Twilio Inc v. TeleSign Corp

1. Case Identification

• Case #: CBM2016-00099
• Patent #: 9,300,792
• Filed: August 25, 2016
• Petitioner(s): Twilio, Inc.
• Patent Owner(s): Telesign Corporation
• Challenged Claims: 1-18

2. Patent Overview

• Title: Registration, Verification and Notification System
• Brief Description: The ’792 patent relates to an automated fraud prevention method. The system sends a message to a user over a previously verified telephone connection upon the occurrence of a predefined "notification event" and requires the user to acknowledge the event to confirm its legitimacy.

3. Grounds for Unpatentability

Ground 1: Obviousness over Bennett in view of Campbell - Claims 1-6, 8, 10-15, and 17 are obvious over Bennett in view of Campbell under 35 U.S.C. §103.

• Prior Art Relied Upon: Bennett (Application # 2005/0273442) and Campbell (Application # 2006/0020816).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner argued that Bennett taught a two-factor authentication system that disclosed nearly all limitations of the independent claims. Bennett’s system received user information, including a telephone number, via a web interface for service registration. It then verified the number by sending a "completion code" via SMS and required the user to enter that code back into the interface. After registration, Bennett taught using stored "decision rules" (the claimed "notification events") to trigger subsequent re-verification for actions like a login from an unknown device. This process also involved sending a code via SMS to the verified number and receiving an acknowledgement when the user entered the code. Petitioner asserted that Campbell taught a fraud prevention system that notified users of specific events, like account suspension due to failed logon attempts, with a descriptive, word-based SMS message (e.g., "Your account has been suspended... Please contact...").
  • Motivation to Combine: A POSITA would combine Campbell's descriptive, word-based notification with Bennett's code-based notification system to yield a predictable result. Both references addressed the same problem of fraud prevention using SMS alerts. Petitioner contended a POSITA would be motivated to add a descriptive sentence to Bennett's verification message to provide better customer service, keep users informed, and instill confidence in the service. This modification would have been a trivial and obvious design choice.
  • Expectation of Success: A POSITA would have a high expectation of success in making this combination, as adding a sentence of text to an existing SMS message was a simple and well-understood capability of the technology at the time.

Ground 2: Ineligibility under §101 - Claims 1-18 are directed to an unpatentable abstract idea.

• Prior Art Relied Upon: N/A
• Core Argument for this Ground:
  • Alice Step 1 (Directed to Abstract Idea): Petitioner argued the claims were directed to the patent-ineligible abstract idea of "obtaining from a verified user an acknowledgement of an action associated with a specified event." This process was analogized to the longstanding commercial practice where a bank first verifies a customer's identity and contact information (e.g., during account opening) and later contacts the customer via a verified channel (e.g., telephone call) to confirm a suspicious transaction before authorizing further activity. Petitioner asserted that the claimed sequence of (1) verification, (2) notification, and (3) acknowledgement is a fundamental method of organizing human activity and a basic commercial practice, making it an abstract idea.
  • Alice Step 2 (Lacks Inventive Concept): Petitioner contended the claims lacked an inventive concept sufficient to transform the abstract idea into a patent-eligible application. The claims merely recited the use of generic, conventional technologies—a "computer interface," a "telephone connection" with SMS, and a standard two-factor authentication process—to automate the longstanding practice. These elements were invoked merely as tools and did not represent an improvement to computer functionality itself or solve a problem unique to computer networks. Petitioner further argued that the dependent claims added only routine and conventional limitations (e.g., specifying the device is a mobile phone or the event is a financial transaction) that were insufficient to confer patent eligibility.

4. Key Claim Construction Positions

• "notification event": Petitioner argued this term was central to the claims and should be construed broadly to include any event that results in the user being contacted. Specifically, Petitioner contended that sending a verification code in response to an event (as taught by Bennett) should qualify as a "notification that the event occurred." This construction was critical, as it supported the argument that Bennett alone disclosed most, if not all, claim limitations. Petitioner acknowledged that if the Board required a more explicit, word-based notification, the combination with Campbell would be necessary to render the claims obvious.

5. Key Technical Contentions

• Priority Date Entitlement: A central contention was that the '792 patent was not entitled to the priority date of its earliest parent, the '421 application (filed Jan. 11, 2005), due to a lack of written description. Petitioner argued the '421 application only described an initial, one-time verification of a user at registration and failed to disclose the key concept of monitoring for and notifying a user of a "notification event" after registration was complete.
• Relevance: Establishing a later priority date (no earlier than Oct. 5, 2006) was critical for the §103 ground. It allowed the Bennett and Campbell references to qualify as prior art under 35 U.S.C. §102(a) in the CBM proceeding, whereas under the earlier priority date, they would have been §102(e) prior art, which is not a permissible basis for a CBM challenge.

6. Relief Requested

• Petitioner requested the institution of a Covered Business Method (CBM) patent review and the cancellation of claims 1-18 of Patent 9,300,792 as unpatentable under 35 U.S.C. §103 and §101.