 0HWKRG 3DWHQWV XQOHVV WKH SHUVRQ RU WKH SHUVRQ¶V UHDO SDUW\ LQ LQWHUHVW RU
`
`SULY\ KDV EHHQ VXHG IRU LQIULQJHPHQW RU KDV EHHQ FKDUJHG ZLWK LQIULQJHPHQW XQGHU
`
`WKDW SDWHQW † D

%
RI WKH $,$
 7KH µ 3DWHQW LV WKH VXEMHFW RI D MXU\
`
`YHUGLFW UHQGHUHG RQ 6HSWHPEHU   DQG D MXGJPHQW HQWHUHG LQ CoreLogic
`
`Information Solutions, Inc. v. Fiserv, Inc. et al 1R &9563 (' 7H[
`2FW  
 $PRQJ RWKHU WKLQJV WKH 'LVWULFW &RXUW HQWHUHG MXGJPHQW LQ IDYRU RI
`
`
`
`
`
`Petitioner Exhibit 1012 p.5
`
`

`

`&DVH &%0
`3DWHQW 
`
`&RUH/RJLF UHMHFWLQJ 3HWLWLRQHU¶V FODLP WKDW SDWHQW FODLPV  DQG  RI WKH
`
`µ SDWHQW DUH LQYDOLG DV DQWLFLSDWHG RU REYLRXV ([ 
 6HYHUDO GD\V HDUOLHU
`
`RQ 6HSWHPEHU   WKH 'LVWULFW &RXUW GHQLHG 'HIHQGDQW¶V 0RWLRQ IRU
`
`6XPPDU\ -XGJPHQW 7KDW 7KH 3DWHQW,Q6XLW >WKH µ 3DWHQW@ LV ,QYDOLG 8QGHU
`
` 86& †  ([ 
 $PRQJ WKH SRVWWULDO PRWLRQV FXUUHQWO\ SHQGLQJ
`
`EHIRUH WKH 'LVWULFW &RXUW DUH 3HWLWLRQHU¶V 0RWLRQ IRU -XGJPHQW $V D 0DWWHU RI /DZ
`
`WKDW FODLPV  DQG  RI WKH µ SDWHQW DUH LQYDOLG XQGHU  86& †  DQGRU
`
`†  DQG 3HWLWLRQHU¶V 0RWLRQ IRU -XGJPHQW $V D 0DWWHU RI /DZ WKDW WKH
`
`µ SDWHQW LV LQYDOLG XQGHU  86& †  7KH 'LVWULFW &RXUW KDV QRW UXOHG RQ
`
`WKHVH PRWLRQV
`
`())(&7 2) 3$7(17 2:1(5¶6 67$78725< ',6&/$,0(5
`
`2Q 'HFHPEHU   ³IRU WKH VROH SXUSRVH RI DYRLGLQJ WKH WLPH DQG
`
`H[SHQVH RI GHIHQGLQJ DJDLQVW WKH &%0 3URFHHGLQJ >&%0@´ WKH
`
`3DWHQW 2ZQHU ILOHG D VWDWXWRU\ GLVFODLPHU XQGHU  86& †  $
VWDWLQJ
`
`WKDW ³&RUHORJLF 6ROXWLRQV //& KHUHE\ GLVFODLPV FODLP  RI 86 3DWHQW
`
`1R ´ 5HVSRQVH  ([ 

`
`7KH 3DWHQW 2ZQHU FRQWHQGV WKDW 3HWLWLRQHU¶V DUJXPHQWV FRQFHUQLQJ ZKHWKHU
`
`WKH µ SDWHQW VDWLVILHV WKH WKUHVKROG FULWHULD IRU LQVWLWXWLQJ D FRYHUHG EXVLQHVV
`
`PHWKRG &%0
SURFHHGLQJ DUH EDVHG RQ FODLP  DQG WKDW WKHUH LV YLUWXDOO\ QR
`
`
`
`
`
`Petitioner Exhibit 1012 p.6
`
`

`

`&DVH &%0
`3DWHQW 
`
`DQDO\VLV RI WKH RWKHU FODLPV 5HVSRQVH 
 +DYLQJ GLVFODLPHG FODLP  WKH 3DWHQW
`
`2ZQHU DVVHUWV WKDW WKH EDVLV IRU LQVWLWXWLQJ D &%0 SURFHHGLQJ LV QRZ PRRW
`
`8VLQJ WKH WHUP ³IRU H[DPSOH´ WKH 3HWLWLRQ GLVFXVVHV FODLP  DV LOOXVWUDWLYH RI
`
`WKH FKDOOHQJHG FODLPV 3HW 
 1RWLQJ WKDW FODLP  ³LV GLUHFWHG WR D SURFHVV IRU
`
`DSSUDLVLQJ D UHDO HVWDWH SURSHUW\´ DQG UHFLWHV D VHULHV RI VWHSV WKDW FXOPLQDWH LQ WKH
`
`VWHS RI ³JHQHUDWLQJ D VLJQDO LQGLFDWLYH RI DQ DSSUDLVHG YDOXH IRU WKH UHDO HVWDWH
`
`SURSHUW\´ WKH 3HWLWLRQ VSHFLILFDOO\ VWDWHV WKDW ³>R@WKHU FODLPV RI WKH µ 3DWHQW DUH
`
`RI D VLPLODU QDWXUH´ Id.
 ,QGHHG WKLV VDPH ODQJXDJH IURP FODLP  LV UHFLWHG LQ
`
`FKDOOHQJHG FODLPV   ZKLFK GHSHQGV IURP GLVFODLPHG FODLP  EXW LV QRW LWVHOI
`
`GLVFODLPHG
  DQG  ZKLFK GHSHQGV IURP FODLP 
 7KH 3DWHQW RZQHU KDV QRW
`
`GLVFODLPHG DQ\ RI WKHVH FKDOOHQJHG FODLPV ,Q DGGLWLRQ WKH 3HWLWLRQ LQFOXGHV VL[W\
`
`SDJHV RI FODLP FKDUWV VSHFLILFDOO\ DGGUHVVLQJ FODLPV     DQG  3HW SS 
`
`
 7KXV ZH FRQFOXGH WKDW 3DWHQW 2ZQHU¶V SRVW H[SLUDWLRQ GLVFODLPHU RI FODLP 
`
`GRHV QRW PRRW WKH EDVLV IRU LQVWLWXWLQJ D &%0 SURFHHGLQJ LQ WKLV FDVH
`
`
`
`5(6 -8',&$7$ $1' &2//$7(5$/ (67233(/
`
`7KH 3DWHQW 2ZQHU FRQWHQGV UHV MXGLFDWD DQG FROODWHUDO HVWRSSHO SUHFOXGH
`
`3HWLWLRQHU IURP FKDOOHQJLQJ WKH µ SDWHQW XQGHU  86& †  5HVSRQVH 
`
`
DQG WKDW UHV MXGLFDWD EDUV 3HWLWLRQHU¶V FKDOOHQJH XQGHU  86& ††  DQG
`
` 5HVSRQVH 

`
`
`
`
`
`Petitioner Exhibit 1012 p.7
`
`

`

`&DVH &%0
`3DWHQW 
`
`
` 
`
` 5HV -XGLFDWD &RQFHUQLQJ  86& ††  DQG 
`
`7KH 3DWHQW 2ZQHU DUJXHV WKDW EHFDXVH 3HWLWLRQHU DGYDQFHG DQ XQVXFFHVVIXO
`
`FRXQWHUFODLP XQGHU † DQG †  3HWLWLRQHU PD\ QRW UHOLWLJDWH LVVXHV WKDW ZHUH
`
`RU FRXOG KDYH EHHQ UDLVHG LQ WKH 'LVWULFW &RXUW 5HVSRQVH 
 +RZHYHU WKH
`
`3DWHQW 2ZQHU GRHV QRW LQGLFDWH ZKDW VSHFLILF LQYDOLGLW\ LVVXHV ZHUH WULHG RU
`
`ZKHWKHU WKH UHIHUHQFHV FLWHG LQ WKH 3HWLWLRQ ZHUH VXEMHFWV RI WKH OLWLJDWLRQ
`
`3HWLWLRQHU¶V DPHQGHG FRXQWHUFODLP LQ WKH 'LVWULFW &RXUW DOOHJHG WKDW HDFK RI WKH
`
`FODLPV RI WKH
` SDWHQW WR EH LQYDOLG IRU IDLOXUH WR PHHW WKH FRQGLWLRQV IRU
`
`SDWHQWDELOLW\ VSHFLILHG LQ  86& ††    DQG  ([  S 

`
`7KHUH ZDV QR MXU\ YHUGLFW UHQGHUHG RU MXGJPHQW HQWHUHG RQ LQIULQJHPHQW RU YDOLGLW\
`
`FRQFHUQLQJ FODLPV    DQG  ZKLFK DUH DOVR WKH VXEMHFW RI WKH 3HWLWLRQ 7KH
`
`DEVHQFH RI VSDFH RQ WKH YHUGLFW IRUP WKH 'LVWULFW &RXUW SURYLGHG WKH MXU\ LQGLFDWHV
`
`WKDW WKHVH FODLPV ZHUH QRW WULHG DQG WKDW UHV MXGLFDWD GRHV QRW DSSO\ WR WKHVH FODLPV
`
`,Q DGGLWLRQ WKH MXU\ YHUGLFW LQ WKH 'LVWULFW &RXUW LQGLFDWHV WKDW 3HWLWLRQHU
`
`GLG QRW SURYH E\ FOHDU DQG FRQYLQFLQJ HYLGHQFH WKDW FODLP  RU FODLP  RI WKH
`
`
` SDWHQW ZDV LQYDOLG ([  S
 8QGHU WKH VWDQGDUG RI SURRI DSSOLFDEOH WR
`
`WKLV SURFHHGLQJ 3HWLWLRQHU KDV WKH EXUGHQ RI SURYLQJ D SURSRVLWLRQ RI
`
`XQSDWHQWDELOLW\ E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH  86& †  H
 %HFDXVH
`
`XQSDWHQWDELOLW\ KDV QRW EHHQ OLWLJDWHG XQGHU D SUHSRQGHUDQFH RI WKH HYLGHQFH
`
`
`
`
`
`Petitioner Exhibit 1012 p.8
`
`

`

`&DVH &%0
`3DWHQW 
`
`VWDQGDUG UHV MXGLFDWD GRHV QRW DSSO\ WR WKH 3HWLWLRQ¶V FKDOOHQJHV WR SDWHQWDELOLW\ RI
`
`WKH FODLPV XQGHU  86 & ††  DQG  See, In re Baxter international, Inc.,
` )G  )HG &LU 
 In re Swanson  ) G   )HG &LU
`

`
` 
`
` 5HV -XGLFDWD DQG &ROODWHUDO (VWRSSHO &RQFHUQLQJ  86& † 
`
`7KH 3HWLWLRQ LQ WKLV FDVH ZDV DFFRUGHG D ILOLQJ GDWH RI 6HSWHPEHU  
`
`VHYHUDO GD\V HDUOLHU WKDQ WKH 'LVWULFW &RXUW¶V GHQLDO RI 3HWLWLRQHU¶V VXPPDU\
`
`MXGJPHQW PRWLRQ RI LQYDOLGLW\ XQGHU  86& †  3DWHQW 2ZQHU DUJXHV WKDW
`
`FROODWHUDO HVWRSSHO SUHFOXGHV 3HWLWLRQHU IURP UDLVLQJ LVVXHV XQGHU  86& † 
`
`LQ WKLV 3HWLWLRQ FLWLQJ 5HVWDWHPHQW †  IRU WKH SURSRVLWLRQ WKDW ZKHQ DQ LVVXH RI
`
`ODZ RU IDFW LV DFWXDOO\ OLWLJDWHG DQG GHWHUPLQHG E\ D YDOLG DQG ILQDO MXGJPHQW DQG
`
`WKH GHWHUPLQDWLRQ LV HVVHQWLDO WR WKH MXGJPHQW FROODWHUDO HVWRSSHO RU LVVXH
`
`SUHFOXVLRQ
DSSOLHV 5HVSRQVH 
 &LWLQJ In re Freeman  )G  
`
` )HG &LU 
 WKH 3DWHQW 2ZQHU QRWHV WKDW RQH RI IRXU IDFWRUV UHOHYDQW WR
`
`FROODWHUDO HVWRSSHO LV ZKHWKHU UHVROXWLRQ RI WKH LVVXH ZDV HVVHQWLDO WR D ILQDO
`
`MXGJPHQW LQ WKH ILUVW DFWLRQ 5HVSRQVH 

`
` ³>)@RU SXUSRVHV RI LVVXH SUHFOXVLRQ  µILQDO MXGJPHQW¶ LQFOXGHV DQ\ SULRU
`
`DGMXGLFDWLRQ RI DQ LVVXH LQ DQRWKHU DFWLRQ WKDW LV GHWHUPLQHG WR EH VXIILFLHQWO\ ILUP
`
`WR EH DFFRUGHG FRQFOXVLYH HIIHFW´ Christo v. Padgett,  )G   Q 
`
`
`
`
`
`Petitioner Exhibit 1012 p.9
`
`

`

`&DVH &%0
`3DWHQW 
`
` WK &LU
FLWLQJ 5HVWDWHPHQW 6HFRQG
-XGJPHQWV †  
 See also,
`
`RF Delaware, Inc. v. Pacific Keystone Technologies, Inc.,  ) G  )HG
`&LU 
 2Q 2FWREHU   WKH 3HWLWLRQHU ILOHG D 0RWLRQ IRU -XGJPHQW DV D
`
`0DWWHU RI /DZ WKDW WKH
` SDWHQW LV LQYDOLG XQGHU  86& †  3HWLWLRQHU¶V
`
`†  -02/
 7KH 3DWHQW 2ZQHU ILOHG D 5HVSRQVH ,Q 2SSRVLWLRQ RQ
`
`1RYHPEHU   3HWLWLRQHU ILOHG D %ULHI LQ 5HSO\ WR WKH 5HVSRQVH ,Q
`
`2SSRVLWLRQ RQ 'HFHPEHU   DQG 3DWHQW 2ZQHU ILOHG D 6XU 5HSO\ RQ
`
`'HFHPEHU   7KH 'LVWULFW &RXUW KDV QRW UXOHG RQ 3HWLWLRQHU¶V †  -02/
`
`QRU KDV DQ\ DSSHDO EHHQ ILOHG RU GHFLGHG )RU D MXGJPHQW WR EH ³ILQDO´ IRU SXUSRVHV
`
`RI SUHFOXVLRQ EHIRUH WKH %RDUG WKH GHFLVLRQ QHHGV WR EH LPPXQH DV D SUDFWLFDO
`
`PDWWHU WR UHYHUVDO RU DPHQGPHQW. See, e.g., Vardon Golf Co., Inc. v. Karsten Mfg.
`
`Corp.,  )G   )HG &LU ) (citing Miller Brewing Co. v. Jos.
`Schlitz Brewing Co.,  )G   WK &LU 
. 7KXV ZH FDQQRW FRQFOXGH
`WKDW WKH 'LVWULFW &RXUW¶V DGMXGLFDWLRQ RI WKH LVVXHV XQGHU  86& †  E\ D
`
`VXPPDU\ MXGJPHQW RUGHU ZKLFK LVVXHG ZLWKRXW DQ RSLQLRQ LV VXIILFLHQWO\ ILUP WR
`
`EH JLYHQ FRQFOXVLYH HIIHFW
`
`
`
`
` 7KH VDPH LV WUXH IRU LVVXHV XQGHU  86& ††  DQG  ZKHUH VLPLODU
`PRWLRQV DUH SHQGLQJ EHIRUH WKH 'LVWULFW &RXUW
`
`
`
`
`Petitioner Exhibit 1012 p.10
`
`

`

`&DVH &%0
`3DWHQW 
`
`
`(9,'(17,$5< 6833257+($56$<
`
`7KH 3DWHQW 2ZQHU DUJXHV WKDW 3HWLWLRQHU¶V SULRU DUW LV XQVXSSRUWHG E\
`
`HYLGHQFH EHFDXVH 3HWLWLRQHU SURYLGHV QR DXWKHQWLFDWLRQ HYLGHQFH DQG GRHV QRW
`
`SURYH WKDW WKH UHIHUHQFHV FRQVWLWXWH SULRU DUW 5HVSRQVH 
 7KH 3DWHQW 2ZQHU
`
`DGPLWV WKDW WKH UHIHUHQFHV FRQWDLQ GDWH LQIRUPDWLRQ EXW DUJXHV WKDW WKHUH LV QR
`
`HYLGHQFH WKH UHIHUHQFHV ZHUH SXEOLFO\ DYDLODEOH RQ VXFK GDWHV Id.
 ,Q DGGLWLRQ
`UHIHUULQJ WR ([KLELWV  DQG  3DWHQW 2ZQHU VWDWHV WKDW WKH GRFXPHQWV
`
`FRQWDLQ PRUH WKDQ RQH GDWH UHQGHULQJ GDWH LQIRUPDWLRQ XQUHOLDEOH Id.

`
`7KH GRFXPHQWV UHIHUHQFHG E\ WKH 3DWHQW 2ZQHU SXUSRUW WR EH SULQWHG
`
`PDWHULDO IURP SHULRGLFDOV ZKLFK DUH VHOIDXWKHQWLFDWLQJ )5(  
 7KH VHFRQG
`
`GDWHV RQ WKH GRFXPHQWV PHQWLRQHG E\ WKH 3DWHQW 2ZQHU DSSHDU WR UHIHU WR
`
`VHFRQGDU\ VRXUFHV IURP ZKLFK 3HWLWLRQHU REWDLQHG WKH GRFXPHQW DQG GR QRW
`
`QHFHVVDULO\ FRQWUDGLFW WKH RULJLQDO GDWHV RI SXEOLFDWLRQ LQ WKH UHOHYDQW SHULRGLFDOV
`
`,Q WKH HYHQW WKDW WKH 3DWHQW 2ZQHU ODWHU UDLVHV VLJQLILFDQW GRXEW DERXW ZKHWKHU WKH
`
`GRFXPHQWV ZHUH DYDLODEOH WR WKH SXEOLF RQ WKH GDWHV LQGLFDWHG RU GR QRW FRQVWLWXWH
`
`SULRU DUW GXULQJ WULDO WKH 3DWHQW 2ZQHU PD\ KDYH DQ RSSRUWXQLW\ WR PRYH IRU
`
`OLPLWHG GLVFRYHU\ FRQFHUQLQJ WKH YHUDFLW\ RI WKH GRFXPHQWV ,Q WKH DEVHQFH RI
`
`HYLGHQFH FDVWLQJ GRXEW RQ WKH UHOLDELOLW\ RI WKHVH VHOIDXWKHQWLFDWLQJ GRFXPHQWV LW
`
`LV SUHPDWXUH IRU XV WR FRQFOXGH WKDW 3HWLWLRQHU FDQQRW UHO\ RQ WKHVH GRFXPHQWV DV
`
`SULRU DUW
`
`
`
`
`
`Petitioner Exhibit 1012 p.11
`
`

`

`&DVH &%0
`3DWHQW 
`
`
`7+( ,19(17,21 2) 7+( µ 3$7(17
`
`$OO RI WKH FKDOOHQJHG FODLPV DUH GUDZQ WR ³$ FRPSXWHU LPSOHPHQWHG PHWKRG
`
`IRU DSSUDLVLQJ D UHDO HVWDWH SURSHUW\´ 1RWLQJ WKDW WUDGLWLRQDO VWDWLVWLFDO WHFKQLTXHV
`
`VXFK DV PXOWLSOH OLQHDU UHJUHVVLRQ DQG ORJLVWLFDO UHJUHVVLRQ KDYH EHHQ WULHG LQ WKH
`
`SDVW WKH µ SDWHQW LGHQWLILHV XQFHUWDLQW\ DV WR WKH RSWLPDO WHPSRUDO DQG
`
`JHRJUDSKLFDO VDPSOH VL]H DPRQJ WKH GLIILFXOWLHV RI DSSO\LQJ D UHJUHVVLRQ PRGHO WR
`
`WKH DSSUDLVDO SUREOHP &R  O   FRO  O 
 7KH µ SDWHQW DGGUHVVHV
`
`WKHVH SUREOHPV ZLWK D PRGHO GHYHORSPHQW FRPSRQHQW DQG D SURSHUW\ YDOXDWLRQ
`
`FRPSRQHQW &RO  OO 
 8VLQJ SUHGLFWLYH PRGHOLQJ WHFKQLTXHV VXFK DV QHXUDO
`
`QHWZRUNV DQG UHJUHVVLRQ PRGHOLQJ WKH PRGHO GHYHORSPHQW FRPSRQHQW XVHV
`
`WUDLQLQJ GDWD GHVFULELQJ D QXPEHU RI UHDO HVWDWH SURSHUWLHV FKDUDFWHULVWLFV DQG
`
`SULFHV WR EXLOG PRGHOV FRQWDLQLQJ LQIRUPDWLRQ UHSUHVHQWLQJ OHDUQHG UHODWLRQVKLSV
`
`DPRQJ D QXPEHU RI YDULDEOHV DQG WR GHYHORS HUURU PRGHOV ZKLFK DUH W\SLFDOO\
`
`UHJUHVVLRQ PRGHOV WR HVWLPDWH HUURU LQ SUHGLFWHG VDOHV SULFHV &RO  OO 

`
`7KH SURSHUW\ YDOXDWLRQ FRPSRQHQW IHHGV LQSXW GDWD GHVFULELQJ WKH VXEMHFW SURSHUW\
`
`DQG LWV JHRJUDSKLF DUHD WR WKH QHXUDO QHWZRUN PRGHOV DQG HUURU PRGHOV WR JHQHUDWH
`
`SULFH HVWLPDWHV HUURU UDQJHV DQG RWKHU FRGHV WR EH RXWSXW WR D GLVSOD\ GHYLFH RU
`
`SULQWHU RU GDWDEDVH IRU IXWXUH DFFHVV &RO  OO 

`
`:LWK WKH FRQVWUXHG WHUPV LQGLFDWHG E\ LWDOLFV FODLP  UHFLWHV
`
`
`
`
`
`Petitioner Exhibit 1012 p.12
`
`

`

`&DVH &%0
`3DWHQW 
`
`
`$ FRPSXWHU LPSOHPHQWHG PHWKRG which does not require a general purpose
`
`computer and does not exclude human interaction or input
IRU DSSUDLVLQJ D UHDO
`HVWDWH SURSHUW\ FRPSULVLQJ WKH VWHSV RI
`
` FROOHFWLQJ WUDLQLQJ GDWD data which is available regarding real estate
`properties

`
`GHYHORSLQJ D SUHGLFWLYH PRGHO which is not limited to a neural network and
`does not exclude a regression model
IURP WKH WUDLQLQJ GDWD data which is
`available regarding real estate properties

`
`VWRULQJ WKH SUHGLFWLYH PRGHO which is not limited to a neural network and
`does not exclude a regression model

`REWDLQLQJ LQGLYLGXDO SURSHUW\ GDWD IRU WKH UHDO HVWDWH SURSHUW\
`
`GHYHORSLQJ DQ HUURU PRGHO a model that estimates error in the predicted
`sales price of the subject property generated by the predictive model
IURP WKH
`WUDLQLQJ GDWD data which is available regarding real estate properties

`
`VWRULQJ WKH HUURU PRGHO a model that estimates error in the predicted sales
`price of the subject property generated by the predictive model
 DQG
`JHQHUDWLQJ D VLJQDO LQGLFDWLYH RI DQ HUURU UDQJH IRU WKH DSSUDLVHG YDOXH
`
`UHVSRQVLYH WR WKH DSSOLFDWLRQ RI WKH LQGLYLGXDO SURSHUW\ GDWD WR WKH VWRUHG HUURU
`
`PRGHO a model that estimates error in the predicted sales price of the subject
`property generated by the predictive model

`
`
`
`
`
`Petitioner Exhibit 1012 p.13
`
`

`

`&DVH &%0
`3DWHQW 
`
`
`:H GR QRW FRQVLGHU FODLP  EHFDXVH WKH 3DWHQW 2ZQHU¶V GLVFODLPHU RSHUDWHV
`
`WR HIIHFWLYHO\ FDQFHO FODLP 
`
`&ODLP  ZKLFK GHSHQGV IURP GLVFODLPHG LQGHSHQGHQW FODLP  DQG
`
`LQFRUSRUDWHV DOO WKH OLPLWDWLRQV RI FODLP  GLIIHUV IURP FODLP  LQ VHYHUDO ZD\V
`
`&ODLP  OLPLWV WKH WUDLQLQJ GDWD WR LQGLYLGXDO SURSHUW\ WUDLQLQJ GDWD GHVFULELQJ SDVW
`
`UHDO HVWDWH VDOHV ZKLFK LV DJJUHJDWHG LQWR DUHD WUDLQLQJ GDWD VHWV GHVFULELQJ D
`
`SOXUDOLW\ RI VDOHV ZLWKLQ D JHRJUDSKLF DUHD 7KH DJJUHJDWLQJ VWHS LV UHSHDWHG XVLQJ
`
`VXFFHVVLYHO\ ODUJHU JHRJUDSKLF DUHDV XQWLO WKH QXPEHU RI VDOHV ZLWKLQ WKH
`
`JHRJUDSKLF DUHD RYHU D SUHGHWHUPLQHG WLPH SHULRG H[FHHGV D SUHGHWHUPLQHG
`
`QXPEHU $QRWKHU LPSRUWDQW GLIIHUHQFH EHWZHHQ FODLPV  DQG  LV WKDW FODLP  GRHV
`
`QRW UHFLWH DQ HUURU PRGHO
`
`&ODLP  GLIIHUV IURP FODLP  E\ UHFLWLQJ WKH VHOHFWLRQ RI D JHRJUDSKLF DUHD
`
`VXUURXQGLQJ WKH UHDO HVWDWH SURSHUW\ DQG REWDLQLQJ DUHD GDWD IRU WKH JHRJUDSKLF
`
`DUHD &ODLP  DOVR GRHV QRW UHFLWH DQ HUURU PRGHO
`
`&ODLP  GHSHQGV IURP FODLP  DQG UHFLWHV WKH VDPH VWHSV RI GHYHORSLQJ DQ
`
`HUURU PRGHO DQG JHQHUDWLQJ D VLJQDO LQGLFDWLYH RI DQ HUURU UDQJH WKDW DUH UHFLWHG LQ
`
`
`
`
`
`FODLP 
`
`
`
`Petitioner Exhibit 1012 p.14
`
`

`

`&DVH &%0
`3DWHQW 
`
`
`&/$,0 &216758&7,21
`
`3HWLWLRQHU QRWHG WKDW ILYH GLVSXWHG FODLP WHUPV ZHUH FRQVWUXHG E\ WKH 'LVWULFW
`
`&RXUW DQG SURSRVHG WKDW WKH 'LVWULFW &RXUW¶V FRQVWUXFWLRQV EH WUHDWHG DV WKH
`
`EURDGHVW UHDVRQDEOH FRQVWUXFWLRQV VROHO\ IRU SXUSRVHV RI WKLV UHYLHZ SURFHHGLQJ
`
` 3HW 
 $OWKRXJK WKH µ SDWHQW ZDV LQ HIIHFW RQ 3HWLWLRQHU¶V ILOLQJ GDWH WKH
`
`3DWHQW 2ZQHU FRQWHQGV WKDW 3HWLWLRQHU DSSOLHG WKH ZURQJ FODLP FRQVWUXFWLRQ
`
`VWDQGDUG EURDGHVW UHDVRQDEOH FRQVWUXFWLRQ
EHFDXVH WKH
`  SDWHQW KDV QRZ
`
`H[SLUHG 5HVSRQVH  
 $UJXLQJ WKDW 3HWLWLRQHU KDV IDLOHG WR PHHW LWV EXUGHQ
`
`WKH 3DWHQW 2ZQHU SURSRVHV QR DOWHUQDWLYH FRQVWUXFWLRQV Id

`7KH %RDUG¶V UHYLHZ RI WKH FODLPV RI DQ H[SLUHG SDWHQW LV VLPLODU WR WKDW RI D
`
`GLVWULFW FRXUW¶V UHYLHZ In re Rambus, Inc.  )G   )HG &LU 
 7KH
`
`SULQFLSOH VHW IRUWK E\ WKH FRXUW LQ Phillips v. AWH Corp  )G  
` )HG &LU 
ZRUGV RI D FODLP ³DUH JHQHUDOO\ JLYHQ WKHLU RUGLQDU\ DQG
`
`FXVWRPDU\ PHDQLQJ´ DV XQGHUVWRRG E\ D SHUVRQ RI RUGLQDU\ VNLOO LQ WKH DUW LQ
`
`TXHVWLRQ DW WKH WLPH RI WKH LQYHQWLRQ
VKRXOG EH DSSOLHG VLQFH WKH H[SLUHG FODLPV
`
`DUH QRW VXEMHFW WR DPHQGPHQW 3HWLWLRQHU SRLQWV RXW WKDW WKH 'LVWULFW &RXUW
`
`FRQVWUXHG WKUHH RI WKH ILYH GLVSXWHG FODLP WHUPV WR KDYH WKHLU SODLQ DQG RUGLQDU\
`
`PHDQLQJ DOWKRXJK WKH\ DUH VRPHZKDW TXDOLILHG IRU FRQWH[W 3HW 
 7KH 'LVWULFW
`
`&RXUW FRQVWUXHG WKH UHPDLQLQJ WZR WHUPV WR KDYH D PHDQLQJ LQ WKH FRQWH[W RI UHDO
`
`HVWDWH DSSUDLVDO ZKLFK LV WKH VXEMHFW PDWWHU RI WKH µ SDWHQW :H KDYH UHYLHZHG
`
`
`
`
`
`Petitioner Exhibit 1012 p.15
`
`

`

`&DVH &%0
`3DWHQW 
`
`WKH GLVWULFW FRXUW¶V FODLP FRQVWUXFWLRQ DQG KROG WKDW WKH\ DUH FRQVLVWHQW ZLWK WKH
`
`RUGLQDU\ DQG FXVWRPDU\ PHDQLQJ DV XQGHUVWRRG E\ RQH RI RUGLQDU\ VNLOO LQ WKH DUW
`
`$FFRUGLQJO\ ZH DGRSW WKH 'LVWULFW &RXUW¶V FODLP FRQVWUXFWLRQV DV IROORZV
`
`&ODLP 7HUP
`
`&RQVWUXFWLRQ
`
`³FRPSXWHULPSOHPHQWHG SURFHVV´
`
`³WUDLQLQJ GDWD´
`
`³GHYHORSLQJGHYHORSPHQW´
`
`³SUHGLFWLYH PRGHO´
`
`³HUURU PRGHO´
`
`
`
`3ODLQ DQG RUGLQDU\ PHDQLQJ ZKLFK GRHV
`QRW UHTXLUH D JHQHUDOSXUSRVH FRPSXWHU
`DQG ZKLFK GRHV QRW H[FOXGH KXPDQ
`LQWHUDFWLRQ RU LQSXW
`'DWD ZKLFK LV DYDLODEOH UHJDUGLQJ UHDO
`HVWDWH SURSHUWLHV
`3ODLQ DQG RUGLQDU\ PHDQLQJ
`
`3ODLQ DQG RUGLQDU\ PHDQLQJ ZKLFK LV
`QRW OLPLWHG WR D QHXUDO QHWZRUN DQG
`ZKLFK GRHV QRW H[FOXGH D UHJUHVVLRQ
`PRGHO
`0RGHO WKDW HVWLPDWHV HUURU LQ WKH
`SUHGLFWHG VDOHV SULFH RI WKH VXEMHFW
`SURSHUW\ JHQHUDWHG E\ WKH SUHGLFWLYH
`PRGHO
`
`7+( µ 3$7(17 ,6 127 $ 3$7(17 )25 $ 7(&+12/*,&$/
`,19(17,21
`
` 3
`
`HWLWLRQHU QRWHV WKDW UHDO HVWDWH DSSUDLVDO LV D ILQDQFLDO SURGXFW RU VHUYLFH DQG
`
`WKDW EHFDXVH WKH µ SDWHQW LGHQWLILHV UHGXFWLRQ RI KXPDQ ELDV LQ FRQYHQWLRQDO
`
`DSSUDLVDO PHWKRGV DV WKH SUREOHP DQG WKH XVH RI VWDWLVWLFDO WHFKQLTXHV DV WKH
`
`VROXWLRQ WKH SDWHQW GRHV QRW VROYH D WHFKQLFDO SUREOHP XVLQJ D WHFKQLFDO VROXWLRQ
`
` 3HW 

`
`
`
`
`
`Petitioner Exhibit 1012 p.16
`
`

`

`&DVH &%0
`3DWHQW 
`
`
`&LWLQJ  &)5 †  E
 WKH 3DWHQW 2ZQHU FRQWHQGV WKDW WKH
`
`WHFKQRORJLFDO QDWXUH RI WKH µ 3DWHQW SODFHV LW RXWVLGH WKH GHILQLWLRQ RI D FRYHUHG
`
`EXVLQHVV PHWKRG EHFDXVH WKH FODLPHG VXEMHFW PDWWHU DV D ZKROH UHFLWHV D WHFKQLFDO
`
`IHDWXUH WKDW LV QRYHO DQG QRQREYLRXV RYHU WKH SULRU DUW DQG VROYHV D WHFKQLFDO
`
`SUREOHP XVLQJ D WHFKQLFDO VROXWLRQ 5HVSRQVH 
 7KH 3DWHQW 2ZQHU DUJXHV WKDW
`
`EHFDXVH WKH µ SDWHQW SURYLGHV D VSHFLILF DXWRPDWHG V\VWHP XVLQJ SUHGLFWLYH
`
`PRGHOV VXFK DV QHXUDO QHWZRUNV WR DGGUHVV SULRU DUW SUREOHPV LQFOXGLQJ WKRVH
`
`IRXQG ZLWK VWDWLVWLFDO WHFKQLTXHV DQG WR JHQHUDWH HVWLPDWHV RI UHDO HVWDWH YDOXHV
`
`ERWK WKH SUREOHP DQG WKH VROXWLRQ DUH WHFKQLFDO 5HVSRQVH 

`
`$V WKUHVKROG PDWWHU ZH DUH QRW SHUVXDGHG WKDW WKH µ 3DWHQW VROYHV D
`
`WHFKQLFDO SUREOHP 7KH FODLPV DUH DOO GUDZQ WR D SURFHVV IRU DSSUDLVLQJ D UHDO
`
`HVWDWH SURSHUW\ 7KH 3DWHQW 2ZQHU KDV QRW GHPRQVWUDWHG WKDW DSSUDLVLQJ UHDO HVWDWH
`
`LV D WHFKQLFDO SUREOHP 7KH 3DWHQW 2ZQHU QRWHV WKDW WKH µ 3DWHQW H[SODLQV WKDW
`
`WUDGLWLRQDO VWDWLVWLFDO WHFKQLTXHV KDYH EHHQ WULHG WR RYHUFRPH SUREOHPV DVVRFLDWHG
`
`ZLWK KXPDQ DSSUDLVHUV EXW WKDW WKRVH VROXWLRQV H[SHULHQFHG SUREOHPV VXFK DV
`
`GLIILFXOW\ LPSOHPHQWLQJ DXWRPDWHG PRGHO UHGHYHORSPHQW Id.
 'LIILFXOW\
`LPSOHPHQWLQJ DQ DXWRPDWHG RU WHFKQLFDO VROXWLRQ WR D SUREOHP WKDW LV QRW WHFKQLFDO
`
`GRHV QRW WUDQVIRUP WKDW QRQWHFKQLFDO SUREOHP LQWR D WHFKQLFDO RQH +HUH WKH
`
`SUREOHP LV DSSUDLVLQJ D UHDO HVWDWH SURSHUW\ DFFXUDWHO\ ZKLFK UHPDLQV D QRQ
`
`WHFKQLFDO SUREOHP
`
`
`
`
`
`Petitioner Exhibit 1012 p.17
`
`

`

`&DVH &%0
`3DWHQW 
`
`
`:H DUH DOVR QRW SHUVXDGHG WKDW WKH VROXWLRQ LV D WHFKQLFDO RQH 7KH 3DWHQW
`
`2ZQHU FRQWHQGV WKDW WKH FODLPV RI WKH µ 3DWHQW DUH FORVHO\ WLHG WR D PDFKLQH
`
`MXVW OLNH WKH &%0LQHOLJLEOH FODLPV DW SDJH  RI WKH 2IILFH 3DWHQW 7ULDO 3UDFWLFH
`
`*XLGH 7ULDO *XLGH
 5HVSRQVH 
 7KH 7ULDO *XLGH ZKLFK GLVWLQJXLVKHV
`
`EHWZHHQ &%0 HOLJLEOH PHWKRGV VXFK DV D PHWKRG IRU YDOLGDWLQJ D FUHGLW FDUG
`
`WUDQVDFWLRQ DQG SDWHQWV WKDW FODLP D &%0 LQHOLJLEOH GHYLFH VXFK DV D QRYHO DQG
`
`QRQREYLRXV FUHGLW FDUG UHDGHU IRU YHULI\LQJ WKH YDOLGLW\ RI D FUHGLW FDUG
`
`WUDQVDFWLRQ GRHV QRW VXSSRUW 3DWHQW 2ZQHU¶V SRVLWLRQ 7KH 7ULDO *XLGH
`
`VSHFLILFDOO\ VWDWHV WKDW PHUH UHFLWDWLRQ RI NQRZQ WHFKQRORJLHV VXFK DV FRPSXWHU
`
`KDUGZDUH RU VSHFLDOL]HG PDFKLQHV ZRXOG QRW W\SLFDOO\ UHQGHU D SDWHQW D
`
`WHFKQRORJLFDO LQYHQWLRQ 7ULDO *XLGH 
 7KH FKDOOHQJHG FODLPV DUH DOO GUDZQ WR
`
`D ³FRPSXWHU LPSOHPHQWHG PHWKRG IRU DSSUDLVLQJ UHDO HVWDWH SURSHUW\´ :H
`
`FRQFOXGH WKDW WKH PHUH UHFLWDWLRQ WKDW WKH PHWKRG LV FRPSXWHU LPSOHPHQWHG RU WKDW
`
`WKH SURFHVV LV DXWRPDWHG XVLQJ NQRZQ WHFKQLTXHV VXFK DV VWRULQJ LQIRUPDWLRQ
`
`GRHV QRW SUHFOXGH WKH SDWHQW IURP TXDOLI\LQJ DV D FRYHUHG EXVLQHVV PHWKRG SDWHQW
`
`6LPLODUO\ ZH DUH QRW SHUVXDGHG E\ WKH 3DWHQW 2ZQHU¶V FRQWHQWLRQ WKDW WKH
`
`([DPLQHU¶V VWDWHPHQWV LQ WKH $SULO   1RWLFH RI $OORZDELOLW\ UHFRJQL]HG WKH
`
`FODLPHG SUHGLFWLYH PRGHO DV VWUXFWXUH DQG WKXV WHFKQRORJLFDO 5HVSRQVH 
 7KH
`
`SRUWLRQ RI WKH 1RWLFH RI $OORZDELOLW\ TXRWHG E\ WKH 3DWHQW 2ZQHU PHUHO\ LQGLFDWHV
`
`WKDW D FRPSXWHU LPSOHPHQWHG SURFHVV IRU FDUU\LQJ RXW WKH DSSUDLVDO RI UHDO HVWDWH
`
`
`
`
`
`Petitioner Exhibit 1012 p.18
`
`

`

`&DVH &%0
`3DWHQW 
`
`SURSHUW\ ZKHUH WKH SUHGLFWLYH PRGHO LV XVHG DV VHW IRUWK LQ WKH FODLPV LV VWUXFWXUDOO\
`
`VXSSRUWHG DQG GHILQHG LQ WKH VSHFLILFDWLRQ DV D QHXUDO QHWZRUN ([  S 

`
`7KH ([DPLQHU GRHV QRW VWDWH WKDW WKH SUHGLFWLYH PRGHO LWVHOI LV VWUXFWXUH QRU GRHV
`
`WKH ([DPLQHU LQGLFDWH WKDW WKH FRPSXWHU LPSOHPHQWHG SURFHVV XVLQJ D SUHGLFWLYH
`
`PRGHO DV FODLPHG VROYHV D WHFKQLFDO SUREOHP XVLQJ D WHFKQLFDO VROXWLRQ 7KH
`
`([DPLQHU¶V VWDWHPHQW LQGLFDWHV WKDW WKH FRPSXWHU LPSOHPHQWHG SURFHVV LV D SURFHVV
`
`IRU FDUU\LQJ RXW WKH DSSUDLVDO RI UHDO HVWDWH ZKLFK LV QRW D WHFKQLFDO SUREOHP $V
`
`GLVFXVVHG DERYH WKH PHUH LPSOHPHQWDWLRQ RI WKH SURFHVV XVLQJ NQRZQ
`
`WHFKQRORJLHV GRHV QRW SUHFOXGH WKH SDWHQW IURP TXDOLI\LQJ DV D FRYHUHG EXVLQHVV
`
`PHWKRG SDWHQW 7KXV ZH FRQFOXGH WKDW WKH µ SDWHQW LV D FRYHUHG EXVLQHVV
`
`PHWKRG SDWHQW
`
`$57 &,7(' ,1 7+( 3(7,7,21
`
`
`3HWLWLRQHU FLWHV WKH IROORZLQJ UHIHUHQFHV WR VXSSRUW LWV FRQWHQWLRQV WKDW WKH
`
`FODLPV RI WKH µ SDWHQW VKRXOG EH IRXQG LQYDOLG 3HWLWLRQHU¶V VSHFLILF FRQWHQWLRQV
`
`ZLWK UHVSHFW WR WKH FKDOOHQJHG FODLPV DUH IRXQG LQ 7DEOHV  RI WKH 3HWLWLRQ
`
` 7D\ ([KLELW 

`
`7D\ GLVFORVHV DSSO\LQJ DQ DUWLILFLDO QHXUDO QHWZRUN $11
WR WKH YDOXDWLRQ
`
`RI UHVLGHQWLDO DSDUWPHQWV DQG FRPSDUHV WKH SHUIRUPDQFH RI D EDFN SURSDJDWLRQ
`
` %3
PRGHO LQ HVWLPDWLQJ VDOHV SULFHV RI DSDUWPHQWV DJDLQVW D WUDGLWLRQDO
`
`
`
`
`
`Petitioner Exhibit 1012 p.19
`
`

`

`&DVH &%0
`3DWHQW 
`
`PXOWLSOH UHJUHVVLRQ DQDO\VLV 05$
PRGHO S 
 $SSOLHG WR D GDWD VHW RI
`
` DSDUWPHQWV LQ IRXU SULPH DQG WKUHH VHPLSULPH UHVLGHQWLDO GLVWULFWV LQ
`
`6LQJDSRUH 7D\ GLVFORVHV GLYLGLQJ WKH GDWD LQWR D WUDLQLQJ VHW RI  SURSHUWLHV IRU
`
`EXLOGLQJ WKH %3 DQG 05$ PRGHOV DQG D WHVW VHW RI  SURSHUWLHV IRU WHVWLQJ WKH
`
`HVWLPDWLRQ SHUIRUPDQFH RI WKH WZR PRGHOV Id. 
 7D\¶V $11 PRGHO KDV DQ
`
`LQSXW OD\HU ZKLFK DFFHSWV D QRUPDOL]HG LQSXW YHFWRU FRQWDLQLQJ  SURSHUW\
`
`DWWULEXWHV DQG D ELDV QRGH D KLGGHQ OD\HU ZLWK DGGLWLRQDO QRGHV DQG DQ RXWSXW OD\HU
`
`ZLWK DQ RXWSXW QRGH WKDW SURYLGHV WKH HVWLPDWHG VDOHV SULFH SS  

`
`6RPH RI WKH NH\ DWWULEXWHV LQ 7D\¶V UHDO HVWDWH VDOHV DSSUDLVDO PRGHO LQFOXGH IORRU
`
`OHYHO EXLOW LQ IORRU DUHD SRVWDO GLVWULFW QXPEHU DQG WKH W\SH RI DSDUWPHQW S 

`
`,QWHUFRQQHFWLRQV EHWZHHQ WKH LQSXWWRKLGGHQ OD\HUV DQG WKH KLGGHQWRRXWSXW
`
`OD\HUV DUH UHSUHVHQWHG E\ ZHLJKW PDWULFHV S 

`
`'XULQJ WUDLQLQJ 7D\¶V PRGHO LQLWLDOO\ RXWSXWV DQ HVWLPDWHG VDOH SULFH XVLQJ D
`
`³IRUZDUG SDVV´ SURFHGXUH S 
 7KH IRUZDUG SDVV SURFHGXUH FRPSDUHV WKH
`
`HVWLPDWHG VDOH SULFH ZLWK WKH QRUPDOL]HG DFWXDO VDOHV SULFH DQG JHQHUDWHV DQ HUURU
`
`VLJQDO ZKLFK LV DFFXPXODWHG RYHU WKH  WUDLQLQJ YHFWRUV IROORZLQJ WKH LQLWLDO RQH
`
`WR REWDLQ WKH PHDQ HUURU VLJQDO SHU LQSXW YHFWRU HSRFK S 
 7D\ WKHQ XVHV D
`
`³EDFNZDUG SDVV´ SURFHGXUH ZKLFK EDVHG RQ WKH PHDQ HUURU VLJQDO SHU LQSXW YHFWRU
`
`SHU HSRFK DXWRPDWLFDOO\ DSSOLHV D ZHLJKW FRUUHFWLRQ WR DOO WKH FRQQHFWLRQV LQ WKH
`
`KLGGHQWRRXWSXW ZHLJKW PDWUL[ DQG VXEVHTXHQWO\ FKDQJHV WKH ZHLJKWV LQ WKH LQSXW
`
`
`
`
`
`Petitioner Exhibit 1012 p.20
`
`

`

`&DVH &%0
`3DWHQW 
`
`WRKLGGHQ PDWUL[ S 
 7KLV UHFXUVLYH SURFHVV RI XVLQJ WKH ZHLJKW PDWULFHV WR
`
`FRPSXWH WKH HVWLPDWHG VDOHV SULFHV LQ WKH IRUZDUG SDVV DQG VHOIDGMXVWLQJ WKH
`
`ZHLJKWV LQ WKH EDFNZDUG SDVV WHUPLQDWHV ZKHQ WKH URRW PHDQ VTXDUH HUURU DW WKH
`
`RXWSXW QRGH IDOOV EHORZ D SUHGHWHUPLQHG WROHUDQFH OHYHO RU FRQYHUJHV WR D
`
`PLQLPXP Id.

`
`/X ([KLELW 

`
`$V DQ DOWHUQDWLYH WR D UXOH EDVHG H[SHUW V\VWHP IRU DSSUDLVLQJ UHDO HVWDWH
`
`GLVFORVHG E\ /X DQG 0RRQH\ LQ  LQ WKLV UHIHUHQFH /X DSSOLHV QHXURFRPSXWLQJ
`
`WR DVVHVV UHVLGHQWLDO SURSHUWLHV IRU WD[ SXUSRVHV S  
 /X GLVFORVHV WKDW
`
`QHXUDO QHWZRUNV FDQ EH XVHG DORQH RU LQWHJUDWHG ZLWK RWKHU LQIRUPDWLRQ SURFHVVLQJ
`
`V\VWHPV LQFOXGLQJ H[SHUW V\VWHPV S 
 /LNH 7D\ /X GLVFORVHV WKDW D
`
`QHXUDO QHWZRUN FDQ EH WUDLQHG E\ D WUDLQLQJ VHW FRQWDLQLQJ D QXPEHU RI WUDLQLQJ
`
`FDVHV DQG WKDW WKH QHWZRUN DWWHPSWV WR PLQLPL]H WKH PDJQLWXGH RI HUURUV EHWZHHQ
`
`WKH DFWXDO RXWSXW DQG WKH H[SHFWHG RXWSXW E\ FKDQJLQJ LQWHUFRQQHFWLRQ ZHLJKWV
`
`EHWZHHQ SURFHVVLQJ HOHPHQWV RYHU D QHWZRUN RI LQWHUFRQQHFWV S 
 $IWHU D
`
`QHWZRUN WUDLQLQJ VHVVLRQ ZDV FRPSOHWHG WKH FKDUDFWHULVWLFV RI KRXVHV LQ WKH WHVWLQJ
`
`VHW ZHUH IHG LQWR WKH QHWZRUN DQG HVWLPDWHG VDOHV SULFHV ZHUH JHQHUDWHG E\ WKH
`
`QHWZRUN S 
 ,QLWLDOO\ GDWD IRU KRPHV VROG LQ ODVW  PRQWKV LQ D SDUWLFXODU
`
`VHFWLRQ RI WKH FLW\ ZHUH FROOHFWHG S 
 (YHQWXDOO\ GDWD IRU D WRWDO RI  FDVHV
`
`
`
`
`
`Petitioner Exhibit 1012 p.21
`
`

`

`&DVH &%0
`3DWHQW 
`
`ZHUH FROOHFWHG IURP D SRSXODWLRQ RI  KRPHV VROG LQ WKH HQWLUH FLW\ RYHU WZR
`
`\HDUV +RPHV VROG LQ WKH ILUVW  PRQWKV ZHUH XVHG WR WUDLQ WKH QHWZRUN DQG KRPHV
`
`VROG LQ WKH ODVW  PRQWKV  FDVHV
ZHUH XVHG WR WHVW WKH QHWZRUN Id.
 /X
`SURYLGHV WDEOHV RI VDOHV SULFHV DQG HUURU VWDWLVWLFV IRU WKH  SURSHUWLHV WHVWHG LQ
`
`7DEOHV  DQG  S 

`
`%R\OH ([KLELW 

`
`%R\OH GLVFORVHV DGGLWLYH DQG PXOWLSOLFDWLYH PRGHOV

This document is available on Docket Alarm but you must sign up to view it.


Or .

Accessing this document will incur an additional charge of $.

After purchase, you can access this document again without charge.

Accept $ Charge
throbber

Still Working On It

This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.

Give it another minute or two to complete, and then try the refresh button.

throbber

A few More Minutes ... Still Working

It can take up to 5 minutes for us to download a document if the court servers are running slowly.

Thank you for your continued patience.

This document could not be displayed.

We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.

Your account does not support viewing this document.

You need a Paid Account to view this document. Click here to change your account type.

Your account does not support viewing this document.

Set your membership status to view this document.

With a Docket Alarm membership, you'll get a whole lot more, including:

  • Up-to-date information for this case.
  • Email alerts whenever there is an update.
  • Full text search for other cases.
  • Get email alerts whenever a new case matches your search.

Become a Member

One Moment Please

The filing “” is large (MB) and is being downloaded.

Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.

Your document is on its way!

If you do not receive the document in five minutes, contact support at support@docketalarm.com.

Sealed Document

We are unable to display this document, it may be under a court ordered seal.

If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.


Access Government Site

We are redirecting you
to a mobile optimized page.





Document Unreadable or Corrupt

Refresh this Document
Go to the Docket

We are unable to display this document.

Refresh this Document
Go to the Docket