CUSTOMEDIA TECHNOLOGIES, LLC v. DISH NETWORK CORPORATION — Oral Argument

0:00 Judge Prost Before we begin our regular order today, I feel compelled to do this, although it's hard for me.

0:08 We often talk about our law clerks when they're leaving and give a little summary,

0:13 and it's emotional for us because we become very close to our clerks in the year or two they serve

0:18 with us. But today is just monumentally beyond that, because this will be the last time that

0:28 I sit with my friend Reggie Walker. And I'm still fighting with him, so I'm hoping he still

0:38 won't leave. So if I have to take this back someday, I'm more than happy to take it. But

0:48 it's just a very emotional thing. And I speak, I know, on behalf of all of the judges on our court.

0:54 We were Reggie's second career. He served in the Navy for 20 years before he came here,

0:59 and even though he's pretending and he's calling it retirement, I suspect he might have at least a

1:05 third career in him. And he still looks younger than, you know, young enough to be my son,

1:11 and that hasn't changed in the 18 years we served together. He's been with all of us on the bench

1:18 this morning for all the time we've been here, including Judge Dyke, who's been here almost 20

1:23 years, I think, and I've been here 18. And Reggie was here when we got here.

1:29 And his service to the court has just been unprecedented. You all see what you see,

1:39 but so much goes into whatever we do, making our lives smooth, making us do our job the way we're

1:46 supposed to do it. And that's all on Reggie. And he served us when he's done monumental work for us

1:53 when the court has traveled. You have no idea. When we were in LA, we sat in seven different

1:56 locations at one time. And he forgave me for that.

1:59 It took a little while. And I'd just like to express to him, he needed an audio because he's

2:05 also in charge of the audio stuff. So I wanted to make sure that he had a public record. I wanted

2:12 to go on the public record to express on behalf of the entire court, just the honor and privilege

2:18 it's been for to have him serve with us these many, many years. And to say that he will be

2:25 missed is the understatement of the century. But

2:29 we're still not letting him go entirely, no matter what he pretends. So you all have not

2:35 seen the last of Reggie. And we love you. I can only second what Chief Judge Probst said.

2:44 Judge Dyk Reggie, thank you so much for all your help. You've been terrific. You make this court a

2:49 special place. And we're all very, very appreciative. I agree with both of my colleagues.

2:55 Judge Moore I don't even know what to say. It's just such a heavy heart that I'll say goodbye to you.

3:00 You've just been a great friend to me and the whole court. And if you weren't a Cowboys fan,

3:08 Judge Prost you'd be perfect. So we'll begin this morning. Custom media technologies versus Dish Network.

3:22 As colleagues know, and we appreciate your cooperation in this, we were faced with four

3:27 separate appeals, which seemed an inordinate amount of trouble. So I'm going to start with you,

3:32 Mr. Morton, and then we'll move on to the next case.

3:33 So we have a little more time, given the issue. Sometimes we have one case and it consumes 12

3:37 issues. So we've divided up the time a little differently. And you may not even need as much

3:43 time as you have, but obviously our questions will determine where we go. So we welcome you

3:48 this morning. The first two cases, which are combined for argument, as I said, are custom

3:53 media technologies, 182239 and 182240. Mr. Morton, whenever you're ready.

4:12 Appellant Attorney (Raymond William Mort) May it please the court. I'm Ray Morton. I represent custom media. The claims of the 090

4:17 patent claim a specific new way for the network to control a reserved storage section of memory

4:27 on a remote user's device. This departed from the prior art traditional methods where the systems

4:35 like Logan and Hertz would have a storage capacity on the user's device where it could store anything.

4:42 The advertisement, maybe other data programs and so forth, would be stored on a single disk.

4:47 Judge Prost So the heart of one of the issues, at least a principal issue, is claim construction.

4:52 So you want to, and let me ask you just as a predicate for that, is that if we reject your

4:58 claim construction argument, I'd like to understand how that affects your 101 issue.

5:03 Appellant Attorney (Raymond William Mort) Well, yes, because I think if you reject it, it affects the 102. I don't think that it rejects

5:10 the 101.

5:12 Uh, throughout the prosecution, uh, it was demonstrated that we have improved the prior

5:19 systems. Maybe height anticipates us, but we still meet one to one because we've improved the system.

5:26 Uh, the examiner, I mean, it took 10 years and he said he finally caught on. He misunderstood how

5:31 we were using the phrase reserve the district court and dish in their briefing said reserved

5:39 meant only. That's what we meant it to be in the prosecution.

5:42 We agree with that. Uh, so the examiner recognized that the improvement was the ability of the

5:49 Judge Prost system to guarantee the no. So let me just circle back because if, and the board rejected

5:55 Appellant Attorney (Raymond William Mort) that claim construction, correct, the board, it's, they rejected this notion that it's

6:03 exclusive, but they tied it to their understanding that it was the memory that they believe that

6:09 we were asserting had to reject the storage of.

6:13 Right.

6:13 Advertising data. That was never our argument. They misinterpreted our argument and they effectively

6:20 rejected it because I don't believe they understood it. What we said is it's the receiver itself,

6:25 the processor on the receiver. When the data comes in, it determines where that data is going

6:29 to be stored. The memory itself is dumb memory. It'll store anything that you happen to put there.

6:36 The board said, we don't read the claim as saying that the memory has to have some special

6:41 structure that precludes it.

6:54 That's what the examiner thought throughout the prosecution until he said he finally caught on that our reserve was more narrow and it assures that there's space on the disc.

7:09 Judge Prost But the board's construction continued to reject what you've just said here.

7:13 Your analysis.

7:14 Appellant Attorney (Raymond William Mort) Well, they said, I don't believe that their construction makes much sense, frankly, because they say that there is no

7:22 exclusivity requirement. If there's no exclusivity requirement, then there's no reservation. It's just an open-ended system.

7:29 We have to differentiate. We have an open-ended system that will store anything to our claim.

7:37 There's a difference between the two. If you take what the board is saying, there is no difference. There has to be a difference between

7:43 us and an open-ended system. It's this processor that sits in the middle that decides where the data is going to be stored.

7:54 The board believed that there was this other option that we were arguing, which is the memory itself somehow guards itself.

8:01 That's not what our position was. So the board said, oh, it must be something over here, but that evaporates the meaning of reserve from the claim.

8:10 Reserve has to have some kind of meaning.

8:13 Judge Dyk In your response to the examiner's rejection, when you added the word only, it sounds as though you described, this is at 2101 and the following of the appendix,

8:30 it sounds as though you described the term only as meaning the same thing as what you now say the word reserve means.

8:39 Appellant Attorney (Raymond William Mort) Well, that's exactly, yes. And what I will point you to.

8:43 Judge Dyk Well, if that's.

8:44 The case then, how can it be that since the examiner refused to allow you to use the word only, that you can accomplish the same thing simply by using a different word?

8:59 Appellant Attorney (Raymond William Mort) Because we're not, the examiner thought that the use of the word only meant that the memory itself was somehow incapable of storing memory, of data.

9:09 This is the same thing that came up in the district court.

9:12 If you look at the district court claim destruction order,

9:14 he interpreted that amendment the way the examiner was reading it, to mean that the memory was unusable to store anything else.

9:21 It was incapable dish in their briefing to the district court said that reserve meant only that that's what it meant.

9:33 And I'll, I'll just point you to it.

9:35 This is the JN 13 applicants stated that the storage sections are created to store only advertising data and emphasize that the storage sections are adapted to store.

9:44 Only.

9:44 That.

9:45 Advertising data that was created.

9:50 So the applicant explicitly quoted the dictionary definition of reserved and to define reserve storage kept only for advertising data to show that reserved and only have the same interpretation.

10:03 That's JN 14.

10:05 So dish is telling the district court that they have the same meaning the district court understood and understood that the amendment that was before the examiner was being interpreted to mean that the memory was incapable of.

10:17 Storing anything else.

10:19 He finally says in the APX APPX 2404 that he was slow to catch on that he finally realized that that's not what was there to give support for that.

10:32 If you look at claim 56 claim 56 uses the word exclusively.

10:37 So the examiner recognized and this goes back to APPX 1202 that before he was saying you're saying that it happens to only store.

10:48 Advertising data I'm not giving that patentable weight because there's nothing doing anything you haven't changed anything you just happen to be using it that way he we then demonstrated that no we do have support for that.

11:01 And then in the APPX 2402 he finally recognized it and that's what he said yes I've given you structural it is structural I've given you patentable weight for it it's statutory under that it has meaning.

11:18 So that's why it took 10 years.

11:21 Judge Moore My problem with your argument.

11:25 Is that even if I accept as correct the claim construction you seek I still think the claims are properly held ineligible under 101.

11:36 So that's my problem with your argument because you've made it clear that you're not claiming a new form a structural change to memory.

11:45 You're just claiming a process or a program.

11:47 To divert.

11:48 things or not divert things so you haven't claimed something structural

11:53 like in n fish to affect the computer and I just don't see so I'll just grant

12:01 you your claim construction and start from that proposition I don't see how

12:04 Appellant Attorney (Raymond William Mort) your claims are eligible well so I would disagree that they're not structural so

12:09 there's a structural change in that the processor is programmed to perform

12:13 Judge Moore differently so the process but no that's software there's there's a difference

12:17 between software and hardware my friend you know you you said the memory is not

12:21 structurally segregated in that way so that would be structural but the

12:26 software is just directing things to or not to particular memory units is what

12:33 you're claiming under your construction I don't see how that's an eligible

12:37 improvement to computer functioning as opposed to an improvement in targeted

12:42 Appellant Attorney (Raymond William Mort) advertising well I mean just this past month the KPN case came out

12:47 and it changed the check data and how it was generated there was no hardware

12:51 change there's no structural change but the software was changed to make the

12:56 Judge Moore system more reliable well software can be changed you argued in your brief that

13:02 this improves computer functionality I don't see how this improves computer

13:08 functionality for that matter I don't see how this change applies outside the

13:12 targeted advertising context and fish involved a new

13:18 storage mechanism that would apply across different software platforms you

13:23 don't have that kind of improvement computer functionality I'm basing my

13:27 questions to you off your brief you argued it improves computer

13:30 Appellant Attorney (Raymond William Mort) functionality I don't see how that's true so the improvement is that improves

13:36 reliability of the system to to conduct the targeted programming so if an

13:41 advertiser is trying to send advertising down to the storage unit and there's no

13:46 available memory

13:48 then it becomes inoperable it's functionally unreliable what we do is the computer's not

13:53 Judge Moore unreliable it's just you're not going to receive the advertising that you want that has nothing to

13:58 do with computer functionality that doesn't improve speed and efficiency reduce memory usage

14:04 of the computer it only ensures targeted advertising well i mean if you want to look at

14:09 your patent we can do that at column 30 let's start at line 57 where you talked about the

14:13 efficiencies that are achieved they're all efficiencies related to targeted advertising

14:17 they're not efficiencies related to computer functioning well if the computer can't store

14:23 Appellant Attorney (Raymond William Mort) the data that you're trying to provide it then the computer is defective in that sense

14:28 Judge Moore you haven't claimed new memory or a new processor you're just claiming rooting a rooting a switch

14:36 rooting things to or from a particular memory but you're not even claiming a switch in the

14:39 hardware sense you're just saying software will hold in

14:43 a

14:43 reserve certain memory i don't well that's true and the abstract idea to me and the benefit to

14:50 Appellant Attorney (Raymond William Mort) the system is ability to to ensure the operation of the system in the kpn case the issue was that

14:58 it was unable to detect systemic errors so it used a time varying function that allowed it to perform

15:06 better it didn't change the system itself it just allowed the operators of the system to detect

15:12 hey

15:13 we're having errors uh we need to change something so there was no structural change there uh the

15:19 computer wasn't able to transmit the data without errors it was just simply able to detect the

15:25 errors it so it made the system more reliable and that that previously undetected errors could

15:30 be found what we are providing is a system where the prior art would fill up and we do talk about

15:39 the prosecution that by providing a dedicated area of

15:43 memory that the network can access did improve the speed of access of that data uh that's an a p p x eleven

15:51 uh let me pull it up for you so if you go to a p p x ten twelve and ten thirteen um we do talk about ten

16:05 eleven twelve we do talk about the previous systems would be slower and that we would be faster uh and

16:12 now it's not in our specification that way but it was described that way to the examiner multiple times

16:17 and uh it's because you know for whatever it is if you have a large data uh disc that's filled with

16:24 whatever data that when it's time to do the advertising you have to go hunt around and find

16:29 where you put it so we do have a dedicated uh area that's under network control that it has a

16:36 known location so that when the advertising pops up it's able to access it faster um the examiner

16:44 you know did at first not see that it was

16:48 straight up the same way that it was in the same way that it was in the same way that it was in the

16:48 structural and that was in APPX 1202 and we pointed that out to him through the prosecution

16:55 and then in the notice of allowance he did demonstrate that he noticed that yes this

17:01 guarantees that there's some space always available and therefore the system is more

17:05 reliable in the follow-on case they you know amended the claims and in light of Alice and

17:11 said that this does improve the functioning of the computer and notice that this was the

17:16 Appellee Attorney (Eliot Damon Williams) inventive concept of the patent good morning may please the court I'll start with the 101

17:48 issue but I think before I do I think it's worth pointing out that both of the cases

17:52 that are before the court today are patents sharing a specification and they both went

17:57 through the covered business method review program of the PTAB it's patents like this

18:01 that justified Congress Congress's decision to implement the covered business method review

18:06 program.

18:07 This is this is the heart of what that program was all about why don't you get to the case

18:11 and not pontificate sure here we have computer implementation of this fundamental economic

18:18 practice of targeting advertisements to end users with no new technology that's that's

18:23 described it's claimed the specification describes all of the technological features as being

18:28 pre-existing in the art to get to I think the heart of what what now is being argued

18:34 to be the technical feature which is the processor.

18:37 There's ability to somehow control storage in some way I'll just point to what's actually

18:43 described in the specification because there is no discussion of the software that supposedly

18:47 implements this new technological feature.

18:50 So even in you know again I think judge Morris Morris point that there's a clear difference

18:55 between software and hardware in both Alice and this court's case law following Alice

19:00 but when there are software inventions that get you know discussed in the context of one-on-one

19:05 where there's.

19:06 There's some possibility that they might be eligible it's always where there's a clear

19:09 description of what the algorithm actually is what's the new thing that's that's not

19:13 here when you look at the specification at for instance in the own I know patent at column

19:19 31 line 44 where this idea is introduced and this is by the way this is the discussion

19:25 in column 31 is the one addressing these what what the inventor called multi-layered advertising

19:34 formats.

19:35 And there's I believe 9 of them number 7 is the one that's actually an issue in these

19:39 claims and that starts around line 44 all it says it's it's programmable designation

19:44 of advertising sections I mean it's that's it that's literally what we're hearing today

19:48 is the invention is just the fact that it's you could programmable lead designate certain

19:52 areas of memory as being for advertisement.

19:56 Okay that's obviously an abstract idea there's no discussion of how how they're doing that

20:00 what's new about that and I think it's important to note that the P tab.

20:03 Did I did I think a really excellent job of going through these arguments and showing

20:08 how none of these things are actually new in any kind of way so for instance for a look

20:15 at the final written decision in the 494 patent keeping in mind that you know the same APJ

20:22 wrote just wrote the final written decisions in both the 494 cases there you'll see that

20:31 page a 109.

20:33 Okay.

20:33 Next page 109 the board addressed I think the heart of this issue Judge Petrovic noted

20:41 there it claims merely invoke computers as a tool to implement the concept of targeted

20:46 advertising and are not directed to any improvement the recited and then I'll go on a little bit

20:51 the recited functionalities reserving storage space for advertising data as well as selecting

20:56 advertising data for targeting the users are basic and routine the board's factual finding

21:01 was that this notion of reserving storage.

21:03 Was old and well-known in the art there's nothing there if you point it to as being

21:09 a technological invention and additionally on page a 114 the board went on to note we

21:20 are persuaded that the recited storage device in space processor and software are generic

21:25 components present and computers and many other electronic devices we are further persuaded

21:30 that the reservation of storage space.

21:32 As well as selection.

21:34 And storage and accessibility are basic functions of these components so these are all well-known

21:38 traditional computing functionality there's no contribution to computer engineering or

21:42 computer science and the specification or the claims instead this is the prototypical

21:47 case of using conventional computing components as a tool to implement a business practice

21:51 and that's invalid under 101 under any case that they want to point to no one has ever

21:57 said anything other than that.

21:59 Judge Moore Well the only case he did point to was KPN so why don't you explain to me how that applied

22:02 across all platforms to take a look.

22:04 Well the first thing that I would point to is the fact that KPN is a software that is

22:04 able to detect error and how it wasn't unique to sort of like a targeted advertising program

22:09 or something.

22:09 Appellee Attorney (Eliot Damon Williams) Right.

22:10 Well so then again I would point to I think this distinction of what was new in KPN is

22:14 that coding mechanism that didn't exist before that allowed now computers to do error detection

22:20 coding in that case.

22:22 Judge Moore And it applied to all types of data transmission.

22:24 Appellee Attorney (Eliot Damon Williams) It did and it applied.

22:25 Judge Moore So this was not just a specific platform a specific program improving a particular program

22:29 like hey I just improved Excel this was like across the computer.

22:33 Right.

22:34 So this was not just a specific platform a specific program improving a particular program

22:34 like hey I just improved Excel this was like across the computer.

22:34 Appellee Attorney (Eliot Damon Williams) I mean I couldn't say it better myself Judge Moore.

22:36 I think if you read Alice and this court's case law implying Alice this distinction that's

22:40 drawn is between using computers as a tool to do something abstract versus making some

22:45 actual contribution to computer science that has broader applicability.

22:50 And certainly in the case of KPN I think the argument was made that that had a broader

22:54 applicability and that it applied to any data and was doing it in a new unique specific

22:58 concrete way that was not in the prior art.

23:00 There's none of that here.

23:01 Here it's a very abstract idea.

23:02 I want to reserve storage for advertisements which by the way wasn't even new and it wasn't

23:08 new as shown by the prosecution history itself and the PTAB relied on this.

23:12 Okay.

23:12 Judge Moore One last question.

23:13 Sure.

23:14 Is for me 101 covers everything.

23:17 Yeah.

23:17 Correct?

23:18 Yes.

23:18 So we don't need to even get to 102 if we agree with you on 101.

23:24 Appellee Attorney (Eliot Damon Williams) So that's going to be true in both sets of cases today.

23:27 That's my understanding.

23:27 The 101 case the 101 invalidation would cover all the challenge claims.

23:31 So one option that the court might consider is just sui sponte consolidating all four

23:38 cases and affirming because if you're affirming on the 101 ground that resolves all the cases

23:42 and it resolves my cross appeals.

23:44 So I do have cross appeals pending in both sets of cases because in the IPRs where 101

23:50 wasn't at issue the board did not invalidate all of the challenge claims.

23:54 But as I said it's my belief those cross appeals become moot if the 101 issues are affirmed

24:00 in the covered business method review.

24:01 And I'm happy to address any of the cross appeal issues if there's questions otherwise

24:06 I can reserve the balance.

24:07 I think we're good.

24:08 Unknown Thank you.

24:08 Okay.

24:08 Thank you.

24:09 Judge Prost I don't want to use your time.

24:21 I would just like you to though confirm if you agree with what your friend just said

24:24 about the procedural posture of these cases.

24:29 Appellant Attorney (Raymond William Mort) It would resolve it between the parties.

24:32 They're depending upon what happens outside of this case who knows if the 102, 103 issues

24:41 should be determined or not.

24:41 But I do agree that if you rule against this on 101 that it effectively we don't have a

24:49 case.

24:49 Judge Prost Thank you.

24:51 Appellant Attorney (Raymond William Mort) So with respect to KPN I don't believe that there's any cases that really limit whether

24:59 or not you meet patent eligibility based upon how broad your claims are.

25:04 Meaning that if you have your claims are drafted to a specific application of the technology

25:11 that you're using.

25:13 That you should not be patent eligible but if you had drafted those claims broader that

25:18 you are.

25:20 KPN didn't address that at all.

25:22 It just said that you have addressed a reliability problem and you've improved the network's

25:27 ability to detect an error.

25:29 Our system improves the system's ability to guarantee that there's always going to be

25:34 space available for the advertising service to work.

25:38 You could make it to say something else.

25:40 It could be like a movie service.

25:41 It could be a gaming service.

25:42 It could be whatever.

25:42 The claim happens to be drafted to advertising.

25:47 We did not describe in the specification that the data boxes and exclusive access to them

25:52 would be limited to advertising.

25:55 We talked about games.

25:57 We talked about movies.

25:57 We talked about other services.

25:59 It happens to be the claims that popped out of this patent are targeted advertising.

26:04 There are other patents that have been issued from this that don't relate to advertising.

26:08 It's just that that's the scope of our claims.

26:10 I don't think we should be penalized under 101.

26:12 I don't think we should be penalized under 101 analysis because our claims are tied to

26:16 a more narrow application.

26:19 Scott, I'm out of time.

26:20 Judge Prost Thank you.

26:22 We'll proceed to the next two cases, which have also been consolidated.