four fifty one etc mr pan thank you judge your email please the court i'd like to cover two issues this morning whether the patents are covered business methods within the meaning of the statute and whether the patents claim eligible subject matter within the meaning of section one  first look when you mean challenger on precedent your honor what i'm saying is that the decision there is not and should not be entitled to collateral estoppel of fact in this case and the court should indeed revisit that question because the holding in the presidential decisions in bergheim or in any tricks establish that whether a claim element or combination of elements is well understood routine and conventional to a skilled artisan in the relevant field is a question of fact and in this case the board's finding that the smart flash patents were ineligible is contrary to that standard because as we explained in our briefs and our opening brief it forty to forty one and in our reply brief it nineteen conflicts with the board's determinations in these proceedings and in prior proceedings that the limitations of the smart flash patents are not obvious in light of the prior art indeed the very limitations that's smart for i could kind of double check something with you might my understanding tell me if this is wrong is that the prior asserted for the one of the two one of three analysis was not actually the same as the sources that the board relied on to fin everybody knows that well that goes to something whether certain of the element elements within the that were claimed that were part of the combination were known and that's really but you know the  basis for the argument the basis for the claim that there is a that there is a non conventional inventive concept involved in what is claimed here goes to the particular interaction of elements the particular way in which the functionalities that are at issue were distributed within the network and were divided were used within the interactions of those elements in the system  described and that is what that is certainly not something that was described in the specification as being conventional or known on the contrary the specification makes clear that the arrangement element that was described in the claims offered significant advantages that would permit the secure and convenient distribution of digital content in a way that would also provide for effective protection of the rights of the content owner and that is what was unknown in the prior art and i think that if you look at specifically what was found in the some of the initiation decisions that are both part of this proceed part of this appeal part one of the prior art patents that was relied on by the petitioners as a basis for finding that one of the elements and was known previously and what the board found and that prior and the initiation decision was that  the petitioner had failed to show sufficiently how the condition for accessing data written into the data carrier is dependent on the amount associated with the payment data forwarded to the payment validation system nor  is in fact subject to common covered business method reviewed and what the statute says is that the patents must claim data processing or other operations being used in the practice administration or management of a financial service it is not enough merely that the patents allude to payment but instead that patents be claimed for an improvement in the financials on the issue isn't a financial sort of the question is not whether payment is a financial service there are financial services that are adjunct to the system that is claimed here and so for example the invention of a novel payment validation system might well  likelihood be a cover business method if it were a technological invention but the point here is that as i think petitioners at pelleas actually concede in their brief there is not the patent does not go to an is that it is important to see that the board was applying the wrong standard claim that their analysis with respect to came claim eleven which could contains nothing that is even related to payment goes to show that the standard was incorrect then there is no question that to prevail on these proceedings we do need to be able to show that with regard to the claims that is judge laurie pointed out do refer to payment and payment data and payment validation but that is nevertheless not within the satisfied here because there is a financial element to at least one claim that each of them happens the payments deafness to you're making a point that the statute requires more can you define  them or is what this is used in means yes i think it a minimum for it for a patent to be used in a financial a financial product or service it would have to claim some improvement on the financial product or service the service here is the secure and convenient distribution of digital content it relies on existing financial infrastructure to achieve that but it is not providing a financial product or service within the plain language of the statute and you know we have in our briefs we've explained the distinction between the claims here and the claims that were at issue in blue calypso in sight sound and i think that attempting to improve a macro mechanism for rendering a payment and in sight sound as we as we pointed out the claims themselves refer to a step that involve transmission of money over over the over wires  therefore involved in actual financial apple financial stack here the difference is that the is in the financials but that what what's going on here payment is not in itself a financial stock in these patents because what is what is going on in these patents is that payment data payment validation are used as a mechanism for controlling the secure distribution of the of digital content and for that reason they are not used in but instead depend on existing financial products and services and if i can and i think that what's the you question before your time starts running out well states well states and i think every one of the other cases and we've had you know i p r's and i think it's true that in all of the cases including like that at least on the one to one grounds is you making an argument that that's a potential distinction between whatever the supreme court might do you know what what they're go and then extends to this case until that unless and until the supreme court people reverses that narrative correct and if i can return to the question of eligibility because i think it does tie is the specific way in which the use of the way in which the data elements are organized on the data carrier and interactions with existing payment validation systems and content delivery systems permits a different and better delivery of digital content to a user and so for example that this is the element that was found to be not disclosed in the prior art in the in the initiation decisions involved having having a use rule on the data carrier that was dependent upon the amount of payment that was associated with the payment validation data so it's an illustration of the way in which by storing the use rule on the data carrier the useful being dependent upon the amount of the you get payment validation parnia get more if you pay more is there something more going on than that i think there is something more going on your honor which is that because the use rule is stored on the data carrier there's an ability control continue to control access in can consistent with the amount of payment in the payment validation data even when the data carrier is no longer connected to the system so unlike for example a metering or a streaming system there are advantages to being able to associate that useful using that architecture involving the receipt of payment data using the payment data to retrieve content is a much more flexible system permits the payment validation of the provider of payment validation not to content contrariwise for the provider of content not to have to implement its own payment and therefore institute of these proceedings in fact in response to mr panners points the language used in a financial service and the language of an improvement in proving a financial service we don't think that's consistent with what but but nevertheless they found that those claims your right in the secure access patent the language financial or payment or something like that or on line sale was not in the claims and what happened in that case to the facilitating of the payment as opposed to using the payment to facilitate something else like the delivery of yeah it was an exchange i don't think we agree with that point your honor i think if we look at the  sound and even secure access it says in secure access the financial in nature as in the clip so wasn't accurate overall description of the challenge claims necessarily quote the statutory definition of a empacher requires that the patent have a claim that contains however phrase i financial activity about what the word that the word there is requires so that's a necessary condition and we held it wasn't that there mr penders point is that's not a sufficient condition so what cases say that merely reciting something that is clearly financial but not in a way that it's the technological improvement in the facilit enough is that so you won't as well cite sound is about a non winds and electronics say and really that's what we have here i mean think about what we've got if in the old world days before the internet if i went into a store and i wanted to purchase a d v d or an audi i had to pay for it i can pay for it with cash and they wouldn't they would wait till i gave them the money before they gave me the the the audi the audio tape or i could use a credit card and if i scanned the credit card what would they do they would validate payment by the scanning of my credit card authorization to access to the data that they can download if i want some music or video off the internet and it's posted somewhere and i want to access it what are these claims do what are these inventions do they say oh you have to first authorize payment and once you authorized payment we will give you permission to access what you want that is exactly what is what is in sight sound and electronic sales so i don't see that there's any difference between these claims in the claims and prior cases where this court h sufficiently qualified as a cd and patents i mean that's a concrete example as far as the the test goes i think you know powers point is they believe that the the p t o board didn't follow the proper test on the contrary the board tracked the test laid out in versace very closely they tracked the test laid out even in sight sound because they said it's a financial activity element here is it's financial in nature those are the exact types of words and language that was used to interpret the statutes and apply the statute of those prior cases so i don't think there's a problem here that these were properly instituted i think they were probably instituted your honor but that was the limit of the issues that we raised in the brief we just wanted to and we could use our brief kind thank you judge laurie i'm a please the court this is a case about collateral estoppel this court has decided the eligibility question judge laurie you were on the panel when mr panner says take a fresh look what he says is that this panel should from the supreme court just reminded us of the law or quo client right was for claims your honor and it was their obligation to patent these obligation to come forward with a material difference between those claims and these claims that's the upshot for example judge dyke's opinion for the court in max linear just recently we've submitted twenty eight a letter on this collateral estoppel applies to related patent claims remember these are all from a common application they all have in common specification but i don't think i don't understand  to be arguing that the ordinary requirements for issues with collusion ordinary ordinary fireman's don't apply that there's any difference to me i think you think something has happened in the interim and one of the standard exceptions to  that there is any material there soon to claim so then the only question so section twenty seven of the statement standard issue preclusion applied the only question is whether there's an exception section twenty eight two is the only exception they have invoked the change in law exception the only change  there are two problems with that to start first twenty two only applies to decisions from a higher court the end bank court of the supreme court it doesn't apply to coordinate decisions at all so there's nothing there's no exception to collateral estoppel for coordinate decisions so so they can't even get the third point and probably the most important one is let's assume they change the law mr panners point is that therefore non obviousness becomes the relevant fact that requires overruling the previous panel decision in this case that's wrong for three reasons first mr panner himself forfeited it in this court room on december seventh two thousand sixteen just lower you asked him does inventive step essentially mean non obviousness and mr panel responded doctrinally this court has said is not the same as non obviousness and chief judge protested a similar question and he again said they're not the same thing so the argument they're now making he waved in smart flash one which presumably is why the panel didn't address it in the opinion second even if it were not waived it is legally irrelevant the doctrine of non obviousness for novelty for that matter is separate from one of one the supreme court said that in luke in funk in deer reiterated in ma can you know articulate a couple of sentences of your own explaining the difference of course your honor novelty goes to whether it is new in the world and one hundred one says whether it is new in the sense that goes to instant step two in particular requires not only that something be disclosed for the first time but that it is something that is allowed to be patented and with reason the supreme court's has separated those two lines of analysis from this court made that clear in the ip engine case for example is patents these were prosecutor in the old guidelines they wouldn't be issued today the court in the smartwatch one case looked at these patents and said they were directed only to an abstract math element the the payment of money for content and they ad nothing the specification itself discloses that these are conventional elements arranged in a conventional fashion performing the routine functions and therefore they are simply do it on a computer claims they are alice claims through and through they are built he claims through and through and that's what this court recognized the first time around and non obviousness is not relevant to that determination in the in the return mail case the court confronted exactly this question if a case out of the p tab is a declamation of institution on one or two and one of three inconsistent with an you know legibility on a one on one and the court said as a matter of law it is not and that is the same position we have cases the court said that there were disputed issues of material fact that precluded resolution at that stage of the want to one question this is not a motion to dismiss case smart questions had two trials on the only for step two and not for obviousness there were others without one example that european thing that's one of the if not the european partners one of the other prior art reference and smart flesh objected to the evidence on step two as irrelevant and the board at appendix six forty one of one of the final written decisions and elsewhere overruled that objection and said that the evidence was relevant to step two and then relied on that evidence as confirmatory of what the specification of self disclosed which is that these are not eligible patents so that there is no disputed question of fact a tricks and gerhard berger only say that if there is a disputed question of material fact we of course would dispute that obvious this is a material fact but even if it were there is no dispute because they had a trial in the p tab p to have considered all the evidence so our question put in any evidence on step two other than the specification in the client and so there's no disputed question of fact in this case so that the only exception that they have invoked to collateral estoppel twenty eight to the change in law the only cases they've cited bergheim are in a trick which apply to disputed questions of material fact simply don't get them there because in this case there is no disputed question of material fact the board decided the facts and they haven't challenged them and it's not material and as i said smart flesh waived it the first time around so so without exception gone we're right back into time and this is a case of an example of that and judge laurie you asked me my colleagues what happens if the institution decisions are invalid he said well they're going to going to force these patents and this recording of somebody else well that's again what collateral estop is designed to force these patents are done this court has decided the case we should not be here today and this is a case in which this court ought to resubmit make clear that is determinations  binding one more point on this this is a problem of smart flashes making when the two proceedings were proceeding in parallel apple came to this court and asked for a stay of the district court proceedings so that the p t had to go first the court denied the state agreed to smart flash then when the district court of appeal is pending apple came to this court and asked to coordinate the appeal so that they could be decided at the same time smart flesh oppose that motion and this court agreed with smart flash hopes that something would change that it could come to this court and essentially ask for a rehearing of the decision it already lost it's over now it's done they lost they lost rehearing they lost this court should not go back and give them a second appreciate that i'd i do think that we are my agree with mr perry with respect to the fact that are and i do think that the the argument has been well well err that the point is that there has been a significant development in the law presidential decision of this court that ought to be applied the court ought it ought equitably to consider that sedition in every single one on one case that we decided or were crime or he tried his long not at all your honor because it would really depend on the nature of the decision and whether there were in fact in other words the question first of all it has it would not revive any final judgment by by any stretch that's not what we're arguing with regard to in this case what we're arguing in this case is that as well because there are claims before you and in the ministry of decision before you that has not been reviewed have to look at that the court might determine there is no inconsistency and therefore collateral estoppel applies but if there is an inconsistency as we've argued here then in other words the basic requirement and i want to be clear that there's a distinction between the collateral estoppel issue and then on the merits but the collateral estoppel issue goes to whether the result would have been different in light of the presidential decision that this court has issued and what we see here that there is a tremendous irony to the fact that mr perry insists upon the existence of a prior trial because indeed there was a trial and in that trial these patents were found to be valid as a matter of fact they were found to be novel and non obvious and that is something that when apple appealed that judgment they did not even claim that there was an adequate evidence to support that they had other challenges but they did not claim there was inadequate evidence to support that