Perfect World Entertainment Inc.v.Uniloc USA, Inc.

Patent Trial and Appeal Board

Mar 10, 2016

08124718 (P.T.A.B. Mar. 10, 2016)

Trials@uspto.gov Paper 27
571-272-7822 Entered: March 10, 2016

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

SEGA OF AMERICA, INC., UBISOFT, INC., KOFAX, INC.,
CAMBIUM LEARNING GROUP, INC., and
PERFECT WORLD ENTERTAINMENT, INC.,
Petitioner,

v.

UNILOC USA, INC. and UNILOC LUXEMBOURG S.A.,
Patent Owner.
____________

Case IPR2014-014531
Patent 5,490,216 C2

Before WILLIAM V. SAINDON, DONNA M. PRAISS, and
PATRICK R. SCANLON, Administrative Patent Judges.

PRAISS, Administrative Patent Judge.

FINAL WRITTEN DECISION
35 U.S.C. § 318(a) and 37 C.F.R. § 42.73

1 Case IPR2015-01026 has been joined with this proceeding.
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I. BACKGROUND
A. Introduction
SEGA of America, Inc., Ubisoft, Inc., Kofax, Inc., and Cambium
Learning Group, Inc. (collectively, “Petitioner”) filed a Petition (Paper 6,
“Pet.”) to institute an inter partes review of claims 1–20 of U.S. Patent No.
5,490,216 (“the ’216 patent”). Uniloc USA, Inc. and Uniloc Luxembourg
S.A. (collectively, “Patent Owner”) timely filed a Preliminary Response
(Paper 10, “Prelim. Resp.”). Taking into account the arguments presented in
Patent Owner’s Preliminary Response, we determined that the information
presented in the Petition establishes a reasonable likelihood that Petitioner
would prevail in challenging claims 1–20 of the ’216 patent under 35 U.S.C.
§§ 102(b) and 103(a). Pursuant to 35 U.S.C. § 314, we instituted this
proceeding on March 10, 2015, as to these claims of the ’216 patent. Paper
11 (“Dec. on Inst.”).
During the course of trial, we joined case no. IPR2015-01206, and
Perfect World Entertainment Inc. as a Petitioner, to this proceeding. Paper
16. Patent Owner timely filed a Patent Owner Response (Paper 14, “PO
Resp.”), and Petitioner timely filed a Reply to the Patent Owner Response
(Paper 19, “Pet. Reply”). An oral hearing was held on December 2, 2015,
and a transcript of the hearing is included in the record. Paper 26 (“Tr.”).
We have jurisdiction under 35 U.S.C. § 6(c). This decision is a Final
Written Decision under 35 U.S.C. § 318(a) as to the patentability of claims
1–20 of the ’216 patent. For the reasons discussed below, we determine that
Petitioner has demonstrated by a preponderance of the evidence that these
claims are unpatentable under §§ 102(e) and 103(a).
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B. Related Matters
The parties indicate that the ’216 patent was asserted in complaints
filed in the U.S. District Court for the Eastern District of Texas against
SEGA of America, Inc. (No. 6:13-cv-627), Ubisoft, Inc. (No. 6:13-cv-628),
Cambium Learning, Inc. (No. 6:14-cv-419), Kofax, Inc. (No. 6:14-cv-427),
and Perfect World Entertainment, Inc. (No. 6:14-cv-429). Pet. 54; Paper 9.
Additional litigations in which the ’216 patent has been asserted are listed in
Ex. 1031. The ’216 patent is also the subject of IPR2015-01207, which was
instituted on December 2, 2015, and petitions filed in IPR2016-00414 and
IPR2016-00427.
The ’216 patent was the subject of Uniloc USA, Inc. v. Microsoft
Corp., No. 03-0440 (D.R.I.) in which a decision on claim construction was
issued (Ex. 1008) and affirmed by the Federal Circuit (Ex. 1009; Ex. 1010).
PO Resp. 4; Pet. 3. The ’216 patent was also the subject of two
reexamination proceedings (Control Nos. 90/010831 and 90/012179). PO
Resp. 4; Pet. 12–15. Additionally, the ’216 patent was the subject of
petitions for covered business method review (CBM2014-00183) and for
inter partes review (IPR2015-00178), which were denied. PO Resp. 5 n.2;
Pet. 55.
C. The ’216 Patent (Ex. 1001)
The ’216 patent, titled “System for Software Registration,” is directed
to a system that allows software to run without restrictions (“use mode”) if a
specified licensing procedure has taken place. Ex. 1001, Abstr. A code
portion in the digital data to be protected may include an algorithm that
generates a registration number unique to a licensee of the digital data. Id.
The algorithm in the code portion is duplicated at a remote location under
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the control of the licensor. Id. A mode switching means compares the local
and remote registration numbers and, if they match, the program enters into
a use mode. Id. at 4:49–54, 13:37–40. If they do not match, the program
enters into a “demo mode” in which features of the program are disabled.
Id.
The block diagram of Figure 8 of the ’216 patent is reproduced below
to illustrate the registration system:

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The registration system depicted in Figure 8 operates in the manner
generally described by the embodiments disclosed in the ’216 patent. Id. at
11:43–45.
D. Illustrative Claims
Independent claims 1 and 12 are illustrative of the claims at issue
(paragraphing, indentations, and bracketed matter added):
1. A registration system for licensing execution of digital
data in a use mode, said digital data executable on a platform,
said system including
[a] local licensee unique ID generating means and remote
licensee unique ID generating means,
[b] said system further including mode switching means
operable on said platform which permits use of said digital data
in said use mode on said platform only if a licensee unique ID
first generated by said local licensee unique ID generating
means has matched a licensee unique ID subsequently
generated by said remote licensee unique ID generating means;
and
[c] wherein said remote licensee unique ID generating
means comprises software executed on a platform which
includes the [sic] algorithm utilized by said local licensee
unique ID generating means to produce said licensee unique ID.
12. A registration system attachable to software to be
protected,
[a] said registration system generating a security key
from information input to said software which uniquely
identifies an intended registered user of said software on a
computer on which said software is to be installed; and
[b] wherein said registration system is replicated at a
registration authority and used for the purposes of checking by
the registration authority that the information unique to the user
is correctly entered at the time that the security key is generated
by the registration system.
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E. Prior Art Relied Upon
Petitioner relies on the following prior art:
Reference Publication Date Exhibit
Haines US 5,077,660 Dec. 31, 1991 1005
Logan US 5,199,066 Mar. 30, 1993 1003
Grundy US 5,291,598 Mar. 1, 1994 1004
Schull US 5,509,070 Apr. 16, 1996 1002
Manduley US 5,956,505 Sept. 21, 1999 1006
Petitioner also relies on the Declaration of Vijay K. Madisetti dated
September 5, 2014 (“Madisetti Decl.” Ex. 1007).
F. Instituted Grounds of Unpatentability
We instituted this proceeding based on the asserted grounds of
unpatentability (“grounds”) set forth in the table below. Dec. on Inst. 23.
Claims Challenged Basis Reference(s)
1–11, 17–20 § 102(e) Schull
10, 11 § 103(a) Schull
12–14 § 102(e) Logan
15, 16 § 103(a) Logan and Grundy
12–14 § 103(a) Haines and Manduley
II. ANALYSIS
A. Claim Interpretation
As a first step in our analysis, we determine the meaning of the
claims. Because the challenged patent expired on September 21, 2013 and,
as such, the claims are not subject to amendment, the rule of “broadest
reasonable construction” per 37 C.F.R. § 42.100(b) does not apply. In this
circumstance, the Board’s review of the claims is similar to that of a district
court. In re Rambus Inc., 694 F.3d 42, 46 (Fed. Cir. 2012). Specifically, the
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
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invention, in light of the language of the claims, the specification, and the
prosecution history of record. Phillips v. AWH Corp., 415 F.3d 1303, 1313–
17 (Fed. Cir. 2005) (en banc).
Petitioner proposes that we adopt the claim construction of the District
Court for the District of Rhode Island issued in Uniloc USA, Inc. v.
Microsoft Corp., No. 03-CV0440 (“Microsoft litigation”) for purposes of the
Petition “except where noted”. Pet. 3; see Ex. 1008 (claim construction
decision and order dated Aug. 22, 2006); Ex. 1011, 27–28 (summary
judgment decision clarifying claim construction dated Oct. 19, 2007).
Petitioner asserts that the term “checking by the registration authority that
the information unique to the user is correctly entered,” as recited in claim
12, lacks written description support. Pet. 6. Petitioner also asserts that
there is no structure disclosed in the ’216 patent to support the term
“platform unique ID generating means,” as recited in claims 7–9. Id. at 9.
Nevertheless, Petitioner provides the District Court construction for these
terms for the purpose of its unpatentability analysis.
Patent Owner does not propose alternative constructions to the
District Court claim constructions, but contends that the Petition
“reconstructs” the claim term “security key” and disputes Petitioner’s
argument that certain claim terms lack definiteness or support in the
specification for the required structure. PO Resp. 9–12. Regarding the term
“security key,” Patent Owner acknowledges that the District Court stated
“vendor information may indeed be an input to creating the licensee unique
ID”, but asserts that the District Court “did not hold that the product number
alone provides ‘a unique identifier associated with a licensee.’” Id. at 9–10
(quoting Ex. 1008, 12). Patent Owner further contends that the claim
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construction of “security key” was not modified by the Federal Circuit,
which stated that “a user intending to use the software in ‘use mode’ enters
certain user information when prompted, which may include a software
serial number and/or name and address information.” Id. at 10 (quoting Ex.
1010, 3). Patent Owner notes that the Federal Circuit decision held that the
District Court’s construction of security key is correct “as a unique identifier
associated with a licensee that can be, but is not limited to, personally
identifiable information about the licensee or user” and that “the licensee
unique ID could encompass vendor-supplied information.” Id. at 11
(quoting Ex. 1009, 13).
In the Decision to Institute, we agreed with the analysis by the District
Court for the District of Rhode Island and adopted the claim construction
issued in the Microsoft litigation. Dec. on Inst. 7; see Ex. 1008; Ex. 1011,
27–28. Given the parties’ acceptance of our constructions of each claim
phrase in the Decision to Institute, we discern no reason to alter those
constructions for the purpose of this Final Written Decision. For
convenience, those constructions are reproduced in the table below.
Claim Term Claim Construction
Licensee Unique ID
(claims 1, 19, 20)
Security Key (claims 12, 13)
Enabling Key (claim 17)
A unique identifier associated with a
licensee
Information uniquely descriptive
of an intending licensee (claim 2)
Information . . . which uniquely
identifies an intended registered
user (claim 12)
Information that is uniquely associated
with a person who intends to become a
licensee so as to access full
functionality of the digital data
Algorithm (claims 1, 13, 14, 19,
20)
A set of instructions that can be
followed to carry out a particular task
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Claim Term Claim Construction
Includes the algorithm utilized
by said local licensee unique ID
generating means to produce said
licensee unique ID (claims 1, 19,
20)
Includes the identical algorithm used
by the local licensee unique ID
generating means to produce the
licensee unique ID
Generated by a third party means
of operation of a duplicate copy
of said registration key
generating means (claim 17)
Generated by a third party’s use of a
duplicate copy of the registration key
generating means
Use mode (claims 1, 7, 19, 20)
Fully enabled mode (claim 17)
Full version run (claim 15)
A mode/version that allows full use of
the digital data or software in
accordance with the license
Partly enabled or demonstration
mode (claim 17)
Demonstration mode (claim 15)
A mode that allows partial use of the
digital data or software
Has matched (claims 1, 17, 19,
20)
A comparison between the locally
generated licensee unique
ID/registration key and the remotely
generated licensee unique ID/enabling
key shows that the two are the same
Mode switching means will
permit said data to run in said
use mode in subsequent
execution . . . only if said
platform unique ID has not
changed (claim 7)
The mode switching means will permit
the data to run in the use mode only if
the platform unique ID is identical to
what it was the previous time the
digital data were run
Registration system (claims 1,
12, 19, 20)
A system that allows digital data or
software to run in a use mode on a
platform if and only if an appropriate
licensing procedure has been followed
Provided to said mode-switching
means by said intending user
(claim 17)
Provided to the mode-switching means
by the person who intends to become a
licensee
Communicated to said intending
user (claim 17)
Communicated to the person who
intends to become a licensee
Checking by the registration
authority that the information
Verification by the registration
authority that information unique to the
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Claim Term Claim Construction
unique to the user is correctly
entered (claim 12)
user and entered by the user is
accurate2
Wherein said registration system
is replicated at the registration
authority (claim 12)
Wherein the portion of the registration
system that generates a security key
from information input to software to
be protected is reproduced exactly at
the registration authority. This
clarifies that only the portion of the
registration system responsible for
generating the security key must be
replicated exactly at the registration
authority, not the entire registration
system.
Serial number (claim 14) A number that is one of a series
Local licensee unique ID
generating means (claims 1, 19,
20)
Remote licensee unique ID
generating means (claims 1, 19,
20)
Registration key generating
means (claim 17)
Function: to generate a local or remote
licensee unique ID
Structure: a summation algorithm or a
summer and equivalents thereof
Mode switching means (claims
1, 19, 20)
Mode-switching means (claim
17)
Function: to permit the digital data or
software to run in a use mode if the
locally generated licensee unique ID
matches with the remotely generated
licensee unique ID
Structure: program code which
performs a comparison of two numbers
or a comparator and equivalents
thereof

2 The District Court used the term “verification” rather than “checking” in its
claim construction for this term. Ex. 1008, 53. We note the use of
“checking” instead in the Decision on Institution is a typographical error.
See Dec. on Inst. 8.
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Claim Term Claim Construction
Platform unique ID generating
means (claims 7–9)
Function: to generate a platform
unique ID
Structure: a summation algorithm or a
summer and equivalents thereof
Regarding the Licensee Unique ID (claims 1, 19, 20), Security Key
(claims 12, 13), and Enabling Key (claim 17) terms that are each construed
to mean “a unique identifier associated with a licensee,” the level of
uniqueness need not distinguish an individual licensee from all other
licensees or persons. As found by the District Court in construing these
claim terms, “one-of-a-kind” uniqueness of the identifier “is inconsistent
with the language of the ’216 Patent itself.” Ex. 1008, 11 (citing Ex. 1001,
Abstr., 6:23–26 (“[I]n particular preferred forms, a serial number . . . is
included in the registration number generation algorithm which introduces
an additional level of uniqueness”)). Because “unique” does not mean
singularly unique, “‘the licensee unique ID does not require personal
information about the user,’ so long as it is ‘unique,’ and not ‘based solely
on platform-related user information.’” Uniloc USA, Inc. v. Microsoft
Corp., 632 F.3d 1292, 1300 (Fed. Cir. 2011) (quoting Uniloc USA, Inc. v.
Microsoft Corp., 290 Fed. App’x 337, 342–43 (Fed. Cir. 2008)) (Ex. 1010,
11). Because the licensee unique ID need not be personal information about
the user, it can be vendor-supplied information; it just cannot be “based
solely on platform-related user information” as that disavowal comes from
the ’216 patent specification itself. Id. (citing Uniloc USA, Inc., 290 Fed.
App’x at 344); Ex. 1001, 2:5–7 (distinguishing prior art on the basis that
“there is no suggestion or contemplation of linking platform identification
with unique user identification”).
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Regarding Petitioner’s assertion that certain claim terms lack
definiteness or written description support, because those issues are neither
appropriate for an inter partes review proceeding nor briefed by the parties,
we do not address them in this decision. See 35 U.S.C. § 311(b). For
purposes of this decision and for the reasons expressed by the District Court,
we adopt and apply the constructions provided in the table above. See Ex.
1008, 53–54, 58–61.
B. Priority Date for the Challenged Claims of the ’216 Patent
The ’216 patent issued from U.S. Patent Application No. 08/124,718
(“the ’718 application), filed September 21, 1993. Ex. 1001, [21]. The ’718
application claims the benefit of the following foreign priority applications:
(1) Australian provisional patent application PL4842 (“the ’4842
application”), filed on September 21, 1992 (Ex. 1025); and (2) Australian
provisional patent application PL5524 (“the ’5524 application”), filed on
October 26, 1992 (Ex. 1026).
In the Decision on Institution, we explained that, based on the record
prior to instituting trial, we were persuaded by Petitioner’s argument that the
’4842 and the ’5524 applications (collectively, “the Australian provisional
applications”) do not provide sufficient written description support for the
“generating means” (“local licensee unique ID generating means,” “remote
licensee unique ID generating means,” and “registration key generating
means,” collectively) and the “mode switching means” recited in
independent claims 1, 17, 19, and 20. Dec. on Inst. 10–12 (citing Pet. 16–
18). In particular, Petitioner argued that the structures identified in the
District Court claim construction for performing the corresponding functions
of the generating means and the mode-switching means are not present in
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the Australian provisional applications. Pet. 15–18 (citing Ex. 1007 ¶¶ 23–
27). For purposes of the Decision on Institution, we determined that
Petitioner presented sufficient evidence indicating that the challenged claims
of the ’216 patent only are entitled to claim the benefit of the filing date of
the ’718 application––namely, September 21, 1993. Dec. on Inst. 11–12.
Although the burden of persuasion with respect to the unpatentability
of the challenged claims remains with Petitioner, the burden of production of
demonstrating that the challenged claims for the ’216 patent are entitled to
the earlier priority dates of the Australian provisional applications lies with
Patent Owner. See Dynamic Drinkware, LLC v. Nat’l Graphics, Inc., 800
F.3d 1375, 1379–80 (Fed. Cir. 2015). Therefore, we turn to Patent Owner’s
showing whether the Australian Provisionals “necessarily disclose” or
“reasonably convey” the structure for (1) a summation algorithm or a
summer and equivalents thereof; and (2) program code, which performs a
comparison of two numbers or a comparator and equivalents thereof. See
Lockwood v. Am. Airlines, Inc., 107 F.3d 1565, 1572 (Fed. Cir. 1997) (a
patentee demonstrates possession of the invention by describing it “in
sufficient detail that one skilled in the art can clearly conclude that the
inventor invented the claimed invention”); Waldemar Link v. Osteonics
Corp., 32 F.3d 556, 558 (Fed. Cir. 1994) (quoting In re Rasmussen, 650
F.2d 1212, 1215 (CCPA 1981)) (“The fact finder must determine if one
skilled in the art, reading the original specification, would immediately
discern the limitation at issue in the parent.”).
1. Generating Means
The structural disclosure in the ’216 patent for the term “licensee
unique ID generating means” and other “generating means” listed in the
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above table is “a summation algorithm or a summer and equivalents
thereof”. See Ex. 1008, 25–27; Ex. 1010, 10, 20; Ex. 1001, 11:54–57,
12:62–65. The specific disclosure in the ’216 patent specification was
described by the District Court as follows:
the only algorithm specified in the ’216 Patent for
generating a licensee unique ID is found in the sixth
embodiment, which states:
The algorithm, in this embodiment, combines
by addition the serial number 50 with the software
product name 64 and customer information 65 and
previous user identification 22 to provide
registration number 66.
’216 Patent, col. 11, ll. 53–56. Similarly, the only hardware
component disclosed for performing the stated function is a
‘summer.’ Id. at col. 12, ll. 62–65.
Ex. 1008, 27.
Patent Owner contends that “[s]imilar structural language exists in the
Australian Provisionals.” PO Resp. 16. Specifically, Patent Owner relies on
the following disclosures in the ’4842 application text and Figure 2B as
disclosing the claimed algorithm (id. at 16–17 (citing Ex. 1025, 4, Fig. 2B)):
Preferably said registration number algorithm combines
information entered by a prospective registered user unique to
that user with a serial number generated from information
provided by the environment in which the software is to run
([e.g.,] system clock, last modify date, user name).

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Fig. 2B, above, is a single box excerpted from a portion of a flowchart. See
Ex. 1025, 5. Patent Owner asserts that the ’5524 application contains similar
disclosures and that “as a whole, each teaches a security key generated by a
registration number algorithm that combines, by addition, information
unique to an intended registered user, with a serial number.” PO Resp. 17.
Patent Owner relies on the Declaration of Dr. Val DiEuliis (Ex. 2008)
for the proposition that these disclosures of the Australian provisional
applications convey to a person of ordinary skill in the art that “both the
registration number and the serial number are numerical data (that is,
numbers) and, as such, that FIG. 2B’s disclosure of ‘adding’ means the
addition of two numbers.” PO Resp. 19 (citing Ex. 2008 ¶ 51). According
to Dr. DiEuliis, Figure 2B “teaches that the algorithm that generates the
registration number also adds the registration number (which was generated
from user unique information) to the serial number . . . .” Ex. 2008 ¶ 53; PO
Resp. 20. Dr. DiEuliis concludes that “the written description and figures
taught an algorithm that uses addition to combine two numbers to arrive at a
Licensee Unique ID, and that this algorithm would be ‘fairly capable of
categorization as a “summation algorithm,”’ as explained by the Federal
Circuit.” Ex. 2008 ¶ 54; PO Resp. 20.
We are not persuaded by Patent Owner’s evidence that the Australian
provisional applications conveyed to a person of ordinary skill in the art a
summation algorithm or a summer and equivalents thereof. The
preponderance of the evidence is that the cited disclosures from the
Australian provisional applications are insufficient for this purpose.
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The two disclosures in the Australian provisional applications on
which Patent Owner relies also appear in the ’216 patent and are reproduced
below from column 4 and Figure 2b:

The excerpt from column 4 states that “the registration number algorithm
combines information entered by a prospective registered user unique to that
user with a serial number” and the excerpted box from Figure 2b states that
the “registration no. generated from user details added to serial no. is
encrypted and re-arranged”. Ex. 1001, 4:6–11, Fig. 2b. Despite these same
two disclosures from the Australian provisional applications being present in
the ’216 patent, only the sixth embodiment in the ’216 patent was found to
provide structure for the generating means. Ex. 1008, 27 (“[H]aving
scrutinized the ’216 Patent in detail, the Court concludes that the only
algorithm specified in the ’216 Patent for generating a licensee unique ID is
found in the sixth embodiment . . . .”); Ex. 1038, 24 (“There is no dispute
that the generating means structure is fleshed out only in the sixth
embodiment . . . .”). There is no dispute that the sixth embodiment is only
present in the ’216 patent; it is not disclosed in the Australian provisional
applications. Therefore, these additional disclosures from the specification
are insufficient for one skilled in the art to “immediately discern the
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limitation at issue,” namely, a summation algorithm. See Waldemar Link, 32
F.3d at 558.
In addition, we do not find credible Dr. DiEuliis’s testimony that the
text in Figure 2B, which states “registration no. generated from user details
added to serial no. is encrypted and re-arranged,” describes the addition of
two numbers (registration no. and serial no.). There is no previous step in
the flowchart depicted in Figure 2B that describes the step of generating the
registration number to indicate that the registration number is an input,
rather than an output. Ex. 1025, Fig. 2B; see Ex. 1026, Fig. 2. Further, as
explained next, the “user details” encompass text, which further explains
why the flowchart is not discussing the addition of numbers.
If the text box in Figure 2B is properly understood to describe the
generation of the registration number from the inputs of user details and
serial number, the Australian provisional applications lack a disclosure of
how to combine user data and information that is in different formats. Ex.
2009, 127:2–4, 62:19–23, 79:19–80:2, 125:7–14, 82:2–7, 87:13–18, 88:7–
15, 132:24–133:14. “[I]nformation entered by a prospective registered user”
and “user details” are not necessarily numbers because user details includes
such information as name and address according to the ’216 patent and the
Australian provisional applications. See Ex. 1001, 3:50–53 (“Preferably, the
information utilized by the local licensee unique ID generating means to
produce the licensee unique ID comprises prospective licensee credit card
number, date of birth and full name and address.”); Ex. 1025, 7 (“The
registration dialogue box C prompts the user for details unique to that user
(including, for example, name, company, address, state, contact
number) . . . .”); Ex. 1026, 8 (“The registration dialogue box C prompts the
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user for details unique to that user (including, for example, name, company,
address, state, contact number) . . . .”).
Even if the flowchart box in the Australian provisional applications
were to reasonably convey to one skilled in the art a simple addition
operation of adding two numbers together, as Dr. DiEuliis contends by the
addition of a registration number to a serial number (Ex. 2008 ¶ 53), that
disclosure also would be insufficient to reasonably convey a summation
algorithm. The summation algorithm structure is not simple addition. Ex.
1010, 20 (the Federal Circuit held that “[t]he structural disclosure in the ’216
patent is not limited to simple addition in the colloquial sense of adding
numbers together and nothing more”). As the Federal Circuit explained, the
“combination by addition” taught by the sixth embodiment of the ’216
patent “necessarily incorporates an initial step of converting the information
into a common format to be added, which requires more than simple
addition.” Id.
Regarding the textual disclosure in the Australian provisional
applications that the “registration number algorithm combines information”
(Ex. 1025, 3), Patent Owner contends that the multitude of ways one could
have combined information in 1992 would have narrowed to “summation”
upon reading the totality of the Australian provisionals, particularly the
“adding” disclosed in Figure 2B. PO Resp. 20–21 (citing Ex. 2008 ¶¶ 58,
61). A disclosure of a genus is not necessarily a disclosure of all of its
species, however. In re Baird, 16 F.3d 380, 382 (Fed. Cir. 1994). We are
not persuaded by Patent Owner’s evidence that the disclosure teaches
combination by addition based on the trial record. Dr. Madisetti testified
that there are a number of different ways to combine letters and numbers
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without mathematical addition. Ex. 1007 ¶ 24; Ex. 2009, 121:13–124:1,
128:5–16, 128:25–129:12, 132:11–20, 154:22–155:5. As examples of how
information can be combined in a non-mathmatical manner, Dr. Madisetti
testified that “[y]ou could put a code for the different digits and scramble
them up. You could take portions of each and try to create another
registration number. You could use different operations in different ways.”
Id. at 121:20–24. Dr. Madisetti also testified that the word “add” does not
necessarily mean “sum” because it can also describe “adding a redundancy”
and “add[ing] a header”. Thus data can be amalgamated into an
alphanumeric number to form a registration number. See Tr. 83. We credit
Dr. Madisetti’s testimony on the meaning of “add” and “combine” in the
context of the Australian provisional applications. In addition, Patent Owner
does not dispute that there is more than one way to combine information. Id.
at 44 (“[T]here are only two forms of combining information in the totality
of the evidence in this case: Summation, the mathematical operation, and
concatenation”).
At oral hearing, Patent Owner argued that the sixth embodiment in the
’216 patent that describes the summation algorithm structure for the claimed
generating means incorporates by reference prior embodiments including
“everything that is disclosed in figure 2.” Id. at 41. It is Patent Owner’s
position that for the summation algorithm structure disclosed in the sixth
embodiment in the ’216 patent, “there is [] traceability back to the Australian
provisionals.” Id. at 42. As Petitioner pointed out in rebuttal, however, the
’216 patent characterizes the disclosures that also appear in the Australian
provisionals as a “generalized description”. Ex. 1001, 11:40–43; Tr. 84.
Thus, in the context of the ’216 patent itself, the disclosures that appear in
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the Australian provisional applications do not convey the specific algorithm
disclosed in the sixth embodiment, namely, combination by addition, nor an
equivalent, but, rather, a generalized description. See Ex. 1001, 11:53–56.
In sum, we credit Dr. Madisetti’s opinion on whether one of ordinary
skill in the art would have immediately recognized from the Australian
provisional applications the structure of a summation algorithm or summer
and its equivalents. Accordingly, we find that the preponderance of the
evidence supports the earliest priority date of September 21, 1993 for the
’216 patent based on the earliest disclosure of structure and hardware for the
claim term “licensee unique ID generating means” and similar terms
“remote licensee uniuqe ID generating means,” and “registration key
generating means”.
2. Mode Switching Means
The structural disclosure in the ’216 patent for the term “mode
switching means” is “program code which performs a comparison of two
numbers or a comparator and equivalents thereof”. See Ex. 1008, 41–44;
Ex. 1001, 13:37–40 (“Comparator 90 together with gates 91, 92, and relay
93 comprise one particular form of mode switcher or switching platform 83
of various kinds of code such as the code of types D and U”), 6:12–14
(“[m]ode switching means can comprise execution of the code portion which
additionally performs a comparison of the locally and remotely generated
registration numbers”).
Patent Owner asserts that the function of the mode switching means is
described in the ’4842 application as follows:
As the final stage in registration the registration authority 16
provides the registration number generated by the registration
authority PC 15 to the user 11. The user 11 enters the registration
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number into the user PC 12 where the security routine checks to
see whether the entered registration number matches the
calculated registration number. If the two match then a valid
registration has taken place and access is provided by the security
routine to a full operating version of the software protected by
the security routine.
Ex. 1025, 6–7; PO Resp. 26 (citing Ex. 2008 ¶ 63). Patent Owner further
asserts one skilled in the art would have understood from the above
disclosure in the Australian provisional applications that (1) they “teach a
software invention”, (2) “a ‘routine attachable to software’ is software,” (3)
“‘software’ is implemented with ‘program code’”, and (4) “the terms
‘program code’ and ‘software’ are often used interchangeably.” PO Resp.
27 (citing Ex. 2008 ¶¶ 65, 66). Patent Owner also relies on Figure 2B of the
Australian provisional applications as supporting disclosure of a “mode
switching means”. Id. at 28 (citing Ex. 2008 ¶ 68). At the oral hearing,
Patent Owner argued that the third block from the top on the right side of
Figure 2B is a decision block that is a software equivalent to a comparator
and a model for software, which is program code. Tr. 47–48; Ex. 1025, 13.
Figure 2B is shown below:
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According to Patent Owner, Figure 2B shows a decision block in the third
block from the top (“Application uses unlocking algorithm to check
validity”) because there is an input and two outputs that are a “yes” and a
“no”. PO Resp. 28 (citing Ex. 2008 ¶ 68); Ex. 1025, 13; Tr. 47.
Patent Owner provides evidence that the function of the mode
switching means was disclosed in the Australian provisional applications,
but not the structure, namely, program code or its equivalent, or the
hardware, a comparator. The fact that the security routine, which provides
the function, is “attachable to software” and that software is “often used
interchangeably” with program code, is not evidence that one of ordinary
skill in the art would have clearly concluded from the Australian
provisionals that program code, or an equivalent, is the structure that
performs the mode switching means function. See Lockwood, 107 F.3d at
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1572. Moreover, Patent Owner does not provide evidence of a comparator
or an equivalent being disclosed in the Australian provisionals to
demonstrate that the inventor was in possession of the invention at the time
of the filing of the Australian provisional applications. See id. Figure 2B
does not reasonably convey a comparator, nor does the record reflect
evidence that the block in Figure 2B to which Patent Owner directs us is a
comparator or an equivalent.
Accordingly, we find that the preponderance of the evidence supports
the earliest priority date of September 21, 1993 for the ’216 patent based on
the earliest disclosure of structure and hardware for the claim term “mode
switching means”.
3. Conclusion
The preponderance of the evidence on this record shows that the
earliest priority date to which the ’216 patent claims are entitled is
September 21, 1993. We, therefore, discern no reason to alter our
determination in this regard for the purposes of this Final Written Decision.
C. Patentability
To prevail on its challenges to the patentability of claims, Petitioner
must prove unpatentability by a preponderance of the evidence. 35 U.S.C.
§ 316(c); 37 C.F.R. § 42.1(d).
1. Principles of Law
a. Anticipation
In order for a prior art reference to serve as an anticipatory reference,
it must disclose every limitation of the claimed invention, either explicitly or
inherently. In re Schreiber, 128 F.3d 1473, 1477 (Fed. Cir. 1997). We must
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analyze prior art references as a skilled artisan would. See Scripps Clinic &
Research Found. v. Genentech, Inc., 927 F.2d 1565, 1576 (Fed. Cir. 1991),
overruled on other grounds by Abbott Labs. v. Sandoz, Inc., 566 F.3d 1282
(Fed. Cir. 2009) (to anticipate, “[t]here must be no difference between the
claimed invention and the reference disclosure, as viewed by a person of
ordinary skill in the field of the invention”).
b. Obviousness
A claim is unpatentable under 35 U.S.C. § 103(a) if the differences
between the subject matter sought to be patented and the prior art are such
that the subject matter as a whole would have been obvious at the time the
invention was made to a person having ordinary skill in the art to which said
subject matter pertains. KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 406
(2007). The question of obviousness is resolved on the basis of underlying
factual determinations including: (1) the scope and content of the prior art;
(2) any differences between the claimed subject matter and the prior art; (3)
the level of ordinary skill in the art; and (4) objective evidence of
nonobviousness. Graham v. John Deere Co., 383 U.S. 1, 17–18 (1966). An
invention “composed of several elements is not proved obvious merely by
demonstrating that each of its elements was, independently, known in the
prior art.” KSR, 550 U.S. at 418. Moreover, a determination of
unpatentability on the ground of obviousness must include “articulated
reasoning with some rational underpinning to support the legal conclusion of
obviousness.” In re Kahn, 441 F.3d 977, 988 (Fed. Cir. 2006). The
obviousness analysis “should be made explicit” and it “can be important to
identify a reason that would have prompted a person of ordinary skill in the
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relevant field to combine the elements in the way the claimed new invention
does.” KSR, 550 U.S. at 418.
2. Schull (Ex. 1002)
Petitioner asserts that claims 1–11 and 17–20 of the ’216 patent are
anticipated by Schull under 35 U.S.C. § 102(e). Pet. 19–37. Petitioner also
asserts that claims 10 and 11 would have been obvious over Schull under 35
U.S.C. § 103(a). Id. at 53. Having determined that the earliest priority date
of the ’216 patent is September 21, 1993, we confirm that Schull is prior art
to the ’216 patent under 35 U.S.C. § 102(e) because it issued from an
application filed in the United States on December 15, 1992. See Ex. 1002,
[22].
a. Overview of Schull
Schull teaches a method of distributing, registering, and purchasing
digital information whereby access to advanced features of the digital
information is given in the presence of a valid password that is generated on
the user’s system. Ex. 1002, Abstr. The password is generated using ID
target information that can be unique to the user, such as the user’s voice or
telephone number, or specific to the user’s processor. Id. at 5:20–47; 6:65–
7:27; 8:26–30; 17:13–20. An algorithm is used to transform the information
into a unique ID. Id. at 7:16–27. The same password-generating algorithm
is used on a licensing processor that is remote from the user’s computer to
transmit the password back to the user’s processor where it is installed and
found for subsequent executions or boots. Id. at 6:1–11, 8:55–9:4, 11:8–13,
35–40, 51–54. A check is conducted between the user’s processor and the
licensing processor to determine whether the installed password correctly
matches the password generated in the user’s processor. Id. The protected
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software may then be run on a user’s processor, which “is typically a
traditional computer”. Id. at 6:46–53.
b. Anticipation of Claims 1–11 and 17–20
The key issue disputed by the parties is whether Schull teaches the
“generating means” required by the claims. Petitioner contends that the
preferred algorithm taught by Schull is a summation algorithm or an
equivalent and provides the Madisetti Declaration in support of its position.
Pet. 21 (citing Ex. 1007 ¶¶ 40–47). According to Dr. Madisetti, the
preferred algorithm disclosed in Schull is a summation algorithm because it
prominently uses addition to perform the function of generating an ID. Ex.
1007 ¶¶ 40–47.
Petitioner also argues that the presence of an operating system, as
required by dependent claims 10 and 11, is implicitly if not expressly present
in Schull’s disclosure because traditional personal computers were almost
universally being used by 1993, thus any program running on a computer
would have been adapted to run under that operating system or in an
operating system environment. Pet. 22–23. Petitioner alternatively argues
that claims 10 and 11 would have been obvious in view of Schull. Id. at 53.
For both positions, Petitioner provides the Madisetti Declaration as
evidence. Ex. 1007 ¶ 38.
Patent Owner contends that Petitioner’s challenge based on Schull is
defective “because Schull fails to teach a summation algorithm, summer, or
equivalent structure for anticipating the licensee unique ID generating
means.” PO Resp. 33 (citing Ex. 2008 ¶¶ 75–105). According to Patent
Owner, Schull uses “concatenation” to generate its “Passwordable ID” and
“concatenation” is not a summation algorithm. Id. at 33–34 (citing Ex. 2008
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¶ 77). Dr. DiEuliis describes concatenation as
the linking together of entities (e.g., characters or numbers), not
a mathematical computation, summation or otherwise. In a
computer system, data is stored in memory as a linear array of
bytes, and concatenation is normally accomplished by copying
the data to a contiguous section of memory so that the result is
stored as a continuous array.
Ex. 2008 ¶ 78. Dr. DiEuliis provides as an example of concatenation “the
concatenation of three numbers––X=1234; Y=56; Z=789––to arrive at the
number 123456789” provided in Dr. Madisetti’s declaration. Id. ¶ 82 (citing
Ex. 1007 ¶ 44). According to Dr. DiEuliis, to concatenate these three
numbers stored in memory requires rearranging the numbers by moving or
copying into a contiguous section of memory. “To accomplish this
rearrangement, at most, the program need only to move each byte to its new
location in memory.” Id. ¶ 83. Dr. DiEuliis states “[m]oving data from one
memory location to another . . . is a basic processor operation and is fast and
efficient. Any type of arithmetic operation such as addition by byte-wide or
multi-byte numbers is much more complicated and significantly slower.” Id.
(footnote omitted).
Because Petitioner relies upon the Declaration of Dr. Madisetti to
explain the method of concatenation in Schull, Patent Owner argues that
Petitioner supplements the teachings of Schull with other teachings of Dr.
Madisetti. PO Resp. 40; Tr. 52.
Patent Owner does not present separate argument as to anticipation of
claims 1–11 and 17–20 by Schull and obviousness of 10 and 11 over Schull.
PO Resp. 32–40, 60.
The passages at issue in Schull describing the algorithms by which
the Passwordable ID is generated read:
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The ID must be generated in such a way that two ID-
Targets will generate different IDs. Also, in order that a plurality
of Licensed-features in a plurality of software programs be
independently licensable on the same ID-Target, any two
Licensed features must be able to generate different IDs even in
conjunction with a single ID-Target. Those familiar with the art
will recognize that this can be achieved a variety of ways, in one
preferred embodiment, each item of protected software is
assigned an adequately unique P-digit Program ID, and each
licensed Feature is assigned an F-digit Feature-ID, and each ID-
Target can be associated with a T-digit Target-ID such as a serial
number. Once assigned (using methods described below) these
ID numbers are combined in a fashion which preserves their
uniqueness (e.g., by concatenating them to produce a number
with N+M+T digits capable encoding 10ˆ(N+M+T) values) and then
using this combination, an encryption of it, or some other
adequately-unique transform of it, as the ID.
Ex. 1002, 7:10–27.3 Schull goes on to describe “error-checking” by
having the Passwordable ID “satisfy some kind of coherence
constraint” that “would be to append two more digits to the ID which
would constitute a checksum for the preceding digits.” Id. at 7:28–36.
We are persuaded by Petitioner’s argument that Schull discloses a
summation algorithm for generating its Passwordable ID. As explained by
Petitioner, Schull’s algorithm combines three ID numbers: Program ID,
Feature ID, and Target ID, which Petitioner refers to as X, Y, and Z in its
explanation. Pet. 21. The X number has “N” digits, the Y number has “M”
digits, and the Z number has “T” digits. Id. The algorithm combines the
numbers X, Y, and Z “(e.g., by concatenating them to produce a number

3 Patent Owner does not dispute Dr. Madisetti’s observation that Schull
contains a typographical error (referring first to P, F, and T-digits and then to
N, M, and T-digits) and his determination that N and M are equivalent to P
and F. Ex. 1007 ¶ 41.
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with N+M+T digits)”. Ex. 1002, 7:24–25; Pet. 21; Ex. 1007 ¶ 41. In 1992,
concatenating three integers to produce the desired result “boils down to two
basic approaches: (1) multiplying the first integer and second integer by a
power of ten (dependent on the number of digits of the subsequent numbers)
and adding the three integers together, or (2) converting the integers to
‘strings,’ concatenating the strings, and converting the result back to an
integer.” Ex. 1007 ¶ 42. Using the former approach to produce a number
with the combined number of digits as the numbers being combined, which
Petitioner argues is the one disclosed in Schull, Dr. Madisetti describes the
mathematical operations that can be performed programmatically. The
mathematical operation provided by Dr. Madisetti is X*10(M+T) + Y*10T + Z,
which uses multiplication and addition. Id. ¶¶ 44; Pet. 21. According to Dr.
Madisetti, this approach is a summation algorithm and is “computationally
quicker” for the reason that “it is a matter of performing basic calculations
and processing smaller numbers, as opposed to converting, combining and
reconverting large strings . . . .” Ex. 1007 ¶ 43.
To explain why Dr. DiEuliis is incorrect about Schull using the other
method of concatenating three integers to generate the PasswordableID,
Petitioner submits with its Reply a Supplemental Declaration of Dr. Vijay K.
Madisetti (Ex. 1039). Pet. Reply 9–10. In his Supplemental Declaration,
Dr. Madisetti provides a detailed explanation based on Schull’s teachings
about the programming used to generate a PasswordableID. Ex. 1039 ¶¶ 7–
14. Regarding how the invention of Schull is implemented, Schull states
that “[o]ne object of [its] invention is to allow programmers to conveniently
invoke the first-described methods by adding a relatively small number of
lines of code to their own programs.” Ex. 1002, 12:46–50. Schull further
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discloses that this object can be achieved by implementing “Pascal
language” and discloses programming that describes the Passwordable ID as
a “longint.” Id. at 12:53–14:13; Ex. 1039 ¶¶ 7–14. According to Dr.
Madisetti, “longint” means the Passwordable ID is “a single integer, single
number, or a whole number.” Ex. 1039 ¶ 11. Concatenating a
PasswordableID in the manner described by Dr. DiEuliis would not produce
a single integer, single number, or a whole number because the components
of the number of would maintain their separate identities stored in separate
places in memory. Id. ¶¶ 15–16. In view of the evidence before us, we are
persuaded that Schull’s longint concatenating implementation describes a
summation algorithm.
Even if the concatenating procedure disclosed by Schull for
generating a Passwordable ID does not necessarily utilize a “summation
algorithm” or equivalent, we find that Schull’s disclosure of appending two
additional digits to the concatenated number using a checksum does. Schull
describes this further step in creating the Passwordable ID as being for the
purpose of error checking. Ex. 1002, 7:28–36. The preponderance of
evidence on this record is that a checksum is a summation algorithm. Dr.
Madisetti testifies that “[a]s of 1992, using a checksum to detect an error in a
number, as described by Schull, was done using what is known as a ‘check
digit[,]’ [and all] of the methods for calculating check digits utilize some
form of addition.” Ex. 1007 ¶ 48. Dr. DiEuliis confirmed that most
checksums use addition and that he had never created a checksum that did
not use summation. Ex. 1041, 63:10–17, 88:8–10. In addition, the
publications relied upon by Dr. DiEuliis for disclosing checksum methods
also confirms that summation is used in those methods. Ex. 1039, 24–36;
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2009, 144:16–20. The issue of whether a checksum is a summation
algorithm was also answered in the affirmative in prior litigation involving
the ’216 patent. Ex. 1032, 177:7–21; Ex. 1042, 20–21; Ex. 1010, 17, 24; Ex.
1037, 30, 41–42; Ex. 1033, 52, 53–55; Ex. 1016, 27; Ex. 1041, 61:21–62:20,
70:8–72:22, 80:10–81:21. Therefore, Schull discloses a licensee unique ID
generating means because Schull discloses the step of appending digits for
error-checking purposes to the Passwordable ID using a checksum.
At oral hearing, Patent Owner asserted that (1) Petitioner is relying on
an inherency argument to establish that Schull used a summation algorithm,
(2) that inherency argument must fail because the experts agree that there are
two methods in which concatenation may be performed, and (3) [t]here is no
express disclosure in Schull for using summation, only concatenation.” Tr.
52–55. When asked how the other form of concatenation would produce a
long integer, Patent Owner conceded that there is no evidence in the record
to that level of detail. Id. at 54:8–16 (“We don’t have expert testimony on
that level of detail”).
After considering Petitioner’s and Patent Owner’s positions, as well as
their supporting evidence, we credit Dr. Madisetti’s testimony regarding the
disclosures in Schull describing the use of a summation algorithm to
generate the PasswordableID. For the reasons provided by Petitioner, we
determine that the preponderance of the evidence demonstrates that claims
1–11 and 17–20 would have been anticipated by Schull. See Pet. 19–37;
Pet. Reply 9–14.
c. Obviousness of Claims 10 and 11
Claim 10 depends from claim 1 and recites “said platform comprises a
computer operating system environment.” Ex. 1001, 14:35–36. Claim 11
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depends from claim 10 and further requires “said digital data comprises a
software program adapted to run under said operating system environment.”
Id. at 14:37–39. Petitioner argues that if Schull’s disclosure of a traditional
computer on which protected software may be run is not sufficient to
anticipate dependent claims 10 and 11, then “modifying the ‘traditional
computer’ of Schull to include an operating system under which protected
software can be run would have been obvious to one of skill in the art.” Pet.
53 (citing Ex. 1007 ¶ 38). Patent Owner contends that claims 10 and 11 are
not unpatentable because Schull is not prior art. PO Resp. 60.
A disclosure that anticipates under 35 U.S.C. § 102 generally renders
the claim unpatentable under 35 U.S.C. § 103, because anticipation is the
“epitome of obviousness.” See In re Fracalossi, 681 F.2d 792, 794 (CCPA
1982); In re Pearson, 494 F.2d 1399, 1402 (CCPA 1974). For the reasons
we find that claims 10 and 11 have been shown by a preponderance of the
evidence to be anticipated by Schull, we also determine that Petitioner has
shown by a preponderance of the evidence that claims 10 and 11 are
unpatentable under 35 U.S.C. § 103(a) as obvious over Schull.
We further find that if Schull’s disclosure of a “traditional computer”
is not a disclosure of a personal computer with an operating system, the
preponderance of the evidence on this record shows that it would have been
obvious to modify Schull’s traditional computer to include an operating
system under which protected software can be run as required by claims 10
and 11. According to Dr. Madisetti, “operating systems for personal
computers had become ubiquitous and necessary to the operation of software
on the computer” prior to 1993. Ex. 1007 ¶ 38. Dr. Madisetti testifies to
the introduction of Windows 3.1 in April 1992, the release of Apple’s
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System Software in 1984, System 7 in 1991, and LINUX in 1991. Id. The
’216 patent also identifies existing operating system environments. Ex.
1001, 2:32–36. These facts are not disputed by Patent Owner. Therefore, if
Schull’s traditional computer did not include an operating system
environment on which software can be run, it would have been obvious to
modify Schull with a computer that did include an operating system
environment. Accordingly, the preponderance of the evidence supports our
finding that claims 10 and 11 would have been obvious over Schull.
3. Logan (Ex. 1003) and Grundy (Ex. 1004)
Petitioner asserts that claims 12–14 are anticipated under 35 U.S.C.
§ 102(e) by Logan (Pet. 37–41) and claims 15 and 16 would have been
obvious under 35 U.S.C. § 103(a) over the combination of Logan and
Grundy (id. at 41–46). Claim 12 requires that the registration system “is
replicated at a registration authority and used for the purposes of checking
by the registration authority that the information unique to the user is
correctly entered at the time that the security key is generated by the
registration system.” Ex. 1001, 14:45–49. Claim 15 depends from claim 12
and further requires that “said registration system checks at the time of boot
of said software as to whether it is a first boot of the software to be protected
or a subsequent boot”. Id. at 14:57–60.
a. Overview of Logan
Logan discloses a method and system for protecting a software
program. Ex. 1003, Abstr. A first software code or serial number is
provided by the vendor that is unique to each original copy of the software.
Id. at 4:19–31. A second software code is stored within the software that the
software supplier is able to identify by reference to the first software code.
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Id. at 4:32–43. The user must provide the software supplier with the
hardware and software serial numbers. Id. at 6:33–39. An activation code is
generated by the software supplier by adding together the serial numbers and
in the same manner accomplished by the software locally to generate a first
intermediate code. Id. at 6:51–67. A mathematical operation is performed
on the first intermediate code and the activation code to produce a second
intermediate code. Id. at 5:53–65. The program compares the second
intermediate code with the second software code and, if they are identical,
then the user is permitted to operate the software uninhibited. Id. at 5:67–
6:7.
b. Anticipation of Claims 12–14
Petitioner asserts that the disclosures in Logan anticipate claims 12–
14. Pet. 37–41. Petitioner identifies Logan’s first intermediate code as the
security key required by independent claim 12 and Logan’s first software
code or serial number as the information uniquely associated with a person
who intends to become a licensee that the user inputs. Id. at 38–39. Logan’s
software supplier is identified as the registration authority that checks
whether the software serial number entered by the user is accurate because
the second intermediate code will not match the stored hidden number if the
serial number is not correctly input by the user. Id. at 40.
Patent Owner contends that the first intermediate code derived in
Logan “is not generated from information unique to the user because
different users who install copies of the software will have the same
software serial number.” PO Resp. at 41–42 (citing Ex. 2008 ¶ 121; Ex.
1003, 6:7–29). According to Patent Owner, vendor-supplied information
may be an input to generate a “security key,” but it is not necessarily
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“information that is uniquely associated with a person” as recited in claim
12. Id. at 43. Patent Owner also contends that Logan’s system does not
anticipate the final element required by claim 12, “checking by the
registration authority that the information unique to the user is correctly
entered at the time the security key is generated by the registration system”
because “the temporal aspect of the checking (i.e. ‘at the time the security
key is generated’) is not disclosed anywhere in Logan.” Id. at 45 (citing Ex.
2008 ¶ 131). Patent Owner further contends that Petitioner’s citation to
Logan for this element is misleading because Logan “describes actions that
take place on the user’s computer, not actions taken by the software
supplier.” Id.
Regarding whether Logan’s first intermediate code is an identifier
associated with the licensee, the uniqueness of the identifier will vary
depending on the inputs by the user, which may include vendor supplied
information and does not require personal information of the user according
to the claim construction analysis of record. See Ex. 1008, 16–21; Ex. 1009,
11. Logan teaches that the software serial number is unique to each original
copy of the software and that it is combined with the hardware serial number
input by the user to generate the first intermediate code. Ex. 1003, 4:19–31
(“Each original copy or embodiment of the computer software has a first
software code which is uniquely associated with that one particular
embodiment”), 4:65–5:30; see Pet. 38–39. The preponderance of evidence
in this record also supports a serial number supplied by a vendor being
unique to the user. Ex. 1046, 27: 1–3 (the inventor of the ’216 patent
testifying that “the serial numbers of each piece of software . . . identifies the
owner of the software . . .”), 29:1–3 (the inventor of the ’216 patent
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testifying that his idea was “linking a serial number to a specific machine”);
Ex. 1044, 10 (Patent Owner arguing in district court that it “expressly
contemplates information that is not one-of-a-kind”); Ex. 1016, 39 (Patent
Owner arguing during reexamination that nexus between the claims and
some commercial embodiments was satisfied because they used “a unique
serial number . . . that is assigned to each copy of the software”); Ex. 1008,
12 (District Court finding in its claim construction of “unique” that “[t]o
construe the word unique to mean no possibility of duplication would simply
be inconsistent with the specification.”). In addition, the claim construction
analysis explicitly rejected “one-of-a-kind information that
describes/identifies a person” when construing “information . . . which
uniquely identifies an intended registered user” recited in claim 12. Ex.
1008, 22.
At the oral hearing, Patent Owner conceded that the Federal Circuit
held that vendor-provided information “could be” the basis for a licensee
unique ID, but argued that whether a particular vendor supplied information
is uniquely associated with a licensee is a fact question. Tr. 61–62. In
Logan, the software serial number is input by the user together with the
hardware serial number to generate the first intermediate code. Therefore,
the information inputted by the user is not solely platform related and
together with the hardware serial number “uniquely identifies an intended
registered user” as recited in claim 12 compared to the software serial
number alone. Accordingly, we are persuaded that the first intermediate
code meets the recited “security key” requirement of claims 12–14, as that
term is construed.
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Logan also teaches that the accuracy with which the software serial
number is input by the user would be checked by the registration authority
because “the software supplier is able to identify the second software code
for each particular embodiment of the software by reference to the first
software code or serial number.” Ex. 1003, 4:37–40. It is also checked by
the registration authority in Logan by preventing full access to the digital
data if the second intermediate code does not match the stored hidden
number. Id. at 5:65–6:7; see Pet. 39–40. Regarding whether algorithms are
replicated at a registration authority in Logan, Patent Owner does not dispute
that the same algorithm is replicated at the registration authority to produce
the first intermediate code. We do not read into the claims a temporal
limitation requiring that the security key is generated at the same time at the
local and remote locations, as argued by Patent Owner. Claim 12 requires
that the registration system is replicated at the registration authority for the
purpose of check on the information unique to the user. Therefore, we are
persuaded that the registration authority disclosed by Logan meets the
requirements of claims 12–14.
After considering Petitioner’s and Patent Owner’s positions, as well as
their supporting evidence, we determine that Petitioner has shown by a
preponderance of the evidence that claims 12–14 would have been
anticipated by Logan.
c. Overview of Grundy
Grundy is directed to “a computer-based method and apparatus to
control the distribution of information . . . whereby a user of computer
software becomes the primary agent of manufacture and distribution of the
software under the direct monitoring and control of a centralized control
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point.” Ex. 1004, 1:7–13. The software is “capable of being operated in two
modes.” Id. at 4:28–29. “The first mode is a full-function mode, where all
the functions and features of the software product are available to the user”
and “[t]he second mode is an evaluation mode, where only certain functions,
decided by the software developer, can be accessed by the user.” Id. at
4:29–34. The software product in evaluation mode is distributed to the user
community. Id. at 9:3–6. The user “is in fact supplied with a complete copy
of the software, but can not operate the software in full-function mode until
after the registration process . . . is completed.” Id. at 9:14–17. An
ownership check is performed “[e]ach time a user starts the software
product” in order to determine whether the software should be executed in
an “evaluation mode” or “full-function mode”. Id. at 5:37–48.
d. Obviousness of Claims 15 and 16
Petitioner asserts that, like Logan, Grundy also teaches a system for
ensuring that copied software is properly registered (Pet. 41), but differs
from Logan in that the software runs in both a demonstration or evaluation
mode and a full-function mode depending on an ownership check each time
the software is executed (id. at 41–42). Petitioner argues that it would have
been obvious to one of ordinary skill in the art to combine the option of
running software in a demonstration mode, as taught by Grundy, with the
software protection system of Logan, because Grundy teaches “the benefit of
providing an evaluation mode to a software consumer is to allow the
consumer to try and evaluate features of the product prior to making a
decision to purchase.” Id. at 42 (citing Ex. 1004, 4:27–36, 9:6–11; Ex. 1007
¶¶ 49–57). Petitioner contends that modifying the software registration
system of Logan with the ownership check process of Grundy would have
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been within the skill and common sense for a skilled artisan; it would have
provided the predictable result of executing the software in two different
modes as described by Grundy; and claims 15–16 would have been obvious
over the combination. Id. at 42–46. Petitioner provides the Madisetti Decl.
as evidence to support the obviousness of claims 15 and 16 over the
combination of Logan and Grundy. Id. (citing Ex. 1007 ¶¶ 52–57).
Patent Owner contends that “[t]here is no disclosure in Grundy’s
system to check at the time of boot whether it is a first or subsequent boot.”
PO Resp. 47. According to Patent Owner, Grundy teaches away from claim
15 because it “emphasi[zes] an entirely different check––the mode check––
at start up.” Id. (citing Ex. 2008 ¶ 139). Patent Owner further contends that
the requirements of claim 15 are not met because “neither Logan nor Grundy
disclose detecting first or subsequent boots.” Id. at 48 (citing Ex. 2008
¶ 142). Regarding the reason to combine Logan and Grundy, Patent Owner
argues that one skilled in the art would have not modified Logan with the
demo mode feature of Grundy because “[t]he common sense approach to
adding a demonstration mode to a software product in view of Logan and
Grundy would have been to abandon Logan and incorporate Grundy alone.”
Id. at 49 (citing Ex. 2008 ¶ 146).
After considering Petitioner’s and Patent Owner’s positions as to
claims 15 and 16, as well as their supporting evidence, we determine that
Petitioner has shown by a preponderance of the evidence that those claims
are unpatentable under 35 U.S.C. § 103(a) as obvious over Logan and
Grundy. Regarding detecting first or subsequent boots as required by claim
15, Grundy discloses the step of determining “if this is the first use,” which
indicates a first or subsequent boot, by checking whether an ownership
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details record exists every time the software is executed. See Ex. 1004,
16:41–49; Ex. 1007 ¶ 52. If no details are present, an initialized ownership
record will be created. Ex. 1004, 16:41–49. On a subsequent boot, an
ownership record will exist and be checked to determine whether the
software should run in evaluation or full-function mode. Id. at 5:37–48,
16:18–17:39. Therefore, the preponderance of the evidence supports
Petitioner’s argument that claims 15 and 16 would have been obvious over
the combined teachings of Logan and Grundy. Petitioner also provides a
reason for combining this particular feature of Grundy with the system of
Logan, namely, “allow[ing] potential users to try and evaluate features of the
software product” as stated by Grundy. Ex. 1004, 4:34–36; Pet. 42.
Therefore, Petitioner’s reason to modify the teachings of Logan with the
teachings of Grundy is apparent from Grundy and has a rational
underpinning. See KSR, 550 U.S. at 418.
4. Haines (Ex. 1005) and Manduley (Ex. 1006)
Petitioner contends that claims 12–14 would have been obvious under
35 U.S.C. § 103(a) over Haines and Manduley. Pet. 46–53.
a. Overview of Haines
Haines discloses a system for reconfiguring postage meters that
selectively enable and disable features. Ex. 1005, Abstr. The user’s meter
generates a request code number from user-entered information in both
systems. Id. at 5:1–6:48. Haines discloses that the meter and the data center
each use the same encryption routine and input numbers so that the data
center can control the feature set of the meter. Id. at 4:17–26. The data
center computer in Haines checks that its configuration request code
matches the configuration request code generated by the user’s meter.
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Haines states that if “the agent has improperly entered numbers,” the codes
will not match. Id. at 7:15–26.
b. Overview of Manduley
Manduley also discloses a system that selectively activates and
unactivates features in a data processing device, such as a parcel manifest
system. Ex. 1006, Abstr., 1:35–39. The user’s meter generates a request
code number from user-entered information as in Haines’ system. Id. at
5:63–6:50. Manduley expressly discloses location data is entered by the
user, such as “zip code or other data identifying the location” of the device.
Id. at 5:53–6:50. “From that information, the data center determines the
identity of the customer holding that device 20 and checks the customer’s
file to determine whether the request is appropriate (step 210).” Id. at 7:63–
8:2.
c. Obviousness of Claim 12
Petitioner argues that it would have been obvious to one of ordinary
skill in the art to modify the system of Haines with the use of location data
as the information that the user inputs because Manduley teaches the benefit
of using location data is to allow the data center to determine the customer
identity. Pet. 47 (citing Ex. 1006, 7:63–8:2). Petitioner provides as
evidence in support of its position the Madisetti Declaration, which
characterizes the modification of Haines as a substitution that is
contemplated by Haines’s suggestion that “other meter specific identifying
information” may be used instead of an ascending register value in
generating a request code. Ex. 1007 ¶ 61 (citing Ex. 1005, 5:28–30).
Petitioner also argues that the use of a zip code, as in Manduley, is
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exemplified as a user input to generate the security key in the ’216 patent.
Pet. 47 (citing Ex. 1001, Fig. 4).
Patent Owner contends that Haines and Manduley are not analogous
art to the ’216 patent because “neither reference is directed towards a user
who desires to obtain a license, install, and use software on their computer”
and, as such, one skilled in the art would not look to these references “to
solve the problems that the inventor of the ’216 Patent faced.” PO Resp. 52
(citing Ex. 2008 ¶ 152); id. at 55. Patent Owner asserts that neither discloses
“licensing procedures or a registration system” or “installation of software
into a user’s computer” because both teach “select[ing] operating features
already installed in a device.” Id. at 52 (citing Ex. 2008 ¶ 154); id. at 54.
Patent Owner further contends that Haines has not been shown to
disclose the “registration system” preamble of claim 12 because “none of the
cited passages disclose any licensing procedure”. Id. at 56. In addition,
Patent Owner asserts that neither Haines nor Manduley discloses the use of
information that is uniquely associated with a person who intends to become
a licensee as required by independent claim 12. Id. at 57. Patent Owner also
argues that Petitioner’s reason for combining Haines’s system with the zip
code input taught by Manduley is not supported by the record because
Manduley identifies the location of the device, not the agent, and “the data
center computer in Haines already knows the identity of the agent.” Id. In
addition, Patent Owner asserts that the “agent” disclosed by Haines and
Manduley cannot be the “intended registered user of said software on a
computer on which said software is to be installed” as recited in claim 12
because “the owner of the business or home (or a post office) is the user of
the meter.” Id. at 58 (citing Ex. 2008 ¶ 180). According to Patent Owner,
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Petitioner has not identified “an intended registered user of said software on
a computer on which said software is to be installed”, “any user’s computer
on which software is to be installed”, or “‘licensee,’ ‘licenses,’ or ‘licensing
procedures’” as recited in claim 12. Id. (citing Ex. 2008 ¶¶ 181, 182).
Based on the trial record, we find the preponderance of the evidence
supports Petitioner’s assertion that claim 12 would have been obvious over
the combination of Haines and Manduley. As an initial matter, we find
Haines and Manduley to be analogous art. The PTO and its reviewing
courts have developed and applied a two-step “test” to determine whether a
prior art reference is “analogous” art and therefore may be used as evidence
with respect to a question of obviousness under § 103. See In re Oetiker,
977 F.2d 1443, 1447 (Fed. Cir. 1992); In re Clay, 966 F.2d 656, 659 (Fed.
Cir. 1992); In re Wood, 599 F.2d 1032 (CCPA 1979). Step 1 requires an
answer to the following question: “Is the reference within the field of the
inventor’s endeavor?” If the answer is “yes,” then the reference is
“analogous” and therefore may be used as evidence. If the answer is “no,”
then Step 2 requires an answer to the following question: “Is the reference
reasonably pertinent to the particular problem the inventor was trying to
solve?” If the answer is “yes,” then the reference is analogous and therefore
may be used as evidence.
Haines and Manduley are analogous art because, like the ’216 patent,
they relate to systems for remotely permitted use of software on a device.
Ex. 1007 ¶ 59. The scope of the ’216 patent is not limited to personal
computers, but, rather, any “platform” on which software runs. Ex. 1001,
2:52–55 (“In broad terms, the system according to the invention is designed
and adapted to allow digital data or software to run in a use mode on a
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platform . . . .”), 2:24–30 (“[T]he term ‘platform’ denotes an environment to
be associated with a computer device such as a microprocessor or other data
processing device which permits execution of the digital data . . . .”). Even
if the Haines and Manduley references could be considered in a different
field of endeavor than the ’216 patent because their intended use is postage
and parcel systems rather than a personal computer, they are analogous art
for the additional reason that they relate to the problem of restricting access
to software to those who have a right to use it. Ex. 1001, 2:40–44 (“In this
specification, ‘use mode’ refers to use of the digital data or software by its
execution on a platform so as to fulfill the seller’s/licensor’s obligations in
relation to the sale or license of the right to execute the digital data or
software in the use mode.”); Ex. 1005, Abstr., 1:41–49 (“only authorized
meter reconfigurations can occur”), 11:13–17; Ex. 1006, Abstr, 1:29–32
(“the marketer may wish to charge the customer a separate amount for each
software function or each variety of data and the customer may wish to pick
and choose among the functions and/or varieties”), 2:31–63.
Petitioner demonstrates by a preponderance of the evidence that
Haines discloses a “registration system” as recited in the preamble of claim
12 and construed in the table above. Pet. 48–49. The reconfiguration
process of Haines is a licensing procedure because it is a system that
provides security for the authorized use of software features. Ex. 1005,
1:45–47, 4:17–26; see Pet. 48–49. Patent Owner argues that Haines does not
disclose a registration system “because it does not disclose any licensing
procedure that must be followed by a prospective user,” citing paragraph
172 of the DiEuliis Declaration. PO Resp. 56. The argument appears to be
that there is no ipsis verbis disclosure of the term “license” in Haines
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because Haines does disclose a system to protect authorized use. Dr.
DiEuliis acknowledged that licensing means you have obtained permission
to use something. Ex. 1048, 106:6–8 (“Licensing is, if you buy a –– a
product, a software product, and you have the license to use it, which means
you’re allowed to use it.”). Accordingly, the preponderance of the evidence
is that Haines discloses a registration system as recited in claim 12.
Petitioner has shown by a preponderance of the evidence that Haines’s
registration system, as modified by Manduley, generates “a security key
from information input to said software”, as required by claim 12. Pet. 46–
52. Haines’s registration system generates a “request code” from the meter
serial number, other meter-specific information, and user-entered
information. Ex. 1005, 5:1–6:48. The request code generated in
Manduley’s registration system reflects user-entered location data. Ex.
1006, 5:63–6:50 (“zip code or other data identifying the location”); see Ex.
1001, Fig. 4 (“ADDRESS,” “CITY,” and “ZIP/POST CODE” listed as
examples of personal information inputs), 5:10–12. The preponderance of
the evidence shows that one of ordinary skill in the art would have
considered it obvious to have modified Haines by substituting information
inputs disclosed in Haines for generating the “request code” with
Manduley’s input of a zip code “which uniquely identifies an intended
registered user of said software on a computer on which said software is to
be installed”, as further recited by claim 12, for the reason disclosed in
Manduley. Pet. 46–48; Ex. 1007 58–63. Manduley itself discloses the
benefit of user-entered location data as allowing the data center to determine
the customer’s identity. Ex. 1006, 7:63–8:2 (the location data entered by the
user is used to “determine[] the identity of the customer holding that
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device”). Dr. Madisetti states that substitution of the inputs used in Haines
is contemplated by Haines, particularly with respect to “other meter specific
identifying information”. Ex. 1007 ¶ 61 (quoting Ex. 1005, 5:28–30).
According to Dr. Madisetti’s testimony, using Manduley’s device zip code,
or other location data, instead of Haines’s ascending register value, is
nothing more than simple substitution of one known element for another and
that the modification would achieve the result described by Manduley
without undue experimentation. Id. ¶¶ 61–63.
The preponderance of the evidence also shows that Haines’s
registration system, as modified by Manduley, is “replicated at a registration
authority and used for the purposes of checking by the registration authority
that the information unique to the user is correctly entered at the time that
the security key is generated by the registration system” as further required
by claim 12. Haines explicitly states that the request code “is checked by the
data center computer which generates the configuration request code using
the same algorithm.” Ex. 1005, Abstr., 1:59–64, 4:17–26.
Patent Owner’s argument regarding the “owner of the business or
home” rather than the “agent” in Haines being the “intended registered user”
as recited in claim 12 is not persuasive. Manduley explicitly teaches “the
user enters data”. Ex. 1006, 6:39–41. Who can be properly characterized as
the “intended registered user” of the registration system in Haines and
Manduley is not relevant. It is the teachings of the references regarding a
registration system that are pertinent to the obviousness analysis of claim 12.
Dr. DiEuliis conceded that the person entering information in the registration
system of claim 12 is irrelevant. Ex. 1041, 111:17–22 (“There’s no explicit
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reference to [] any one person entering this [user] information [of claim
12]”).
We also are not persuaded by Patent Owner’s argument regarding the
degree of uniqueness that should be accorded a zip code in identifying the
agent in Manduley (PO Resp. 57) because the claim construction analysis
explicitly rejected “one-of-a-kind information that describes/identifies a
person” when construing “information . . . which uniquely identifies an
intended registered user” as recited in claim 12. Ex. 1008, 22.
d. Obviousness of Claim 13
Claim 13 depends from claim 12 and further requires that “said
security key is generated by a registration number algorithm.” Ex. 1001,
50–51. Petitioner has shown that Haines’s registration system explicitly
states that a non-linear encryption algorithm is used to generate its request
code. Pet. 52; Ex. 1005, 9:66–10:19 (“[T]he configuration request code and
the configuration enable code are generated by an encryption routine, stored
both in the meter ROM and in the data center computer. The encryption
routine is a nonlinear algorithm that generates a number that is apparently
random to an outside person.”), 6:43–50.
Patent Owner contends that obviousness of claim 13 has not been
shown because the Petition contradicts itself as to whether the “security key”
recited in claim 13 is disclosed in Haines. PO Resp. 59 (citing Pet. 50, 52;
Ex. 2008 ¶¶ 186–87). We have considered Patent Owner’s argument and are
not persuaded. Petitioner argues that one of ordinary skill in the art would
have modified the registration system of Haines, particularly the request
code generated in Haines, with the location input taught by Manduley. Pet.
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46–53. This is clear from the complete statements on pages 50 and 52 of the
Petition that Patent Owner cites:
Haines does not expressly disclose that the configuration request
code (i.e., security key) is generated from inputted information
that is uniquely associated with a person who intends to become
a licensee. However, Manduley discloses generation of a request
code that reflects user entered location data, such as the “zip code
or other data identifying the location” of the device, which is
used by the data center to “determine[] the identity of the
customer holding that device.”
Id. at 50, 52–53. Therefore, the preponderance of the evidence
demonstrates that claim 13 would have been obvious in view of
Haines and Manduley.
e. Obviousness of Claim 14
Claim 14 depends from claim 13 and further requires that the
“registration number algorithm combines information entered by a
prospective registered user unique to that user with a serial number
generated from information provided by the environment in which the
software to be protected is to run.” Ex. 1001, 53–56. Petitioner has shown
that Haines, as modified by Manduley’s location data, generates a request
code, which includes information entered by a prospective register user
unique to that user and a meter serial number, using a non-linear encryption
algorithm. Pet. 52–53; Ex. 1005, 5:1–6:50, 9:66–10:19; Ex. 1006, 5:39–
6:50, 7:63–8:2.
Patent Owner asserts that Petitioner’s argument is flawed because
claim 14 depends from claim 13 and the analysis of whether Haines
discloses the required “security key” required by claim 13 is contradicted by
the analysis of claim 14. PO Resp. 59 (citing Pet. 52–53). Patent Owner
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further contends that “Petitioners fail to point to any evidence that either
Haines or Manduley discloses combining information ‘provided by the
environment in which the software to be protected is to run,’ as recited in
claim 14.” Id. at 59–60 (citing Ex. 2008 ¶ 190).
For the reason explained above in connection with claim 13, we are
not persuaded that Petitioner failed to show that the combination of Haines
and Manduley discloses the “security key” recited in claim 13. Regarding
the “information provided by the environment in which the software to be
protected is to be run” recited in claim 14, Petitioner has shown that Haines
discloses generating a request code from information that includes a meter
serial number. Pet. 52, 47; Ex. 1005, 5:1–6:48; Ex. 1007 ¶ 60. Therefore,
the preponderance of the evidence demonstrates that claim 14 would have
been obvious in view of Haines and Manduley.
f. Conclusion
In sum, the preponderance of the evidence shows that claims 12–14
would have been obvious over Haines and Manduley.
D. Conclusion
Petitioner has demonstrated by a preponderance of the evidence that
(1) claims 1–11 and 17–20 of the ’216 patent are anticipated under § 102(e)
by Schull; (2) claims 10 and 11 of the ’216 patent are unpatentable under
§ 103(a) over Schull; (3) claims 12–14 of the ’216 patent are anticipated
under § 102(e) by Logan; (4) claims 15 and 16 of the ’216 patent are
unpatentable under § 103(a) over the combination of Logan and Grundy; and
(5) claims 12–14 of the ’216 patent are unpatentable under § 103(a) over the
combination of Haines and Manduley.

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III. ORDER
In consideration of the foregoing, it is
ORDERED that claims 1–20 of the ’216 patent are held to be
unpatentable; and
FURTHER ORDERED that, because this is a Final Written Decision,
parties to this proceeding seeking judicial review of our decision must
comply with the notice and service requirements of 37 C.F.R. § 90.2.
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PETITIONER:

Eric A. Buresh
Mark C. Lang
ERISE IP, P.A.
eric.buresh@eriseip.com
mark.lang@eriseip.com

Don Daybell
James Maune
ORRICK, HERRINGTON & SUTCLIFFE LLP
d2dptabdocket@orrick.com
jmaune@orrick.com

PATENT OWNER:

Sean D. Burdick
Brett Mangrum
UNILOC USA, INC.
sean.burdick@unilocusa.com
brett@etheridgelaw.com