PTAB

CBM2014-00007

Callidus Software Inc v. TQP Development LLC

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Key Events
Petition
petition

1. Case Identification

2. Patent Overview

  • Title: Encrypted Data Transmission System Employing Means for Randomly Altering the Encryption Keys
  • Brief Description: The ’730 patent discloses a method for secure data transmission using symmetric key encryption. The system avoids transmitting encryption keys by providing a common "seed value" to a transmitter and receiver, which they independently use to generate identical sequences of pseudo-random encryption keys, with new keys being produced based on a predetermined amount of data transmitted.

3. Grounds for Unpatentability

Ground 1: Claims 1-10 are Unpatentable as Directed to an Abstract Idea under 35 U.S.C. § 101

  • Prior Art Relied Upon: N/A - Challenge is based on patent-ineligible subject matter under §101.
  • Core Argument for this Ground: Petitioner argued that all challenged claims are directed to the abstract idea of generating a new encryption key each time a predetermined number of encrypted data blocks are transmitted. This argument was presented as part of a petition for Covered Business Method (CBM) patent review, which permits §101 challenges for patents that are not "technological inventions."
    • Abstract Mathematical Concept: Petitioner contended that the claimed method is a "hopelessly abstract" mathematical concept. It recites manipulating mathematical constructs like "seed values," "pseudo random key values," and "blocks" of data using an unspecified algorithm to create and update symmetric keys. The claims do not recite a specific apparatus or a particular algorithm for performing the encryption or key generation, making them generic enough to cover any implementation of the abstract idea.
    • Failure of Machine-or-Transformation Test: Petitioner asserted the claims also fail the machine-or-transformation test, which it described as a "useful and important clue" to patent eligibility.
      • Not Tied to a Particular Machine: The claims are not tied to a specific machine because the terms "transmitter" and "receiver" are generic and could encompass people performing the steps manually (e.g., passing notes or tapping telegraph messages). The steps of generating keys and encrypting data merely occur "at" the transmitter or receiver, which only provides a location rather than requiring the components to perform the steps.
      • No Transformation of Matter: The method does not transform any article to a different state or thing. It involves only the manipulation of data, which Petitioner characterized as disembodied, transitory signals that cannot effectuate a transformation of matter.
    • Preemption of an Abstract Idea: Because the claims are not tied to any specific implementation, Petitioner argued they effectively preempt the abstract idea itself. The method could be performed by hand and is untethered to any specific application, thus improperly monopolizing a fundamental concept.
    • Dependent Claims Add No Inventive Concept: Petitioner argued that dependent claims 2-10 fail to add any meaningful limitations to render the abstract idea patent-eligible.
      • Claim 2 (altering the predetermined number of blocks) was described as a minor, non-inventive change to the specifics of the abstract idea.
      • Claims 3-8 (associating different seed values with remote locations) merely associate the abstract idea with data points (locations), which is insufficient to confer patentability.
      • Claims 9-10 (adding error control and data compression) were characterized as adding only rudimentary, conventional data manipulation steps that are unrelated to the core encryption algorithm.

4. Key Claim Construction Positions

  • Petitioner argued that because the ’730 patent is expired, its claims must be construed according to the principles of Phillips v. AWH Corp. (i.e., their plain and ordinary meaning to a person of ordinary skill in the art), rather than the Broadest Reasonable Interpretation standard typically used in PTAB proceedings.
  • This position was central to the §101 challenge, as Petitioner proposed broad constructions for key terms to support the argument that the claims are not tied to a specific apparatus.
  • Key proposed constructions included:
    • transmitter: "one that transmits"
    • receiver: "one that receives"
  • Petitioner supported these broad constructions by citing dictionary definitions and the inventor's deposition testimony, where the inventor allegedly described the terms as "abstractions." The constructions are intended to show that the claims could be infringed by two people communicating, not just by specific hardware.

5. Relief Requested

  • Petitioner requested the institution of a Covered Business Method patent review and the cancellation of claims 1-10 of the ’730 patent as unpatentable under 35 U.S.C. § 101.