Apple Inc.v.Sightsound Technologies, LLC

Patent Trial and Appeal Board

Oct 8, 2013

07586391 (P.T.A.B. Oct. 8, 2013)

Trials@uspto.gov Paper 17
571-272-7822 Entered: October 8, 2013
UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

APPLE INC.
Petitioner

v.

SIGHTSOUND TECHNOLOGIES, LLC
Patent Owner
____________

Case CBM2013-00019
Patent 5,191,573

Before MICHAEL P. TIERNEY, JUSTIN T. ARBES, and
GEORGIANNA W. BRADEN, Administrative Patent Judges.
Opinion for the Board filed by Administrative Patent Judge ARBES.
Opinion Concurring filed by Administrative Patent Judge TIERNEY.
ARBES, Administrative Patent Judge.
DECISION
Institution of Covered Business Method Review
37 C.F.R. § 42.208
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Petitioner Apple Inc. filed a Corrected Petition (Paper 8) (“Pet.”) to
institute a covered business method review of claims 1, 2, 4, and 5 of Patent
5,191,573 (the “‟573 patent”) pursuant to 35 U.S.C. § 321 et seq. Patent
Owner SightSound Technologies, LLC filed a preliminary response
(“Prelim. Resp.”). We have jurisdiction under 35 U.S.C. § 324. For the
reasons that follow, the Board has determined not to institute a covered
business method review.
1

I. BACKGROUND
The standard for instituting a covered business method review is set
forth in 35 U.S.C. § 324(a):
THRESHOLD—The Director may not authorize a post-grant
review to be instituted unless the Director determines that the
information presented in the petition filed under section 321, if
such information is not rebutted, would demonstrate that it is
more likely than not that at least 1 of the claims challenged in
the petition is unpatentable.
Petitioner challenges claims 1, 2, 4, and 5 as unpatentable under
35 U.S.C. §§ 101 and 112. Pet. 34-58. We deny the Petition as discussed
below.

A. The ’573 Patent (Ex. 1001)
The ‟573 patent, entitled “Method for Transmitting a Desired Digital
Video or Audio Signal,” issued on March 2, 1993 based on Application
07/586,391, filed September 18, 1990, which is a file wrapper continuation

1
In a decision entered concurrently, a covered business method review of
the ‟573 patent is being instituted in Case CBM2013-00020.
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of Application 07/206,497, filed June 13, 1988. The ‟573 patent has
expired.
The ‟573 patent was previously the subject of an ex parte
reexamination (Control No. 90/007,402) requested by Napster, Inc. on
January 31, 2005. Following reexamination, claims 1-6 of the ‟573 patent
were confirmed. Ex. 1001 at 10-25 (reexamination certificate issued
November 30, 2010). Claims 1, 2, 4, and 5 of the ‟573 patent also are the
subject of Case CBM2013-00020 (grounds based on 35 U.S.C. §§ 102 and
103).
The ‟573 patent relates to a “method for the electronic sales and
distribution of digital audio or video signals.” Ex. 1001, col. 1, ll. 9-14. The
patent describes how three types of media used for storing music at the time
of the invention—records, tapes, and compact discs—did not allow for
music to be transferred easily and had various problems, such as low
capacity and susceptibility to damage during handling. Id., col. 1, l. 17-col.
2, l. 9. The patent discloses storing “Digital Audio Music” (i.e., music
encoded into binary code) on a computer hard disk and selling and
distributing such music electronically. Id., col. 1, ll. 53-56; col. 2, ll. 10-35.
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Figure 1 of the ‟573 patent is reproduced below:

As shown in Figure 1 above, an agent authorized to sell and distribute
“Digital Audio Music” has a control unit 20 (control panel 20a, control
integrated circuit 20b, and sales random access memory chip 20c) and hard
disk 10, which stores the music to be distributed. Id., col. 3, ll. 44-67. On
the other side of the figure, a user has a control unit 50 (control panel 50a,
control integrated circuit 50b, incoming random access memory chip 50c,
and playback random access memory chip 50d), hard disk 60, video display
unit 70, and speakers 80. Id., col. 3, l. 67-col. 4, l. 10. The agent and user
are connected via telephone lines 30. Id., col. 3, ll. 63-67. According to the
‟573 patent, control units 20 and 50 are “designed specifically to meet the
teachings of this invention,” but all other components shown in Figure 1
were “already commercially available.” Id., col. 4, ll. 16-23.
The patent describes a process by which a user transfers money “via a
telecommunications line” to purchase music from the agent and the music is
transferred electronically “via a telecommunications line” to the user and
stored on the user‟s hard disk. Id., col. 5, ll. 29-45. Control integrated
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circuits 20b and 50b regulate the electronic transfer. Id., col. 4, ll. 29-47.
The agent‟s sales random access memory chip 20c stores music temporarily
so that it can be transferred to the user. Id. The user‟s incoming random
access memory chip 50c stores music temporarily before storage in hard disk
60, and playback random access memory chip 50d stores music temporarily
so that it can be played. Id. Once a song is stored in the user‟s hard disk 60,
the user can select it among others in a visual display using control panel
50a and play it on speakers 80. Id., col. 4, ll. 52-63. In addition to “Digital
Audio Music,” the patent contemplates “Digital Video” being sold and
distributed electronically via the disclosed methods. Id., col. 5, l. 67-col. 6,
l. 2.

B. Related Matters
The ‟573 patent was asserted previously in two district court
litigations: SightSound.com Inc. v. N2K, Inc. et al., W.D. Pa. Case No.
2:98-cv-00118-DWA (filed January 16, 1998) (the “N2K litigation”), and
SightSound Techs., LLC et al. v. Roxio, Inc. et al., W.D. Pa. No.
2:04-cv-01549-DWA (filed October 8, 2004). Pet. 17-18. Both cases settled
prior to trial. See Ex. 2001. The ‟573 patent is being asserted currently
against Petitioner in SightSound Techs. LLC v. Apple Inc., W.D. Pa. Case
No. 2:11-cv-01292-DWA (filed October 10, 2011) (the “Apple litigation”).
Pet. 17-18. The Apple litigation has been stayed. Prelim. Resp. 9.

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C. Exemplary Claim
Claim 1 of the ‟573 patent is exemplary of the claims at issue:
1. A method for transmitting a desired digital audio
signal stored on a first memory of a first party to a second
memory of a second party comprising the steps of:
transferring money electronically via a
telecommunication line to the first party, at a location remote
from the second memory and controlling use of the first
memory, from the second party financially distinct from the
first party, said second party controlling use and in possession
of the second memory;
connecting electronically via a telecommunications line
the first memory with the second memory such that the desired
digital audio signal can pass therebetween;
transmitting the desired digital audio signal from the first
memory with a transmitter in control and possession of the first
party to a receiver having the second memory at a location
determined by the second party, said receiver in possession and
control of the second party; and
storing the digital signal in the second memory.

D. The Asserted Grounds
Petitioner challenges claims 1, 2, 4, and 5 of the ‟573 patent on the
grounds that the claims do not recite patent-eligible subject matter under
35 U.S.C. § 101 and lack sufficient written description support under
35 U.S.C. § 112.

E. Claim Interpretation
Consistent with the statute and legislative history of the America
Invents Act (AIA), the Board interprets claims of an unexpired patent using
the “broadest reasonable construction in light of the specification of the
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patent in which [they] appear[].” 37 C.F.R. § 42.300(b); see also Office
Patent Trial Practice Guide, 77 Fed. Reg. 48756, 48766 (Aug. 14, 2012).
For claims of an expired patent, however, the Board‟s claim interpretation
analysis is similar to that of a district court. See In re Rambus Inc., 694 F.3d
42, 46 (Fed. Cir. 2012). Claim terms are given their ordinary and customary
meaning as would be understood by a person of ordinary skill in the art at
the time of the invention and in the context of the entire patent disclosure.
In re Translogic Tech., Inc., 504 F.3d 1249, 1257 (Fed. Cir. 2007). We
apply this standard to the claims of the expired ‟573 patent.
We note that the district court interpreted various terms of the ‟573
patent in both the N2K litigation and Apple litigation. See SightSound.com
Inc. v. N2K, Inc., 185 F. Supp. 2d 445 (W.D. Pa. 2002) (report and
recommendation in the N2K litigation); Exs. 1014-15 (Apple litigation).
Petitioner‟s proposed interpretations are consistent with the district court‟s
interpretations in the Apple litigation, and Patent Owner does not dispute
Petitioner‟s proposed interpretations in its preliminary response. See Pet.
30-34. We have reviewed the district court‟s claim interpretations and
determine that the interpretations in the Apple litigation are consistent with
the ordinary and customary meaning of the terms as understood by one of
ordinary skill in the art. Accordingly, for purposes of this decision, we
adopt the following interpretations of terms in claims 1, 2, 4, and 5 of the
‟573 patent:
Claim Term Interpretation
“first party” a first entity, whether a corporation or a real
person
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Claim Term Interpretation
“second party” a second entity, whether a corporation or a
real person
“telecommunication
line” (claim 1),
“telecommunications
line” (claims 1 and 4)
an electronic medium for communicating
between computers
“electronically” through the flow of electrons
“connecting
electronically”
connecting through devices or systems which
depend on the flow of electrons
“transferring money
electronically”
providing payment electronically (i.e.,
through devices or systems which depend on
the flow of electrons)
“digital audio signal” digital representation of sound waves
All other terms in claims 1, 2, 4, and 5 are given their ordinary and
customary meaning and need not be further construed at this time.

II. ANALYSIS
We turn now to Petitioner‟s asserted grounds of unpatentability and
Patent Owner‟s arguments in its preliminary response to determine whether
Petitioner has met the threshold standard of 35 U.S.C. § 324(a).

A. Standing
The parties disagree as to whether Petitioner has standing to file a
petition for a covered business method review of the ‟573 patent. See
Pet. 11-17; Prelim. Resp. 23-39.
Section 18 of the AIA provides for the creation of a transitional
program for reviewing covered business method patents. Section 18 limits
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reviews to persons or their privies that have been sued or charged with
infringement of a “covered business method patent,” which does not include
patents for “technological inventions.” AIA §§ 18(a)(1)(B), 18(d)(1); see
37 C.F.R. § 42.302. It is undisputed that Petitioner has been sued for
infringement of the ‟573 patent. The Apple litigation was filed in the U.S.
District Court for the Western District of Pennsylvania on October 10, 2011,
and is pending. See Pet. 17; Prelim. Resp. 8-9. The only dispute is whether
the ‟573 patent is a “covered business method patent” as defined in the AIA.
See Pet. 11-17; Prelim. Resp. 23-39. For the reasons explained below, we
conclude that the ‟573 patent is a “covered business method patent” and
Petitioner has standing to file a petition for a covered business method
review of the ‟573 patent.

1. Financial Product or Service
A “covered business method patent” is a patent 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, except that the term does not include patents for
technological inventions.” AIA § 18(d)(1); see 37 C.F.R. § 42.301(a). For
purposes of determining whether a patent is eligible for a covered business
method patent review, the focus is on the claims. See Transitional Program
for Covered Business Method Patents—Definitions of Covered Business
Method Patent and Technological Invention; Final Rule, 77 Fed. Reg.
48734, 48736 (Aug. 14, 2012) (“CBM Rules”). A patent need have only one
claim directed to a covered business method to be eligible for review. Id.
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In promulgating rules for covered business method reviews, the Office
considered the legislative intent and history behind the AIA‟s definition of
“covered business method patent.” Id. at 48735-36. The “legislative history
explains that the definition of covered business method patent was drafted to
encompass patents „claiming activities that are financial in nature, incidental
to a financial activity or complementary to a financial activity.‟” Id. (citing
157 Cong. Rec. S5432 (daily ed. Sept. 8, 2011) (statement of Sen.
Schumer)). The legislative history indicates that “financial product or
service” should be interpreted broadly. Id.
Claim 1 of the ‟573 patent is directed to activities that are financial in
nature, namely the electronic sale of digital audio. Claim 1 recites
“transferring money electronically via a telecommunication line to the first
party . . . from the second party.” The electronic transfer of money is a
financial activity, and allowing such a transfer amounts to providing a
financial service. Indeed, Patent Owner acknowledges that a fundamental
step of claim 1 of the ‟573 patent is “selling” a desired digital audio signal to
a user. See Prelim. Resp. 9-10. The financial nature of the claimed method
is indicated further by the fact that the claim requires the first and second
parties to be “financially distinct” from each other. The Specification of the
‟573 patent also confirms the claimed method‟s connection to financial
activities. The Specification states that the invention is a method for the
electronic “sale[]” of digital audio where a user may “purchase” and receive
digital audio. See, e.g., Ex. 1001, col. 1, ll. 9-14; col. 2, ll. 26-30; col. 2,
ll. 51-58; see also claim 3 (“providing a credit card number of the second
party . . . so the second party is charged money”). We are persuaded that
claim 1 recites a method for performing data processing or other operations
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used in the practice, administration, or management of a financial product or
service, as required by Section 18(d)(1) of the AIA.
In its preliminary response, Patent Owner makes a number of
arguments that the ‟573 patent does not qualify as a “covered business
method patent.” Patent Owner contends that Congress intended covered
business method reviews to apply only to a “narrow class of patents,”
relying on various statements in the legislative history of the AIA. Prelim.
Resp. 25-30. In particular, Patent Owner asserts that only patents with a
“clear nexus to the financial business” are eligible for a covered business
method review. Id. at 23-24, 27, 30. As such, “a petitioner must show more
than just the existence of a payment step or a monetary element in a patent
claim to establish the necessary nexus between the patent and a financial
product or service.” Id. at 27.
It is the statutory language, however, that controls whether a patent is
eligible for a covered business method review. The AIA does not require a
“nexus” to a “financial business,” but rather 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). Further, contrary to Patent Owner‟s view of the legislative
history, the legislative history indicates that the phrase “financial product or
service” is not limited to the products or services of the “financial services
industry” and is to be interpreted broadly. CBM Rules, 77 Fed. Reg. at
48735-36. Senator Schumer, for example, stated:
Nothing in the America Invents Act limits use of section
18 to banks, insurance companies or other members of the
financial services industry. Section 18 does not restrict itself to
being used by petitioners whose primary business is financial
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products or services. Rather, it applies to patents that can apply
to financial products or services. Accordingly, the fact that a
patent is being used by a company that is not a financial
services company does not disqualify the patent from section 18
review. . . .
The plain meaning of “financial product or service”
demonstrates that section 18 is not limited to the financial
services industry. At its most basic, a financial product is an
agreement between two parties stipulating movements of money
or other consideration now or in the future. . . .
157 Cong. Rec. S5432 (daily ed. Sept. 8, 2011) (statement of Sen. Schumer)
(emphasis added). Although claim 1 of the ‟573 patent does not relate to a
financial services business, it does recite the electronic movement of money
between financially distinct entities, which is an activity that is financial in
nature.
Patent Owner further argues that SightSound Technologies, LLC was
formed as a media company, not a financial services company, and the
entities sued by Patent Owner for infringement of the ‟573 patent (including
Petitioner) sell digital content, not financial products. Prelim. Resp. 30-31.
Again, however, as the legislative history cited above demonstrates, a patent
need not be used by a financial services company or involve a traditional
financial services business to qualify as a covered business method patent.
The cited entities may not provide typical financial services, but, according
to Petitioner, they do sell digital content, which is the financial activity
recited in claim 1.
Finally, Patent Owner argues that a determination that the ‟573 patent
is a covered business method patent would be a “radical expansion of the
scope of patents subject to CBM review” where “[v]irtually any patent that
mentions a sale would be subject to CBM review, even when the patent
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itself has nothing to do with finance.” Id. at 31-33. Patent Owner‟s
argument is not persuasive. The Board reviews petitions on their own facts
to determine whether the challenged patent is a “covered business method
patent” under the AIA definition. Petitioner‟s argument that every patent
mentioning a sale would be subject to covered business method review
ignores the specific language of claim 1 (“transferring money electronically”
from a second party to a “financially distinct” first party) and the claim‟s
expressly stated connection to financial activity.
2
Further, we do not agree
with Patent Owner that the ‟573 patent has nothing to do with finance. The
Specification of the ‟573 patent states repeatedly that the disclosed method
involves the electronic “sale” of digital audio and the electronic “transfer” of
“money.” See, e.g., Ex. 1001, col. 1, ll. 9-14; col. 2, ll. 26-30; col. 2, ll.
51-58; col. 3, ll. 3-8; col. 5, ll. 33-35. For the reasons stated above, and
based on the particular facts of this proceeding, we conclude that claim 1 of
the ‟573 patent meets the “financial product or service” component of the
definition in Section 18(d)(1) of the AIA.

2. Technological Invention
The definition of “covered business method patent” in Section
18(d)(1) of the AIA does not include patents for “technological inventions.”
To determine whether a patent is for a technological invention, we consider
“whether the claimed subject matter as a whole recites a technological
feature that is novel and unobvious over the prior art; and solves a technical

2
Petitioner‟s argument also ignores the fact that a patent mentioning a sale,
but directed to a “technological invention[],” would not be a covered
business method patent. See AIA § 18(d)(1); infra Section II.A.2.
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problem using a technical solution.” 37 C.F.R. § 42.301(b). The following
claim drafting techniques, for example, typically do not render a patent a
“technological invention”:
(a) Mere recitation of known technologies, such as
computer hardware, communication or computer networks,
software, memory, computer-readable storage medium,
scanners, display devices or databases, or specialized machines,
such as an ATM or point of sale device.
(b) Reciting the use of known prior art technology to
accomplish a process or method, even if that process or method
is novel and non-obvious.
(c) Combining prior art structures to achieve the normal,
expected, or predictable result of that combination.
Office Patent Trial Practice Guide, 77 Fed. Reg. 48756, 48763-64 (Aug. 14,
2012).
We are persuaded that claim 1 as a whole does not recite a
technological feature that is novel and unobvious over the prior art. See Pet.
11-17. The method of claim 1 utilizes various technical components: a
“first memory,” “second memory,” “telecommunications line,”
“transmitter,” and “receiver.” All of these components, however, were
generic hardware devices known in the prior art. The Specification of the
‟573 patent discloses, for instance, that “agent‟s Hard Disk 10,” “user‟s Hard
Disk 60,” and “Telephone Lines 30” were “already commercially available.”
See Ex. 1001, col. 4, ll. 16-20; Pet. 14. The applicant also acknowledged
during prosecution that certain prior art references had a “transmitter” and
“receiver,” and stated that claim 1 can use “[a]ny suitable recording
apparatus” and is “not limited to a predesigned receiver.” See Ex. 1002 at
100, 139-41; Pet. 10, 14-15. Claim 1 is merely the recitation of known
technologies to perform a method, which indicates that it is not a patent for a
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technological invention. See Office Patent Trial Practice Guide, 77 Fed.
Reg. at 48764 (examples a and b).
Patent Owner does not dispute that the individual technical
components of claim 1 were known in the art, but argues that Petitioner fails
to address whether the particular combination of steps in claim 1 was novel
and non-obvious. Prelim. Resp. 33-37. Petitioner, however, discusses claim
1 as a whole in its Petition and explains sufficiently why the combination of
steps does not recite a technological feature that is novel and non-obvious
over the prior art. See, e.g., Pet. 11-16 (addressing Patent Owner‟s
admissions regarding the claim).
Patent Owner also argues that claim 1 of the ‟573 patent is not merely
an abstract idea and is not a business process capable of being performed
using a pen and paper. Prelim. Resp. 35-37. According to Patent Owner,
the hardware components recited in the claim are necessary to perform the
claimed method. Id. Patent Owner‟s argument appears to relate to whether
claim 1 recites patent-eligible subject matter under 35 U.S.C. § 101 rather
than whether the patent is for a “technological invention” under the AIA.
The tests are not the same. As explained above, none of the technical
components of claim 1 were novel or non-obvious at the time of the ‟573
patent, and we are not persuaded that the particular combination of
components in the claim amounts to a technological feature that is novel and
unobvious over the prior art. Further, while we agree with Patent Owner
that the steps in claim 1 must be implemented using the recited hardware
(i.e., a “first memory,” “second memory,” “telecommunications line,”
“transmitter,” and “receiver”), that does not mean necessarily that the patent
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is for a technological invention because the components themselves were
known in the art.
We also have considered whether the method of claim 1 solves a
technical problem using a technical solution, but, because we conclude that
claim 1 does not recite a technological feature that is novel and unobvious
over the prior art, the ‟573 patent is a “covered business method patent” and
is eligible for a covered business method patent review.

B. Asserted Ground Based on 35 U.S.C. § 101
Petitioner challenges claims 1, 2, 4, and 5 of the ‟573 patent as
claiming patent-ineligible subject matter under 35 U.S.C. § 101. Pet. 34-51.
Petitioner relies on the declaration of Dr. John P. J. Kelly (Exhibit 1051) in
support of its position. Id. Patent Owner, in its preliminary response, does
not argue the merits of Petitioner‟s asserted ground of unpatentability based
on Section 101. In connection with its standing argument, however, Patent
Owner asserts that the challenged claims are not directed to an “abstract
idea” and instead claim a specific combination of “critical hardware
components.” Prelim. Resp. 35-37. Upon review of Petitioner‟s analysis
and supporting evidence, we determine that Petitioner has not established
that claims 1, 2, 4, and 5 are more likely than not unpatentable under Section
101 for the reasons explained below.
The Supreme Court has made it clear that the test for patent eligibility
under Section 101 is not amenable to bright-line categorical rules. Bilski v.
Kappos, 130 S. Ct. 3218, 3229-30 (2010). Further, the Federal Circuit has
recognized that it has been especially difficult to apply Section 101 properly
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in the context of computer-implemented inventions. CLS Bank Int’l v. Alice
Corp. Pty. Ltd., 717 F.3d 1269, 1277 (Fed. Cir. 2013).
Our analysis begins with the statute. Section 101 provides that
“[w]hoever invents or discovers any new and useful process, machine,
manufacture, or composition of matter, or any new and useful improvement
thereof, may obtain a patent therefor, subject to the conditions and
requirements of this title.” “„In choosing such expansive terms . . . modified
by the comprehensive „any,‟ Congress plainly contemplated that the patent
laws would be given wide scope.‟” Bilski, 130 S. Ct. at 3225 (quoting
Diamond v. Chakrabarty, 447 U.S. 303, 308 (1980)). There are, however,
three limited, judicially created exceptions to the broad categories of
patent-eligible subject matter in Section 101: laws of nature, natural
phenomena, and abstract ideas. Mayo Collaborative Services v. Prometheus
Labs., Inc., 132 S. Ct. 1289, 1293 (2012).
While an abstract idea by itself is not patentable, a practical
application of an abstract idea may be deserving of patent protection. Id. at
1293-94; Bilski, 130 S. Ct. at 3230; Diamond v. Diehr, 450 U.S. 175, 187
(1981). To be patent-eligible, a claim cannot simply state the abstract idea
and add the words “apply it.” See Mayo, 132 S. Ct. at 1294. The claim must
incorporate enough meaningful limitations to ensure that it claims more than
just an abstract idea and is not merely a “drafting effort designed to
monopolize the [abstract idea] itself.” See id. at 1297. Limiting the claim to
a particular technological environment or field of use, or adding insignificant
pre- or post-solution activity, do not constitute meaningful limitations. See
Bilski, 130 S. Ct. at 3230; Diehr, 450 U.S. at 191-92; Parker v. Flook, 437
U.S. 584, 595 n.18 (1978).
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It is undisputed that the challenged claims of the ‟573 patent each
recite a “method,” or process, that is by definition statutory subject matter
under Section 101. The question is whether the claims recite just an abstract
idea and, therefore, fall under the abstract idea exception. Petitioner has not
persuaded us that it is more likely than not that they do.
We address primarily independent claim 1 of the ‟573 patent, as
Petitioner‟s arguments are directed to that claim. See Pet. 34-36. Petitioner
contends that claim 1 recites the abstract idea of “selling digital music
electronically in a series of rudimentary steps between a buyer and seller”
and preempts the entire field of “selling downloadable digital music.” Id. at
34-42; Ex. 1051 ¶¶ 58-64.
We do not view claim 1 as reciting merely a seller selling digital
music electronically to a buyer. The claim recites a specific combination of
computer components, at specific locations, that interact in a specific way to
accomplish the steps of the method. Money is transferred electronically “via
a telecommunication line” from a second party to a first party. The second
party is in control of a “second memory” and is remote from the first party,
which is in control of a “first memory” where a desired digital audio signal
is stored. The first memory and second memory are connected
electronically “via a telecommunications line” so that the desired signal can
pass between. The signal is transmitted from the first memory with a
“transmitter” in control of the first party to a “receiver” in control of the
second party and having the second memory, where the signal then is stored.
The “first memory,” “second memory,” “transmitter,” “receiver,” and
“telecommunications line” components, and the specific functions
performed using those components, represent meaningful limitations on the
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scope of the claim that take it beyond the abstract concept of selling music.
To illustrate, the claim does not recite merely transferring money from one
party to another to buy music and then transmitting the music purchased
with that money. Instead, a desired digital audio signal is stored in a
particular location (“first memory”), transmitted with a particular device
(“transmitter”) to another location over a particular medium
(“telecommunications line”), received with a particular device (“receiver”),
and stored in the other location (“second memory”). These specific
functions performed using the components are not insignificant pre- or
post-solution activity—they are the solution itself.
Petitioner further argues that the specific computer components
recited in claim 1 add nothing to the claims because each was known
individually in the prior art and can be found in a general purpose computer.
Id. at 37, 42-45; see Ex. 1051 ¶¶ 58-78. Petitioner‟s analysis, however, does
not account sufficiently for the claim as a whole (i.e., the particular
combination of components and how the claim requires that they be used).
3

The Supreme Court‟s holding in Diehr is instructive on this point:
In determining the eligibility of [a] claimed process for
patent protection under § 101, . . . claims must be considered as
a whole. It is inappropriate to dissect the claims into old and
new elements and then to ignore the presence of the old
elements in the analysis. This is particularly true in a process

3
As explained above, we are satisfied that Petitioner has addressed claim 1
as a whole in arguing that the claim (i.e., the particular combination of claim
steps) does not recite a technological feature that is novel and unobvious
over the prior art. See supra Section II.A.2. The issue of whether the claim
as a whole (i.e., the particular combination of claim steps) represents an
abstract idea as opposed to a practical application of an idea, however, is a
different question.
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claim because a new combination of steps in a process may be
patentable even though all the constituents of the combination
were well known and in common use before the combination
was made.
450 U.S. at 188; see also Bilski, 130 S. Ct. at 3230. Thus, while components
like computer memory and telecommunications lines were known at the
time of the invention, it is those components in combination (with the
specific functions performed using the components) that must be analyzed.
Assessing claim 1 in that light, we are not convinced that the claim
represents only the abstract idea of selling music.
We view claim 1 of the ‟573 patent (and the other challenged claims
2, 4, and 5) as analogous to the claim at issue in Ultramercial, Inc. v. Hulu,
LLC, 722 F.3d 1335 (Fed. Cir. 2013). The claimed invention in that case
was a method of monetizing and distributing copyrighted products over the
Internet. Id. at 1337-38. The steps recited in the claim involved specific
electronic interactions between specific computer systems over a
communications network. Id. at 1350. According to the Federal Circuit, the
method in Ultramercial required an “extensive computer interface” and
performance of the method “through computers, on the internet, and in a
cyber-market environment.” Id. at 1350-52. The Court held that the claim
was not directed to the abstract idea of monetizing advertising, but rather
had meaningful limitations restricting it to a practical application of that
idea. Id. at 1352-54. As the Court observed in Ultramercial:
When assessing computer implemented claims, while the mere
reference to a general purpose computer will not save a method
claim from being deemed too abstract to be patent eligible, the
fact that a claim is limited by a tie to a computer is an important
indication of patent eligibility. This tie to a machine moves it
farther away from a claim to the abstract idea itself. Moreover,
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that same tie makes it less likely that the claims will pre-empt
all practical applications of the idea.
This inquiry focuses on whether the claims tie the
otherwise abstract idea to a specific way of doing something
with a computer, or a specific computer for doing something; if
so, they likely will be patent eligible. On the other hand, claims
directed to nothing more than the idea of doing that thing on a
computer are likely to face larger problems. While no
particular type of limitation is necessary, meaningful limitations
may include the computer being part of the solution, being
integral to the performance of the method, or containing an
improvement in computer technology.
Id. at 1348 (citations omitted); see also id. at 1344 (“the relevant inquiry is
whether a claim, as a whole, includes meaningful limitations restricting it to
an application, rather than merely an abstract idea”).
We also note that, like the claim at issue in Ultramercial, claim 1 does
not involve a mere recitation of steps with a statement that the steps are
performed “on a computer.” See id. at 1352. Nor does the claim involve the
mere performance of calculations that any general purpose computer can do.
Nor does it involve steps that can be performed by a human (e.g., using a
pen and paper). The specific computer components recited in the claim are
integral to the performance of the claimed method.
As to the remaining challenged claims, Petitioner does not address
specifically the language of claims 2, 4, and 5. See Pet. 34-51. We are not
persuaded that these claims are more likely than not unpatentable under
35 U.S.C. § 101 for reasons similar to those explained above for claim 1. In
addition, while Petitioner argues that the challenged claims are directed to
the abstract idea of selling digital music electronically, see Pet. 34-42, claims
4 and 5 of the ‟573 patent recite the transmission of a desired digital video
signal. We are not persuaded by Petitioner‟s analysis for this reason as well.
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Based on the information presented in the Petition and supporting
evidence, we are not persuaded that claims 1, 2, 4, and 5 are more likely than
not unpatentable as claiming patent-ineligible subject matter under 35
U.S.C. § 101.

C. Asserted Ground Based on 35 U.S.C. § 112
Petitioner challenges claims 1, 2, 4, and 5 of the ‟573 patent as lacking
adequate written description support so as to preclude patentability under
35 U.S.C. § 112, first paragraph.
4
Pet. 52-58. Petitioner relies on the
testimony of Dr. Kelly in support of its position. Id. (citing Ex. 1051).
Upon review of Petitioner‟s analysis and supporting evidence, we determine
that Petitioner has not established that claims 1, 2, 4, and 5 are more likely
than not unpatentable for lacking an adequate written description for the
reasons explained below.
The written description requirement of 35 U.S.C. § 112, first
paragraph, requires that “the disclosure of the application relied upon
reasonably convey[] to those skilled in the art that the inventor had
possession of the claimed subject matter as of the filing date.” Ariad
Pharm., Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1351 (Fed. Cir. 2010). One
shows “possession” by descriptive means such as words, structures, figures,
diagrams, and formulas that set forth fully the claimed invention. Lockwood
v. American Airlines, Inc., 107 F.3d 1565, 1572 (Fed. Cir. 1997). It is not
sufficient for purposes of the written description requirement that “the

4
Section 4(c) of the AIA re-designated 35 U.S.C. § 112, first paragraph, as
35 U.S.C. § 112(a). Because the ‟573 patent has an effective filing date
before September 16, 2012, we refer to the pre-AIA version of 35 U.S.C.
§ 112.
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disclosure, when combined with the knowledge in the art, would lead one to
speculate as to modifications that the inventor might have envisioned, but
failed to disclose.” Id. “One shows that one is „in possession‟ of the
invention by describing the invention, with all its claimed limitations, not
that which makes it obvious.” Id. “[T]he hallmark of written description is
disclosure. . . . [T]he test requires an objective inquiry into the four corners
of the specification from the perspective of a person of ordinary skill in the
art.” Ariad, 598 F.3d at 1351. Also, the claimed invention does not have to
be described in ipsis verbis in the specification to satisfy the written
description requirement. Union Oil Co. of California v. Atlantic Richfield
Co., 208 F.3d 989, 1000 (Fed. Cir. 2000).
Independent claim 1 (emphasis added) recites the steps of
“transferring money electronically via a telecommunication line to the first
party . . . from the second party,” “connecting electronically via a
telecommunications line the first memory with the second memory such that
the desired digital audio signal can pass therebetween,” and “transmitting the
desired digital audio signal.” Independent claim 4 recites similar limitations
for a desired digital video signal.
Petitioner argues that the challenged claims lack adequate written
description support because the specification of the ‟573 patent, as filed
originally,
5
disclosed electronic communication over “telephone lines”
rather than “telecommunications lines.” Pet. 52-58. The originally filed
‟573 patent specification described the electronic sale and distribution of

5
See Ex. 1002 at 11-18, 49-61, 73-88. Application 07/586,391, which
issued as the ‟573 patent, was a file wrapper continuation of Application
07/206,497 under the now obsolete procedure of 37 C.F.R. § 1.62.
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Digital Audio Music “via telephone lines,” specifically Telephone Lines 30
shown in Figure 1. Ex. 1002 at 12, 14-16. On December 9, 1991, the
applicant filed an Office Action response amending the claims to recite
connecting first and second memories “via a telecommunications link.” Id.
at 134-36. The response also amended the specification to add certain
disclosure mirroring the language of the amended claims and reciting
connection “via a telecommunications line” or “via a telecommunication
link.” Id. at 127, 132-34. The Examiner objected to the specification under
35 U.S.C. § 112, first paragraph, as “failing to provide clear support for the
amendments” to the specification, and rejected claim 11 as indefinite under
35 U.S.C. § 112, second paragraph, because “the „telecommunications link‟
is not well connected in the system.” Id. at 148.
In a subsequent Office Action response dated June 23, 1992, the
applicant amended the specification by deleting the previously added
material and adding new disclosure describing the transfer of money “via a
telecommunications line” and the connection of first and second memories
“via a telecommunications line.” Id. at 151-55. The applicant also amended
the claims similarly. Id. at 155-59. The Examiner then allowed all of the
pending claims but one, which the applicant cancelled, and the ‟573 patent
issued. Id. at 193-204.
According to Petitioner, because the term “telecommunications line”
is broader than “telephone line,” the added disclosure pertaining to a
“telecommunications line” constituted impermissible new matter lacking
written description support in the originally filed specification. Pet. 54-57.
We agree with Petitioner that the term “telecommunications line” is broader
than “telephone line.” As explained above, we interpret the term
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“telecommunications line” to mean an electronic medium for
communicating between computers. A telephone line, by contrast, is an
electronic medium for a particular type of communication (i.e., telephone
communication).
We are not persuaded, however, that the originally filed specification
lacks adequate written description support for the “telecommunications line”
aspects of the challenged claims. Petitioner‟s arguments do not address the
overall disclosure of the original specification or explain sufficiently why
the original specification as a whole would not have indicated possession of
the invention to a person of ordinary skill in the art. The original
specification describes repeatedly the storage, sale, distribution, transfer, and
retrieval of Digital Audio Music (i.e., music encoded into binary code)
“electronically.” See Ex. 1002 at 14-18. For example, the specification
discloses that “[i]nasmuch as Digital Audio Music is software and this
invention electronically transfers and stores such music, electronic sales and
distribution of the music can take place via telephone lines onto a hard disk.”
Id. at 14. Original claim 1 also recited a system in which “the binary
structure of Digital Audio Music can be electronically transferred via
telephone lines from a hard disk of the seller to the hard disk of the user.”
Id. at 18, 59. These disclosures are directed broadly to electronic
communication of digital signals. They provide an example of what the
communication “can” be (i.e., via a telephone line) and do not limit
expressly the invention to an embodiment communicating via a telephone
line. See, e.g., id. at 17 (stating that “different embodiments of the
invention” are possible).
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A patent applicant is not required to describe in the specification
every embodiment of the invention. See LizardTech, Inc. v. Earth Resource
Mapping, Inc., 424 F.3d 1336, 1345 (Fed. Cir. 2005) (“A claim will not be
invalidated on section 112 grounds simply because the embodiments of the
specification do not contain examples explicitly covering the full scope of
the claim language. That is because the patent specification is written for a
person of skill in the art, and such a person comes to the patent with the
knowledge of what has come before.”) (citations omitted); Cordis Corp. v.
Medtronic AVE, Inc., 339 F.3d 1352, 1365 (Fed. Cir. 2003) (a specification
may contain sufficient written description of a “„broadly claimed invention
without describing all species that [the] claim encompasses‟”) (citation
omitted); Rexnord Corp. v. Laitram Corp., 274 F.3d 1336, 1344 (Fed. Cir.
2001). Petitioner does not explain sufficiently why the broad disclosures in
the original specification are not indicative of possession of a method
involving communicating over a broader “telecommunications line.” See,
e.g., Commonwealth Sci. & Indus. Res. Organisation v. Buffalo Tech. (USA),
Inc., 542 F.3d 1363, 1379-82 (Fed. Cir. 2008) (finding that a specification
amendment to replace “radio frequencies in excess of 10 GHz” with “radio
frequencies” in general was not improper new matter based on broad
disclosures in the specification as a whole).
Further, we are not persuaded by Petitioner‟s arguments given the
nature of the technology at issue and the level of ordinary skill in the art at
the time. As the Federal Circuit held in Ariad, “the level of detail required
to satisfy the written description requirement varies depending on the nature
and scope of the claims and on the complexity and predictability of the
relevant technology.” 598 F.3d at 1351 (for generic claims, the adequacy of
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27
the disclosure should be evaluated in light of “„the existing knowledge in the
particular field, the extent and content of the prior art, the maturity of the
science or technology, [and] the predictability of the aspect at issue‟”)
(citation omitted). Dr. Kelly testifies that a person of ordinary skill in the art
would have had “a bachelor‟s degree or equivalent in computer engineering
or computer science and approximately two years of experience in
developing software and hardware that transmit and receive files over a
network,” and that various media for communicating between computers,
such as a telephone line for computer modem communication and Ethernet
and Apple LocalTalk local area networks (LANs), were known in the art.
Ex. 1051 ¶¶ 14, 46-50, 86-93. Petitioner has not provided sufficient and
credible evidence demonstrating that such an individual, with knowledge of
computer communication methods, would have viewed the applicant as only
in possession of a method using a “telephone line” rather than
“telecommunications lines” in general.
We have reviewed Dr. Kelly‟s testimony regarding technical
differences between telephone line communication and communication via
certain other telecommunications lines of the time. See id. ¶¶ 82-94. The
original specification, however, need not explain the technical details of how
every type of telecommunications line would work to provide sufficient
written description support for the claimed invention involving
“telecommunications lines.” Given what the original specification does
disclose, the nature of the technology at issue, and the level of ordinary skill
in the art at the time, we are not persuaded that the claims lack adequate
written description support in the original specification.
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Based on the information presented in the Petition and supporting
evidence, we are not persuaded that independent claims 1 and 4, as well as
claims 2 and 5 that depend therefrom, are more likely than not unpatentable
for lacking an adequate written description under 35 U.S.C. § 112, first
paragraph.

D. Conclusion
We conclude that Petitioner has not demonstrated that the challenged
claims are more likely than not unpatentable based on the asserted grounds.
Therefore, we do not institute a covered business method review on any of
the asserted grounds as to any of the challenged claims.

III. ORDER
In consideration of the foregoing, it is hereby:
ORDERED that the Petition is denied as to all challenged claims of
the ‟573 patent.
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1
TIERNEY, Administrative Patent Judge, concurring in the result only.
I concur in the result only.
Case CBM2013-00019
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2
PETITIONER:

J. Steven Baughman
Ching-Lee Fukuda
ROPES & GRAY LLP
steven.baughman@ropesgray.com
ching-lee.fukuda@ropesgray.com

PATENT OWNER:

David R. Marsh
Kristan L. Lansbery
ARNOLD & PORTER LLP
david.marsh@aporter.com
kristan.lansbery@aporter.com