good morning your honour's both in the courtroom and remotely and we have please the court the one nine five in zero five nine patents both share a common specification both patents have claims that are directed the specific and unconventional idea of connecting user clicks to bonus impressions or decrease price based on user activity third party activity in which the internet users are out there determine which ads are better clicking on them that's recorded in the bonus impressions are tied to that the advantages from this and if it's understood on this record it was an important invention in internet advertising  the advantages which are set forth in the patent have never been debated by google or found contrary by the patent office so it is an important invention one thing that this court should certainly stand for is that the alice test be applied as a matter of law in this particular case step one the panel was really all over the place they found six different variations of what the abstract idea is and i get that there can be shades of gray with abstract ideas but it's all over the place but they alternately conclude with want to page twenty nine of their opinion and that's where in so many of those courts cases it's where we get to the meat of the alice determination step two and in step two the was absolutely clear that you have to now take what the abstract ideas what is it that you found you have to compare the abstract idea to the claims to determine whether the claims are narrowed confined or ti case if you look at the opinion pages twenty nine to thirty five six pages devoted to step two not want books he's the one time it page thirty two one time do they even mention bonus impressions and there's no analysis they just say it in passing when they're talking about old trim or short at no point in the opinion and from pages twenty nine to thirty five does the panel ever say this is what we found the abstract i be going to be here are the limitations the idea here is adjusting the terms of dealing by altering the prices and quantities or quantities of contracts the only and to do and doing that on the basis of a certain class of consumer reaction here you know in the advertising world there are their kind of double sided markets and there are three parties of performance information by consumers registering a certain level of interest that doesn't actually tie it down to anything not abstract because all that's being done using that consumer reaction to a just a term of the contract was said to me that's an incorrect generalization of what the invention is and it's not consistent with what  say and that may be at least ordinarily a valuable thing to do correct well i mean the benefits i mean there's it's been in practice for over fifteen years and it's advantages of proven true and there's no dispute about those advantages abstract idea with the patent office found was that the abstract idea was analyzing and collecting data in a performance based advertising model the patents discuss and google doesn't debate nor did the patent office find differently that in performance based advertising the price goes up as you say have more viewers or in the context of an internet more clicks that's that is what they're abstract idea was found to be was based on performance  pricing it is an undisputed record that in performance based advertising the abstract idea so called by the patent office that as views go up price goes up as you click more the price goes up that's how it was the unconventional thought and it had never been done before unconventional and this is google with all the resources could not find that this is ever been done before in any form of advertising would you what do you do with the idea which i think we've articulated several times i think maybe the briefs quote in particular synopsis that had never been done before abstract ideas are still abstract and i think that's a great point so the question is what is meant by abstract and that is this court has what i would say three buckets of abstract ideas that if i were looking and i know the jurisprudence i've done with this issue a lot one of them is for example allison bilski where we have a conventional activity and it's performed with with computers and just performing conventional activity on computers as is abstract you've got for example electric power grid where we found that in the power grid arena where we collect data and we bring it in and we manipulate dead and we display it that that's an abstract idea and we found then in the other class of cases results we're going to claim where you you have these and it's software patents are kind of this where you have like a module one an input one you have these vague techie sounding claims but at the end of the day they don't mean anything and you have a result that's going to judge price and sitting by doesn't nation and loyalty conversion i think is an excellent case where he talks about patent claims that are dressed up in the of invention but they claim only a result this case doesn't fall into any of that in this case there is a specific method where you take connecting connecting clicks to bonus impressions based on viewers third parties that are out there looking at the ads deciding what they like they click if it's recorded in the bonuses are tied to that if you look to for example and this is the danger how about was how would you how would you describe the difference between this case and of promotion particularly thank you for asking that question ultra mercial i think it's probably one of the most classic cases that should have survived one hundred one why what was the ultimate show ultram or show was a case in which in order to get free media content on the internet you had to look at a paid or an advertisement so the notion is you look at the ad i'll give you the free stuff that is how public t v has worked since the beginning of public t v if i want to watch the super bowl i have to watch the advertisements and then i get the free super bowl if i want to watch dateline n b c i got to watch the advertisements then i've got to then i get my my news or my dateline n b c whatever i'm getting that's conventional and time conventional activity to the internet  is not patentable and if you look at d d r this case is right on top of d v r and d v r there was one advance internet users in d v r would be on clicking around looking i get to a website i'm at that website and now i leave and then help retain customers let's look at let's look at bascom in bascom what was there was no new firewall on bascom bascom was simply taking existing fire wall and putting in a different location remote from the user and because that one thing one little thing was moving the location of that server it was patentable and that's patent law i mean right now we have in this country we have what physical thing have you moved here the physical thing we it's business methods so fans that might be called business methods can be patentable correctly that's what bill's say that doesn't mean that adjusting the terms of sale can be one of those things and that is how google characterized this and that is not this invention this invention has nothing to do with a pricing model for advertising of the the negotiation on pricing occurred before our patent that same negotiation for pricing occurs after our patent with the patent says what the patents say is not how to negotiate the best price or any particular price the invention here is specific connecting clicks two bonus impressions based on third party activity  recorded monitored and then you give the bonus impressions and it leads to the advantages of better ad since that's one of the patents and then the other one is some kind of price adjustment the decrease in price  it please the court i want to start with step two because i think that is really the thrust of the argument from the other side with respect to stress with respect to step two i think the synopses decision is directly on point and that is because what you hear from the appellant and what you see throughout their brief their arguments before the board and every step along the way is the notion that they have an inset inventive concept because they claim that the pricing model that they have in their claims is novel that isn't the test under step one or under step two synopses says quite clearly that the claim for a new abstract idea is still an abstract idea and that is precisely what we have here even if you were to grant them their argument that this was in fact a novel pricing model also mentally what alast have to requires is something more something that will tie that abstract idea into something that is concrete in the claims and here we don't have that and the reason that we don't have that is what the claims provide is completely conventional computer hardware computer computer network there's no dispute about that their own expert admitted and this is at appendix page twenty nine seventy two he agreed that the hardware that is described in the patent for implementing the inventions is generic computer hardware he even said that the value of the invention here has nothing to do with the computer or the performance of the invention of the computer but rather it is the type of algorithm that   certainly would be specific to which to say is there inventive step right so on that point your honor the heart there's nothing in the claim that's hardware that would be the inventive step so then you have to look to the south or them that they're claiming a and if you look at the algorithm that they're pointing to their expert admits that each of the steps of the claim was routine and conventional and this is at appendix they say that each step can be performed routinely through a computer initiated on group but we still need to concentrate on the specific set not in the prior right as seems to be the case perhaps the searches were inadequate i don't know brought in this petition that's not to say that there wouldn't be one but in this petition we're only dealing with want to one and then the one was issued with respect to want to one i think what you're pointing out is exactly what i'm getting at which is their only articulation of this inventive step is the suggestion that no one before this time had thought of giving bonus impressions in response to user action and they're saying that's the thing that's novel and new about our invention that is itself an abstract idea that is not something that actually ties the claim down what this court's precedent has found to satisfy alice step two is something that changes either the hardware or the algorithm in a way that is specific and concept certainly honor but that's no different than an ultra martial or an by say for any of the many cases where this court has found that there's an abstract idea and there's an insufficient inventive step because all that you are doing in the claim is implementing that abstract idea using conventional and routine hardware and conventional in this case conventional and routine implementation of the hardware application you're overstating i think where president takes office we know that there are  is a novel concept because there was no citation to show of this so why aren't the sequence of steps that implemented a novel concept contention from the other side that the inventive step that is being provided is the novel idea of giving bonus impressions in response to user action for the one five patent or for the zero five nine patent the idea of reducing the price for the advertisements based on the action by the user in both cases all that we're doing is implementing that abstract idea and if you look at the claims themselves the claims aren't providing any more detail worse or technological says solution of how to do that then you would find in the claims an ultra mercial for example an ultra mercial there were numerous steps that were being implemented to achieve the process of previewing an advertisement in order to pay for the copyrighted material in the same way with these claims do is they say look define a contract between the buyer and the seller so that the set and i'm looking at the one thousand five patent page one zero nine of the appendix define a contract where they set a price for the advertisement provide the number of impressions automatically record the number of times that there's a view of that impression and then give bonus impressions based on that the specification itself acknowledges that there's nothing inherently technological about that in fact what it says is you could do this in the context of a billboard or print media or a radio ad or a television ad remember of course claim step two of alice is about the modification to step one or is about the implementation of the invention to remove it from the ambit of the abstract idea that unpatentable it can't simply be only have an abstract idea but it's novel therefore patentable because all then you have is a one or two analysis or one of three analysis the inventor of step has to be something that takes the abstract idea and actually tethers that to something concrete and tangible recording the other automatic determining these are all steps we agree there's inducted by computer where there conducted by computer or some other way doesn't really affect the could take each of the types of actions that is claimed in this for example presenting impressions for example counting user feedback all of that was known what they're saying is new is the idea that if you record a certain number clicks or certain number of actions you provide bonus impressions all that they're arguing is new is a particular contract for pricing advertising so there is in the one from ninety five patent that contract is if i give you a certain number of impressions and you get a certain number of user actions back all give you more impressions that's the terms of a contract in the same way for the zero five nine patent all that they're arguing is new they're not harming there's any new hardware any change whatsoever to the way in which you serve ads or even any step an ad serving that is new or different than what was done before it is only the terms of the contract and the over five nine that is i'm going to give you i mean agree to give you a certain number impressions for certain rights and to use or dispute about whether collecting clicks is new i don't believe there's a dispute about that your honor so their expert acknowledge and i think he would have to that that can't be new and the reason for that is if you look at for example the billboard example in the patent it acknowledges that you can put a phone number on a billboard and and and and call that number and then record the number of people that call in the same way on the internet recording interaction with an advertisement isn't something new and there is no suggestion from them that that is that itself is new it's only the idea the abstract idea of changing the pricing model for the advertisement based on that into one of these two particular flavors of pricing model that is alleged to be new and that is simply a the definition of the contract between buyer and seller for purposes of creating a contractual advertising relationship which is precisely the between two parties with respect to pricing or with respect to advertising those are abstract ideas and saying implement them on a computer using these steps isn't enough i mean if we look at the process and the claim of ultra marshall it does exactly what your honor was just pointing out it says here's an idea of how to structure the relationship for purposes of providing advertising before you see copyrighted material and here are the steps of the process that we're going to follow that's no different than the claims of the one five nine and zero nine five they define the contractual relationship they implemented on conventional hardware using conventional known steps on that hardware and the only thing that is even alleged to be different is the structure of the contract between the buyer and the seller and that cannot be enough to take what is otherwise an abstract idea and render it sufficient under step two because if that were enough then ultra mercial oh ip by save all of those cases would have been decided differently and what it would ultimately do is say well all you're doing awesome only on step two of alice is a one  one and one twelve in the two for the for those zero five nine and one zero one for the one thousand five that's not to say that in a district court it's action for example if we hadn't filed the c b m's are they done differently there wouldn't be one applying this court's precedents these are not patent eligible so that was that was the decision it was made was to focus on pattern eligibility and on the one five and the zero five nine the one twelve issue because the claims are such a mismatch from the specification that eligible it found on the zero five nine the challenge claims were also found and that in that under section one twelve and the reason for that was and again there's no question here with respect to what the legal standards are there's no legal challenge can you have claims that claim a process or method that is directly in conflict with the purported invention that's just right in your specification and in fact capture the very thing that you're specification i criticizing as the problem that you were trying to solve and there's no question under this court's precedent and by maida and bamberg that that poses a fundamental one twelve problem and yet you don't think that that one twelve gr almost out of time are maybe just over time a i respond to that your honor so your honor i don't think it makes a difference a first of all the question assumes the premise that google practices the patent that is not been shown that is on the record and i think second of all there are lots of different ways to implement advertising structure as many different ways as you can create contracts to do it that's precisely the want to one problem with respect to one twelve this patent purports to claim a very specific model and these claims are very specific in requiring that when you actually set the price you reduce the price over time based on action from the user the specification directly and repeatedly criticizes that and says that's precisely the kind of model that it wants to overcome because it doesn't give the seller guaranteed revenue say for two from this one simply doesn't look outside the four corners of the docket for this issue i don't think you need to look outside the four you tell me you know so one thing i noticed in the argument is when they're talking about one twelve hour pattern specific and when we're talking about going to one it's not specific what we have before us is is and you've picked up on your question your honor i mean this was a real invention money was paid by a real company that still has a business based around this this patent they paid for the patents it passes one and two it passes one of three googles using this invention or at least we claim and that's a real invention that's just go by on a test the panel never applied the test in step two and if we're going to say patents are going down then they at least deserve the the dignity of comparing the abstract idea to the specifics of the claim and this  a specific method they keep calling it a pricing model or adjusting a contract is a method by which clicks by users are connected to bonus impressions or decreased price based upon third party users looking at ads on the internet it's never been done before it's a specific method patent last chance for anything it's that incremental improvements that are specifically claimed is all the patent law requires and we find ourselves in a crisis you can't on every sixty in ip watchdog you can't help but read and alice is ruling the patent system on software patents business methods and if you look at alice the seminal decision the court says we can't let the exception be the rule and we've now gotten to a point where arguments like i heard the argument it's not technological you were correct to say it doesn't have to be technological bilski specifically says it doesn't have to be technological the patent next talks about process instead of taking somebody way we bring the content to us basket no new fire wall nothing different what was different but one thing in vasco that the location of the fire wall would be in a remote location that's it and as long as that incremental step was claimed if we look at amdocs what was different amdocs amdocs one little thing you know back should have a central server where you would process and store data in docs idea was process the data closer to the source that presents prevents congestion one running on a computer specific that was enough in this case we have a specific rule this is not about the just in contracts or where making contracts or setting price or any such thing they mention for saddam for sato was a setting the price case it was grouping customers and products in a way that you could have terminal price that's what people been doing forever the versace case turned on the notion of if you automate that with computers is that patentable alice says no bills he says no we all know that's wrote law at this point four years after alice we know that if you have a conventional activity and you automate it with the computer that's not patentable but we have to be remiss in turning alice into a rule that is not that and that abstract idea is not the exception for software business methods it's the rule and we fall in this passage called like the finger to the wind test it doesn't feel like it's something that should be patentable that's exactly what went wrong here google sold the panel on the fact that it wasn't technological don't take my word for it look at pages twenty four thirty and thirty three of this opinion where the patent office said several times this is not technological if that's the rule and seem yams to me as i'm not even have a c v in perceiving because the litmus test for getting c b s is that you're not technological and all of a sudden there's a default that if i'm not technological i don't get a patent this is specifically claimed connecting clicks to bonus impressions based on third party activity that's recorded on servers in bonus impressions or produced it was a wonderful invention with wonderful advantages and as the written description i just briefly comment on that that was completely wrong the patent never says that you can't use this method with performance based advertising it says in column one line six hundred sixty five you want a reasonable balance between performance and fixed fee contracts this invention will help you improve your balance it never once says that you can't use this invention with a performance based contract it obviously works that way as well the written description portion of this decision