Case 6:21-cv-00735-ADA Document 32-13 Filed 01/27/22 Page 1 of 36
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`Exhibit 10
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`

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`Case 6:21-cv-00735-ADA Document 32-13 Filed 01/27/22 Page 2 of 36
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`______________
`
`
`HTC CORPORATION and HTC AMERICA, INC.,
`Petitioners,
`
`v.
`
`ANCORA TECHNOLOGIES INC.,
`Patent Owner.
`
`______________
`
`
`U.S. Patent No. 6,411,941
`
`Case No.: CBM2017-00054
`
`______________
`
`
`
`
`
`
`PATENT OWNER’S PRELIMINARY RESPONSE TO PETITION
`UNDER 37 C.F.R. § 42.207(a)
`
`
`
`
`
`

`

`Case 6:21-cv-00735-ADA Document 32-13 Filed 01/27/22 Page 3 of 36
`Case No.: CBM2017-00054
`Atty. Dkt. No.: ANCC0114CBMR1
`Patent No.: 6,411,941
`
`
`
`TABLE OF CONTENTS
`
`
`
`Table of Authorities .................................................................................................. ii
`
`List of Exhibits ......................................................................................................... iv
`
`I.
`
`II.
`
`Introduction ...................................................................................................... 1
`
`Overview of the ‘941 Patent ............................................................................ 1
`
`III. The ‘941 Patent is not eligible for CBM review under Section 18 of
`the AIA ............................................................................................................ 5
`
`A.
`
`B.
`
`By statute, CBM review is available only for a narrow range of
`plainly business-related patents ............................................................. 5
`
`The claims of the ‘941 Patent are not financial in nature
`because they recite or require no financial activity element ................. 8
`
`1.
`
`2.
`
`The ‘941 Patent describes a method to control access to
`software, which is a technique of general utility and not a
`financial activity .......................................................................... 9
`
`The claims of the ‘941 Patent do not recite or require the
`exchange of money ...................................................................12
`
`3. Whether the ‘941 Patent may be used to solve a piracy
`problem is “incidental” and thus irrelevant to CBM
`review eligibility .......................................................................16
`
`C.
`
`The ‘941 Patent recites a technological invention ..............................17
`
`1.
`
`2.
`
`The ‘941 Patent solves a technical problem using a
`technical solution ......................................................................17
`
`The ‘941 Patent recites a technological feature that is
`novel and unobvious .................................................................22
`
`IV. Conclusion .....................................................................................................27
`
`Certificate of Service ...............................................................................................28
`
`Certificate of Compliance Pursuant to 37 C.F.R. § 42.24 .......................................30
`
`
`
`
`
`
`
`i
`
`

`

`Case 6:21-cv-00735-ADA Document 32-13 Filed 01/27/22 Page 4 of 36
`Case No.: CBM2017-00054
`Atty. Dkt. No.: ANCC0114CBMR1
`Patent No.: 6,411,941
`
`
`
`Table of Authorities
`
`Cases
`
`Ancora Techs. v. Apple, Inc.,
`
`No. 11-cv-06357, 2012 WL 6738761 (N.D. Cal. Dec. 31, 2012),
`aff’d, 744 F.3d 732 (Fed. Cir. 2014) ..........................................................3, 21
`
`
`Apple Inc. v. SightSound Techs., LLC,
`
`CBM2013-00020, Paper No. 14 (PTAB Oct. 8, 2013) .......................... 15, 16
`
`Apple, Inc. v. ContentGuard Holdings, Inc.,
`
`CBM2015-00046, Paper No. 12 (PTAB June 3, 2015) .................................26
`
`Bloomberg L.P. v. Quest Licensing Corp.,
`
`CBM2014-00205, Paper No. 16 (PTAB Apr. 7, 2015) ...................... 6, 18, 25
`
`emnos USA Corp. v. dunnhumby Ltd.,
`
`CBM2015-00116, Paper No. 8 (PTAB Nov. 10, 2015) ......................... 21, 26
`
`Google Inc. v. At Home Bondholders’ Liquidating Trust,
`
`CBM2016-00036, Paper No. 12 (PTAB Aug. 22, 2016) ........................ 19-20
`
`Google Inc. v. Content Guard Holdings, Inc.,
`
`CBM2015-00040, Paper No. 34 (PTAB June 21, 2016)...............................11
`
`Hewlett Packard Co. v. YYZ LLC,
`
`CBM2015-00049, Paper No. 9 (PTAB June 30, 2015) .................................20
`
`Indeed, Inc. v. Career Destination Dev., LLC,
`
`CBM2014-00069, Paper No. 12 (PTAB Aug. 20, 2014) ..............................16
`
`Informatica Corp. v. Protegrity Corp.,
`
`CBM2015-00021, Paper No. 38 (PTAB May 31, 2016)........................ 16, 17
`
`Motorola Mobility, LLC v. Intellectual Ventures I, LLC,
`
`CBM2015-00004, Paper No. 9 (PTAB Mar. 27, 2015). ...............................21
`
`
`
`ii
`
`

`

`Case 6:21-cv-00735-ADA Document 32-13 Filed 01/27/22 Page 5 of 36
`Case No.: CBM2017-00054
`Atty. Dkt. No.: ANCC0114CBMR1
`Patent No.: 6,411,941
`
`
`Old Republic Gen. Ins. Grp., Inc. v. Intellectual Ventures II LLC,
`
`CBM2015-00184, Paper No. 7 (PTAB Apr. 15, 2016) .................................26
`
`Par Pharm., Inc. v. Jazz Pharm., Inc.,
`
`CBM2014-00149, Paper No. 12 (PTAB Jan. 13, 2015) ................................15
`
`PNC Bank NA v. Parus Holdings, Inc.,
`
`CBM2015-00109, Paper No. 10 (PTAB Nov. 9, 2015) ................................10
`
`Qualtrics LLC v. OpinionLab, Inc.,
`
`CBM2016-00003, Paper No. 9 (PTAB Apr. 13, 2016) .................................10
`
`Sally Beauty Holdings, Inc. v. Intellectual Ventures I LLC,
`
`CBM2016-00030, Paper No. 8 (PTAB Aug. 2, 2016) ............................ 25-26
`
`Samsung Elec. Am., Inc. v. Smartflash LLC,
`
`CBM2014-00190, 2015 WL 1535809 (PTAB Apr. 2, 2015) .......................11
`
`Secure Axcess, LLC v. PNC Bank Nat. Ass’n,
`
`848 F.3d 1370 (Fed. Cir. 2017) .................................................. 6, 7, 8, 12, 16
`
`SEGA of Am., Inc. v. Uniloc USA, Inc.,
`
`CBM2014-00183, Paper No. 11 (PTAB Mar. 10, 2015) ... 7-10, 12, 14-15, 17
`
`ServiceNow, Inc. v. Hewlett-Packard, Co.,
`
`CBM2015-00108, Paper No. 10 (PTAB Oct. 7, 2015) .......................... 10, 14
`
`Unwired Planet, LLC v. Google Inc.,
`
`841 F.3d 1376, 1380 (Fed. Cir. 2016) ....................................... 6, 7, 11, 14-17
`
`Statutes
`AIA §18 ....................................................................................................... 5, 6, 8, 17
`
`Other Authorities
`
`PTO Final Review Rules, 77 Fed. Reg. 48,680, 48,709 (Aug. 14, 2012) ................. 6
`
`Rules
`37 C.F.R. §42.301 ............................................................................... 5, 6, 17, 22, 24
`
`
`
`
`
`iii
`
`

`

`Case 6:21-cv-00735-ADA Document 32-13 Filed 01/27/22 Page 6 of 36
`Case No.: CBM2017-00054
`Atty. Dkt. No.: ANCC0114CBMR1
`Patent No.: 6,411,941
`
`
`
`
`
`List of Exhibits
`
`Date
`2/5/2002
`
`Identifier
`2/5/2002 Response
`
`2/20/2002
`
`3/9/2010
`
`2/20/2002 Notice of
`Allowance
`3/9/2010 Notice of
`Intent
`
`Exhibit
`No.
`2001
`
`2002
`
`Description
`February 5, 2002 Response to
`Office Action
`February 20, 2002 Notice of
`Allowance
`2003 March 9, 2010 Notice of Intent to
`Issue an Ex Parte Reexamination
`Certificate
`
`
`
`
`
`
`
`iv
`
`

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`Case 6:21-cv-00735-ADA Document 32-13 Filed 01/27/22 Page 7 of 36
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`Case No.: CBM2017-00054
`Patent No.: 6,411,941
`
`
`I.
`
`Introduction
`
`Atty. Dkt. No.: ANCC0114CBMR1
`
`Petitioners (collectively “HTC”) have failed to establish that U.S. Patent No.
`
`6,411,941 (the ’941 Patent) is eligible for CBM review. HTC improperly
`
`characterizes the claims as “financial” based on a “test” that the Federal Circuit has
`
`unequivocally held to be insufficient and misaligned with the CBM eligibility
`
`statute. HTC also fails to address an entire prong of the “technological invention”
`
`test, providing no discussion of the claimed invention’s technical problem or
`
`technical solution. For these reasons, the Board should deny institution of this CBM
`
`review proceeding against any of the claims of the ’941 Patent.
`
`II. Overview of the ‘941 Patent
`
`The ’941 Patent discloses a specific and novel approach to reducing software
`
`piracy. As the “Background of the Invention” explains, prior to the ’941 Patent both
`
`“hardware” and “software” approaches existed for attempting to reduce the known
`
`problem of software piracy. (Ex. 1001, ’941 Patent at 1:12-32.) Hardware “dongles”
`
`were externally inserted into a computer’s “port” (i.e., a computer’s “parallel”
`
`printing port), and the “dongle” would determine whether a particular software
`
`program was allowed to operate on a particular computer. (Id. at 1:27-29.) Although
`
`“dongles” were effective at reducing piracy, such a solution was also expensive to
`
`implement and cumbersome for customers. (Id. at 1:26-32.) Another approach
`
`relied on software “license keys” that could be stored on the computer’s hard drive.
`
`1
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`

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`Case 6:21-cv-00735-ADA Document 32-13 Filed 01/27/22 Page 8 of 36
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`Case No.: CBM2017-00054
`Patent No.: 6,411,941
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`(Id. at 1:19-21.) Such software-based approaches, while efficient, were recognized
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`Atty. Dkt. No.: ANCC0114CBMR1
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`as not effectively reducing piracy. (Id. at 1:19-26.)
`
`Facing these shortcomings in the existing technology, the ’941 Patent sought
`
`a more effective approach to reduce software piracy. The ’941 Patent explains that
`
`the computer’s existing “Basic Input Output System” (“BIOS”) could be used in an
`
`unconventional manner to store a verification “key” that could “halt” or restrict
`
`unauthorized operation of a software program. (Id. at 1:44-2:27.) The ’941 Patent
`
`recognized that by storing the verification “key” in the computer BIOS, no additional
`
`hardware (e.g., a “dongle”) would be necessary, but using the computer’s BIOS
`
`would also deter hackers from illegally copying software programs. (Id. at 3:4-17.)
`
`The claims of the ’941 Patent capture the ’941 Patent’s novel and unique
`
`solution to preventing illegal copying of software programs. First, the claims recite
`
`manipulating the computer’s BIOS1 to “set up” a “verification structure” in the
`
`
`1 The Northern District of California construed the term “BIOS” to mean “an
`
`acronym for Basic Input/Output System. It is the set of essential startup operations
`
`that run when a computer is turned on, which tests hardware, starts the operating
`
`system, and supports the transfer of data among hardware devices.” (Ex. 1009 at
`
`20.)
`
`2
`
`

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`Case 6:21-cv-00735-ADA Document 32-13 Filed 01/27/22 Page 9 of 36
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`Case No.: CBM2017-00054
`Patent No.: 6,411,941
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`“erasable, non-volatile memory2 of the BIOS.” This claimed “erasable” BIOS
`
`Atty. Dkt. No.: ANCC0114CBMR1
`
`memory is distinct from “Read Only Memory” or “ROM” (which is not “erasable”)
`
`and is also distinct from the “volatile” memory area of the computer. (Id. at 5:9-16.)
`
`The claimed verification structure established in the erasable memory area of the
`
`BIOS is used to store one or more “license records”3 that are then used to verify
`
`whether a particular computer program is licensed to execute on the particular
`
`computer on which the “verification structure” has been set up, and in which the
`
`“license record” is stored.
`
`Claim 1 of the ‘941 Patent reads as follows:
`
`1. A method of restricting software operation within a license for use
`
`with a computer including an erasable, non-volatile memory area of a
`
`BIOS of the computer, and a volatile memory area; the method
`
`comprising the steps of:
`
`selecting a program residing in the volatile memory,
`
`
`2 The Federal Circuit affirmed the Northern District of California’s holding that the
`
`term “non-volatile memory” was not indefinite. (Ex. 1010 at 14).
`
`3 The Northern District of California construed the term “license record” to mean “a
`
`record from a licensed program with information for verifying that licensed
`
`program.” (Ex. 1009 at 20.)
`
`3
`
`

`

`Case 6:21-cv-00735-ADA Document 32-13 Filed 01/27/22 Page 10 of 36
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`Case No.: CBM2017-00054
`Patent No.: 6,411,941
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`Atty. Dkt. No.: ANCC0114CBMR1
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`using an agent to set up a verification structure in the erasable, non-
`
`volatile memory of the BIOS, the verification structure accommodating
`
`data that includes at least one license record,
`
`verifying the program using at least the verification structure from the
`
`erasable non-volatile memory of the BIOS, and
`
`acting on the program according to the verification.
`
`For illustrative purposes, the figure below demonstrates how the invention of
`
`claim 1 modifies the preexisting “BIOS” (shown in yellow) by setting up a
`
`“verification structure” in BIOS – a “structure” that did not previously exist in
`
`conventional BIOS. (Id., claim 1, 6:64-67.) This “verification structure” is set up
`
`to accommodate data to include a “license record” corresponding to a computer
`
`program.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Claim 1 uses this novel “verification structure” to “verify” a computer
`
`program that is located in the computer’s volatile memory (shown in orange). (Ex.
`
`1001, ’941 Patent, 7:1-3.) This verification step is then used to determine whether
`
`4
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`

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`Case 6:21-cv-00735-ADA Document 32-13 Filed 01/27/22 Page 11 of 36
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`Case No.: CBM2017-00054
`Patent No.: 6,411,941
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`the computer program will be permitted to run on the computer or whether another
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`Atty. Dkt. No.: ANCC0114CBMR1
`
`action is required: “acting on the program according to the verification.” (Id. at 4.)
`
`For example, the program may be stopped or erased, or the user may be informed of
`
`the unlicensed status of the program. (Id. at 2:20-26, 6:40-52.)
`
`III. The ‘941 Patent is not eligible for CBM review under Section 18
`of the AIA
`
`The ‘941 Patent is not eligible for CBM review under AIA §18 because (1) it
`
`does not “claim[] a method or corresponding apparatus for performing data
`
`processing or other operations used in the practice, administration, or management
`
`of a financial product or service” (i.e., it is not financial in nature), AIA §18(d)(1),
`
`and (2) because “the claimed subject matter as a whole recites a technological feature
`
`that is novel and unobvious over the prior art; and solves a technical problem using
`
`a technical solution” (i.e., it is a technological invention), 37 C.F.R. §42.301(b).
`
`A. By statute, CBM review is available only for a narrow range
`of plainly business-related patents
`
`To be eligible for covered business method (CBM) review, a patent must both
`
`(1) be financial in nature; and (2) not claim a technological invention. AIA §18; 37
`
`C.F.R. §42.301(a). A CBM patent is restricted by statute to one
`
`that claims a method or corresponding apparatus for performing data
`
`processing or other operations used in the practice, administration, or
`
`management of a financial product or service . . .
`
`5
`
`

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`Case 6:21-cv-00735-ADA Document 32-13 Filed 01/27/22 Page 12 of 36
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`Case No.: CBM2017-00054
`Patent No.: 6,411,941
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`AIA §18(d)(1). Petitioners have the burden to prove that the patent meets both
`
`Atty. Dkt. No.: ANCC0114CBMR1
`
`criteria. 37 C.F.R. §42.301(a); PTO Final Review Rules, 77 Fed. Reg. 48,680,
`
`48,709 (Aug. 14, 2012); see also Bloomberg L.P. v. Quest Licensing Corp.,
`
`CBM2014-00205, Paper No. 16 at 7-11 (PTAB Apr. 7, 2015).
`
`The Federal Circuit has recently clarified that the U.S. Patent and Trademark
`
`Office’s previously broad criteria for CBM eligibility—which had inquired only
`
`“whether the patent claims activities that are financial in nature, incidental to a
`
`financial activity, or complementary to a financial activity”—exceeded statutory
`
`bounds and were “not in accordance with law.” Unwired Planet, LLC v. Google Inc.,
`
`841 F.3d 1376, 1380, 1382 (Fed. Cir. 2016).
`
`The Federal Circuit in Unwired Planet emphasized the limits Congress placed
`
`on the definition of a CBM patent, 841 F.3d at 1382 (noting further that “[a]ll
`
`patents, at some level, relate to a potential sale of a good or service.”), adding that
`
`“[g]eneral policy statements [relied on in promulgating the ‘incidental or
`
`complementary’ standard] . . . are not legally binding” and that “the views of a single
`
`legislator, even a bill’s sponsor, are not controlling.” Id. at 1381. The Federal Circuit
`
`has re-emphasized this narrowing. Secure Axcess, LLC v. PNC Bank Nat. Ass’n, 848
`
`F.3d 1370, 1380 (Fed. Cir. 2017) (warning of “unintended consequences” of
`
`overbroad interpretation and holding that “the statutory definition of a CBM patent
`
`requires that the patent have a claim that contains, however phrased, a financial
`
`6
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`

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`Case 6:21-cv-00735-ADA Document 32-13 Filed 01/27/22 Page 13 of 36
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`Case No.: CBM2017-00054
`Patent No.: 6,411,941
`
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`activity element” (emphasis added)). Accordingly, care must be taken when relying
`
`Atty. Dkt. No.: ANCC0114CBMR1
`
`on pre-Unwired Planet decisions regarding the breadth of CBM review eligibility.
`
`Following Secure Axcess and Unwired Planet, CBM eligible patent claims
`
`must surpass a merely “incidental or complimentary” relationship to financial
`
`activity and must instead be squarely directed to a financial activity themselves. As
`
`is consistent with the common-sense notion of what constitutes a business method,
`
`a financial activity element is needed. 848 F.3d at 1381; see also SEGA of Am., Inc.
`
`v. Uniloc USA, Inc., CBM2014-00183, Paper No. 11 at 12-13 (PTAB Mar. 10, 2015)
`
`(holding that CBM-eligible patents must “recite or require” an activity involving the
`
`movement of money).
`
`As explained above, the ‘941 Patent “relates to a method and system of
`
`identifying and restricting an unauthorized software program's operation.” (Ex.
`
`1001, ‘941 Patent at 1:6-8.) Previous technical methods to restrict unauthorized
`
`software use were inadequate. Software based methods were effective for “honest
`
`software users” but vulnerable to “hackers,” who could easily manipulate volatile
`
`memory. (Id. at 1:19-26.) Pure hardware-based methods—requiring, for example, a
`
`dongle needing to be physically plugged into a computer’s parallel port—were
`
`incompatible with certain methods of software distribution, such as downloading.
`
`(Id. at 1:27-1:32.) The ‘941 Patent overcame these technical limitations by using
`
`normally inaccessible nonvolatile BIOS memory to set up a data storage structure
`
`7
`
`

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`Case 6:21-cv-00735-ADA Document 32-13 Filed 01/27/22 Page 14 of 36
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`Case No.: CBM2017-00054
`Patent No.: 6,411,941
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`for software license records. (Id. at 6:59-7:4.) The storage of software licensing data
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`Atty. Dkt. No.: ANCC0114CBMR1
`
`in the normally inaccessible computer BIOS renders such data less vulnerable to
`
`hacking and allows increased control of software operation in any context. (Id. at
`
`2:62-3:17.)
`
`Ignoring this intrinsic record, Petitioners mischaracterize the ‘941 Patent as a
`
`“business method.” This is plainly in contrast to the common-sense meaning
`
`intended by the AIA.
`
`B.
`
`The claims of the ‘941 Patent are not financial in nature
`because they recite or require no financial activity element
`
`The ‘941 Patent does not “claim[] a method or corresponding apparatus for
`
`performing data processing or other operations used in the practice, administration,
`
`or management of a financial product or service . . .” AIA §18(d)(1). Accordingly,
`
`CBM review should be denied.
`
`The focus of CBM review eligibility determination is on the claims of a
`
`patent “in the traditional patent law sense.” Secure Axcess, LLC v. PNC Bank Nat’l
`
`Ass’n, 848 F.3d 1370, 1379 (Fed. Cir. 2017). For eligibility, a claim must require “a
`
`financial activity element,” 848 F.3d at 1381; see also SEGA of Am., Inc. v. Uniloc
`
`USA, Inc., CBM2014-00183, Paper No. 11 at 12-13 (PTAB Mar. 10, 2015) (holding
`
`that CBM-eligible patents must “recite or require” an activity involving the
`
`movement of money). The claims of the ‘941 Patent do not require a financial
`
`8
`
`

`

`Case 6:21-cv-00735-ADA Document 32-13 Filed 01/27/22 Page 15 of 36
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`Case No.: CBM2017-00054
`Patent No.: 6,411,941
`
`
`activity.
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`Atty. Dkt. No.: ANCC0114CBMR1
`
`1.
`
`The ‘941 Patent describes a method to control access
`to software, which is a technique of general utility and
`not a financial activity
`
`The ‘941 Patent describes a “method of restricting software operation within
`
`a license limitation.” (See Ex. 1001, ‘941 Patent at Abstract.) This involves a
`
`particularly innovative technical process wherein an authentication verification data
`
`structure is set up in the nonvolatile BIOS memory area not ordinarily usable for
`
`such storage. (See Ex. 1001, ‘941 Patent.)
`
`Technology for restricting software use has been found ineligible for CBM
`
`review. See, e.g., SEGA of Am., Inc. v. Uniloc USA, Inc., CBM2014-00183, Paper
`
`No. 11 (PTAB Mar. 10, 2015). In SEGA, the PTAB declined to extend CBM
`
`eligibility to technology for restricting software, even under the broad “incidental or
`
`complementary” standard. SEGA of Am., Inc. v. Uniloc USA, Inc., CBM2014-
`
`00183, Paper No. 11 at 3 (PTAB Mar. 10, 2015) (describing patent for invention
`
`allowing software to run without restrictions if a specified licensing procedure has
`
`taken place). There, as here, no movement of money was recited or required. Id. at
`
`11-12 (observing that “[t]he claims on their face are directed to technology that
`
`restricts the use of software. The software to be protected has no particular
`
`relationship to a financial product or service[,]” even though “the registration
`
`process ‘requires the user to provide details, including payment information, to the
`
`9
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`Case No.: CBM2017-00054
`Patent No.: 6,411,941
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`software vendor.’” (emphasis added)).
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`Atty. Dkt. No.: ANCC0114CBMR1
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`The PTAB has also routinely denied CBM review eligibility to claims of
`
`“general utility” with no tie to a specific financial product or service. See, e.g.,
`
`Qualtrics LLC v. OpinionLab, Inc., CBM2016-00003, Paper No. 9 at 5 (PTAB Apr.
`
`13, 2016) (finding that a patent claiming a website tool for gathering information is
`
`not a CBM patent because it is of “general utility”); ServiceNow, Inc. v. Hewlett-
`
`Packard, Co., CBM2015-00108, Paper No. 10 at 15-16 (PTAB Oct. 7, 2015)
`
`(denying CBM institution for patent claiming a “system for managing a conversation
`
`in a web service” because the “claims are of general utility” with no recitation of
`
`“finance related” terminology or limitations); PNC Bank NA v. Parus Holdings, Inc.,
`
`CBM2015-00109, Paper No. 10 at 15 (PTAB Nov. 9, 2015) (finding a patent
`
`claiming “methods, systems, and devices for managing user communications,
`
`including using speech recognition to interpret input from users” is not CBM eligible
`
`because its “claims are not limited to any particular context and, instead, are directed
`
`to commercial and non-commercial applications alike”); SEGA of Am., Inc. v. Uniloc
`
`USA, Inc., CBM2014-00183, Paper No. 11 at 11 (PTAB Mar. 10, 2015) (denying
`
`CBM institution where “claims on their face are directed to technology that restricts
`
`the use of software” having “no particular relationship to a financial product or
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`service”). No claim limitation in the ‘941 Patent restricts—or even ties—its usage
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`to a particular financial product or service.
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`10
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`Case No.: CBM2017-00054
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`Petitioners cite a handful of cases to argue that software access restriction is
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`CBM eligible. However, in these cases, either (1) the claims have specifically
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`required an additional financial activity; or (2) the PTAB improperly relied on the
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`erroneous “incidental or complementary” standard for CBM eligibility.
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`For instance, the PTAB found patents to be CBM eligible where claimed
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`subject matter included “data accessed conditioned on payment validation.”
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`Samsung Elec. Am., Inc. v. Smartflash LLC, CBM2014-00190, 2015 WL 1535809,
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`at *4 (PTAB Apr. 2, 2015) (relying, however, on Sen. Schumer’s legislative history
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`statement for breadth of CBM eligibility, as made defunct by Unwired Planet).
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`Google Inc. v. Content Guard Holdings, Inc., CBM2015-00040, Paper No. 34
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`at 11-14 (PTAB June 21, 2016), which petitioners rely on to insist that licensing of
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`software constitutes a financial activity, concerned a patent explicitly describing the
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`transfer of rights in the context of a commercial transaction—using language such
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`as “supplier” and “consumer.” The patent there involved affirmatively granting
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`rights, not preventing access by hackers as in the ‘941 Patent. Id. Moreover, the
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`PTAB relied on the erroneous “incidental or complementary” standard. Id. at 12.
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`There, too, the financial transactional context was “an essential element of the
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`invention” recited in the claim preamble. Id. at 12 (emphasis added). In contrast,
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`regarding the ‘941 Patent, petitioners contend that the “supposed innovation is the
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`setting up step” in which license information is stored in a computer’s BIOS. (See
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`11
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`Petition at 5.) Petitioners make no argument that the essential step of the ‘941 Patent
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`is financial in nature.
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`Notably, Secure Axcess, LLC v. PNC Bank Nat’l Ass’n, 848 F.3d 1370 (Fed.
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`Cir. 2017) (holding that a CBM patent must be directed to a financial product or
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`service and not merely incidental or complimentary to one)—in which CBM review
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`was denied—involved very similar technology (security-oriented authentication)
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`arguably much more appropriate to a financial context than the ‘941 Patent. In
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`Secure Axcess, the patent claims referred to “customers.” Id. at 1374. This
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`demonstrates that the ‘941 Patent fall within the Federal Circuit’s exclusions from
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`CBM review eligibility.
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`2.
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`The claims of the ‘941 Patent do not recite or require
`the exchange of money
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`Petitioners point to language in ‘941 Patent claim 1 that recites “acting on the
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`program according to the verification.” (Petition at 12-13.) But this claim limitation
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`does not require “a financial activity element.” Secure Axcess, 848 F.3d at 1381;
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`SEGA of Am., CBM2014-00183, Paper No. 11 at 12-13 (PTAB Mar. 10, 2015)
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`(holding that CBM-eligible patents must “recite or require” an activity involving the
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`movement of money). This is confirmed by dependent claim 10 which recites:
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`10. A method according to claim 9 wherein acting on the program
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`includes
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`the step:
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`restricting
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`the program's operation with
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`12
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`Case No.: CBM2017-00054
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`predetermined limitations if the comparing yields non-unity or
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`insufficiency.
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`Dependent claim 10 confirms that the “acting” limitation of claim 1 does not
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`require a “financial activity element” or “recite or require” an activity involving the
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`movement of money. These claims cover purely technical functions.
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`Petitioners also point to language in dependent claim 2 that references a
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`“license authentication bureau.” (Petition at 12-13.) Like the “acting on a program”
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`limitation addressed above, this limitation fails to require a “financial activity
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`element” or the movement of money. The ‘941 specification explains that the
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`“bureau is a telecommunications accessible processor where functions such as
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`formatting, encrypting, and verifying may be performed.” (See, e.g., Ex. 1001, ‘941
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`Patent at 3:42-44.) Dependent claims 3 and 4 recite technical functions of the
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`“license authentication bureau” recited in claim 2. Claim 3 recites how the bureau
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`remotely assists in physically setting up the verification structure in the computer’s
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`BIOS. Claim 4 recites how the bureau remotely assists in physically performing the
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`verification step. Nowhere do the claims require that the bureau perform any
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`financial function.
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`Last, Petitioners point to language in the ‘941 Patent specification (not the
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`claims) noting that the “acting on the program” step “may include actions such as
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`erasing the software in volatile memory, warning the license applicant/user, placing
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`Case No.: CBM2017-00054
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`a fine on the applicant/user through the billing service charges collected at the license
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`bureau (if applicable), or scrambling sections of the BIOS of the computer (or of
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`functions interacting therewith)”4 (see Ex. 1001, ‘941 Patent at 6:46-52; Petition at
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`12-13). Petitioners attempt to argue, relying on pre-Unwired Planet dicta from
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`SEGA (Petition at 12-13), that these examples involve a financial activity.
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`However, as discussed above, the claimed methods are of general utility, and
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`the PTAB has previously denied institution of CBM reviews for general utility
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`patents, “notwithstanding the presence of some exemplary disclosure in the
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`Specification of finance-related activity.” ServiceNow, Inc. v. BMC Software, Inc.,
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`CBM2015-00107, Paper No. 12 at 13 (PTAB Sept. 11, 2015); Par Pharm., Inc. v.
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`Jazz Pharm., Inc., CBM2014-00149, Paper No. 12 at 13 (PTAB Jan. 13, 2015).
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`Thus, even if there was an example in the specification of a financial activity, this
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`would be insufficient for CBM eligibility.
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`4 The quote presented by Petitioners is not accurate. Petitioners omit a qualifying
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`parenthetical and add a period. Cf. Petition at 12 (“placing a fine on the
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`applicant/user through the billing service charges collected at the license bureau”)
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`with Ex. 1001,‘941 Patent at 6:49-50 (“placing a fine on the applicant/user through
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`the billing service charges collected at the license bureau (if applicable), . . .”
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`(emphasis added)). The omission obscures the hypothetical nature of the example.
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`14
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`Even if the categories of possible CBM-eligible activities noted in dicta in
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`SEGA (and relied on by Petitioners) were applied post-Unwired Planet, those
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`constitute “processing of payments related to the licensing of software” and
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`“facilitating payment of a software license.” SEGA of Am., Inc. v. Uniloc USA, Inc.,
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`CBM2014-00183, Paper No. 11 at 13 (PTAB Mar. 10, 2015). These are explicitly
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`described as transactional, enabling the purchase of a product. In contrast, the
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`example in the ‘941 Patent, as noted above, describes punitive restrictions in the
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`form of a possible fine (among other punitive measures, such as erasing memory or
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`scrambling the BIOS). (Ex. 1001, ‘941 Patent at 6:46-52.) Moreover, the
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`specification devotes less than a sentence to the issue of a possible fine, and the
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`claims are silent on the subject. (Id. at 6:46-52); cf. Apple Inc. v. SightSound Techs.,
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`LLC, CBM2013-00020, Paper No. 14 at 11-12 (PTAB Oct. 8, 2013) (noting that
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`claims recite “transferring money electronically” and specification describes
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`methods of payment and recites that the invention is a method of “sale”).
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`Further, the PTAB decisions relied on by Petitioners regarding the charging
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`of fees as financial activity are based on the pre-Unwired Planet “incidental or
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`complementary” standard. See, e.g., Indeed, Inc. v. Career Destination Dev., LLC,
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`CBM2014-00069, Paper No. 12 at 9-10 (PTAB Aug. 20, 2014) (“[T]he claims
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`encompass searching for employment candidates that are certified public
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`accountants. A certified public accountant job is a job that involves a financial
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`Case No.: CBM2017-00054
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`activity. Thus, we determine that the ‘901 patent is at least incidental and/or
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`Atty. Dkt. No.: ANCC0114CBMR1
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`complementary to a financial activity, and determine, therefore, that the ‘901 patent
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`is a covered business method patent.”); Apple, Inc. v. SightSound Techs., LLC,
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`CBM2013-0020, Paper No. 14 (PTAB Oct. 8, 2013).
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`3. Whether the ‘941 Patent may be used to solve a
`piracy problem is “incidental” and thus irrelevant to
`CBM review eligibility
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`As established, for