mr pearl in good morning you may proceed morning your honor may please the court the district court held that claims to computer systems and products and claims to methods of using a computer as an intermediary  claims all require a computer current to a data storage unit many of alsa systems claims require other hardware components expressly these are concrete machines  storage medium i think may technically have been a manufacture but the distinction in that case was a cyber source held that the process that was embodied on the storage medium was a process that could be performed entirely in the human mind the storage medium was defined completely functionally and all it did was how it was the process it didn't perform the process and so this court determined that the storage medium under the circumstances should analyzed as a process not as a manufactured what part of this cannot be performed in the human mind none of our claims can be performed in the human mind because they all require the use of a computer to exchange the obligation our system claims are claims to the computer systems themselves which are machines under elop that and our process claims as a district court held all require the use of a computer so none of that true for a claim thirty three of the four s nine that is true the district court assume for purposes of its decision the claim thirty three requires the use of the computer the posture of this case is that despite the length of time it's been pending we have been doing it in stages and so the court has not yet performed a claim destruction analysis and a full blown markman proceeding c e o s brought their motion under section one hundred one and the district court entertained it on the assumption that claim thirty three requires the use of a computer what if we disagree with that assumption if you disagree with that assumption the appropriate thing to do would be to remand for further markman proceedings because claim thirty three requires the use of shadow records which the specification makes clear are data files in an electronic storage system and so if a computer were not required some other machine or i would have to be a machine that was capable of manipulating electronic data files would have to be required by the claim in the context of the specification is there any reason principled reason to distinguish between claims system claims or media claims in that in the context of this case i think this court's cases do make a distinction between machine claims and and process claims in the machine context the issue that allopaths settled close to twenty years ago was a computer a general purpose computer that was programmed to perform steps that were concededly purely mathematical calculations were argued to be really a process and should be analyzed as a process and whether the process to be performed was abstract but what about the statements in cyber source that implementing on a computer that which would could be done otherwise by the human mind is not the way distinguishable would fire a source was referring to was if you had a process that could be completely performed in the human mind merely reciting the same process would be performed on a computer may not be sufficient and i think that the circumstance of the sirens to report was in vision in was when you had a claim to something like a series of calculations and the computer was being used solely to perform calculations more quickly or more efficiently which is not the case with respect to our computer in our process claims and we have to ricky to the method claim again claim thirty three of the four seven nine and then again what why is that method any different from the method in there are two reasons first claim thirty three as construed by the district court for purposes of its opinion requires the use of a computer to perform the process bilski conceivably did not involve a computer or machine of any kind it was simply the process unadorned by a machine secondly in terms of the specificity of the method to be performed i do think claim thirty three is more than claim one in bilski which the supreme court construed as simply directed to the concept of hedging but i would say that the principle distin is rather than and see us as characterize it as an escrow arrangement rather than a classic escrow where two parties pay in to a escrow agent and the f b i agent has both sides it simply makes the exchange our claim thirty three does not operate that way our claim thirty three has a computer maintain shadow accounts that are distinct from the accounts where the real money is they the balances in the shadow accounts are updated beginning of the day to reflect those balances and then the transactions occur electronically in the virtual world over the course of a day and the only transactions that are allowed to go through are those that will not take the  amount that would be left below the credit balance that is a particular way and at the end of the day our computer sends an instruction to the real world to make the adjustments in the real world accounts it  is a particular honest way could using their just be an intermediary who does that same calculation back and forth during the course of the day well not and fall within our claim because our claim requires that the computer be the intermediary and the computer is playing a significant role in this invention which really has nothing to do with the fact admittedly it does do calculations faster using the computer as the intermediary s three i think that the the reason that our expert below said that a person skilled would know that a computer is involved is because of the specification which is unlike many of these cases that have been rising recently underwent a one devoted to an extensive description of the computer system that would implement the method and particularly the use of the term shadow records which specification defines as an electronic data file in the data storage unit and so in that context claim thirty three has to require the use of a computer in the district court so found but the but the what the district court set is yet the computer  of the method steps as claimed each step of the method was analyzed and none required the use of a computer all of our method steps require the use of a computer to perform so i think it's a critical distinction between this case and cyber source the rankly you started with the systems claims and i'm having a think those present the closest question respect all of your claims so the question is the district courts that distinguishes this from  assume you disagree and a lot i disagree with that because i think the point of allopath was that when you take a general purpose computer and you program and work to figure it to do certain operations it becomes a new machine not an abstract idea and that the new machine is being defined not structurally in the classic sense but the programming is defining the structure of the new machine which i think is the point that this court recently made an ultra mercial in reiterat computer system configured to perform the steps under allopath that is the machine as this court said that is apparatus not mathematics so that would be patent eligible but it would be patentable to deter would be determined by the application of othe substantive patentability requirements of title thirty five for the implementation of an abstract idea in your view is is not abstract it becomes a especially programmed machine even though it's it's simply performing an abstract idea that was precisely the facts of allopathy the operations at the computer it was performing were simply a series of mathematical calculations and the argument that the p made was this court should analyze it as a process by looking at the abstracted this of the mathematical calculations and this court rejected that proposition and said if that were right a general purpose computer would never be patentable but more importantly a claim to a programmed general purpose computer to perform operations is a machine irrespective of whether the process that is programmed to perform would be separately patentable standing alone i'd like to reserve the balance of my there was actually an advance in computer technology there addressing a particular problem relating to the use of internet contact and i think in this case clearly it's very different because the computer here will of being performed in the mind which was then simply implemented on a computer is that a distinction that is present in this case that is that in cyber source the method was determined to be something that could be performed in the human mind but in this case the argument is that this is incapable of being performed in the human mind has to be performed well and in this case we respectfully submit that the  but the if you look at this the claims here you have an underlying concept which has the maintenance of accounts which can be done in the human mind or on pencil and paper then you have a calculation simply to see whether or not there is here we believe that for the short decision insofar as it went in fact is dispositive of the idea that this the claims here would not pass the machine or transformation test the pain it is almost directly on point for that and that under any of the suggested tests of that proposed by those cases these claims do not pass muster they do not go through the course filter as it's been fact apply in most cases and they would be very few cases to which it wouldn't apply so we think it really does apply here and that's again i think determined by the court decision and for the shark in terms of the the question of preemption which is that computer language result in the claim to the whole preempting the use of the underlying idea that as a practical matter it is it appropriate for us to we say look past the claim language and evaluate these inventions on the basis of what the underlying idea is i think your honor the answer is twofold first the it is appropriate to look to the underlying and gear it's all about you know how to open the door i think the answer your honor is that you can can and should look at the underlying idea and that is what cyber czar set up that is not the end of the inquiry one of course when one can look to the underlying concept understand the players better but then one can look as to whether the any additional language that's in the claims and we do have additional language here relating to the computer at least in the system claims whether any additional also we would look at the question of whether the additional language and whether it whether that result in the practical matter a preemption of the use of the underlying idea so it's not you cannot look just at the underlying idea we want you making preemption that's another question i have in my mind this week we've got all these concepts floating around stratified us on the metal principles something that too broad something that preempts every claim preempts something so it is are we talking about rats no i think we're talking about whether there is an abstract idea whose use is preempted so every claim fundamental principle that might be preempted some something so fundamental that would endure future inventors from developing and he was sort of the distinction honor has been resolved by a combination of bilski and cyber source the reason i say that in citation to again the this court decision in cyber source where it quoted  and therefore reaffirmed the language from the bilski federal circuit opinion that quote the application of only human intelligence to the solution of practical problems is no more than a claim to a fundamental principle so that the question of what is fundamental doesn't mean it's just equals mc squared what is fundamental is also a mental concept or in this case an application of economic principles and something we've we've likened to a two sided to what's going on in your case that's analogous here outgrowth because the use of this concept of employing an intermediary and for exchange of an obligation if there's enough money in the accounts and as the district court served here that concept can be applied in many many fields and if one looks to the deep end and claims is that really what is claimed i mean i mean your friend would say that what is claimed is not any use of anything mediate because there could be a lot of ways that an intermediary could could monitor funds or whole funds what he's saying is that the only thing that's claimed is th  i think there's many perhaps a more fundamental answer to your honor's question which is if there may be different abstract concepts which could be applied in an economic field maybe you could you could just have something that was not quite the u s forensic we have here but something where someone just came in and said i'll give you money if you give me money as a to do in a different currency or something like that about involving  obligation that doesn't lessen the impact of the lawyer here if these claims have an abstract concept and as a practical matter claimed as drafted and we've seen the progression of the draftsmanship from by the way the planes were grafted that shouldn't matter but you're saying these planes preempt every possible way of using an in isn't my drafting the systems and sufficient to put it in the machine or because again by putting it on a computer they're claiming the computer system the complex their claim the computer system was implemented on a computer albeit a maybe earlier stage computer at the time it doesn't i was on it with all the court you had shift registers mentioned in the claim that it was on a computer and that's where the court of the spring court initially said just putting something on  up distinguishing on that ground then what will happen is anyone can simply go and take one claim disconfirmed it's to the other form that it is the type of draftsmanship that would suggest was counseled against again by the supreme court both in benson and then again in the fluke case that it wouldn't courage pure draftsmanship to try to get around us and we suggest that this issue was addressed again by cyber source in a sense that cyber source had method claims and it had computer readable medium claimed you did not have an actual computer system but had those two but the language of cyber source clearly states that the character of the underlying invention the character of it software which programs the computer so it's really in effect and saying absolutely the same function it really should be no difference mr glass and even if we agree with you that the idea of a two way escrow account is an abstract idea what about the presence in both the method claims and the system claims in the media claims for that matter of the fact that there are these first and second shadow accounts the shadow accounts are  simply a type of account shot of one count shadowing another which is really what you have when you're if you have an intermediary that is essentially dealing with the two parties who are seeking what something like a why isn't that an application of of the on the middle idea in a particular well i suppose it's not an application it is it is in itself an abstract idea whether it's a  call it a shadow account whether you call it a record it doesn't make any difference it's just an account and it's an account maintained by a third party and that's it he said adding a layer upon layer of different things to the to the pencil and paper and then whether the addition of the computer language such as it might be there's anything more than allowed to speed up the process which is what happens here and whether the practical matter of preamps the only thing few more minutes since mr glassman ran over will give you some extra time thank you no harm but let me start with the last thing that mr glassman said that the only reason for the computer is for speed that is incorrect the undisputed evidence before the district court for mr ginsburg which is in the record at appendix pages ten thirteen through ten fifteen is that the computer is not there solely for speed but rather that this is an automated method that we have claimed and that method only works as intended when you do it on a computer and there are several reasons for that but do you disagree with his read as i understood it of ultra mercial which is the level of intimacy and complexity was tested it gets what constitutes an advancement in computer technology and if you agree with that then how is what you're doing in these claims and i'd get how do we know but it's an advancement i disagree with that characterization of ultra martial ultra martial noted that the invention would require complex programming as would this invention but the point of ultra martial as i understand it was that the claim was not to the abstract idea of using advertising as currency but a particular series of steps implemented by computer to accomplish a particular end which is the same thing we have in this case i would submit if you take the ultra version does say far from abstract to conclude advances in computer technology both hardware and software drive innovation in every area of scientific and that was in production with what they will result they were reaching here so it seems to me that we're talking about it the answer right i think that what that language from ultra mercial is not referring to some advanced mint in making a computer better which is i what i understood mr glassman to mean by an advance in computer technology i understood that language and ultram ursule to be saying that the computer is a very diverse invention of been very important and coming up with new ways to use a computer to accomplish real world ends are real advances because that's what ultra marshall was about and that's what the computer did there not because the ultimate goal wasn't about a faster processor or a different way to construct a computer it used a general purpose computer just like we use a general purpose computer configured a particular way to solve a real world problem just as we do and if you look at it if you were to take this court ultimately case in this court cyber source case and put them on the table we are much closer ultra mercial than we are to cyber source cyber source was a series of method steps that the court in reading the actual steps of the method not reading out a machine because there wasn't a machine so those actual steps could be performed entirely in the human mind and simply reciting the same thing on a computer disk that didn't perform the method but just housed it didn't change the analysis you still treat it as a process ultra mercial was a series of steps in the e commerce area that were implemented on a computer each of those steps if you were to take away the computer a person could have a piece of media have an advertisement interact with the customer in the same way as the ultra martial claim without the computer but the analysis this court undertook wasn't is it impossible to do something like this claim without a computer the analysis this court undertook was the use of the computer with this particular method is not an abstract idea it's a particular way of doing something to solve a real world problem and that's what we've done here let me just focus i think on the disconnect between mr glassman and myself in terms of analyzing our method claims on the system claims i would submit that controls on our method claims mr glassman looks at our claims then abstracts them up to a higher level of generality and says that's really what you're preempting we aren't they just report identified this concept as the idea of using an intermediary to facilitate a simultaneous exchange in order to minimise the risk that may well be an abstract idea but that isn't what we claim we claim a particular way of doing that and we require a computer we require shadow accounts we require a particular series of steps that the computer performs and someone who wants to exchange obligations with an interviewer either without a computer or with a different kind of computer system is not foreclosed by anything we have done here my time has elapsed you have some additional time if you if there are any other points you'd like to make i just like to sum briefly if i could as to our system claims they are a claim to a computer system itself programmed by software to accomplish a particular in that is indistinguishable from the claim that this found to be a machine not an abstract idea as to our method claims the district court assumed that they are required to be performed by a computer that computer is not there soley for speed the undisputed evidence is that the computer while it makes calculations faster this invention is not about calculating some number this invention is about a real world application that only as a practical matter works with the computer so that reason the district court's ruling should be reversed as to all of our