Dish Network Corp. v. Customedia Technologies, L.L.C. (PTAB 2018)

Claims for Managing and Delivering Targeted Advertising Data Found Invalid under Covered Business Method (CBM) Patent Review

By James Korenchan --

On June 11, 2018, the U.S. Patent and Trademark Office Patent Trial and Appeal Board (PTAB) issued a final written decision in the Covered Business Method (CBM) patent review between Dish Network Corp./LLC (collectively, "Dish Network") and Customedia Tech. LLC ("Customedia"), in which the challenged claims were found to be unpatentable under 35 U.S.C. § 101.  (Some challenged claims were also found to be unpatentable under 35 U.S.C. §§ 102 and 112, but this post addresses only the § 101 challenge.)

Dish Network filed a petition requesting CBM review of claims 1-8, 17, and 23 of U.S. Patent No. 8,719,090, challenging each of the claims under 35 U.S.C. § 101, challenging claim 7 under 35 U.S.C. § 112, and challenging claims 1, 5, and 7 under 35 U.S.C. §§ 102 and 103.  In a related inter partes review proceeding, claims 1-8, 17, and 23 of the '090 patent were each challenged on §§ 102 and 103 grounds in view of the same references as in the CBM review.  Dish Network sought review by the PTAB through CBM to focus on the anticipation and obviousness challenges of only claims 1, 5, and 7.  But more importantly, since § 101 challenges are prohibited in inter partes reviews, Dish Network sought CBM review to issue a challenge under § 101.  As such, the PTAB issued a final written decision in the inter partes review simultaneously with the CBM decision.

The '090 Patent

The '090 patent, titled "System for Data Management and On-Demand Rental and Purchase of Digital Data Products," issued on May 6, 2014, and has a priority date of August 26, 1999.  The '090 patent discloses a digital data management system having a remote Account-Transaction Server ("ATS") and a local host Data Management System and Audio/Video Processor Recorder-player ("VPR/DMS") unit.  The '090 patent discloses various objectives of the digital data management system.  One of these objectives -- particularly, to "[r]ent/lease storage space in users Data Box to personalize and target advertising to the individual preferences of the user" -- is the focus of the challenged claims.  In practice, a broadcaster content provider would transmit advertising data to the VPR/DMS via the ATS, and the advertising data is then recorded on individual "data boxes" of the VPR/DMS.  Those data boxes can be reserved, rented, leased, or purchased from various entities, such as content providers, broadcasters, and cable/satellite distributors.  For example, the '090 patent notes that a cable distributor could provider a customer with a cable set-top box and reserve certain areas (e.g., data boxes) within the VPR/DMS storage for use by the cable company.

As a representative claim, claim 1 is reproduced below.

1.  A data delivery system for providing automatic delivery of multiple data products from one or more multimedia data product providers, the system comprising:
    a remote account transaction server for providing multimedia data products to an end user, at least one of the multimedia products being specifically identified advertising data; and
    a programmable local receiver unit for interfacing with the remote account transaction server to receive one or more of the multimedia data products and for processing and automatically recording the multimedia data products, said programmable local receiver unit including at least one individually controlled and reserved advertising data storage section adapted specifically for storing the specifically identified advertising data, said at least one advertising data storage section being monitored and controlled by said remote account transaction server and such that said specifically identified advertising data is delivered by said remote account transaction server and stored in said at least one individually controlled and reserved advertising data storage section.

Standing to Seek CBM Patent Review

A CBM patent 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.

Financial Product or Service

Patent owner Customedia made a threefold argument against CBM eligibility of the '090 patent.  First, Customedia argued that the PTAB's analysis of certain dependent claims "was not based on arguments set forth in the Petition, exceeded statutory jurisdiction, was inconsistent with the express language of 35 U.S.C. § 324 and 37 C.F.R. § 42.208(c), was improperly raised sua sponte, and presents substantial due process issues."  But the PTAB was not convinced.

Second, Customedia argued that, regardless of whether disclaimed claims meet the finance prong for CBM eligibility, any disclaimed claims (dependent claims 10, 15, 19, 32, 45, and 48 in the present case) must be treated as never having existed and cannot constitute the basis for CBM eligibility.  However, the PTAB stated that disclaimed claims here were not disclaimed at the time of institution of the CBM review, and thus it was proper to consider those claims in determining whether the '090 patent is CBM eligible.

Third, Customedia argued that, although the claims of the '090 patent recite advertising, the claims do not recite selling advertising, and thus the '090 patent is not CBM eligible.  To this point, Customedia further argued that the selling of advertising must be central to the operation of the claim, and that claims 1, 5, and 7 do not recite selling advertising as a central operation of the claim.  But the PTAB disagreed with this position, arguing that the claims explicitly recite financial activities involving actual financial transactions, such as the data management system selling advertising data and the transaction server performing billing operations.  In support of this, the PTAB cited to various limitations in the claims, such as "an advertiser plac[ing] an advertising order," considerations of "advertising rates" and "cost effectiveness," and "financial transactions" that "can be instantly and automatically conducted directly through said system."

Technological Invention

The definition of CBM patents does not include patents for "technological inventions."  A two-prong framework is provided for determining whether a patent is for a technological invention.  In particular, the PTAB must consider (1) whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art and (2) solves a technical problem using a technical solution.

As to prong one, Customedia asserted that "the use of reserved storage space for advertising data" in the '090 patent was novel and unobvious, citing to statements in the Notice of Allowability of the '090 patent concerning the combination of specific prior art cited during prosecution.  But the PTAB disagreed with Customedia's approach:

Petitioner met its burden of showing, that a claim is anticipated or obvious over the cited prior art, is not commensurate with a determination that the claimed subject matter, as a whole, recites a technological feature that is novel and unobvious over the prior art.  . . .  While the former analysis focuses on the novelty or obviousness of the claim as a whole, the latter analysis [for CBM purposes] focuses on the novelty or obviousness of specific, discrete technological features recited in the claim as a whole [emphasis in original].

In fact, the Notice of Allowability states the opposite of what Customedia asserted, and refers to a prior art teaching of the concept of data storage being reserved for advertising data storage.  The PTAB found no other technological feature in claim 1 to be novel or unobvious.  For instance, the PTAB also noted that the claimed programmable local receiver having a data storage section is a known device, such as a set-top box.

The PTAB went on to address prong two, noting that the '090 patent itself describes that its purpose is "to provide a system that creates a transaction or commercial zone for data to be received, manipulated, stored, retrieved, and accessed by a user," such as by renting/leasing storage space in the data boxes to personalize and target advertising.  The PTAB also noted that the '090 patent is not concerned with a lack of storage space for targeted advertising, but rather is focused on delivering targeted advertisements (which Dish Network stated was "decidedly nontechnical").  For at least this reason, the PTAB concluded that the '090 patent does not solve a technical problem using a technical solution.

Analysis under 35 U.S.C. § 101

With respect to prong one of the Alice framework, Customedia argued that the '090 patent is "directed to solving the technical problem of how to ensure that the end user's storage device has enough storage for targeted advertising by claiming a system to deliver, control, and store the advertising data on local receivers in reserved data storage sections."  Customedia also argued that claim 1 involves "modifying the typical computer memory configuration to reserve storage space just for advertising data."  But the PTAB found these arguments to be unpersuasive because claim 1 does not require the advertising data storage section to have a specific structure, such as separate portions allocated to respective users, and does not require any data other than specifically identified advertising data to be received by and stored at the programmable local receiver unit.  The PTAB thus found claim 1 to be directed to the patent-ineligible concept of delivering targeted advertising to a user, similar to the patent-ineligible concepts in Affinity Labs, Smartfish, and Ultramerical.

The PTAB also found that none of the elements of the challenged claims add an inventive concept sufficient to transform the patent-ineligible abstract idea into a patent-eligible invention.  Going through the challenged claims, Dish Network asserted that various claim elements are well-understood, conventional, and routine, and provided evidence (per Berkheimer) including prior art, expert testimony, and the '090 patent's specification.  Customedia relied on expert testimony and the Notice of Allowability as evidence to the contrary, arguing that use of a reserved storage space just for advertising data that is monitored and controlled by a remote account transaction server is an inventive concept.  But because claim 1 does not recite managing and integrating various types of advertising data, the PTAB was not convinced by Customedia.  The PTAB thus found that Dish Network showed patent-ineligibility by a preponderance of the evidence.

Dish Network Corp. v. Customedia Technologies, L.L.C. (PTAB 2018)
Panel: Administrative Patent Judges Meredith C. Petravick, Michael W. Kim, and Kalyan K. Deshpande
Final Written Decision by Administrative Patent Judge Petravick

Comments

[EG]

Hey James,

I predict that this PTAB decision will be reversed by the Federal Circuit. In no way does the claimed invention qualify as a CBM patent.

[Skeptical]

Ping...
pong...

ping...
pong...