Sony Corporation of Americav.Network-1 Technologies, Inc.

Patent Trial and Appeal Board

Jul 1, 2015

09520350 (P.T.A.B. Jul. 1, 2015)

Trials@uspto.gov Paper 7
571-272-7822 Entered: July 1, 2015

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

SONY CORPORATION OF AMERICA,
Petitioner,

v.

NETWORK-1 TECHNOLOGIES, INC.,
Patent Owner.
____________

Case CBM2015-00078
Patent 6,218,930 B1
____________

Before JONI Y. CHANG, JUSTIN T. ARBES, and GLENN J. PERRY,
Administrative Patent Judges.

ARBES, Administrative Patent Judge.

DECISION
Denying Institution of Covered Business Method Patent Review
37 C.F.R. § 42.208
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Petitioner Sony Corporation of America filed a Petition (Paper 2,
“Pet.”) requesting covered business method patent review of claims 6 and
8–23 of U.S. Patent No. 6,218,930 B1 (Ex. 1001, “the ’930 patent”) pursuant
to 35 U.S.C. §§ 321–29. Patent Owner Network-1 Technologies, Inc. filed a
Preliminary Response (Paper 5, “Prelim. Resp.”).
We have jurisdiction under 35 U.S.C. § 324. Pursuant to 35 U.S.C.
§ 324(a), the Director may not authorize a covered business method patent
review unless the information in the petition, if unrebutted, “would
demonstrate that it is more likely than not that at least 1 of the claims
challenged in the petition is unpatentable.” For the reasons that follow, we
have decided not to institute a covered business method patent review.

I. BACKGROUND
A. The ’930 Patent
The ’930 patent relates to “the powering of 10/100 Ethernet
compatible equipment,” specifically “automatically determining if remote
equipment is capable of remote power feed and if it is determined that the
remote equipment is able to accept power remotely then to provide power in
a reliable non-intrusive way.” Ex. 1001, col. 1, ll. 13–19. The ’930 patent
describes how it generally was known in the prior art to power
telecommunications equipment, such as telephones, remotely, but doing so
had not “migrated to data communications equipment” due to various
problems, such as the high power levels required by data communications
equipment. Id. at col. 1, ll. 22–32. The ’930 patent describes a need in the
art to power data communications equipment remotely and to “reliably
determin[e] if a remote piece of equipment is capable of accepting remote
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power.” Id. at col. 1, ll. 42–44. Figure 3 of the ’930 patent is reproduced
below.

Figure 3 depicts remote telephone 62, which is capable of receiving and
transmitting both voice and data. Id. at col. 3, ll. 60–66. Telephone 62 is
connected to access node 64 at the customer’s premises, and access node 64
is connected to one of the ports of Ethernet switch 68 via wiring 66
comprising “a Category 5 Ethernet 100BaseX cable of 4 sets of unshielded
twisted pairs.” Id. Ethernet switch 68 comprises automatic remote power
detector 22 (shown in Figure 1) and remote power supply 34 (shown in
Figure 2). Id. at col. 4, ll. 1–4.
The preferred embodiment described in the ’930 patent operates as
follows. A remote access device, such as the telephone shown in Figure 3,
normally is powered by “an [alternating current] ac transformer adapter
plugged in to the local 110 volt supply,” but may or may not be capable of
being powered remotely. Id. at col. 2, ll. 40–44. The system detects
whether the access device is capable of being powered remotely by
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“delivering a low level current (approx. 20 [milliamperes (mA)])” over
existing twisted pairs of an Ethernet cable used for data signaling and
“measuring a voltage drop in the return path.” Id. at col. 2, l. 66–col. 3, l. 2,
col. 3, ll. 44–48. If there is no voltage drop or a fixed voltage level is
detected, the device is not capable of accepting remote power. Id. at col. 3,
ll. 2–11. If a varying or “sawtooth” voltage level occurs (caused by the
access device repeatedly beginning to start up but being “unable to sustain
the start up” due to the low current level), the device is capable of accepting
remote power. Id. at col. 3, ll. 12–22. The system then increases the power
being supplied remotely to the access device. Id. Once the access device is
operating under remote power, the system looks for removal of the access
device and decreases the power being supplied when the device is no longer
connected. Id. at col. 3, ll. 49–58.

B. Illustrative Claim
Claim 23 of the ’930 patent recites:
23. Method for remotely powering access equipment in
an Ethernet data network, comprising:
(a) providing an access device adapted for data
transmission;
(b) connecting said access device to at least one data
signaling pair connected between the access device and a data
node adapted for data switching, wherein said at least one data
signaling pair is arranged to transmit data therebetween;
(c) receiving at said access device a low level current
from a main power source over said data signaling pair,
wherein said main power source is connected to supply power
to the data node; and wherein a voltage level is generated on the
data signaling pair in response to the low level current;
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(d) producing a voltage level on the data signaling pair in
response to the low level current, wherein said voltage level can
be sensed;
(e) receiving at said access device controlled power
supplied by a secondary power source arranged to supply power
from the data node via said data signaling pair to the access
device, in response to a preselected condition of said voltage
level.

C. The Prior Art
Petitioner relies on the following prior art:
U.S. Patent No. 5,345,592, issued Sept. 6, 1994
(Ex. 1024, “Woodmas”);
International Patent Application Publication
No. WO 96/23377, published Aug. 1, 1996 (Ex. 1025,
“Hunter”);
Japanese Unexamined Patent Application Publication
No. H10-13576, published Jan. 16, 1998 (Ex. 1027) (Ex. 1028,
English translation, “Matsuno”);
Ron Whittaker, TELEVISION PRODUCTION 232–56 (1993)
(Ex. 1026, “Television Production”).

D. The Asserted Grounds
Petitioner challenges claims 6 and 8–23 of the ’930 patent on the
following grounds:
Reference(s) Basis Claim(s) Challenged
Woodmas 35 U.S.C. § 102(b) 6, 8, 9, 12–17, 19, and 22
Woodmas and Hunter 35 U.S.C. § 103(a) 6 and 8–23
Woodmas and
Television Production
35 U.S.C. § 103(a) 6, 8, 9, 12–17, 19, and 22
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Reference(s) Basis Claim(s) Challenged
Matsuno 35 U.S.C. § 103(a) 22
Matsuno and Hunter 35 U.S.C. § 103(a) 20, 21, and 23

E. Related Proceedings
The ’930 patent was challenged previously in a number of petitions
seeking inter partes review. In Case IPR2013-00071 (“the -71 Case”),
Avaya Inc. (“Avaya”) challenged claims 6 and 9 based on certain prior art,
including Matsuno, and we instituted an inter partes review. In Case
IPR2013-00092, Sony Corporation of America (Petitioner in this
proceeding), Axis Communications AB, and Axis Communications Inc.
challenged claims 6, 8, and 9 based on certain prior art, including Woodmas,
and we denied institution. In Case IPR2013-00385, Dell Inc. challenged
claims 6 and 9 based on the same grounds as Avaya, and we instituted a
review and joined the proceeding with the -71 Case. In Case
IPR2013-00386, Sony Corporation of America, Axis Communications AB,
Axis Communications Inc., and Hewlett-Packard Company challenged
claims 6, 8, and 9, and we denied institution and joinder with the -71 Case.
In Case IPR2013-00495, Sony Corporation of America and Hewlett-Packard
Company challenged claims 6 and 9 based on the same grounds as Avaya
and Dell, and we instituted a review and joined the proceeding with the -71
Case. On May 22, 2014, we entered a final written decision in the -71 Case
concluding that claims 6 and 9 had not been shown to be unpatentable. The
decision is currently on appeal.
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The ’930 patent also has been the subject of two ex parte
reexaminations. In Reexamination Control No. 90/012,401, which was
stayed pending resolution of the -71 Case, the Office confirmed the
patentability of claims 6, 8, and 9, as well as new claims 10–23 added to the
’930 patent during the reexamination. The corresponding reexamination
certificate (Ex. 1008) issued on October 14, 2014. In Reexamination
Control No. 90/013,444, Sony Corporation of America filed a request for
ex parte reexamination concurrently with its Petition in this proceeding,
based on the prior art references asserted in this proceeding and additional
prior art. See Pet. 3. The Office granted the request on April 3, 2015, and
the reexamination is ongoing.

II. DISCUSSION
The parties raise a number of preliminary issues in their papers,
including (1) whether Petitioner is estopped under 35 U.S.C. § 315(e)(1)
from challenging claims 6 and 9 based on the final written decision in the
-71 Case, (2) whether the Petition should be denied under 35 U.S.C.
§ 325(d) because it allegedly presents the same or substantially the same
prior art or arguments as in Petitioner’s earlier petitions, and (3) whether the
’930 patent is a “covered business method patent” eligible for covered
business method patent review. See Pet. 11–27; Prelim. Resp. 4–62. We
need not address the first two issues, however, because Petitioner has not
established that the ’930 patent is a covered business method patent.
Section 18 of the Leahy-Smith America Invents Act, Pub. L. No.
112-29, 125 Stat. 284 (2011) (“AIA”), provides for the creation of a
transitional program for reviewing covered business method patents, and
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limits reviews to persons or their privies that have been sued or charged with
infringement of a “covered business method patent,” which does not include
patents for “technological inventions.” AIA §§ 18(a)(1)(B), 18(d)(1); see
37 C.F.R. § 42.302. Petitioner bears the burden of demonstrating that the
’930 patent is a covered business method patent. See 37 C.F.R. § 42.304(a).
A “covered business method patent” is “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.” AIA § 18(d)(1) (emphasis added); see 37 C.F.R.
§ 42.301(a). In promulgating rules for covered business method patent
reviews, the Office considered the legislative intent and history behind the
AIA’s definition of “covered business method patent.” See Transitional
Program for Covered Business Method Patents—Definitions of Covered
Business Method Patent and Technological Invention; Final Rule, 77 Fed.
Reg. 48,734, 48,735–36 (Aug. 14, 2012) (“CBM Rules”). The “legislative
history explains that the definition of covered business method patent was
drafted to encompass patents ‘claiming activities that are financial in nature,
incidental to a financial activity or complementary to a financial activity.’”
Id. at 48,735 (emphasis added) (citing 157 Cong. Rec. S5432 (daily ed. Sept.
8, 2011) (statement of Sen. Schumer)). When determining whether a patent
is eligible for covered business method patent review, the focus is on “what
the patent claims.” Id. at 48,736. A patent need have only one claim
directed to a covered business method to be eligible for review. Id.
Petitioner cites claim 23 and makes four arguments in support of its
contention that the ’930 patent is a covered business method patent. Pet.
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11–19. First, Petitioner argues that claim 23 is “broad enough to cover a
financial product or service” because it covers “remote equipment, which
includes a variety of financial products and products incidental or
complementary to financial activities.” Id. at 13–14. We disagree. Claim
23 recites a method of remotely powering access equipment in an Ethernet
data network, where the method comprises the steps of (a) providing an
access device (e.g., a Voice over IP (VoIP) telephone), (b) connecting the
access device to a data signaling pair and data node (e.g., an Ethernet
switch), (c) receiving a low level current at the access device, (d) producing
a voltage level on the data signaling pair in response to the low level current,
and (e) receiving controlled power at the access device in response to a
preselected condition of the voltage level. The claim recites a specific way
of providing remote power to an access device using a “low level current”
and “preselected condition” of a resulting voltage level. Petitioner does not
point to—and we do not find—any language in claim 23 relating to a
financial product or service.
Nor does Petitioner cite any language in the Specification of the ’930
patent relating to a financial product or service. Rather, Petitioner only cites
a statement in the Background of the Invention that “[t]he desire to add
remotely powered devices to a data network is being pushed by the
convergence of voice and data technologies.” Ex. 1001, col. 1, ll. 33–35;
see Pet. 13. We do not see how this statement relates to financial products
or services, or how it supports Petitioner’s position that claim 23 recites data
processing or other operations used in the practice, administration, or
management of a financial product or service, as required by § 18(d)(1) of
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the AIA. We have reviewed the remainder of the Specification as well and
find no mention of anything pertaining to a financial product or service.
Second, Petitioner argues that the ’930 patent is a covered business
method patent because claim 23 “covers a large number of PoE
[Power-over-Ethernet] devices used in retail services.” Pet. 14–17.
Petitioner cites documents and web pages purportedly describing devices
(at least some of which Patent Owner allegedly has accused of infringing
claims of the ’930 patent) that use PoE, such as video surveillance systems
for retail point-of-sale terminals, point-of-sale credit card equipment, and
radio frequency identification (RFID) readers used by retailers for inventory
control and supply chain management. Id. (citing Exs. 1010–19). From this
documentation, Petitioner draws various broad conclusions, including that
“claim 23 covers a financial service—transaction data analysis,” and that the
’930 patent “covers all aspects of the retail industry: from day-to-day
front-end operations—sales and credit card transactions, and monitoring of
store operation—to the back-end of inventory control and supply chain
management.” Id.
Petitioner’s argument is not persuasive. The fact that certain devices
may be equipped for PoE does not mean that claim 23 “covers” activities
like transaction data analysis, inventory control, or supply chain
management. Claim 23 is concerned solely with providing remote power to
an access device and how that remote powering is accomplished. Again, the
focus of our inquiry is on the claims and whether the ’930 patent claims a
method of performing data processing or other operations used in the
practice, administration, or management of a financial product or service.
See AIA § 18(d)(1); CBM Rules, 77 Fed. Reg. at 48,736. Claim 23
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describes a method of remotely powering access equipment, without any
particular connection to financial products or services. See, e.g., Sega of
Am., Inc. v. Uniloc USA, Inc., Case CBM2014-00183, slip op. at 11–13
(PTAB Mar. 10, 2015) (Paper 11) (claims were “directed to technology that
restricts the use of software” where the software had “no particular
relationship to a financial product or service”); Salesforce.com, Inc. v.
Applications in Internet Time LLC, Case CBM2014-00162, slip op. at 9–10
(PTAB Feb. 2, 2015) (Paper 11) (“the claims on their face are directed to
technology common in business environments across sectors with no
particular relationship to the financial services sector”) (citation and
quotation marks omitted); J.P. Morgan Chase & Co. v. Intellectual Ventures
II LLC, Case CBM2014-00160, slip op. at 6–12 (PTAB Jan. 29, 2015)
(Paper 11) (claims pertaining to secure electronic communications had
“general utility not limited or specific to any application”); PNC Fin. Servs.
Group, Inc. v. Intellectual Ventures I LLC, Case CBM2014-00032, slip op.
at 6–15 (PTAB May 22, 2014) (Paper 13) (claims described “software
systems that have general utility not specific to any application”).
Third, similar to its argument based on the use of PoE in retail
services, Petitioner contends that claim 23 “covers a large number of PoE
devices used in banking and financial services.” Pet. 18. For example,
Petitioner argues that two alleged licensees of the ’930 patent use PoE in
their bank kiosks and financial trading products. Id. (citing Exs. 1020–21).
Petitioner further asserts that Patent Owner “broadly asserts that any PoE
device infringes the ’930 patent.” Id. (citing Ex. 1002). Again, the fact that
PoE-equipped devices may have uses other than receiving remote power,
such as uses pertaining to banking, does not mean that claim 23 “covers”
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such activities. Petitioner’s position, in essence, would mean that any patent
claiming something that can be used in connection with a financial service
(e.g., an Ethernet cable, a generic computer monitor, or even a ballpoint pen)
would be eligible for covered business method patent review, regardless of
what the patent claims. We are not persuaded that Petitioner’s position is
consistent with the statutory language, which requires us to focus on what
the challenged patent claims.
Fourth, Petitioner argues that the definition of “covered business
method patent” should be interpreted broadly, and cites a statement in the
legislative history of the AIA that “‘if a patent holder alleges that a financial
product or service infringes its patent, that patent shall be deemed to cover a
‘financial product or service’ for purposes of this amendment regardless of
whether the asserted claims specifically reference the type of product o[r]
service accused of infringing.’” Id. at 11–12 (citing 157 Cong Rec. S1365
(daily ed. Mar. 8, 2011) (statement of Sen. Schumer) (Ex. 1023)).
According to Petitioner, Patent Owner has asserted in related district court
cases that the claims of the ’930 patent “are infringed in conducting financial
activities.” Id. at 12. Although we agree that the definition of “covered
business method patent” should be interpreted broadly, the statute requires
that we focus on what the challenged patent claims, and the legislative
history reflects that focus. See AIA § 18(d)(1); CBM Rules, 77 Fed. Reg. at
48,735–36; 157 Cong. Rec. S5432 (daily ed. Sept. 8, 2011) (statement of
Sen. Schumer) (“section 18 is intended to cover not only patents claiming
the financial product or service itself, but also patents claiming activities that
are financial in nature, incidental to a financial activity or complementary to
a financial activity”) (emphasis added); 157 Cong. Rec. S5441 (daily ed.
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Sept. 8, 2011) (statement of Sen. Leahy) (stating that the definition is not
intended to cover “technologies common in business environments across
sectors and that have no particular relation to the financial services sector,
such as computers, communications networks, and business software”).
Moreover, even if Petitioner’s view of the statute is correct, we are not
persuaded that Patent Owner has accused financial products or services of
infringing the claims of the ’930 patent. Rather, as Patent Owner points out,
it has accused “Ethernet data nodes (such as switches and hubs) and Ethernet
powered devices (such as IP telephones and wireless access points).” See
Prelim. Resp. 39 (citing Ex. 2009).
For the foregoing reasons, based on the present record and particular
facts of this proceeding, we determine that the information presented in the
Petition does not establish that the ’930 patent qualifies as a “covered
business method patent” under § 18(d)(1) of the AIA. Therefore, we do not
institute a covered business method patent review on any of the asserted
grounds as to any of the challenged claims.

III. ORDER
In consideration of the foregoing, it is hereby:
ORDERED that the Petition is denied as to all challenged claims of
the ’930 patent.
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PETITIONER:

Lionel M. Lavenue
Theresa Weisenberger
FINNEGAN, HENDERSON, FARABOW, GARRETT & DUNNER, LLP
lionel.lavenue@finnegan.com
theresa.weisenberger@finnegan.com

PATENT OWNER:

Charles F. Wieland III
Robert G. Mukai
BUCHANAN INGERSOLL & ROONEY PC
Charles.Wieland@bipc.com
robert.mukai@bipc.com