-81- Vo LUNT ARY DISMISSAL OF COMPLAINT FILED AGAINST PRIVY OR REAL PARTY-IN

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1 September 27, [Petitioner] itself manufactured any supposed reduction in its evaluation time by requesting ex parte reexamination." See also Biodelivery Sciences Int'!, Inc. v. Manoso! Rx, LLC, IPR , Paper 28 (Nov. 13, 2013). COUNTERCLAIM ASSERTING A PATENT IS A "COMPLAINT ALLEGING INFRINGEMENT OF THE PATENT" UNDER 315(B) AND RESULTS IN A ONE-YEAR BAR TO THE PETITION. St. Jude Med., Cardiology Div., Inc. v. Volcano Corp., IPR , Paper 29 (Oct. 16, 2013). In response to a complaint for patent infringement, Patent Owner filed a counterclaim for infringement of its own patents on September 20, The case was dismissed with prejudice on October 21, The Board was called on to decide."whether a counterclaim alleging infringement of a patent is 'a complaint alleging infringement of the patent' within the meaning of 35 U.S.C. 315(b)." The Board held that it was. "Nothing in the legislative history indicates that Congress intended to apply the 315(b) time limit to some, rather than all, accused infringers. Construing 'complaint' in 315(b) restrictively, to exclude counterclaims that present allegations of infringement, would have just that effect. It would leave a patent open to serial attack, even after years of patent infringement litigation, in the event that the accused infringer is accused of infringement only via a counterclaim. That interpretation would frustrate Congressional intent, and would lead to unjustified discrimination among otherwise similarly-situated accused infringers. See Graham Cnty. Soil & Water Conservation Dist. v. US. ex rel. Wilson, 559 U.S. 280, 298 (2010) (acknowledging the "conventional judicial duty to give faithful meaning to the language Congress adopted in the light of the evident legislative purpose") (internal quotation omitted)." The Board explained that "[a] complaint and a counterclaim instead bear marked similarities. A counterclaim imposes the same burdens on the parties as does a complaint. A counterclaim alleges a cause of action, just like a complaint; confirming that equivalence, Wright and Miller explains that a counterclaim 'basically is a defendant's complaint.' 5 FED. PRAC. & PROC. Crv (3d ed.). The same rules of pleading apply to a counterclaim of infringement as to a complaint. FED. R. Crv. P. 8(a); Vivid Technologies, Inc. v. Am. Sci. & Eng'g, Inc., 200 F.3d 795, 803 (Fed. Cir. 1999) (remanding for entry of infringement counterclaim that 'violated no rule of pleading'). By filing a counterclaim, the defendant, in effect, sues the plaintiff within the same civil action. When the counterclaim alleges patent infringement, the original plaintiff becomes an accused infringer who has been sued for patent infringement. The accused infringer must answer the counterclaim or face default. See Info. Sys. & Networks Corp. v. United States, 994 F.2d 792, 797 (Fed. Cir. 1993) ('[D]efaultjudgment is an important sanction which deters parties from ignoring the requirement to file an answer to a counterclaim.'). The similarities between a complaint and a counterclaim underscore their equivalence for purposes of 3 l 5(b ). " The Board also noted that a dismissal of the complaint with prejudice does not "purge" that cause of action. ONE-YEAR BAR UNDER 35 U.S.C. 315(B) INDEPENDENT OF PRODUCTS ACCUSED OF INFRINGEMENT. Accord Healthcare, Inc. USA v. Eli Lilly & Co., IPR , Paper 13 (Oct. 1, 2013). Patent owner had served petitioner with two complaints: one more than one year before the petition was filed, and one less than one year before the filing of the petition. Petitioner "argues that the two infringement actions concern distinct products and are based on different sets of facts." The Board rejected the implicit argument "that the one-year period set forth in 3 l 5(b) should not be measured from the date of service of the complaint in the '086 action. The plain language of the statute does not indicate or suggest that the filing of a -77-

2 later lawsuit renders the service of a complaint in an earlier lawsuit a nullity. Moreover, as the legislative history of 35 U.S.C. 315(b) indicates, Congress intended that inter partes reviews should not be used as "tools for harassment" by 'repeated litigation and administrative attacks.' H.R.Rep. No at 48 (2011). Allowing such attacks 'would frustrate the purpose of the section as providing quick and cost effective alternatives to litigation.' Id. " The Board, therefore, denied the petition. FILING A TIMELY PETITION IS NOT AN "ENTRY TICKET" AND THE BOARD'S INSTITUTION DECISION IS NOT A "HOW-TO GUIDE" FOR THE FILING OF ADDITIONAL UNTIMELY PETITIONS IF A MOTION FOR JOINDER IS DENIED. ZTE Corp. v. Contentguard Holdings Inc., IPR , Paper 12 (Sept. 25, 2013). Petitioner "did not file the petition within the one-year period provided in 35 U.S.C. 315(b) for a petition that is not accompanied by ajoinder motion, and the motion for joinder accompanying the petition for inter partes review that [Petitioner} filed outside the one year window has been denied. The Board is concerned about encouraging, unnecessarily, the filing of petitions which are partially inadequate. A decision to institute review on some claims should not act as an entry ticket, and a how-to guide, for the same Petitioner who filed an unsuccessfuljoinder motion, and is outside of the one-year statutory period, for filing a second petition to challenge those claims which it unsuccessfully challenged in the first petition." LAWSUIT DISMISSED WITH PREJUDICE TEN YEARS BEFORE THE FILING OF A PETITION FOR INTER PARTESREVIEW RESULTS IN A BAR UNDER 35 u.s.c. 315(B). Universal Remote Control, Inc. v. Universal Electronics, Inc., IPR , Paper 9 (Aug. 26, 2013). In addressing the argument that an earlier suit barred the petition under 315(b ), the petitioner argued that the earlier litigation was never effectively brought on the patent because it was dismissed. The Board disagreed. While it noted that prior decisions had held that a complaint dismissed without prejudice left the parties "as though the action had never been brought," the Board concluded that the dismissal of the earlier action had been with prejudice. This difference, according to the Board, meant that the earlier suit could not be ignored for the purposes of analyzing timeliness under 31 S(b ). SERVICE OF A SECOND COMPLAINT FOR INFRINGEMENT OF THE SAME PATENT DOES NOT NULLIFY THE SERVICE OF AN EARLIER COMPLAINT FOR PURPOSES OF 315(B). Universal Remote Control, Inc. v. Universal Electronics, Inc., IPR , Paper 9 (Aug. 26, 2013). Although "the plain language of [section 315(b)] does not address the subject of multiple lawsuits involving the same patent... the one-year grace period" does not apply "only to the last of a chain of multiple lawsuits." Nor does "the filing of a later lawsuit render[] service of a complaint in an earlier lawsuit to be a nullity as Petitioner argues. The plain language of the statute does not include such a restriction." Thus, the Board concluded "that 315(b) means that an inter partes review may not be instituted if the petition requesting the proceeding is filed more than one year after the date on which the petitioner is served with a complaint alleging infringement of the patent. Because Petitioner was served with a complaint alleging infringement of the patent on March 21, 2001, inter partes review cannot be instituted." ONE YEAR BAR FOR FILING A PETITION FOR IPR RUNS FROM THE TIME AW AIYER OF SERVICE IS FILED IF SERVICE OF COMPLAINT w AIVED. The Scotts Co. LLC v. Encap, LLC, IPR , Paper 12 (Jul. 3, 2013). Patent owner "alleges that (petitioner] failed to file the instant petition timely because [patent owner] notified [petitioner] of its alleged -78-

3 infringement... more than one year before [petitioner} filed the instant petition... We determine that [the] petition was filed timely. "Under 35 U.S.C. 3 l 5(b), a party may not file a petition for inter partes review if the party had been served with a complaint alleging infringement more than one year previously. Thus, mere notification of a complaint does not trigger the one-year statutory bar. Furthermore, Rule 4(d)(4) of the Federal Rules of Civil Procedure provides that '[w]hen the plaintiff files a waiver, proof of service is not required and these rules apply as if a summons and complaint had been served at the time of filing the waiver.' (Emphasis added.) Thus, where Petitioner waives service of a summons, the one-year time period begins on the date on which waiver is filed. See Decision- Service Under 35 U.S.C. 315(b)-in case no. IPR Paper 20). Here, Scotts Company waived service of a summons in the infringement action no earlier than January 12, 2012, and filed the instant Petition on January, 10, Thus, the petition was filed timely." BAR UNDER 35 U.S.C. 315(B) CANNOT BE ERF2CTED WHERE EARLIER-FILED COMPLAINT DISMISSED WITHOUT PREJUDICE. BAE Sys., Information & Electronic Sys. Integration, Inc. v. Cheetah Omni, LLC, IPR , Paper 15 (Jul. 3, 2013). Patent owner argued that petitioner's "petition is ban ed under 35 U.S.C. 315(b), which mandates that an inter partes review may not be instituted if the petition is filed more than 1 year after the date on which the 'petitioner, real party in interest, or privy of the petitioner' is served with a complaint alleging infringement of the patent." The Board rejected the argument. Patent owner had "filed a patent infringement complaint against" petitioner on November 12, That action was voluntarily dismissed on February 10, 2011, and patent owner "subsequently filed a complaint in the U.S. Court of Federal Claims against the United States on April 22, 2011, asserting infringement" of the same patent and identifying the same accused product as identified in the earlier suit against petitioner~ Patent owner alleged that the petition "was filed over two years after [petitioner] was served with a complaint.... However, [patent owner] voluntarily dismissed that action pursuant to Fed. R. Civ. P. 41(a) before any of the named defendants were required to answer.... As [petitioner] correctly states, a voluntary dismissal of an infringement action nullifies the effect of the alleged service of the complaint on the petitioner. See, e.g., Graves v. Principi, 294 F.3d 1350, 1356 (Fed. Cir. 2002) ("The dismissal of an action without prejudice leaves the parties as though the action had never been brought."); see also IPR (Macauto US.A. v. BOS GMBH & KG at (Paper 18, Ex. I 009)). Thus, the dismissal of the earlier Texas action against [petitioner] nullifies the effect of the alleged service of the complaint and did not trigger the effect of the alleged service of the complaint and did not trigger the 31 S(b) one-year statutory bar." 35 U.S.C. 315(B) DOES NOT BAR PETITION WHERE SOME OF SEVEN CO-DEFENDANTS WERE SERVED WITH A COMPLAINT MORE THAN ONE YEAR BEFORE FILING OF THE PETITION, DESPITE EVIDENCE THAT PETITIONER'S APPLICATION DEVELOPER AGREEMENT REQUIRED APPLICATION DEVELOPERS TO DEFEND PETITIONER IN INFRINGEMENT LITIGATION. Apple Inc. v. Achates Reference Publishing, Inc., IPR , Paper 22 (Jun. 3, 2013); Apple Inc. v. Achates Reference Publishing, Inc., IPR , Paper 21(Jun.3, 2013). "Patent Owner argues in its preliminary response that the Petition should be denied for failure to comply with the statutory requirements for instituting an inter partes review." "Patent Owner contends that 'at least some' of the remaining seven co-defendants in the related litigation[] were served more than one year before" the filing date of the petition in the -79-

4 instant proceeding. Moreover, the Patent Owner contended that the Petitioner did not identify all real parties-in-interest. "Whether a non-party is a 'real party-in-interest' or 'privy' for purposes of an inter partes review proceeding is a 'highly fact-dependent question' that takes into account how courts generally have used the terms to 'describe relationships and considerations sufficient to justify applying conventional principles of estoppel and preclusion.' Office Patent Trial Practice Guide, 77 Fed. Reg , (Aug. 14, 2012) ("Trial Practice Guide"). Whether parties are in privity, for instance, depends on whether the relationship between a party and its alleged privy is 'sufficiently close such that both should be bound by the trial outcome and related estoppels.' Id. Depending on the circumstances, a number of factors may be relevant to the analysis, including whether the non-party 'exercised or could have exercised control over a party's participation in a proceeding' or whether the non-party is responsible for funding and directing the proceeding. Id. at We also find guidance in the Supreme Court's decision in Taylor v. Sturgell, 553 U.S. 880 (2008), which sets forth the general rule under federal common law that a person not a party to a lawsuit is not bound by a judgment in that suit, subject to certain exceptions, including the following: [N]onparty preclusion may be justified based on a variety of pre-existing 'substantive legal relationship[ s]' between the person to be bound and a party to the judgment. Q-ualifying relationships include, but are not limited to, preceding and succeeding owners of property, bailee and bail or, and assignee and assignor. These exceptions originated 'as much from the needs of property law as from the values of preclusion by judgment.' 553 U.S. at 894 (citations omitted); see Trial Practice Guide at (citing Taylor)." Patent Owner identified a "publicly available software development kit (SDK) agreement that Petitioner allegedly enters into with iphone application developers like co-defendants. The SDK agreement includes a clause requiring the developer to indemnify Petitioner for third party patent infringement claims." The agreement required indemnification of Apple, and required Apple's permission to enter into a settlement agreement that binds Apple. The Board rejected the argument. First, the Board noted that "Patent Owner provides no proof that any of the co-defendants in the related litigation ever signed the SDK agreement." Second, the Board noted that the indemnification provision "is not indicative of the codefendants being real parties-in-interest or privies of Petitioner. The agreement does not give the developer the right to intervene or control Petitioner's defense to any charge of patent infringement, nor has Patent Owner argued that to be the case for the co-defendants in the related litigation." "Further, Petitioner and its co-defendants have distinct interests in the related litigation such that, at least based on the facts available to us, it does not appear that Petitioner would be estopped by any judgment against one of the co-defendants... Even if a judgment were obtained against one or more of the co-defendants, Petitioner would still be exposed to an adverse judgment based on its own actions and would, therefore, assert its own defenses independent of the co-defendants. This further indicates that the relationship between Petitioner and the co-defendants is not the type that would make the co-defendants real parties-in-interest or privies of Petitioner." "We also disagree with Patent Owner's reading of the indemnification clause in the SDK agreement. Patent Owner suggests that because the clause obligates the indemnitor to pay for -80-

5 'losses' incurred by Petitioner, the co-defendants would be required to pay 'Petitioner's legal fees... in this Inter Partes Review' and 'if Petitioner were to enter into a settlement agreement with Patent Owner in this Inter Partes Review that resulted in monetary damages being paid.'... We see no such requirement in the indemnification clause, as it relates only to 'losses' incurred by Petitioner as a result of' any claims that [the indemnitor' s] Applications violate or infringe any third party intellectual property,' which is not an issue in this proceeding... Patent Owner also points to the portion of the indemnification clause precluding the indemnitor from entering into a settlement with a third party that affects or binds Petitioner without Petitioner's consent.... We do not see the relevance of this clause, as the co-defendants are not parties to this proceeding and have no ability to settle on behalf of Petitioner." "SERVED WITH A COMPLAINT" AS USED IN 35 U.S.C. 315(B) REQUIRES SERVICE WITH SUMMONS, NOT JUST PROVIDING A PARTY WITH A COPY OF THE COMPLAINT. Motorola Mobility LLC v. Arnouse, IPR , Paper 20 (Jan. 30, 2013). "The issue before us is whether Motorola must be served with a summons and complaint before the time for filing an inter partes review petition begins to run." "We do not adopt [Patent Owner's] statutory construction that a mere receipt of a complaint initiates the one-year time period." To adopt the Patent Owner's position "would frustrate the legislative intent" because "[a] petitioner would not be required to appear as a defendant in a patent infringement action, until the petitioner is served with a summons," and the "one-year time period would begin to run even when the petitioner is not yet a defendant in the litigation." Therefore, a petitioner "must be served with a summons before the one-year time period for filing an inter partes review petition is triggered." Vo LUNT ARY DISMISSAL OF COMPLAINT FILED AGAINST PRIVY OR REAL PARTY-IN INTEREST UNDER FED. R. CIV. P. 41(A) RENDERS THAT COMPLAINT IRRELEVANT FOR DETERMINING WHETHER 315(B) DEPRIVES PETITIONER OF STANDING. Macauto U.S.A. v. BOS GMBH & KG, IPR , Paper 18 (Jan. 24, 2013). Patent Owner had filed a complaint against Taiwanese parent company of Petitioner. The Complaint was voluntarily dismissed under Fed. R. Civ. P. 41(a) by joint stipulation. The Board concluded that this earlier complaint was not a bar to the filing of an inter partes review under 35 U.S.C. 315(a). "As to the requirement of service, the Board notes that the infringement suit against [Petitioner's parent company] was voluntarily dismissed without prejudice under Fed.R.Civ.P. 41(a), pursuant to a joint stipulation... The Federal Circuit has consistently interpreted the effect of such dismissals as leaving the parties as though the action had never been brought. [Collecting authorities.] Accordingly, the dismissal of the earlier action against [the parent company] nullifies the effect of the alleged service of the complaint on Petitioner." FAILURE TO FILE WAIVER OF SERVICE LEADS TO FAILURE OF PROOF ON DATE OF SERVICE FOR DETERMINING APPLICATION OF 315(B) BAR. Macauto U.S.A. v. BOS GMBH & KG, IPR , Paper 18, (Jan. 24, 2013). "As to the date of the alleged service, [Petitioner's parent company] apparently signed and returned a waiver of service under Fed.R.Civ.P. 4(d)... Under subdivision (d)(4) of that Rule, to establish a service date the waiver of proof of sen ice must be filed. There is no evidence in the record or otherwise that Patent Owner has done so... As Patent Owner has not demonstrated that a service waiver -81-

6 one claim, or even just a few claims, with the single patentable addition would not suffice. To the extent that [patent owner] perceives the limit for motions to amend to be unfair, [patent owner] is not without remedy. [patent owner] may possibly pursue such additional claims by filing a request for ex parte reexamination or by filing a reissue application." 11. Oppositions to Motions to Amend PETITIONER NEED NOT ADDRESS CLAIMS LISTED IN MOTION TO AMEND THAT ARE NOT INVOLVED IN THE TRIAL. Illumina, Inc. v. The Trustees of Columbia Univ. in the City of New York, IPR , Paper 66 (Aug. 21, 2013); Illumina, Inc. v. The Trustees of Columbia Univ. in the City of New York, IPR , Paper 67 (Aug. 21, 2013). During a conference call regarding the Petitioner's Opposition to the Motion to Amend filed by the Patent Owner, Petitioner sought clarification "on whether it should respond to [Patent Owner's] inclusion, in its Motion to Amend, of dependent claims that are not involved in the trial. [Petitioner] was advised that it need not address the propriety of a listed claim that is not involved in the trial." PETITIONER MAY RESPOND TO NEW ISSUES ARISING!<'ROM PROPOSED SUBSTITUTE CLAIMS BY SUBMITTING EVIDENCE RESPONSIVE TO THE PROPOSED SUBSTITUTE CLAIMS, INCLUDING NEW EXPERT DECLARATIONS. Intellectual Ventures.Mgmt., LLC v. Xilinx, Inc., IPR , Paper 20 (May 10, 2013); Intellectual Ventures Mgmt., LLC v. Xilinx, Inc., IPR , Paper 20 (May 10, 2013). "[C]ounsel for (petitioner] inquired whether it need file a motion to file supplemental information if [petitioner]relies on 'new evidence' in support of any opposition it files to [patent owner's] motion to amend. Petitioners may respond to new issues arising from proposed substitute claims including evidence responsive to the amendment. This includes the submission of new expert declarations that are directed to the proposed substitute claims. See Office Patent Trial Practice Guide, 77 Fed. Reg , (August 14, 2012). Thus, (petitioner] need not file a separate motion to file supplemental evidence, provided that the evidence in support of [petitioner's] opposition is relied upon to respond to new issues arising from the proposed substitute claims." PETITIONER MAY SUBMIT SUPPLEMENTAL EVIDENCE IN RESPONSE TO MOTION TO AMEND IF NEEDED WHERE SUPPLEMENTAL EVIDENCE RELATED TO GROUND FOR TRIAL THAT WAS DENIED. Bloomberg Inc. v.. M~arkets-Alert Pty. Ltd., CBM , Paper 22 (May 1, 2013). Petitioner "renewed its request to submit an affidavit from the organization 'Internet Archive' regarding certain archived Web pages cited in the petition, as supplemental information under 37 C.F.R The affidavit was said to be related to authentication of the archived Web pages. "The Board noted that the asserted grounds of unpatentability based on those archived Web pages were not authorized... and a patent owner response should not address grounds that were denied (see 37 C.F.R (a)). Therefore, an affidavit related to authentication of the archived Web pages is not necessary." Petitioner "may be authorized to file such an affidavit under certain situations at a later time. For instance, if [patent owner] files a motion to amend claims, and if Bloomberg submits an opposition that asserts a ground of unpatentability based on the archived Web pages in response to new issues arising from the motion, Bloomberg may submit the affidavit in an exhibit with such an opposition." -102-

7 IN OPPOSING MOTION TO AMEND, PETITIONER CAN ARGUE THAT AMENDED OR SUBSTITUTE CLAIMS ARE UNPATENT ABLE, AND SUBMIT EVIDENCE TO SUPPORT THE ARGUMENT. Garmin Int'!, Inc. v. Cuozzo Speed Techs., LLC, IPR , Paper 27 (Mar. 6, 2013). The Parties asked "what actions petitioners are permitted to take in opposing a patent owner's proposed amendment." The Board indicated that "in opposing [Patent Owner's] motion to amend claims, [Petitioner] may argue unpatentability over prior art of the proposed substitute claims and submit evidence to support the argument." 12. Miscellaneous MOTION TO AMEND MAY BE SUPPORTED BY AN EXPERT DECLARATION, BUT THE MOTION ITSELF SHOULD PROVIDE THE REQUIRED ARGUMENTS AND EXPLANATIONS The Scotts Co. LLC v. Encap, LLC, IPR , Paper 17 (Aug. 27, 2013). During a conference call regarding a motion to amend claims, "(t]he Board stated that [patent owner's] motion to amend may be supported by an expert declaration, but that the motion itself should set fot1h the arguments and explanations with appropriate pinpoint citations to the expert declaration, rather than incorporating by reference the expert declaration." R. Definition of Covered Business Method Patent Section 18 of the AIA created the Transitional Program for Covered Business Method Patents. While a covered business method patent review "shall employ the standards and procedures of, a post-grant review," unlike post-grant review, the Transitional Program took effect on September 16, 2012 and is available for patents regardless of whether they are subject to first inventor to file or not. Like post-grant review, the grounds for attacking a qualifying business method patent include challenges to patent eligibility under Section 101, definiteness, written description, and enablement under Section 112, novelty under Section 102, and obviousness under Section 103, as well as proper compliance with the reissue statute under Section 1. If a post-grant review is available for a particular patent, then a transitional business method patent review under Section 18 of the AIA is not available. Not all patents are eligible for covered business method patent review. The AIA defines "covered business method patent" as "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." It is enough that one patent claim is directed to a covered business method to institute a covered business method review. A patentee cannot avoid a covered business method review by disclaiming the claim analyzed by the petitioner for a covered business method review. The patent's claims do not need to recite a financial service in order to qualify for a covered business method review. Decisions relating to the definition of "covered business method patent" are summarized below. 1. Covered Business Method Patents Generally METHOD FOR SUPPORTING MANAGEMENT OF COLLABORATIVE ACTIVITY WAS COVERED BUSINESS METHOD WHERE SPECIFICATION DESCRIBED USE OF SYSTEM IN FINANCIAL DECISION MAKING. Salesforce.com, Inc. v. Virtualagility, Inc., CBM , Paper 16 (Nov. 16, -103-

8 2013). "Claim 8 is directed to a method for supporting management of a collaborative activity using a system that includes a processor, a storage device, and an interface provided by the processor.... Although claim 8 does not expressly refer to financial activity, such as those described in the Specification, the claimed method has a particular application involving financial activities. The Specification discloses that the method can be used to evaluate: (i) budgeting issues, (ii) the cost of or investment in each particular goal or initiative, (iii) the economic return anticipated for achievement of the particular goal or initiative, (iv) the ratio of return on investment, or (v) the potential profit or loss of a scalable process... When applied to the activities listed above, and based on the legislative history that a covered business method patent is to cover activities that are financial in nature, the method of claim 8 represents a financial product or service used by an organization, which allegedly improves the financial health of the organization... Based on the foregoing examples noted by Petitioner and the language of claim 8, the Board is persuaded that claim 8 recites a method for performing data processing or other operations, used in the practice, administration or management of a financial product or service, as required by Section 18(d)(l) of the AIA." A PATENT WITH A SPECIFICATION THAT DESCRIBES NO FINANCIAL PRODUCT OR SERVICE IS DIFFERENT FROM A SPECIFICATION THAT DESCRIBES APPLYING THE INVENTION AS A FINANCIAL PRODUCT OR SERVICE WHEN EVALUATING A PETITION FOR CBM REVIEW. Salesforce.com, Inc. v. Virtualagility, Inc., CBM , Paper 16 (Nov. 16, 2013). "The Board reviews each petition based on its own facts, and construes each claim in the context of the specification of the particular involved patent. A specification that describes no financial product or service application is different from a specification that does describe such an application. Here, as discussed above, the Specification describes applying the invention as a financial product or service for use by an organization to improve the financial health of the organization." LISTING ITEMS ONLINE FOR CUSTOMERS TO FILE MORE EASILY IS INCIDENT AL OR COMPLEMENTARY TO A FINANCIAL ACTIVITY AND IS A COVERED BUSINESS METHOD. Linkedin Corp. v. AVMarkets Inc., CBM , Paper 13 (Nov. 12, 2013). "Independent claim 1... is directed to a method for generating increased numbers of sales leads, and includes steps of gathering data items and making them available on Web pages... [T]he invention 'provide[s] increased exposure and generation of sales leads for entities marketing products... over the Internet.'... [T]hat the patent provides a market for physical parts rather than financial instruments is not determinative. Likewise, that [Petitioner] is not a bank and [Patent Owner] is not a non-practicing entity also are not determinative... Listing items online so that the intended customers can find them more easily is, therefore, a marketing technique in the sale of products. Accordingly, the subject matter of claim 1 is incidental or complementary to a financial activity (product sales) and, thus, directed to a financial product or service and eligible for covered business method patent review." PATENT CLAIM TO METHOD OF REPRESENTING ITEMS IN A DATABASE BY ASSOCIATING ITEMS WITH ATTRIBUTES HA YING VALUES WAS USED IN THE PRACTICE, ADMINISTRATION OR MANAGEMENT OF FINANCIAL PRODUCTS OR SERVICES BECAUSE PATENT SPECIFICATION REFERRED TO "FINANCIAL SERVICES" AS ONE USE OF THE TECHNOLOGY. Volusion, Inc. v. Versata Software, Inc., CBM , Paper 8 (Oct. 24, 2013). "Petitioner points out that the '282 patent explicitly states that '[m]any embodiments of the present invention have application to a wide range of industries' including 'financial services.'... Patent Owner alleges that the -104-

9 patent does not claim a method or corresponding apparatus used in the practice, administration, or management of financial products or services... Patent Owner does not address the explicit statement in the '282 patent concerning 'financial services' that was pointed out in the Petition. Claim recites a method of representing a plurality of items in a database hierarchically. As described in the '282 specification, the claimed invention has application in the field of e cornmerce, in the fom1 of e-catalogs used by potential buyers. A person of ordinary skill in the art would have understood that the items that can be displayed to a user may be associated with financial services... Claim 11 encompasses arranging items for display to a user associated with any product or service, such as financial services. In other words, the steps are not limited in application to any particular product or service. Therefore, we are persuaded that at least one claim covers data processing or other operations used in the practice, administration, or management of a financial service." PATENT THAT STATES THAT IT RELATES TO TRANSACTING COMMERCE OVER A NETWORK AND TO PROCESSING INFORMATION RELATED TO COMMERCIAL TRANSACTIONS, WHICH IS ITSELF A FINANCIAL TRANSACTION. Volusion, Inc. v. Versata Software, Inc., CBM , Paper 8 (Oct. 24, 2013). "Petitioner points out that the '481 patent explicitly states that the invention relates to 'transacting commerce over a network, and, more particularly, to a method and apparatus for processing information related to such commercial transactions.'... Patent Owner alleges that the patent does not claim a method or corresponding apparatus used in the practice, administration, or management of financial products or services... Patent Owner does not address the explicit statement in the '481 patent concerning ''transacting commerce over a network' that was pointed out in the Petition. Claim 50 of the '481 patent recites a method of using a computer system to provide product selections to a user, which relates to a commercial transaction, which is itself financial in nature. The steps are not limited in application to any particular product. We are persuaded that at least one claim covers data processing or other operations used in the practice, administration, or management of a financial product (e.g., a credit card, an auto loan, or a mortgage)." METHOD OF TRANSMITTING DIGITAL AUDIO THAT INCLUDES STEPS OF "TRANSFERRING MONEY ELECTRONICALLY" AND "TRANSMITTING THE DESIRED DIGITAL AUDIO SIGNAL" IS DIRECTED TO FINANCIAL PRODUCT OR SERVICE. Apple Inc. v. SightSound Techs., LLC, CBM , Paper 17 (Oct. 8, 2013); Apple Inc. v. SightSound Techs., LLC, CBM , Paper 14 (Oct. 8, 2013). The parties disputed whether the petitioner had standing to bring a covered business method patent review because the patent owner contended that the '573 patent was not a "covered business method patent" as defined in the AIA. The Board disagreed with the Patent Owner. The Board explained that "[fjor the purposes of determining whether a patent is eligible for a covered business method patent review, the focus is on the claims... A patent need have only one claim directed to a covered business method to be eligible for review." Turning to the patent claims, the Board explained that ''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.... 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 -105-

10 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... We are persuaded that claim 1 recites a method for performing data processing or other operations used in the practice, administration or management of a financial product or service, as required by Section 18(d)(l) of the AIA." METHOD OF TRAi~SMITTING DIGITAL AUDIO THAT INCLUDES STEPS OF "SELLING ELECTRONICALLY THE DESIRED DIGITAL VIDEO OR DIGITAL AUDIO SIGNALS," "CHARGING A FEE," AND "CHARGING THE ACCOUNT" IS DIRECTED TO FINANCIAL PRODUCT OR SERVICE. Apple Inc. v. Sightsound Techs., LLC, CBM , Paper 13 (Oct. 8, 2013); Apple Inc. v. SightSound Techs., LLC, CBM , Paper 12 (Oct. 8, 2013). The parties disputed whether the petitioner had standing to bring a covered business method patent review because the patent owner contended that the '440 patent was not a "covered business method patent" as defined in the AIA. The Board disagreed with the patent owner. The Board explained that "[f]or the purposes of determining whether a patent is eligible for a covered business method patent review, the focus is on the claims... A patent need have only one claim directed to a covered business method to be eligible for review." Turning to the patent claims, the Board explained that "the '440 patent is directed to activities that are financial in nature, namely the electronic sale of digital audio or video. Claim 1 recites (emphasis added): selling electronically by the first party to the second party through telecommunications lines, the desired digital video or digital audio signals in the first memory, the second party is at a second party location and the step of selling electronically includes a step of charging a fee via telecommunications lines by the first party to the second party at a first party location remote from the second party location, the second party has an account and the step of charging a fee includes the step of charging the account of the second party. "The electronic sale of something, including charging a fee to a party's account, is a financial activity, and allowing such a sale amounts to providing a financial service... Indeed, Patent Owner acknowledges that a fundamental step of claim 1 of the '440 patent is 'selling' a desired digital audio or video signal to a user.... The Specification further describes how a fee is charged, including, for example, charging an account using a party's credit card number.... We are persuaded that claim 1 recites a method for perfonning data processing or other operations used in the practice, administration, or management of a financial product or service, as required by Section 18(d)(l) of the AIA." THE LANGUAGE OF SECTION 18 OF THE AIA DOES NOT LIMIT CBM REVIEW TO A "NARROW CLASS" OF PATENTS. Apple Inc. v. Sightsound Techs., LLC, CBM , Paper 17 (Oct. 8, 2013); Apple Inc. v. SightSound Techs., LLC, CBM , Paper 14 (Oct. 8, 2013). "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.... In particular, Patent Owner asserts that only patents with a 'clear nexus to the financial business' are eligible for a covered business method review... 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."' The Board rejected this argument and explained that "[i]t 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 -106-

11 product or service.' AIA 18(d)(l). 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... 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." See also Apple Inc. v. Sightsound Techs., LLC, CBM , Paper 13 (Oct. 8, 2013); Apple Inc. v. SightSound Techs., LLC, CBM , Paper 12 (Oct 8, 2013). A PATENT NEED NOT BE USED BY A FINANCIAL SERVICES COMPANY TO CONSTITUTE A COVERED BUSINESS METHOD PA TENT. Apple Inc. v. Sightsound Techs., LLC, CBM , Paper 17 (Oct. 8, 2013); Apple Inc. v. SightSound Techs., LLC, CBM , Paper 14 (Oct. 8, 2013). "Patent Owner further argues that [it] was formed as a media company, not a financial services company, and the entities sued by Patent Owner for infringement of the '573 patent... sell digital content, not financial products... [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." See also Apple Inc. v. Sightsound Techs., LLC, CBM , Paper 13 (Oct. 8, 2013); Apple Inc. v. SightSound Techs., LLC, CBM , Paper 12 (Oct. 8, 2013). CLAIMS RECITING POINT-OF-SERVICE APPLICATION THAT PROVIDES ACCESS TO CHECKING ACCOUNT AND SAVINGS ACCOUNT CONSTITUTE COVERED BUSINESS METHOD. SAP Am., Inc. v. Pi-Net Int'l, Inc., CBM , Paper 15 (Sept. 19, 2013). "Petitioner asse1is that, because the claims recite providing a point-of-service application that provides access to both a checking account and a savings account, the '158 Patent claims an activity that is entirely financial in nature... Petitioner further asserts that the claims qualify for a covered business method proceeding because they are not directed to a technological invention, i.e., they are not concerned with a technical problem, which is solved by a technical solution, even if they recite some de minimus [sic] technical feature... Noting that transferring funds among accounts is not a technical problem, Petitioner also asserts that providing a Web page for display, providing a point-of-service application for selection within the Web page and accepting a signal from the Web input device to select the Web application are not novel or non-obvious technical features of a technical solution." On the other hand, the Patent Owner argued that the claims are "pure technology claims implemented for financial transactions and that the technology disclosed in the '158 Patent operates the same in financial and non-financial transactions." The Board found that the patent is a covered business method patent because claim 1 "recites only using a data structure that facilitates switching so that a financial transaction can occur" and "[ c ]laim 1 does not recite a particular technology." COVERED BUSINESS METHOD INCLUDES SYSTEMS FOR DISSEMINATING LOAN INFORMATION OVER A NETWORK. Meridian/ink, Inc. v. DH Holdings, LLC, CBM , Paper 20 (Jun. 24, 2013). "The '526 Patent discloses and claims an automated system for collecting and disseminating loan information over a network connection," and "Patent Owner agrees that making adjustments to mortgages based on certain aspects of a loan or borrower was known in the art on the filing date of the application for the '526 Patent." The PTAB explained, that "[a] covered business method patent is a patent that claims a method or con-esponding apparatus for performing data processing or other operations used in the practice, administration, or -107-

12 management of a financial product or service. 37 C.F.R (a). The claims of the '526 Patent, which are drawn to a system and method for collecting and disseminating loan information over a network connection, satisfy this definition." METHOD OF INFORMING USERS OF STOCK MARKET EVENTS IS DATA PROCESSING METHOD USED IN PRACTICE OF FINANCIAL PRODUCT OR SERVICE. Bloomberg Inc. v. Markets-Alert Pty. Ltd., CBM , Paper 18 (Mar. 29, 2013). "Claim 1, the sole independent claim, recites a method of informing user(s) of stock market events through a series of steps for monitoring stock market data and notifying the user of certain stock market events. As such, claim 1 is directed to a method for perfom1ing data processing or other operations used in the practice, administration, or management of a financial service (informing the user of certain stock market events)." CLAIMED SYSTEM TO DETERMINE LEVEL OF SAFETY OR COST OF INSURANCE IS USED IN PROVIDING FINANCIAL PRODUCT OR SERVICE. Liberty Mutual Ins. Co. v. Progressive Cas. Ins. Co., CBM , Paper 15 (Feb. 12, 2013). "It cannot reasonably be disputed that [Patent Owner] claims 'an apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service.' Claim 1 itself states that the system is used to determine a level of safety or cost of insurance and requires an operation on data which reflects how certain collected data affect a premium of an insurance policy, safety, or level of risk. The claim also states that the server is configured 'to generate a rating factor,' and we have determined that 'rating factor' means a calculated insurance risk value that reflects a corresponding insurance premium." DETERMINATION OF WHETHER PATENT IS DIRECTED TO COVERED BUSINESS METHOD IS BASED ON WHAT IS CLAIMED; ONE CLAIM IS ENOUGH TO DEEM WHOLE PATENT SUBJECT TO CBM REVIEW. Liberty Mutual Ins. Co. v. Progressive Cas. Ins. Co., CBM , Paper 11 (Mar. 15, 2013). "The determination of whether a patent is eligible for covered business method patent review is based on what the patent claims. A patent having one claim directed to a covered business method is eligible for review even if the patent includes additional claims." HEALTH INSURANCE, PROPERTY-CASUALTY INSURANCE, AND LIABILITY INSURANCE ARE ALL FINANCIAL PRODUCTS AND CLAIM IS DIRECTED TO A FINANCIAL SERVICE. Liberty Mutual Ins. Co. v. Progressive Cas. Ins. Co., CBM , Paper 13 (Feb. 27, 2013); Liberty Mutual Ins. Co. v. Progressive Cas. Ins. Co., CBM , Paper 12 (Feb. 27, 2013). "It cannot be reasonably disputed that Progressive claims 'an apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service.' Any one of health insurance, property-casualty insurance, and liability insurance as is recited in claim 53 is a financial product, and the activities recited in claim 53 about the insurance policy together constitute a financial service." PATENT WAS A COVERED BUSINESS METHOD PATENT WHERE PATENT ABILITY HINGED ON INSURANCE NATURE OF THE DATA BEING PROCESSED. Liberty Mutual Ins. Co. V. Progressive Cas. Ins. Co., CBM , Paper 16 (Feb. 25, 2013); Liberty Mutual Ins. Co. v. Progressive Cas. Ins. Co., CBM , Paper 12 (Feb. 25, 2013). "[I]t appears that the patentability of the invention in the '088 patent is not based on the mere combination of a web browser, a communications network, software modules, and a computer, but instead on the insurance nature of the data being processed. Therefore, we conclude that the independent claim 1 lacks a novel and unobvious technological feature." -108-

13 REHEARING DENIED WHERE PTAB CONCLUDED BROADEST REASONABLE INTERPRETATION OF CLAIM INCLUDES FULFILLMENT ACTIVITIES FOR RETAIL BANKS. CRS Advanced Techs., Inc. v. Frontline Techs., Inc., CBM , Paper 34 (Feb. 19, 2013). "Patent Owner argues that the Board applied a standard that 'an activity that is at least 'incidental' and/or 'complementary to a financial activity'... qualifies as a covered business method under the statute' instead of applying the actual language of the statute. Patent Owner asserts that the activities recited in the claims... are 'used in an entirely different pursuit than the practice, administration or management of a financial product or service.'... "We disagree that the Decision applied an erroneous legal standard for determining whether the '151 patent is a covered business method patent... In our Decision, we found that the broadest reasonable construction of the '151 claim term 'performing substitute fulfillment for a plurality of different organizations' includes retail banks... Thus, because the legislative history supports the notion that the definition of covered business method patents be broadly interpreted, we concluded that the substitute fulfillment and processing operations claimed by the '151 patent are 'used in the practice, administration or management of a financial product or service' as required by the statute... We further conclude that Patent Owner has not met its burden to show that the Decision misapprehended or overlooked any matters. 37 C.F.R (d)." PA TENT CLAIM DOES NOT NEED TO EXPRESSLY REFER TO FINANCIAL PRODUCTS OR SERVICES TO BE A COVERED BUSINESS METHOD. CRS Advanced Techs., Inc. v. Frontline Techs., Inc., CBM , Paper 17 (Jan. 2013). "Patent Owner argues that the Petitioner has not demonstrated that the '151 patent is a covered business method patent, asserting that the challenged claims are 'neutral with respect to the practice, administration, or management of a financial product or service,' and are therefore not properly 'directed to' a covered business method... Patent Owner adds that '[t]here are no claim elements directed to money, financial transactions, or any type of activity that is inherently a financial product or service.'... "We are not persuaded by Patent Owner's argument, which is too narrowly focused on the 'directed to' language provided in the Office's explanation of the rules. Patent Owner's argument does not take into consideration the legislative intent and history behind the definition of covered business method. For example, in considering public comments during the rulemak:ing process, the Office stated that the legislative history supported the notion that the definition of covered business method patents be broadly interpreted to encompass patents claiming activities that are financial in nature, incidental to a financial activity, or complementary to a financial activity. 77 Fed. Reg. 157 (August 14, 2013) 48734, The Office also stated that it did not adopt the suggestion that the term financial product or service be limited to the products and ser\lices of the financial services industry as it ran contrary to the intent behind 18(d)(l)... Nothing in the statute, its legislative history, or the rules requires that a covered business method patent include claim elements that map directly to financial products or services as the Patent Owner seems to suggest." PATENT CLAIMS DIRECTED TO SUBSTITUTE FULFILLMENT SYSTEM FOR "RETAIL BANKS" WAS A COVERED BUSINESS METHOD. CRS Advanced Techs., Inc. v. Frontline Techs., Inc., CBM , Paper 17 (Jan. 23, 2013). Claim 1 explicitly claimed use of the invention in "retail banks," among a plurality of different organizations. 'These claims are broad enough to include substitute fulfillment for retail banks (or any other financial institution). Retail banks are involved in financial activity.... Thus, substitute fulfillment is an activity that is at least -109-

14 'incidental' and/or 'complementary to a financial activity and qualifies as a covered business method patent under 18 of the AIA." METHOD AND APPARATUS FOR PRICING IS A COVERED BUSINESS METHOD EVEN IF CLAIMS DO NOT EXPRESSLY RECITE FINANCIAL PRODUCTS OR SERVICES. SAP Am., Inc. V. Versaia Dev. Group, Inc., CBM , Paper 36 (Jan. 9, 2013). Patent Owner "contends that there is nothing in the claims indicating that they are related to a financial service or product.... [Patent Owner] alleges that financial products or services are not mentioned anywhere in the claims or specification, rather the claims are directed to product/service pricing. We do not interpret the statute as requiring the literal recitation of the terms financial products or services. The term financial is an adjective that simply means relating to monetary matters. This definition is consistent with the legislative history of Section 18, which explains that the definition was intended to encompass patents claiming activities incidental and complementary to a financial activity.[] We hold that [Patent Owner's] '350 patent claims methods and products for determining a price and that these claims, which are complementary to a financial activity and relate to monetary matters, are considered financial products and services under 18(d)(l)." 2. Novel and Unobvious Technical Features MEANS-PLUS-FUNCTION CLAIM LIMITATIONS WITH CORRESPONDING STRUCTURE OF WELL KNOWN SERVERS INSUFFICIENT TO AVOID INSTITUTION OF CBM REVIEW. Meridian/ink, Inc. v. DH Holdings, LLC, CBM , Paper 20 (Jun. 24, 2013). "Written in 'means plus function' language, claims 1-5 of the '526 Patent are not drawn to a specific machine, but instead, recite abstract loan processing functions, where the structure corresponding to the means to perform the recited functions, i.e., a server, is well known. The means recited in independent claim 1 of the '526 patent preempts the idea of using a network to carry out the abstract loan processing functions. "The Patent Owner cites Research Corporation Technologies v. Microsoft Corp., 672 F.3d 859, (Fed. Cir. 2010), to support the proposition that inventions with specific application or improvements to technologies in the marketplace are not likely to be so abstract that they override the statutory language and framework of the Patent Act.... The Patent Owner's reliance on Research Corp. is misplaced. In Research Corp., the court determined that method and apparatus claims drawn to half toning grey scale and color images, utilizing a pixel-by-pixel comparison of the image to a blue noise mask, were not abstract and therefore were patent eligible... In contrast, claims 1-5 of the '526 Patent do not recite any improvements to the technologies implemented by the means or abstract principle of exchanging information used in locating and selecting a mortgage loan over a network." DETERMINATION OF WHETHER A CLAIMED INVENTION IS A TECHNOLOGICAL INVENTION IS DETERMINED BY CONSIDERING WHETHER THE CLAIMED SUBJECT MATTER AS A WHOLE RECITES A TECHNICAL FEATURE THAT IS NOVEL AND UNOBVIOUS OVER THE PRIOR ART AND SOLVES A TECHNICAL PROBLEM USING A TECHNICAL SOLUTION. Meridian/ink, Inc. v. DH Holdings, LLC, CBM , Paper 20 (Jun. 24, 2013). "A covered business method patent does not include patents for technological inventions... A technological invention is determined by considering whether the claimed subject matter as a whole recites a technical feature that is novel and unobvious over the prior art, and solves a technical problem using a -110-