IP Law Daily PTAB properly found Uniloc’s 1996 software registration system patent invalid for anticipation
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Monday, October 23, 2017

PTAB properly found Uniloc’s 1996 software registration system patent invalid for anticipation

By Cheryl Beise, J.D.

Substantial evidence supported the Patent Trial and Appeal Board’s determination that a patent directed to a software registration system owned by Uniloc USA could not claim priority to two Australian provisional applications filed in 1992 and that the challenged patent was invalid as anticipated by an earlier-filed U.S. patent, the U.S. Court of Appeals for the Federal Circuit has held. In a final decision resolving two inter partes review proceedings filed by software companies accused of infringing the patent, the Board properly concluded that the challenged patent discloses a "summation algorithm" structure that was not included in the Australian provisionals, but was disclosed by the cited prior art reference (Uniloc USA, Inc. v. Sega of America, Inc., October 23, 2017, Prost, S.).

Uniloc USA, Inc., owns U.S. Patent No. 5,490,216 (the ’216 patent), issued on February 6, 1996, and entitled "System for Software Registration." The patent is directed to a system that allows software to run without restrictions (use mode) if a specified licensing procedure has been followed. An algorithm on the user’s computer combines certain user information to generate a "local" ID that is unique to the user. The same process and algorithm is duplicated at a registration server for the program’s licensor to create a "remote" ID. If both IDs match, the program enters a "use mode" where that program can be accessed without restrictions. The ’216 patent was filed on September 21, 1993, and claims priority to two separate Australian provisional patent applications: PL4842 filed September 21, 1992, and PL5524 filed October 26, 1992.

Sega of America, Inc., Ubisoft, Inc., Kofax, Inc., and Cambium Learning Group, Inc., (collectively, "Appellees") filed petition for inter partes review challenging all 20 claims of the ’216 patent. The Board instituted IPR proceedings on all claims and found them unpatentable as anticipated by U.S. Patent No. 5,509,070 ("Schull"), entitled "Method for encouraging purchase of executable and non-executable software." Schull was filed on December 15, 1992.

Uniloc appealed, challenging the Board’s priority analysis and its anticipation finding.

Priority. Uniloc argued that the Board erred in its priority analysis because it "looked myopically at whether specific structure was disclosed in the provisionals," which "may answer the question posed by paragraph six of Section 112, but not paragraph one."

The Federal Circuit disagreed, finding that the Board conducted the proper analysis for determining priority. The Board first construed the "generating means" term as encompassing the function "to generate a local or remote licensee unique ID" and the structure "a summation algorithm or a summer and equivalents thereof." Neither party challenged the Board’s construction, which was adopted from a 2006 district court decision. In construing the "generating means" term, the Board determined that only the sixth embodiment of the ’216 patent discloses the applicable structure. It was undisputed that this embodiment constituted new matter added to the ’216 patent that was not included in the Australian provisionals.

Uniloc nevertheless argued that the provisionals disclose a "summation algorithm" by teaching that the "registration number algorithm combines information entered by a prospective registered user unique to that user with a serial number generated from information provided by the environment in which the software to be protected is to run." However, the Board reviewed the provisions and determined that the disclosed algorithm was insufficient for one skilled in the art to "immediately discern" a summation algorithm. This finding was supported by substantial evidence, according to the court. For example the Appellees’ expert testified "that there are a number of different ways to combine letters and numbers without mathematical addition," such using a code for different digits and scrambling them up.

Therefore, the Board "proceeded through the proper analysis for determining priority by first construing the means-plus-functions claims under § 112, ¶ 6, and then determining if the original disclosure ‘describ[ed] the invention, with all its claimed limitations,’" the court said. Because substantial evidence supported the Board’s finding that the provisionals do not disclose a summation algorithm, the ’216 patent was not entitled to claim priority to the Australian provisionals.

Anticipation. Uniloc next argued Schull does not anticipate the ’216 patent because it fails to disclose a "generating means." Claim 1 of the ’216 patent recites a "local licensee unique ID generating means and remote licensee unique ID generating means." The Board construed "generating means" as encompassing the function "to generate a local or remote licensee unique ID" and the structure "a summation algorithm or a summer and equivalents thereof."

Schull discloses a system that allows a user to access advanced features of software only with a valid password. It describes a password-generating algorithm that locally generates a "Passwordable ID" by concatenating a Program ID, Feature ID, and Target ID. The Board held that Schull’s disclosure of concatenating the three IDs, as well as its disclosure of the two-digit checksum, independently discloses a summation algorithm. The Federal Circuit agreed that substantial evidence at a minimum supported the Board’s finding that the checksum discloses a summation algorithm.

In sum, the Board applied the proper legal standard in determining the priority date of the ’216 patent, and properly concluded that the ’216 patent is not entitled to claim priority to the Australian provisionals. Substantial evidence also supported that Schull discloses the "generating means" term and therefore anticipates the ’216 patent.

The case is No. 2016-2000.

Attorneys: Daniel Luke Geyser (Stris & Maher LLP) for Uniloc USA, Inc. and Uniloc Luxembourg S.A. Eric Allan Buresh (Erise IP, PA) for Sega of America, Inc., Ubisoft, Inc., Kofax, Inc. and Cambium Learning Group, Inc.

Companies: Uniloc USA, Inc.; Uniloc Luxembourg S.A.; Sega of America, Inc.; Ubisoft, Inc.; Kofax, Inc.; Cambium Learning Group, Inc.

MainStory: TopStory Patent FedCirNews

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