

Call them non-producing entities or patent trolls, it makes little difference when entities like Uniloc are so quick to run to court to extract their tolls from the high tech community. That's what makes yesterday's major defeat for Uniloc (38 [PDF; Text]) even more satisfying. Not only did Uniloc lose, but it didn't even survive a 12(b)(6) motion in which Rackspace/Red Hat challenged the validity of Uniloc's patent and won. For those unfamiliar with the U.S. Rules of Civil Procedure, a 12(b)(6) motion is a defense motion to throw out the law suit because the plaintiff has failed "to state a claim upon which relief can be granted." In this case, Red Hat (providing legal counsel on behalf of Rackspace under Red Hat's indemnification) argued that the asserted patent was invalid and, thus, Uniloc failed to state a proper claim. No discovery. No Markman hearing. Nothing but the arguments the defense set forth in its brief (16 [PDF; Text]) and reply brief (25 [PDF; Text]) supporting its motion and oral arguments with respect to the same. Judge Leonard Davis of the Eastern District of Texas agreed that the asserted patent claimed failed as patentable subject matter in contradiction of Section 101 of the Patent Act. GAME. SET. MATCH.



The importance of this case cannot be underscored. It demonstrates that a court that has been favored by patent plaintiffs for years recognizes that there are some really bad patents out there, and the court is not going to hesitate to throw them out at the first opportunity. The Uniloc patent asserted was U.S. Patent No. 5,892,697. The patent covers a method for processing a floating point number. Uniloc asserted the LInux Kernel infringes Claim 1 of the patent which reads: A method for processing floating-point numbers, each floating-point number having at least a sign portion, an exponent portion and a mantissa portion, comprising the steps of: converting a floating-point number memory register representation to a floating-point register representation; rounding the converted floating-point number; performing an arithmetic computation upon said rounded number resulting in a new floating-point value; and converting the resulting new floating-point register value to a floating-point memory register representation. In other words, Uniloc held a patent on a new, novel, non-obvious method for rounding numbers! And not just in a specific application, but for any possible use of the rounding technique. Now if that is noything more than a mathematical formula with no specific application, then I don't know what is one. What is unbelievable is that the U.S. Patent Office allowed this claim! What were they thinking? In seeking to have the '697 claim patent declared invalid, the defense focused on three things: Claim 1 is nothing more than an abstract idea or mathematical formula that lacks a specific application; The remaining claims of the '697 patent do nothing to mitigate this conclusion; and Even if Claim 1 is not merely an abstract idea, it fails the machine-or-transformation test. One case cited by the defense almost perfectly underscored its assertions: Gottschalk v. Benson, 409 U.S. 63 (1972). The Benson patent, like the Uniloc patent, "purported to cover 'the programmed conversion of numerical information in general-purpose digital computers' from one format to another." This provided a perfect argument for the defense. Just to make sure this ugly beast didn't raise its head again, the defense also asserted that the '697 patent fails the "machine-or-transformation" test that has been so widely discussed in recent cases, namely In re Bilski. Bilski states that under the "machine-or-transformation" a process may be patentable if (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing. In Dealertrack the court clarified that the machine portion of the test requires more than simply performing an unpatentable process on a general purpose computer. The particular machine must impose a meaningful limit on the scope of the claim, rather than function solely as an obvious mechanism for permitting a solution to be achieved more quickly, i.e., through the utilization of a computer for performing calculations. In Cybersource the court clarified that the transformation portion of the test cannot be satisfied by the [m]anipulation or reorganization of data, or the transfer of data from one format to another. In this instance, these arguments struck home. Claim 1 of the Uniloc patent makes no mention of a machine. Further, the claim merely converts a number from one format to another, raw data to raw data in a new format, and the courts have previously held such a conversion does not constitute a transformation. (See, Benson and Cybersource.) Uniloc was so confident of its position it agreed to the court's resolution of this invalidity question at the 12(b)(6) stage. How did Uniloc respond to the defense assertions? Oh, no, Claim 1 is not a mathematical formula nor is it abstract! Why? Because it provides a new approach to how a computer actually converts, stores and retrieves floating point numbers. In other words, it goes to how the computer actually works at close to its most fundamental level. How important is this, Uniloc asks? Important enough for IEEE to promulgate a standard on the processing of floating point numbers in general. According to Uniloc, the '697 patent is an improvement on the IEEE process. (See, plaintiff's response brief (23 [PDF; Text]) and surreply (29 [PDF; Text])) Incredibly, Uniloc argued that the very specific steps outlined in Claim 1 do not constitute an algorithm despite the fact that they set forth the process a computer (or human being) should follow in order to be more efficient in rounding numbers. Please. The court was buying none of Uniloc's arguments. While saying the "machine-or-transformation" test alone is not dispositive of invalidity, the court found in favor of the defense on this issue without citing any of plaintiff's arguments to the contrary. The court then turned to the issue of mathematical formulas and algorithms, concluding: Claim 1 is, in essence, a formula to solve mathematical problems of converting one form of numerical representation to another. Benson, 409 U.S. at 65. Claim 1 recites a four-step method for processing floating-point numbers: (1) convert the floating-point number from a memory register representation to a register representation; (2) round the result; (3) perform[] an arithmetic computation on the rounded result to obtain a new floating-point number; and (4) convert[] the result back to a memory register representation. 697 Patent, Col. 14:4656. Plaintiffs argue that the arithmetic operation is not restricted to a specific addition or subtraction. Dkt. No. 23 at 8. Although the type of computation that can fulfill the computing step is not specified, it is limited to an arithmetic operation. The previous step, which involves rounding a number, is also an arithmetic operation. Essentially, Claim 1 uses numeric conversions and arithmetic operations in a prescribed procedure to solve a mathematical problem. Therefore, just as in Benson, Claim 1 discloses a procedure for solving a given type of mathematical problem. Benson, 409 U.S. at 65. Consequently, granting a patent on Claim 1 would pre-empt the mathematical formula and in practical effect . . . be a patent on the algorithm itself. Id. at 72. Under Benson, Claim 1 is a mathematical formula that is unpatentable under section 101. And what about Uniloc's argument that this was a new and improved method for rounding numbers? The court said: [I]nventions with specific applications or improvements to technologies in the marketplace [may not] be so abstract that they override the statutory language and framework of the Patent Act. Research Corp., 627 F.3d at 869. However, according to the patent itself, the claims novelty and improvement over the standard is the rounding of the floating-point number before, rather than after, the arithmetic computation. 697 Patent Col. 4:3248. So, as in Flook, Claim 1 merely constitutes an improvement on the known method for processing floating-point numbers. Id. at 595 n.18. Claim 1, then, is merely an improvement on a mathematical formula. Even when tied to computing, since floating-point numbers are a computerized numeric format, the conversion of floating-point numbers has applications across fields as diverse as science, math, communications, security, graphics, and games. Thus, a patent on Claim 1 would cover vast end uses, impeding the onward march of science. Benson, 409 U.S. at 68. Under Flook, the improvement over the standard is insufficient to validate Claim 1s otherwise unpatentable subject matter. While the result may seem inevitable to many of you, it is especially gratifying that it came from the Eastern District of Texas. Judge Leonard Davis, who rendered this opinion, probably handles as many patent infringement actions as any district court judge in the country. While he didn't enter his judicial career with any particular knowledge of patent law, over the years he has developed a keen sense of the limits of patentability, and this Uniloc patent was over the top. While it is just one more bad patent out of the way, it was disposed of quickly (or at least relatively quickly in light of how long patent litigation often lasts). Kudos to the esteemed William Lee of Wilmer Cutler and his team who represented Rackspace/Red Hat in this action. ________________________ 16 IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS UNILOC USA, INC., and UNILOC

LUXEMBOURG S.A.,

Plaintiffs,

v.

RACKSPACE HOSTING, INC., and

RACKSPACE US, INC.,

Defendants. CIVIL ACTION No. 6:12-cv-375 JURY TRIAL DEMANDED DEFENDANTS BRIEF IN SUPPORT OF THEIR MOTION TO DISMISS

PLAINTIFFS COMPLAINT FOR FAILURE TO ALLEGE INFRINGEMENT OF

A PATENTABLE CLAIM UNDER 35 U.S.C. § 101 TABLE OF CONTENTS I. INTRODUCTION 2 II. UNILOCS COMPLAINT 3 A. Unilocs Allegation of Infringement 3 B. Asserted Claim 1 4 C. Claims 2-28 5 III. UNILOCS COMPLAINT SHOULD BE DISMISSED UNDER RULE 12(B)(6) 6 A. Section 101 Determinations Can and Should Be Made At the Motion to Dismiss Stage In Cases Such as This One, Where The Asserted Claims Are Plainly Not Patentable 6 B. Uniloc has Failed to State a Claim Upon Which Relief May Be Granted Because the 697 Patent Claims Are Not Patentable 8 __1. Claim 1  The Only Claim Identified in the Complaint  Is Not Patentable, Because it Purports to Claim an Abstract Idea 8 __2. Claims 6-14 and 19-20 Do Not Render the Algorithm Patentable Because They Purport to Claim the Same Abstract Ideas As Claim 1 11 __3. Claims 2-5, 15-18, and 21-28 Do Not Render The Algorithm Patentable Because They Add No More Than Components of A General Purpose Computer For Making Calculations 12 C. All the Claims Fail the Federal Circuits Machine-or-Transformation Test 15 IV. CONCLUSION 17 i TABLE OF AUTHORITIES Cases Ashcroft et al., v. Iqbal et al.,

556 U.S. 662 (2009) 2, 6 Bancorp Services, L.L.C. v. Sun Life Assur. Co. of Canada (U.S.),

No. 11-1467, 2012 WL 3037176 (Fed. Cir. July 26, 2012) passim Bell Atlantic Corporation el al. v. Twombly,

550 U.S. 544 (2007) 2, 6 Bilski v. Kappos,

130 S.Ct. 3218 (2010) 8, 15 CyberFone Sys., LLC v. Cellco P'ship,

No. 11-827, 2012 WL 3528115 (D. Del. Aug. 16, 2012) 7 CyberSource Corporation v. Retail Decisions, Inc.,

654 F.3d 1366 (Fed. Cir. 2012) 2, 12, 15, 16 Dealertrack, Inc v. Huber,

674 F.3d 1315 (Fed. Cir. 2012) 2, 13, 15, 16 Glory Licensing LLC v. Toys R Us, Inc.,

No. 09-4252, 2011 WL 1870591 (D.N.J. May 16, 2011) 7, 16 Gottschalk v. Benson,

409 U.S. 63 (1972) passim H-W Tech., L.C. v. Apple, Inc.,

No. 3:11-cv-651, 2012 WL 959316 (N.D. Tex. Feb. 23, 2012) 7 In re Bilski,

545 F.3d 943 (Fed. Cir. 2008) 6, 15, 16 Mayo Collaborative Services v. Prometheus Laboratories, Inc.,

132 S.Ct. 1289 (2012) 1, 2, 8, 13 Parallel Networks, LLC v. Abercrombie & Fitch,

No. 6:10-cv-111, 2011 WL 3609292 (E.D. Tex. 2011) 6 Parker v. Flook,

437 U.S. 584 (1978) 10, 11, 13 ii Prompt Medical Systems, L.P. v. Allscriptsmysis Healthcare,

No. 6:10-cv-71, 2012 WL 678216 (E.D. Tex. Feb. 13, 2012) 7, 13 Tellabs, Inc. v. Makor Issues & Rights, Ltd.,

551 U.S. 308 (2007) 3 Ultramercial, LLC v. Hulu, LLC,

657 F.3d 1323 (Fed. Cir. 2011) 7 WildTangent, Inc. v. Ultramercial, LLC,

132 S.Ct. 2431 (2012) 7 Wilson v. Birnberg,

667 F.3d 591 (5th Cir. 2012) 3 Constitutional Provisions Fed. R. Civ. P. 12(b)(6) 1 iii MOTION Defendants Rackspace Hosting, Inc. and Rackspace US, Inc. (collectively Rackspace) respectfully request that the Court dismiss the Complaint filed by Uniloc USA, Inc. and Uniloc Luxembourg S.A. (collectively, Uniloc) under Rule 12(b)(6) of the Federal Rules of Civil Procedure. CONCISE STATEMENT OF THE REASONS IN SUPPORT OF THE MOTION The Court should dismiss Unilocs Complaint because it alleges infringement of a patent directed to abstract ideas and mathematical algorithms. The patent asserted in the Complaint  U.S. Patent No. 5,892,697 (697 patent)  seeks to establish exclusive rights in the processing and conversion of numbers. As such, the 697 patent violates the Supreme Courts bright-line prohibition against patenting . . . mathematical formulas and the like. Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S.Ct. 1289, 1303 (2012) (emphasis added). Indeed, the Supreme Courts leading decision in Gottschalk v. Benson  addressing precisely the same issues raised by Unilocs claims  compels dismissal of the Complaint. The patent in Benson, like Unilocs 697 patent, purported to cover the programmed conversion of numerical information in general-purpose digital computers from one format to another. Gottschalk v. Benson, 409 U.S. 63, 64 (1972) (emphasis added). The Supreme Court held that the claimed mathematical formulas were not patentable. Id. at 71-72. Moreover, it confirmed in doing so that the prohibition against patenting abstract ideas and mathematical algorithms applies regardless of whether the patent claims are drafted as method or apparatus claims, id. at 72, and regardless of whether they include references to computers or computer components. Id. at 64, 72-74. Unilocs claims also fail the Federal Circuits machine-or-transformation test. Federal Circuit case law confirms that the utilization of a computer for performing calculations does 1 not satisfy the machine prong of this test, Dealertrack, Inc v. Huber, 674 F.3d 1315, 1333 (Fed. Cir. 2012), and [m]anipulation or reorganization of data [] does not satisfy the transformation prong. CyberSource Corporation v. Retail Decisions, Inc., 654 F.3d 1366, 1375 (Fed. Cir. 2012). As the Supreme Court has emphasized in its recent decisions in Ashcroft v. Iqbal and Bell Atlantic Corp. v. Twombly, when the allegations in a complaint, however true, could not raise a claim of entitlement to relief, this basic deficiency should . . . be exposed at the point of minimum expenditure of time and money by the parties and the court. Bell Atlantic Corporation el al. v. Twombly, 550 U.S. 544, 558 (2007) (quoting 5 Wright & Miller § 1216, at 233-34); see also Ashcroft et al., v. Iqbal et al., 556 U.S. 662, 679 and 85 (2009) (given the heavy costs of litigation, only a complaint that states a plausible claim for relief survives a motion to dismiss). The 697 Patent plainly violates the Supreme Courts bright-line rules on patentability. In keeping with the Supreme Courts decisions in Benson, Iqbal, and Twombly and this Courts stated desire to move cases to their proper resolution in a timely and economic manner, Defendants respectfully request that the Court address this issue now, before the parties proceed to time consuming and expensive discovery. Unilocs Complaint for infringement of the 697 Patent is fatally flawed, and should be dismissed. BRIEF IN SUPPORT OF THE MOTION I. INTRODUCTION Unilocs Complaint should be dismissed because it depends entirely on a claim for patent infringement that violates the Supreme Courts bright-line prohibition against patenting . . . mathematical formulas and the like. Prometheus Laboratories, 132 S.Ct. at 1303. Unilocs Complaint alleges infringement of a patent that does nothing more than process numbers  a 2 classic unpatentable algorithm. The Complaint fails to state a claim upon which relief can be granted, and should be dismissed. II. UNILOCS COMPLAINT A. Unilocs Allegation of Infringement Unilocs Complaint alleges infringement of at least claim 1 of U.S. Patent No. 5,892,697. This patent can and should be considered on this motion to dismiss because it is the basis for Unilocs allegations of infringement, and is specifically cited in and attached to the Complaint. See, e.g., Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007) (courts must consider complaint in its entirety, including in particular documents incorporated into the complaint by reference, in ruling on Rule 12(b)(6) motions); Wilson v. Birnberg, 667 F.3d 591, 595 (5th Cir. 2012) (motion to dismiss analysis focuses on the complaint and its proper attachments). Claim 1, like every other claim in the 697 patent, is directed to the processing of numbers that are expressed in a format known as floating point. 697 Patent, Abstract, 1:9- 10.1 The patent describes an alternative method for performing floating-point arithmetic that, in contrast to prior methods, rounds the number at a different stage of the algorithm. Id. at 2:66-3:4, 4:33-48. The disclosure asserts that rounding the operands rather than the result increases the efficiency of the arithmetic operations, id. at 4:41-45, and allows computers to more efficiently handle overflow and underflow situations (where the exponent portion of ________________________________ A floating-point number is a number in which the decimal point can float, moving anywhere relative to the significant digits, because the change in the decimal point location is compensated for by a corresponding change in the exponent. For example, the number 12345 x 10-4 can also be written as 1234.5 x 10-3, because when the decimal floats one space to the left, the exponent adjusts accordingly. In this example, the digit 12345 is referred to as the mantissa, and -3 or -4 as the exponent. 697 Patent at 1:28-41. This flexibility in decimal placement allows floating-point numbers to express a wide range of values, including very large or very small numbers. Id. at 1:54- 58. 3 the number is too large or too small to represent) while performing floating-point arithmetic. Id. at 1:54-58; 2:65-3:3. B. Asserted Claim 1 Unilocs Complaint asserts only Claim 1 of the 697 Patent. Pl.s Original Complaint For Patent Infringement (Complaint), ¶ 14 (asserting infringement of at least claim 1). Claim 1 recites nothing more than a mathematical formula: 1. A method for processing floating-point numbers, each floatingpoint number having at least a sign portion, an exponent portion and a mantissa portion, comprising the steps of: converting a floating-point number memory register representation to a floating-point register representation; rounding the converted floating-point number; performing an arithmetic computation upon said rounded number resulting in a new floating-point value; and converting the resulting new floating-point register value to a floating-point memory register representation. Id. at 14:46-56 (emphasis added). The preamble confirms that this is a method claim for processing numbers. The four claim elements describe how those numbers are processed. The number is first convert[ed] from one format (floating-point number memory register representation) to another format (floating-point register representation). Id. at 14:50-51. The converted number is then round[ed]. Id. at 14:52. An arithmetic computation is then performed on that rounded number. Id. at 14:53. The resulting value of that arithmetic computation is then converted back into the original format (the floating-point memory register representation.). Id. at 14:55- 4 56.2 So the only asserted claim consists entirely of the conversion, rounding, computation, and reconversion of a number. C. Claims 2-28 The other 697 claims do nothing to render patentable the mathematical algorithm described in Claim 1. Claims 6-14 and 19-20 are dependent on Claim 1, and describe additional steps that can be taken in the algorithmic process of converting the floating-point number from a floating-point number memory register representation to a floating-point register representation, and back again. These steps include, for example, using a comma code to represent the degree of underflow and overflow in the numbers3; transcribing, extending or testing portions of the numbers; setting or encoding bits or values; and add[ing] or subtract[ing] values from the exponent. Id. at 15:12-59, 16:9-19. Claims 2-5, 15-18, and 21-28 reference, in addition to these basic algorithms, standard components of a general computer where these processes might be implemented including, for example, a register, circuits, memory, and an arithmetic unit. Id. at 14:57-15:12, 15:60- 16:8, 16:20-18:18. The patent acknowledges that these structures are not new. Id. at 2:31-32 (prior art used circuitry to handle overflow and underflow numbers); id. at 2:36-40 ([i]n the current era . . . there are specific floating-point registers and a dedicated floating-point unit. Data movement, both to and from memory, is handled by floating-point load and store instructions.). The specification also makes clear that these structural elements are not integral to the invention. _______________________ The initial conversion entails moving data into a format with more placeholders, because the floating point register format normally utilizes additional bits beyond those needed for the memory format(s). Id. at 8:20-22. The second conversion (or reconversion) returns the number to the original memory format with the original number of placeholders. As the patent specification confirms, the comma code is part of the way the number is expressed in the memory representation format; it appears at the least significant end of the mantissa, and indicates the degree to which the number is too large (overflow) or too small (underflow) to represent. Id. at 7:12-18. 5 Id. at 5:57 (well-known structures and circuits have not been shown in detail in order not to unnecessarily obscure the present invention.) (emphasis added). III. UNILOCS COMPLAINT SHOULD BE DISMISSED UNDER RULE 12(B)(6) A. Section 101 Determinations Can and Should Be Made At the Motion to

Dismiss Stage In Cases Such as This One, Where The Asserted Claims Are

Plainly Not Patentable The primary issue presented by this motion  invalidity under § 101  is a question of law. In re Bilski, 545 F.3d 943, 951 (Fed. Cir. 2008). As the Supreme Court emphasized in its recent decisions in Ashcroft v. Iqbal, and Bell Atlantic Corp. v. Twombly, only a complaint that states a plausible claim for relief survives a motion to dismiss. Iqbal, 556 U.S. at 679. The litigation process exacts heavy costs in terms of efficiency and expenditure of valuable time and resources . . . . Id. at 685. Accordingly, when the allegations in a complaint, however true, could not raise a claim of entitled to relief, this basic deficiency should . . . be exposed at the point of minimum expenditure of time and money by the parties and the court. Twombly, 550 U.S. at 558 (quoting 5 Wright & Miller § 1216, at 233-34). It is no answer to say that a claim just shy of a plausible entitlement to relief can, if groundless, be weeded out early in the discovery process or during summary judgment. Id. at 559. Instead, a deficient complaint should be dismissed at the Rule 12(b)(6) stage. This Court has similarly recognized that addressing critical legal issues at the outset of a case can spare substantial burdens on the courts and save the parties very significant sums of money in legal fees. In Parallel Networks, LLC v. Abercrombie & Fitch, for example, the Court was able to resolve the case in a manner of months  as opposed to years  for the vast majority of Defendants by addressing three dispositive legal issues at the outset of the case. Parallel Networks, No. 6:10-cv-111, 2011 WL 3609292 at *10 (E.D. Tex. 2011). 6 Section 101 issues are properly addressed at the motion to dismiss stage in cases, such as this one, where the asserted patent claims plainly cover subject matter that is not patentable. See, e.g., Glory Licensing LLC v. Toys R Us, Inc., No. 09-4252, 2011 WL 1870591, *1-4 (D.N.J. May 16, 2011) (dismissing patent infringement complaint for failure to state a claim because claims covering a system for processing information on a programmed computer were directed to an abstract idea and thus unpatentable under § 101). As the Federal Circuit and this Court have both confirmed, Section 101 issues can be determined without claim construction. See, e.g., Bancorp Services, L.L.C. v. Sun Life Assur. Co. of Canada (U.S.), No. 11-1467, 2012 WL 3037176 at *5 (Fed. Cir. July 26, 2012) (noting that, in Bilski, the Supreme Court f[ound] subject matter ineligible for patent protection without claim construction); Ultramercial, LLC v. Hulu, LLC, 657 F.3d 1323, 1325 (Fed. Cir. 2011) (the subject matter at stake and its eligibility does not require claim construction), vacated on other grounds, WildTangent, Inc. v. Ultramercial, LLC, 132 S.Ct. 2431 (2012); CyberFone Sys., LLC v. Cellco P'ship, No. 11-827, 2012 WL 3528115 at *4 (D. Del. Aug. 16, 2012) (holding claims to the use of a telephone for capturing, processing, and storing data not patentable under § 101 without the benefit of claim construction); H-W Tech., L.C. v. Apple, Inc., No. 3:11-cv- 651, 2012 WL 959316, at *5 (N.D. Tex. Feb. 23, 2012) (claim construction may not always be necessary for determining subject matter eligibility), report and recommendation adopted, 2012 WL 923751 (N.D. Tex. Mar. 19, 2012); Prompt Medical Systems, L.P. v. Allscriptsmysis Healthcare, No. 6:10-cv-71, 2012 WL 678216 at *2 (E.D. Tex. Feb. 13, 2012) (Davis, J.) (claim construction is not always necessary). The dispositive issue of law is whether Uniloc can state a claim for relief based on the 697 Patent. The patent itself, which Uniloc attached to its Complaint, answers the question: 7 Uniloc cannot state a claim for relief because the patent attempts to cover abstract ideas and mathematical algorithms. The Court can and should address this threshold issue now, before the parties engage in expensive and time-consuming discovery and claim construction. B. Uniloc has Failed to State a Claim Upon Which Relief May Be Granted As the Supreme Court has repeatedly emphasized, laws of nature, physical phenomena, and abstract ideas are part of the storehouse of knowledge of all men . . . free to all men and reserved exclusively to none. Bilski v. Kappos, 130 S.Ct. 3218, 3225 (2010) (quoting Funk Brothers Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948)). Mathematical algorithms are a paradigmatic example of abstract ideas. Benson, 409 U.S. at 65. The Supreme Court accordingly has enforced a bright-line prohibition against patenting . . . mathematical formulas and the like. Prometheus, 132 S.Ct. at 1303. Unilocs Complaint violates this bright-line prohibition and should be dismissed. 1. Claim 1  The Only Claim Identified in the Complaint  Is Not

Patentable, Because it Purports to Claim an Abstract Idea. Under black-letter law, Uniloc cannot state a claim for relief based on Claim 1 of the 697 patent  the only claim specifically referenced in Unilocs Complaint  because it claims a mathematical formula that is not patentable. Claim 1 is quintessentially abstract. It is directed to a method for processing numbers through format conversions and arithmetic operations, and it recites no tangible objects whatsoever, and no physical transformation of anything. See 697 Patent at 14:45-56. Instead, the claim recites nothing more than an algorithm that manipulates data formats, rounds a number, performs a computation, and converts the data back into the original format. The Supreme Courts decision in Benson, involving highly similar patent claims, compels dismissal of this case. The patent in Benson  like the 697 patent  was directed to the 8 programmed conversion of numerical information [sic] in general-purpose digital computers. Benson, 409 U.S. at 64. The purported inventors claimed a method of programming a general purpose computer to convert signals from binary-coded decimal form (BCD) into pure binary form. Id. at 65. The Court held that the claimed formulas for the conversion from one form of numerical representation to another were not patentable, because they were mental processes, and abstract intellectual concepts. Id. at 67-68. The general computer system referenced in the patent was not a particular machine, and the mathematical conversion was not a sufficient [t]ransformation and reduction of an article to a different state or thing. See id. at 70-71. The Court emphasized that one may not patent an idea, and warned that this would have been the practical result of allowing to stand a patent that covered a mathematical algorithm for converting numbers that had no substantial practical application except in connection with a digital computer. Id. at 71-72. Unilocs 697 patent not only purports to cover a comparable technology to Benson, but the claims are also written in almost the same format. Compare Benson, 409 U.S. at 74 (claiming a  processing method for converting binary coded decimal number representations into binary number representations ); with 697 Patent, claim 1, 14:45-51 (claiming a method for processing floating point numbers  by  converting memory register representations  into floating-point register representations .). Like the claims in Benson , Claim 1s formula for converting floating-point numbers could be executed entirely within the human mind, or by a person using a pencil or paper. For example, an individual would be practicing Claim 1 if she: wrote down any number in the memory register representation format;

rewrote it in the register representation format;

rounded that number in any direction; 9 added, subtracted, multiplied, or divided that number by any other number; and

rewrote the result in the original format. ?ul> See 697 Patent at 14:45-56. In fact, Claim 1 of the 697 patent is even more abstract than the claim rejected by the Supreme Court in its subsequent decision in Parker v. Flook, 437 U.S. 584, 585 (1978). The claim at issue in Flook covered a new and presumably better method for calculating . . . values in order to adjust an alarm limit for a catalytic conversion process. 437 U.S. at 594-95. The claimed method included three steps: measuring operating conditions such as temperature, pressure, and flow rates; using an algorithm to calculate an updated alarm-limit value; and adjusting the alarm limit to the updated value. Id. at 585. The algorithm had a practical and limited application  it was primarily useful for computerized calculations producing automatic adjustments in alarm settings. Id. at 585-86. The Court nevertheless held that the claim failed as a matter of law because it was directed essentially to a method of calculating, using a mathematical formula, even though the solution had a specific purpose. Id. at 595 (quoting In re Richman, 663 F.2d 1026, 1030 (CCPA 1977)). Claim 1  in contrast  has no such link to the physical world. Nor is it limited to any specific, real-world application. As the Federal Circuit has similarly confirmed, mental processes  such as those in Benson, Flook, and Claim 1 of the 697 patent  are not patentable, whether they are completed manually, or require computer implementation. Bancorp, 2012 WL 3037176 at *1-3, 11 (holding unpatentable both independent method claims for tracking the values of life insurance policies and dependent claims that required this method be performed by a computer, because a computers increased efficiency does not materially alter . . . patent eligibility). 10 Even if Claim 1 had disclosed a computer or its components  which it does not  such a recitation would not rescue the unpatentable mental process. The Supreme Court invalidated the Benson claims in precisely such circumstances, where the mathematical formula . . . has no substantial practical application except in connection with a digital computer. 409 U.S. at 71- 72. Claim 1 is invalid whether its process can be performed by a person using pen and paper, or may only be practiced on a computer, and this legal result is no accident. Abstract ideas, mental processes, and mathematical algorithms are unpatentable in every form because they are not the kind of discoveries that the [Patent] statute was enacted to protect. Flook, 437 U.S. at 593. 2. Claims 6-14 and 19-20 Do Not Render the Algorithm Patentable

Because They Purport to Claim the Same Abstract Ideas As Claim 1. Claims 6-14 and 19-20 are as abstract as Claim 1, and do not make the purported invention patentable. Instead, they simply describe further steps that can be taken in connection with the format conversion and calculations, without reference to anything more concrete than representations of numbers. Several of the 697 claims recite almost exactly the same steps held unpatentable in Benson. For example, claims 13 and 19 provide for testing portions of the number being processed, just as the method in Benson called for testing the binary digit position. Compare 697 Patent, 15:51-55; with 409 U.S. at 74. Similarly, claims 12 and 14 recite setting bits in the converted format, which was accomplished in Benson by shifting the signals to the right, and subsequently shifting the signals to the left. Compare 697 Patent, 15:47-50 and 15:56-59; with Benson, 409 U.S. at 74. The remaining claims are no more transformative. Claims 7-8 are directed to using a comma code to represent a set of numerical values. Claim 9 recites transcribing a portion of a number. Claim 10 extends the exponent portion of the number. Claim 11 adds to or subtracts 11 from a portion of a number. Finally, Claim 20 encodes an accuracy value for a number. None of these claims pass muster under Section 101, because the determination of those values, and their subsequent manipulation, is a matter of mere mathematical computation. Bancorp, 2012 WL 3037176 at *11 (invalidating patents for managing investments that required determining, storing, and adjusting multiple values, because they were directed to abstract ideas). Like Claim 1, these claims represent precisely what Benson warned against: a patent on the algorithm itself. 409 U.S. at 72. 3. Claims 2-5, 15-18, and 21-28 Do Not Render The Algorithm

Patentable Because They Add No More Than Components of A

General Purpose Computer For Making Calculations. Claims 2-5, 15-18, and 21-28 reference, in addition to the same basic algorithms, various well-known structures and circuits to facilitate the processing of floating-point numbers.4 These references to standard computer components cannot evade the Supreme Courts categorical bar against patenting mathematical algorithms. As the Court emphasized in Benson, the rule against patenting abstract ideas cannot be avoided by drafting the claims as a machine or component, or by claiming that they are implemented on a computer or computer components. Id. at 72. Indeed, the claims in Benson failed as a matter of law even though they included limitations, like those in claims of the 697 patent, referencing the storing and shifting of signals, the testing of positions, and the use of a register. Id. at 73 (quoting claims). The Federal Circuit has similarly held that the use of a computer [for] making calculations or computations . . . fails to circumvent the prohibition against patenting abstract __________________________ While Claims 22-28 are purportedly apparatus claims, this does not change the analysis, or render them any less abstract. Benson, 409 U.S. at 67-68, 72 (the same principle applies to product and process claims); Bancorp, 2012 WL 3037176 at *9 (Fed. Cir. July 26, 2012) (holding a machine or system equivalent to an abstract mental process for purposes of patent ineligibility.); CyberSource, 654 F.3d at 1374 (Fed. Cir. 2011) ([r]egardless of what statutory category . . . A claims language is crafted to literally invoke, we look to the underlying invention for patent-eligibility purposes.). The form of claiming is particularly a distinction without a difference here, because the apparatus claims merely paraphrase the method claims, and appear to be no more than object[s] on which the method operates. Bancorp, 2012 WL 3037176 at *8. 12 ideas and mental processes. Bancorp Services, 2012 WL 3037176 at *1-3, 9, 11 (holding unpatentable claims that required method be performed by a computer, because a computers increased efficiency does not materially alter . . . patent eligibility). As the Federal Circuit recognized in Cybersource, this is precisely the holding of the Supreme Court in Gottschalk v. Benson. Cybersourcesee also Prometheus Laboratories, 132 S.Ct. at 1301 (implementing a mathematical principle on a physical machine, namely a computer, [is] not a patentable application of that principle); Dealertrack, 674 F.3d at 1333 (computer-aided limitation does not render a claim patentable).5 The 697 Patents only independent apparatus claims merely employ a computer to perform calculations. Claim 22, for example, recites means for performing an arithmetic operation. 697 Patent, 16:48-65. Similarly, Claim 25 discloses an arithmetic logic unit for performing arithmetic operations. Id. at 17:7-18:8. The patent nowhere claims that these hardware elements are anything more than standard elements of a general purpose computer. ________________________ Because these claims of the 697 Patent merely implement a mathematical principle on a computer, they are fundamentally different from claims that have been held to contain eligible subject matter. The 697 Patent produces no tangible product. See, e.g., Research Corp Technologies, Inc. v. Microsoft Corp., 627 F.3d 859, 869 (Fed. Cir. 2010) (patentees did not seek to patent a mathematical formula, but claimed a process for rendering higher quality halftone images). The 697 Patent is not inextricably linked to a particular machine. See, e.g., SiRF Technology, Inc. v. Intl Trade Comn, 601 F.3d 1319, 1332-1333 (Fed. Cir. 2010) (process for identifying the location of a particular GPS receiver was unlike the utilization of a computer for performing calculations, because the method would be impossible to execute without the particular GPS, whose position was the precise goal of the claims). And the 697 Patent adds no practical limitation or application to its mathematical formula. See, e.g., CLS Bank Intl v. Alice Corp. Pty. Ltd., 685 F.3d 1341, 1351 (Fed. Cir. 2012) (recognizing that use of a computer to perform calculations cannot render a claim subject matter eligible, and finding patentability based on the practical application of a business concept in a specific way); see also Prompt Medical Sys., 2012 WL 678216 at *8 (patent did not designate[] a mathematical algorithm as its point of novelty, but rather covered a method for generating medical treatment codes based on doctor-patient encounters). Far from rescuing the claims of the 697 Patent, these decisions confirm the claims fatal flaw: they disclose nothing more than the implementation of a mathematical formula for processing floating point numbers. See, e.g., Flook, 437 U.S. at 585 (no subject matter eligibility exists where the only novel feature of the method is a mathematical formula). 13 Reciting a computer to perform calculations cannot rescue the 697 Patent, and neither can reciting standard parts of a computer. Benson, 409 U.S. at 72 (warning against indirect attempts to obtain patents and avoid the rejection by [claiming] a machine or components thereof programmed in a given manner) (quoting The Presidents Commission on the Patent System, emphasis added). In fact, the register element that appears in every apparatus claim of the 697 patent was also present in the method claim deemed unpatentable in Benson. Compare 409 U.S. at 74; with 697 Patent at 16:48-18:18, Claims 22-28.6 Disclosing such computer elements is particularly unavailing when the mathematical procedures can be carried out in existing computers long in use, no new machinery being necessary. Benson, 409 U.S. at 67. The 697 Patent does not  and could not  assert that the memory referenced in Claims 18 and 22-24, the arithmetic unit referenced in Claims 15-17, 21, 25-26, or the circuit(s) referenced in Claims 2-5 and 25-28 represent new machinery. Instead, the patent disclaims any purported novelty for these elements, acknowledging that the invention employs well known structures and circuits. 697 Patent at 5:56-59 (well-known structures and circuits have not been shown in detail in order not to unnecessarily obscure the present invention); see also id. at 2:31-32 (prior art used circuitry to handle overflow and underflow numbers); id. at 2:38 (prior art microprocessors already contained a dedicated floating-point unit); id. at 5:51-56 (although the patent describes specific bit lengths, register contents, block diagrams, etc . . . [i]t will be obvious, however, to one skilled in the art that these specific details need not be used to practice the present invention). ________________________ This element also appears in method Claim 21. Id. at 16:33. 14 C. All the Claims Fail the Federal Circuits Machine-or-Transformation Test Prior to the Supreme Courts decision in Bilski, the Federal Circuit evaluated Section 101 issues using a machine-or-transformation test. In Bilski, the Supreme Court held that, although this is not the sole test for determining whether a patent covers eligible subject matter, it can be a useful and important clue. Bilski, 130 S.Ct. at 3227. Under the machine-or-transformation test, a process may be patentable if (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing. Bilski, 130 S.Ct. at 3225-26 (quoting In re Bilski, 545 F.3d 943, 954 (Fed. Cir. 2008) (en banc)). However, the machine portion of the test requires more than simply performing an unpatentable process on a general purpose computer. The particular machine must impose a meaningful limit on the scope of the claim, rather than function solely as an obvious mechanism for permitting a solution to be achieved more quickly, i.e., through the utilization of a computer for performing calculations. Dealertrack, Inc., 674 F.3d at 1333. Moreover, the transformation portion of the test cannot be satisfied by the [m]anipulation or reorganization of data, or the transfer of data from one format to another. CyberSource, 654 F.3d at 1375 (holding that such manipulation of data was merely the incidental use of a computer to perform [a] mental process). Claim 1 of the 697 Patent recites no machine whatsoever. As the patent acknowledges, the floating-point number memory register representation and floating-point register representation referenced in these claims are simply formats, ways in which certain numbers are presented. See, e.g., 697 Patent at 1:10-13 (the purported invention is directed to a technique for representing floating-point numbers in a memory register format and floating point 15 register format) (emphasis added); see also 5:27-32 (Fig. 2 illustrates a memory register format representation, and Fig. 3 illustrates a floating-point register format representation). As for the transformation portion of the test, as Benson confirms, conversion of a number from one format to another is not a patentable transformation. Benson, 409 U.S. at 70, 74 (conversion of numbers from one representative format to another not patentable). The 697 patent fails the transformation test, because it does not transform the raw data into anything other than more data. Bancorp, 2012 WL at *5; see also CyberSource, 654 F.3d at 1375 ([m]anipulation or reorganization of data [ ] does not satisfy the transformation prong); Glory Licensing, 2011 WL 1870591 at *5 (where data is merely transferred from one format . . . to another . . . a transformation cannot be said to have taken place.). The remaining unasserted claims are equally deficient. Claims 6-14, and 19-20, like Claim 1, are method claims that reference no physical apparatus, and merely disclose steps in the mathematical algorithm. Claims 2-5, 15-18, and 21-28 fare no better, because they simply recite standard elements of a general purpose computer, and do not disclose any particular machine that would pass the machine-or-transformation test. See Benson, 409 U.S. at 64 (claim directed to converting numbers on general purpose computers, not limited to any particular apparatus, was not patentable); see also Dealertrack, 674 F.3d at 1333 (subject matter cannot be made patent-eligible through the utilization of a computer for performing calculations). Moreover, all the claims fail the transformation portion of the test, because they do not transform the raw data into anything other than more data. Bancorp, 2012 WL 3037176 at *5. Instead, the 697 Patent merely processes numbers. Such [p]urported transformations or manipulations simply of . . . abstractions cannot meet the test because [numbers] are not physical objects or substances. In re Bilski, 545 F.3d at 963. 16 IV. CONCLUSION In summary, all the claims of the 697 patent are unpatentable because they express no more than abstract ideas and mathematical algorithms, and fail the machine-or-transformation test. No relief may be granted on Unilocs Complaint for patent infringement. Rackspace accordingly requests that the Court dismiss the Complaint. Dated: August 27, 2012 Respectfully submitted, /s/ Michael E. Jones

Michael E. Jones

SBN : 10929400

Potter Minton P.C.

[address telephone email] OF COUNSEL: William F. Lee

Cynthia D. Vreeland

Monica Grewal

Adam S. Gershenson

WILMER CUTLER PICKERING

HALE AND DORR LLP

[address telephone] Corey McCaffrey

WILMER CUTLER PICKERING

HALE AND DORR LLP

[address telephone] Christine Capuyan

WILMER CUTLER PICKERING

HALE AND DORR LLP

[address telephone email] Attorneys for Defendants Rackspace Hosting,

Inc. and Rackspace US, Inc. 17 CERTIFICATE OF SERVICE The undersigned hereby certifies that all counsel of record who are deemed to have consented to electronic service are being served with a copy of this document via the Courts CM/ECF system per Local Rule CV-5(a)(3)(A) on August 27, 2012. /s/ Michael E. Jones 18

23 IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

TYLER DIVISION UNILOC USA, INC. and UNILOC

LUXEMBOURG S.A.,

Plaintiffs,

v.

RACKSPACE HOSTING, INC. and

RACKSPACE US, INC.,

Defendants. CIVIL ACTION NO. 6:12-cv-00375 JURY TRIAL DEMANDED PLAINTIFFS OPPOSITION TO DEFENDANTS DISMISS FOR FAILURE

TO ALLEGE INFRINGEMENT OF A PATENABLE CLAIM UNDER 35 U.S.C. § 101 TABLE OF CONTENTS I. INTRODUCTION 1 II. SUMMARY OF ARGUMENTS IN FAVOR OF CLAIM 1 3 III. BACKGROUND OF THE 697 PATENT 3 IV. THE INVENTION DESCRIBED IN CLAIM 1 4 V. ARGUMENTS AND AUTHORITIES 6 A. Claim 1 Does Not Describe a Mathematical Algorithm 7 B. Claim 1 is Not an Abstract Expression 9 C. Machine or Transformation Test is Not Dispositive 11 VI. CLAIMS 2 - 28 12 VII. CONCLUSION 14 ii TABLE OF AUTHORITIES CASES Bilski v. Kappos,

130 S. Ct. 3218 (2010) 7, 11 Diamond v. Diehr,

450 U.S. 175 (1981) 7 Doe ex rel. Doe v. Dallas Indep. Sch. Dist.,

153 F.3d 211 (5th Cir. 1998) 2 Gottschalk v. Benson,

409 U.S. 63 (1972) 7, 8, 9 In re Bilski,

545 F.3d 943, 951 (Fed. Cir. 2008) 2 Lormand v. US Unwired, Inc.,

565 F.3d 228, 232 (5th Cir. 1998) 1 Mackay Radio & Tel. Co. v. Radio Corp. of America,



306 U.S. 86, 94 (1939) 9 Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,

475 U.S. 574, 587 (1986) 1 Microsoft Corp. v. i4i Ltd. Pship,

131 S. Ct. 2238, 2242 (2011) 1 Parker v. Flook,

437 U.S. 584, 588 (1978) 8, 9 Prompt Med. Sys., L.P. v. AllscriptsMysis Healthcare Solutions, Inc.,

No. 6:10-CV-71, 2012 U.S. Dist. LEXIS 30694 (E.D. Tex. Feb. 13, 2012) 11 Research Corp. Techs. v. Microsoft Corp.,

627 F.3d 859, 868 (Fed. Cir. 2010) 9, 10, 11 State St. Bank & Trust Co. v. Signature Fin. Group,

149 F.3d 1368, 1370 (Fed. Cir. 1998) 2 Ultramercial, LLC v. Hulu, LLC,

657 F.3d 1323, 1327 (Fed. Cir. 2011) 11 iii STATUTES & AUTHORITIES Rule 12(b)(6) 1-2, 14 35 U.S.C. § 101 1-3, 6-8, 11-14 35 U.S.C. § 112 12 35 U.S.C. § 282 1 iv Plaintiffs, Uniloc USA, Inc. and Uniloc Luxembourg S.A. (together Uniloc), respectfully submit this opposition to Defendants Motion to Dismiss Unilocs Complaint for Failure to Allege Infringement of a Patentable Claim under 35 U.S.C. § 101. For the reasons set forth herein, Defendants motion should be denied. Uniloc alleges that Defendants Rackspace Hosting, Inc. and Rackspace US, Inc. (collectively, Rackspace) have infringed and continue to infringe United States Patent No. 5,892,697 (the 697 patent). In lieu of answering, Rackspace filed a motion to transfer the case to the Western District of Texas (Dkt. No. 17) and the present motion to dismiss under Rule 12(b)(6). I. INTRODUCTION In the Fifth Circuit, a Rule 12(b)(6) motion to dismiss for failure to state a claim is viewed with disfavor and rarely granted. Lormand v. US Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009). Rackspaces Motion, however, does not argue that Unilocs Complaint suffers from a pleading defect; rather, it seeks summary judgment of invalidly. By using Rule 12(b)(6) to cloak what is otherwise a request for judgment on the merits, Rackspace seeks to circumvent the rigorous clear and convincing evidence standard required to invalidate a patent presumed valid by statute. 35 U.S.C. § 282; see also Microsoft Corp. v. i4i Ltd. Pship, 131 S. Ct. 2238, 2242 (2011) (We consider whether § 282 requires an invalidity defense to be proved by clear and convincing evidence. We hold that it does.); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) ([on] summary judgment the inferences to be drawn from the underlying facts . . . must be viewed in the light most favorable to the party opposing the motion.). 1 Because of this, Rackspaces Motion is untimely and not the appropriate vehicle to raise arguments related to the validity of the asserted patent under 35 U.S.C. § 101, especially given that infringement contentions have not been served nor has there be a claim construction ruling in this case. See Doe ex rel. Doe v. Dallas Indep. Sch. Dist., 153 F.3d 211, 220 (5th Cir. 1998) (The Rule 12(b)(6) motion . . . must be distinguished from a motion for summary judgment under Rule 56, which goes to the merits of the claim and is designed to test whether there is a genuine issue of material fact. The Rule 12(b)(6) motion only tests whether the claim has been adequately stated in the complaint.); see also In re Bilski, 545 F.3d 943, 951 (Fed. Cir. 2008) (In analyzing validity under 35 U.S.C. § 101, claim construction is an important first step.) (citing State St. Bank & Trust Co. v. Signature Fin. Group, 149 F.3d 1368, 1370 (Fed. Cir. 1998) (noting that whether a claim is invalid under § 101 is a matter of both claim construction and statutory construction)). Accordingly, the Motion should be dismissed on these grounds alone. Despite the foregoing, Uniloc generally agrees with Rackspace that a quick resolution of this issue on the merits will advance this litigation. Therefore, Uniloc will dedicate most of this Opposition to addressing the merits of Rackspaces arguments concerning whether the claims of United States Patent No. 5,892,697 (the 697 Patent) meet the requirements for patentability under 35 U.S.C. § 101. In addition, to further narrow the issues, Uniloc represents to the Court that it will only be asserting Claim 1 of the 697 Patent against Rackspace in this lawsuit. While Uniloc is not required to make this decision at this time (as no date for the serving of infringement contentions has been set), Uniloc believes such election will allow the Court to most efficiently focus on the one claim at issue in this suit instead of the 27 other claims of the 697 Patent. Accordingly, Unilocs arguments, found below, primarily involve Claim 1 of the 697 Patent. 2 II. SUMMARY OF ARGUMENTS IN FAVOR OF CLAIM 1 This Court should deny Rackspaces request to dismiss Unilocs claims of infringement, as the claims of the asserted patent meet the requirements for patentability under 35 U.S.C § 101. Rackspaces motion, which relies heavily on the Supreme Courts Benson decision, is based on a mischaracterization of the inventions described in the 697 Patent. As will be shown below, the 697 Patent describes and claims an improved way to process certain types of numbers inside a computer. This process is neither a mathematical formula nor an abstract idea and therefore falls within the zone of subject matter eligible for patent protection under 35 U.S.C § 101. III. BACKGROUND OF THE 697 PATENT The 697 Patent describes an improved method and apparatus to process floating-point numbers. 697 Patent (Dkt. No. 1-2), Col. 1:8-9. Floating-point numbers are numbers having digits to the right of the decimal point in a computer (e.g., 12.897). Floating-point numbers described in the 697 Patent have at least three fields: (i) a sign (to indicate whether the number is positive or negative), (ii) an exponent field (which allows for the representation of very large or small numbers) and (iii) a mantissa (the body of the number). 697 Patent, Col. 1:18-32. Due to their nature, digital computers (both at the time of the invention and today) have to process floating-point numbers in a significantly different way than integers. Thus, adding 2 and 2 together is, from a computers standpoint, very different than adding 2.1 and 2.1. Not only is the computation of floating-point numbers different, it is more difficult than processing integers. The adding of 2 and 2 is a trivial operation for a computer, compared to adding 2.1 and 2.1. This complexity stems, in part, from having to process the various fields that make up the floating-point number. In many instances, microprocessors have dedicated circuits 3 to process floating-point numbers. 697 Patent, Col. 2:36-46. When a particular floating point number is not being operated on, it may be stored in memory (i.e., RAM) associated with the microprocessor. But, when the floating-point number is to be operated on by the microprocessor, it is moved into a special memory unit called a register. Once in the correct register, the microprocessor can perform arithmetic computations on the number. Id. In the early 1980s, the Institute of Electrical and Electronics Engineers (IEEE) standardized a method for processing floating-point numbers in a computer. See 697 Patent, Col. 1:18-21. This standard was promulgated as IEEE Standard 754. This Standard ultimately enjoyed wide adoption, and was implemented in various Intel processors that powered billions of PCs around the world. See Exh. A, p. 6 (According to one IEEE 754 revision committee member, [the Standard] has been the pivotal flagship example of IEEE standards and one of the most implemented and far-reaching of any IEEE standard. Since 1984, more than 1.2 billion Intel processors alone have confirmed to the [IEEE 754 Standard].). While this standard was helpful in presenting a unified process by which computer manufacturers and software developers could perform arithmetic computations on floating point numbers, it was computationally time intensive to implement certain portions of the standard. 697 Patent, Col. 2:24-35. Thus, efforts were made to improve the standard to cut down on the time it took to process floating point numbers. IV.THE INVENTION DESCRIBED IN CLAIM 1 As described in the 697 Patent, Claim 1 outlines improvements to the IEEE Standard and the processing of floating-point numbers in general. First, the inventor of the 697 Patent realized that the format of a floating-point number, as stored in memory (i.e., RAM), may not be 4 the optimal format for the number once it is loaded into a register. 697 Patent, Col. 2:36-46. Given that millions (or perhaps billions) of floating-point numbers can be stored in RAM associated with a microprocessor, it is important to minimize the amount of memory used to store each number. But, when a floating-point number is moved to a register, of which there are relatively few, the format of the number needs to be optimized for speed of processing (i.e., the amount of memory used to store the number in a register is not as important a consideration as when the number is stored in memory). Id. Second, the inventor also realized that computational efficiencies could be realized over what was present in the IEEE Standard if the operand (i.e., the number on which a computation is to be performed) is rounded prior to the actual arithmetic operation, as opposed to rounding the result of the operation itself. As stated in the 697 Patent: Utilizing the value in the floating-point register converted by the load means from the memory register, the arithmetic logic means performs its computation upon the operand. However, prior to doing so it first rounds the value . By rounding, the arithmetic logic means replaces the inaccurate portion of the mantissas of the arithmetic unit operands by either all zero bits, all one bits, the accuracy section of the mantissa, or the complement of the accuracy section. Rounding, and thereby adjusting, the operand is contrary to the IEEE 754 rounding of results . The benefit of rounding the operand instead of the result is that carry propagation is eliminated and no exponent adjustment is required. Additionally, due to the lack of result rounding, arithmetic operations have a more efficient implementation. In particular, it becomes possible to have fewer pipeline stages or eliminate conditionally performed pipeline stages thereby shortening the total logic delay of the arithmetic operation. 697 Patent, Col. 4:32-48 (emphasis added). In other words, 697 Patent goes against the teaching of the IEEE 754 standard by rounding a number before a mathematical operation is performed on the number, thereby allowing for a more efficient processing of the number. These advancements are captured in the language of Claim 1, presented below. The middle column recites the actual claim language, while the right hand column describes how the 5 corresponding step achieves the benefits of the invention. Step

No. Claim Element Description of the Step A method for processing floating-point numbers, each floating-point number having at least a sign portion, an exponent portion and a mantissa portion, comprising the steps of: The preamble sets forth the components of the floating point number to be processed. 1 converting a floating-point number memory register representation to a floating-point register representation; The format of the floating-point number is changed from how it is represented in memory to how it is represented in a floating-point register. 2 rounding the converted floating-point number; The floating-point number is rounded prior to being operated upon. 3 performing an arithmetic computation upon said rounded number resulting in a new floating-point value; An arithmetic computation is performed on the rounded floating-point number. 4 converting the resulting new floating-point register value to a floating-point memory register representation. Finally, the format of the new floatingpoint number is converted back to the format used to store the number in memory. V. ARGUMENTS AND AUTHORITIES Title 35 U.S.C. § 101 states that [w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title. Claim 1, which by its own terms and read in the context of the 697 Patent, describes an improved method for processing floating-point numbers. The Claim itself then lists a number of process steps by which floating-point numbers are processed. In the absence of any other authority, this explanation alone should settle any issues about the patentability of Claim 1 under 35 U.S.C. § 101 - the Claim purports to be an improvement of an existing process by which 6 floating-point numbers are processed - which is statutory subject matter by the very words of the statute. But, as most recently stated by the Supreme Court, there are three specific exceptions to § 101s broad patent-eligibility principles: laws of nature, physical phenomena, and abstract ideas. While these exceptions are not required by the statutory text, they are consistent with the notion that a patentable process must be new and useful. Bilski v. Kappos, 130 S. Ct. 3218, 3225 (2010) (internal citations omitted). Rackspace states that Claim 1 falls into two of these exceptions: (1) the Claim is unpatentable because it is a mathematical formula/algorithm (and hence a law of nature), see Diamond v. Diehr, 450 U.S. 175, 186 (1981) (We defined algorithm as a procedure for solving a given type of mathematical problem, and we concluded that such an algorithm, or mathematical formula, is like a law of nature, which cannot be the subject of a patent.), and (2) the Claim is unpatentable because it is an abstract idea. These are distinct concepts and will be addressed separately below. A. Claim 1 Does not Describe a Mathematical Algorithm Rackspace repeatedly states that Claim 1 recites a mathematical formula or an unpatentable algorithm. This is incorrect, as Claim 1 does not recite any general mathematical algorithm, let alone a particular mathematical formula of the type found improper in Benson. See generally Gottschalk v. Benson, 409 U.S. 63 (1972). Instead, Claim 1 covers a method for generally processing floating-point numbers. Such a determination can be made from a simple inspection of the performing step in Claim 1 (step 3). This step requires an arithmetic computation to be performed, but is not limited to any particular one. It could be multiplication, division, a logarithmic operation, etc. Likewise, the conversion steps do not require the application of any particular mathematical formula, let alone recite a mathematical formula. 7 The lack of a specific mathematical formula in Claim 1 is fatal to Rackspaces attempt to apply the holdings of Benson and Flook. In Benson, the Supreme Court found that the claimed method recited a specific mathematical formula, that this formula was only useful in a digital computer, and that if patentability of the claim at issue was upheld, it would wholly pre-empt the mathematical formula and in practical effect would be a patent on the algorithm itself. Benson, 409 U.S. at 72. The specific formula is discussed by the Supreme Court on pp. 66-67 of the opinion. In Flook, the Supreme Court rejected a claim under 35 U.S.C. § 101 because it also recited a specific mathematical formula (and contained no other point of novelty). Parker v. Flook, 437 U.S. 584, 588 (1978). Claim 1 from Flook is reproduced below: 1. A method for updating the value of at least one alarm limit . . . comprising the catalytic chemical conversion of hydrocarbons wherein said alarm limit has a current value of Bo+K wherein Bo is the current alarm base and K is a predetermined alarm offset which comprises: (1) Determining the present value of said process variable, said present value being defined as PVL; (2) Determining a new alarm base B1, using the following equation: B1=Bo(1.0-F)+PVL(F), where F is a predetermined number greater than zero and less than 1.0; (3) Determining an updated alarm limit which is defined as B1+GK; and thereafter (4) Adjusting said alarm limit to said updated alarm limit value. Id. at 596-597. As can be seen in the preamble of the claim and in steps 1-3, a series of variables are defined (e.g., Bo+K and PVL), then the variables are used to determine a new base alarm value in step 2 (value B1). Finally, an updated alarm value is calculated by adding B1+GK. After reviewing this series of steps, the Supreme Court concluded that the mathematical formula was what one thinks of in terms of formula - it takes a series of definite inputs, applies 8 certain arithmetic operations to them, then generates a definite output. Id. at 586 (Using the formula, an operator can calculate an updated alarm limit once he knows the original alarm base, the appropriate margin of safety, the time interval that should elapse between each updating, the current temperature (or other process variable), and the appropriate weighting factor to be used to average the original alarm base and the current temperature.). Thus, in both Benson and Flook, the Supreme Court prohibited the naked patenting of a particular mathematical formula, stating that such formulas were akin to laws of nature and free for anyone to use. Id. at 589. In Flook, the Court hedged its wording to some extent by signaling that mathematical equations could be part of a valid claim if it contained significant pre or post processing. Id. at 591 (While a scientific truth, or the mathematical expression of it, is not patentable invention, a novel and useful structure created with the aid of knowledge of scientific truth may be. (quoting Mackay Radio & Tel. Co. v. Radio Corp. of America, 306 U.S. 86, 94 (1939)). These holdings, therefore, are not applicable to Claim 1 because it does not purport to cover any particular mathematical formula or algorithm and certainly does not explicitly recite one. Unlike the claims at issue in Benson and Flook, one cannot extract an equation from Claim 1 such as E=mc2, Area = length * width, PV=nRT, or the algorithms expressly recited in the claims at issue in Benson and Flook. Given the lack of a mathematical equation, Claim 1 does not fall into the exception of being a law of nature. B. Claim 1 is not an Abstract Expression For an otherwise qualifying claim to be an abstract expression, the Federal Circuit has stated that the disqualifying [abstract] characteristic should exhibit itself so manifestly as to override the broad statutory categories of eligible subject matter and the statutory context that 9 directs primary attention on the patentability criteria of the rest of the Patent Act. Research Corp. Techs. v. Microsoft Corp., 627 F.3d 859, 868 (Fed. Cir. 2010). The Federal Circuit went on to state that this court notes that inventions with specific applications or improvements to technologies in the marketplace are not likely to be so abstract that they override the statutory language and framework of the Patent Act. Id. And that is the precise case at hand. The 697 Patent specifically describes certain aspects of the IEEE 754 Standard and discusses (and claims) perceived improvements to that Standard. See 697 Patent, Col. 4:32-48 (quoted above). Also as mentioned above, the processes and algorithms described in this Standard have been implemented in billions of microprocessors. Given the wide adoption of IEEE 754 and its incorporation to actual products in the marketplace, it cannot be said that the Standard itself is some abstract expression. The improvement to this Standard recited by Claim 1 is likewise not abstract and is exactly the type of invention the Federal Circuit was referring to when it said specific applications or improvements to technologies in the marketplace [i.e., IEEE 754 Standard] are not likely to be so abstract that they override the statutory language and framework of the Patent Act. In the 697 Patent, the specification explicitly discusses rounding an operand before a mathematical operation is performed on it, states that this is contrary to the IEEE 754 rounding of results (697 Patent, Col. 4:40-1) and then goes on to specifically claim such improvement. Thus, the rounding before operating improvement to the computing arts recited in Claim 1 is a definite and substantive advancement to a concrete industry standard. It should therefore not be lightly mischaracterized as some form of useless abstract expression. In addition to the sequence of rounding an operand followed by an arithmetic operation, the conversion steps in Claim 1 (steps 1 & 4) also contribute to the efficiency by which certain 10> processors can process floating-point numbers. See 697 Patent, Col. 2:36-46. These steps require converting a floating-point number that is composed of three specific fields (a sign, exponent and mantissa) from one format to another before and after rounding the operand and performing an arithmetic operation. Uniloc asserts that, when analyzed in the context of the 697 Patent, these steps are also definite and not abstract. Thus, when viewed in its entirety, Claim 1 recites a specific and definite improvement to a widely recognized international standard for processing floating-point numbers. These types of improvements have been explicitly recognized by the Federal Circuit as being not likely to be so abstract as to run afoul of 35 U.S.C. § 101, contrary to the arguments set forth by Rackspace. C. Machine or Transformation Test is Not Dispositive As has been realized by several Courts, Information Age inventions are less suited for analysis under the so-called Machine or Transformation (MoT) Test than traditional Industrial Age inventions. See Prompt Med. Sys., L.P. v. AllscriptsMysis Healthcare Solutions, Inc., No., 6:10-CV-71, 2012 U.S. Dist. LEXIS 30694, at *12-13 (E.D. Tex. Feb. 13, 2012) (The Federal Circuit and a plurality of the Supreme Court have recognized that the machine-or-transformation test, though particularly useful for evaluating the patentability of Industrial Age technology, may be less appropriate for evaluating technologies rooted in the Information Age.) (citing Ultramercial, LLC v. Hulu, LLC, 657 F.3d 1323, 1327 (Fed. Cir. 2011) (While machine-ortransformation logic served well as a tool to evaluate the subject matter of Industrial Age processes, that test has far less application to the inventions of the Information Age.)). This realization coupled with the Supreme Courts Bilski decision has greatly lessened the importance of the MoT Test today. Accordingly, no analysis of Claim 1 under the MoT Test is presented herein. Instead, the analysis above proceeds as described in Research Corp. and in Prompt Med. 11 Sys., where, instead of determining whether the claim under scrutiny passes a particular test, the focus is on whether a claim that would otherwise be proper under 35 U.S.C. § 101 falls within one of the three recognized exceptions to patentability (laws of nature, physical phenomena, and abstract ideas). VI. CLAIMS 2-28 Given Unilocs representation that it will only be asserting Claim1 in this lawsuit, Uniloc has not focused on the other claims in the 697 Patent - claims 2-28. Uniloc notes, however, these other claims have additional limitations that bear on an analysis under 35 U.S.C. § 101, despite arguments to the contrary from Rackspace in its Motion. For example, Rackspace states that the 697 Patent does not - and could not - assert that the . . . circuit(s) referenced in [Claim 2] . . . represent new machinery. Contrary to Rackspaces claim, the 697 Patent does exactly that. Claim 2 requires a load primary control logic circuit. Claim 2 requires that this circuit operate in a mode for load[ing] an exact number, load[ing] with implied maximal accuracy encoding, load[ing] with accuracy encoding only for normal numbers and not for underflow or overflow numbers, and load[ing] with accuracy for all numbers. Several of these operations are identified with various objects of the invention. See 697 Patent, Col. 4:57 - 5:13. Given the close tie between the language of Claim 2 and the various objects of the invention, Rackspaces sweeping comment that this language adds nothing to the § 101 analysis is simply wrong. Instead, Claim 2 adds meaningful restrictions to Claim 1 by including the use of hardware that performs operations central to the inventive aspects of the 697 Patent. Another example - independent Claim 22 has five elements written in means-plusfunction language that would require an analysis under 35 U.S.C. § 112, ¶ 6 to properly analyze 12 its structural elements. Rackspace has attempted no such undertaking. Instead, Rackspace makes misleading statements such as Claim 22, for example, recites means for performing an arithmetic operation. . . . The patent nowhere claims that [this] hardware element [is] anything more than [a] standard [element] of a general purpose computer. Rackspace Motion, p. 13. The full element being cited to by Rackspace is a means for performing an arithmetic operation upon at least one converted floating-point value based upon said selected accuracy and rounding. The 697 Patent contrasts the arithmetic unit of the present invention with a unit operating according to the IEEE Standard: Once rounded, floating-point addition, subtraction, multiplication and division is performed in the arithmetic circuit logic block 62 using the two modified operands. It should be understood that for the present invention, the arithmetic computations are performed on pairs of operands representing a range of values, whereas the IEEE 754 floating-point operands represent single binary numbers. 697 Patent, Col. 12:17-23 (emphasis added). In light of this disclosure that specifically differentiates the operation of the arithmetic circuit logic block (referred to in Claim 22 as the means for performing an arithmetic operation) from the operation of a prior art arithmetic logic unit, Rackspaces claim that the means for performing an arithmetic operation is a standard element of a general purpose computer should be dismissed. Rackspaces goes on to make other generalized arguments with respect to the other elements in Claim 22, as well as the other claims of the 697 Patent. These arguments suffer from similar deficiencies as the ones noted above. Rackspace picks and chooses various claim elements to focus on and mischaracterizes various portions of the specification, but never presents a full analysis of any particular claim. Given this lack of scrutiny, Rackspace certainly has not met its burden of proving that each and every claim of the 697 Patent is invalid under 35 U.S.C. § 101 by clear and convincing evidence. But, given Unilocs statement that it is willing 13 to stand or fall on Claim 1, a claim by claim analysis, by either party, is not believed to be necessary for disposition of Rackspaces Motion. VII. CONCLUSION For the foregoing reasons, Claim 1 of the 697 Patent does not fall within any of the Supreme Courts narrow, specific exceptions to patentability under 35 U.S.C. § 101. Therefore, Rackspaces request[] that the Court dismiss [Unilocs] Complaint under Rule 12(b)(6) should be denied. Rackspace Motion, p. 17. Dated: September 13, 2012 Respectfully submitted, /s/ Barry J. Bumgardner

Barry J. Bumgardner

Lead Attorney

Texas State Bar No. 00793424

Steven W. Hartsell

Texas State Bar No. 24040199

NELSON BUMGARDNER CASTO, P.C.

[address telephone fax] James L. Etheridge

Texas Bar No. 24059147

ETHERIDGE LAW GROUP, PLLC

[address telephone fax email] T. John Ward, Jr.

Texas State Bar No. 00794818

J. Wesley Hill

Texas State Bar No. 24032294

WARD & SMITH LAW FIRM

[address telephone email] 14 ATTORNEYS FOR PLAINTIFFS UNILOC

USA, INC. AND UNILOC LUXEMBOURG S.A. CERTIFICATE OF SERVICE I hereby certify that on the 13th day of September, 2012, I electronically filed the foregoing document with the clerk of the court for the U.S. District Court, Eastern District of Texas, Tyler Division, using the electronic case filing system of the court. The electronic case filing system sent a Notice of Electronic Filing to the attorneys of record who have consented in writing to accept this Notice as service of this document by electronic means. /s/ Barry J. Bumgardner 15

25 IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS UNILOC USA, INC., and UNILOC

LUXEMBOURG S.A.,

Plaintiffs,

v.

RACKSPACE HOSTING, INC., and

RACKSPACE US, INC.,

Defendants. CIVIL ACTION No. 6:12-cv-375 JURY TRIAL DEMANDED DEFENDANTS REPLY IN SUPPORT OF THEIR MOTION TO DISMISS

PLAINTIFFS COMPLAINT FOR FAILURE TO ALLEGE INFRINGEMENT OF

A PATENTABLE CLAIM UNDER 35 U.S.C. § 101 TABLE OF CONTENTS I. INTRODUCTION 1 II. UNILOCS RESPONSES CANNOT PREVENT DISMISSAL UNDER RULE

12(B)(6) 1 A. The Court Can and Should Find Claim 1 Unpatentable at the Motion to

Dismiss Stage 1 B. The Supreme Courts Decision in Benson Compels Dismissal of the Complaint 3 __1. Claim 1 is Virtually Indistinguishable from the Claims at Issue in Benson 3 __2. Unilocs Argument That Claim 1 is Less Specific Than the Benson Claims

Confirms that Claim 1 is Not Patentable 6 3. Claim 1 Is Not Limited to any Specific Applications or Improvements 8 C. Uniloc Does Not Dispute That Claim 1 Also Fails The Machine-or-

Transformation Test 10 III. CONCLUSION 10 i TABLE OF AUTHORITIES Cases Ashcroft v. Iqbal,

556 U.S. 662 (2009) 1 Bancorp Services, L.L.C. v. Sun Life Assur. Co. of Canada (U.S.),

687 F.3d 1266 (Fed. Cir. 2012) 3, 7, 9, 10 Bell Atlantic Corporation v. Twombly,

550 U.S. 544 (2007) 1, 3 Bilski v. Kappos,

130 S. Ct. 3218 (2010) 2, 10 Cybersource Corp. v. Retail Decisions, Inc.,

654 F.3d 1366 (Fed. Cir. 2011) 4, 9, 10 Glory Licensing LLC v. Toys R Us, Inc.,

No. 09-4252, 2011 WL 1870591 (D.N.J. May 16, 2011) 2, 7 In re Bilski,

545 F.3d 943 (Fed. Cir. 2008) 2, 7 In re Warmerdam,

33 F.3d 1354 (Fed. Cir. 1994) 4 Microsoft Corp. v. i4i Ltd. P'ship,

131 S. Ct. 2238 (2011) 3 OIP Technologies v. Amazon.com, Inc.,

No. 12-cv-01233 Dkt. No. 50 (N.D. Cal. Sept. 11, 2012) 2, 7 Parallel Networks, LLC v. Abercrombie & Fitch,

No. 6:10-cv-111, 2011 WL 3609292 (E.D. Tex. Aug. 12, 2011) 3 Parker v. Flook,

437 U.S. 584 (1978) 9 Phoenix Licensing, L.L.C. v. Aetna, Inc.,

No. 2:11-cv-285, Dkt. No. 186 (E.D. Tex. Sept. 12, 2012) 2 Research Corp. Techs. v. Microsoft Corp.,

627 F.3d 859 (Fed. Cir. 2010) 8, 9 Vacation Exchange, L.L.C. v. Wyndham Exchange & Rentals, Inc.,

No. 12-cv-04229, Dkt. No. 27 (N.D. Cal. September 18, 2012) 2, 5 ii Other Authorities 5 Wright & Miller § 1216 1, 3 iii I. INTRODUCTION As Unilocs opposition brief confirms, Rackspaces motion to dismiss presents a narrow issue of law that can and should be addressed on a motion to dismiss. Uniloc has acknowledged that it intends to assert only one claim of the 697 patentClaim 1and there is no dispute that, if this sole asserted claim is not patentable, Unilocs Complaint should be dismissed. Indeed, Uniloc agrees that a quick resolution on this issue will advance this litigation, and that the Complaint will stand or fall on Claim 1. Pl. Opp. Br. at 2, 14. The Complaint cannot stand, because Claim 1 recites no more than a method for processing and converting numbersprecisely what the Supreme Court declared not patentable in Gottschalk v. Benson, 409 U.S. 63, 64 (1972). The Court accordingly should dismiss Unilocs Complaint, because it cannot state a plausible claim for relief. See Bell Atlantic Corporation v. Twombly, 550 U.S. 544, 558 (2007) (quoting 5 Wright & Miller § 1216, at 233-34) (when the allegations in a complaint, however true, could not raise a claim of entitlement to relief, this basic deficiency should . . . be exposed at the point of minimum expenditure of time and money by the parties and the court.); Ashcroft v. Iqbal, 556 U.S. 662, 679 and 685 (2009) (given the heavy costs of litigation, only a complaint that states a plausible claim for relief survives a motion to dismiss). II. UNILOCS RESPONSES CANNOT PREVENT DISMISSAL UNDER RULE

12(B)(6) A. The Court Can and Should Find Claim 1 Unpatentable at the Motion to

Dismiss Stage Uniloc does not dispute that issues of patentability under 35 U.S.C. § 101 can be properly addressed on a motion to dismiss as a matter of law, policy, and efficient judicial administration. See Def. Op. Br. at 6-8; see Pl. Opp. Br. at 2. Indeed, since Uniloc filed its brief, two district court decisions have granted motions to dismiss for precisely the grounds sought here. Vacation 1 Exchange, L.L.C. v. Wyndham Exchange & Rentals, Inc., Ex. No. 1, No. 12-cv-04229, Dkt. No. 27 at 1-3 (N.D. Cal. September 18, 2012) (dismissing patent infringement complaint for failure to state a claim under § 101 because claims were abstract, and thus not patentable, finding claim construction not necessary under Federal Circuit precedent); OIP Technologies v. Amazon.com, Inc., Ex. No. 2, No. 12-cv-01233 Dkt. No. 50 at 1, 7-8 (N.D. Cal. Sept. 11, 2012) (dismissing patent infringement complaint for failure to state claim under § 101, and rejecting argument that claim construction would bear on analysis); see also Glory Licensing LLC v. Toys R Us, Inc., No. 09-4252, 2011 WL 1870591, *1-4 (D.N.J. May 16, 2011) (dismissing patent infringement complaint for failure to state a claim under § 101). Uniloc references the importance of claim construction generally, but like the plaintiffs in Vacation Exchange and OIP Technologies, Unilocs opposition brief fails to explain how claim[] construction would materially impact the § 101 analysis in the instant case. OIP Technologies, No. 12-cv-01233 at 7; see also Vacation Exchange, No. 12-cv-04229 at 2-3.1 Moreover, although Uniloc cites the Federal Circuits decision in Bilski for the proposition that claim construction can be an important first step in the § 101 analysis, the Federal Circuit and Supreme Court both held the claims at issue in that case not patentable without claim construction. See Bilski v. Kappos, 130 S. Ct. 3218, 3231 (2010); In re Bilski, 545 F.3d 943 (Fed. Cir. 2008); see also Bancorp Services, L.L.C. v. Sun Life Assur. Co. of Canada (U.S.), 687 ________________________ Although a few courts have delayed a ruling on patent-eligibility where the claims required construction, both parties have agreed that a quick resolution is appropriate in this case. Pl. Opp. Br. at 2. Moreover, Unilocs sole asserted claim is not patentable under any reasonable construction, including Unilocs own chart, submitted as a Description of the Step[s] recited in Claim 1. See Pl. Opp. Br. at 6; cf. Phoenix Licensing, L.L.C. v. Aetna, Inc., Ex. No. 3, No. 2:11-cv-285, Dkt. No. 186 (E.D. Tex. Sept. 12, 2012) (reserving determination under § 101, given claim construction dispute over claims in four patents). 2 F.3d 1266, 1273 (Fed. Cir. 2012) (emphasis added) (Bilksi f[ound] subject matter ineligible for patent protection without claim construction.).2 Most fundamentally, Uniloc generally agrees with Rackspace that a quick resolution of the § 101 issue in this case will advance this litigation. Pl. Opp. Br. at 2. The Court accordingly should address this single dispositive issue of law now, at the point of minimum expenditure of time and money by the parties and the court. Twombly, 550 U.S. at 558 (quoting 5 Wright & Miller § 1216, at 233-34); see also Parallel Networks, LLC v. Abercrombie & Fitch, No. 6:10-cv-111, 2011 WL 3609292 at *10 (E.D. Tex. Aug. 12, 2011) (resolving case in a manner of monthsas opposed to yearsfor the vast majority of Defendants by addressing three dispositive legal issues at outset of case). B. The Supreme Courts Decision in Benson Compels Dismissal of the

Complaint 1. Claim 1 is Virtually Indistinguishable from the Claims at Issue in

Benson Uniloc does not dispute that, under Benson, the programmed conversion of numerical information in general-purpose digital computers is not patentable. Benson, 409 U.S. at 64; see Pl. Opp. Br. at 7-9. Benson recognized that these processes for converting numbers are mathematical algorithms that cannot be patented because they disclose no more than mental processes, and abstract intellectual concepts. Benson, 409 U.S. at 67. Indeed, such claims are manifestly abstract as a matter of law, because manipulation of basic mathematical constructs [is] the paradigmatic abstract idea. Cybersource Corp. v. Retail Decisions, Inc., 654 F.3d ____________________________ Uniloc also suggests that Rackspaces motion seeks to import a lower standard for invalidating the 697 Patent, but the preponderance-of-the-evidence standard governs the invalidity analysis under § 101 regardless of when that inquiry occurs, because subject matter eligibility is an issue of law. Microsoft Corp. v. i4i Ltd. P'ship, 131 S. Ct. 2238, 2253 (2011) (Breyer, J., concurring) (the clear and convincing evidentiary standard that generally governs inquiries into patent invalidity applies to facts and not to questions of law.); Cybersource, 654 F.3d at 1369 ([i]ssues of patent-eligible subject matter are questions of law.). 3 1366, 1372 n.2 (Fed. Cir. 2011), quoting In re Warmerdam, 33 F.3d 1354, 1355, 1360 (Fed. Cir. 1994). Uniloc attempts to distinguish Claim 1 of the 697 patent based on the argument thatin contrast to Bensonit does not recite any particular mathematical formula. Pl. Opp. Br. at 7. But the claims cannot be distinguished. As the chart below demonstrates, both sets of claims indisputably relate to the same thing, the programmed conversion of numerical information. Benson, 409 U.S. at 64. 697 Patent, Claim 1 Benson, Claim 13 Benson, Claim 8 A method for processing floating-point numbers, each floating-point number having at least a sign portion, an exponent portion and a mantissa portion, comprising the steps of: converting a floatingpoint number memory register representation to a floating-point register representation; A data processing method for converting binary coded decimal number representations into binary number representations comprising the steps of The method of converting signals from binary coded decimal form into binary which comprises the steps of rounding the converted floating-point number; performing an arithmetic computation upon said rounded number resulting in a new floating-point value; converting the resulting new floating-point register value to a floatingpoint memory register representation. (1) testing each binary digit position 1, beginning with the least significant binary digit position, of the most significant decimal digit representation for a binary 0 or a binary 1; (2) if a binary 0 is detected, repeating step (1) for the next least significant binary digit position of said most significant decimal digit representation; (3) if a binary 1 is (1) storing the binary coded decimal signals in a reentrant shift register, (2) shifting the signals to the right by at least three places, until there is a binary 1 in the second position of said register, (3) masking out said binary 1 in said second position of said register, (4) adding a binary 1 to the first position of said 4 697 Patent, Claim 1 Benson, Claim 13 Benson, Claim 8 detected, adding a binary 1 at the (i+1)th and (i+3)th least significant binary digit positions of the next lesser significant decimal digit representation, and repeating step (1) for the next least significant binary digit position of said most significant decimal digit representation; (4) upon exhausting the binary digit positions of said most significant decimal digit representation, repeating steps (1) through (3) for the next lesser significant decimal digit representation as modified by the previous execution of steps (1) through (3); and (5) repeating steps (1) through (4) until the second least significant decimal digit representation has been so processed. register, (5) shifting the signals to the left by two positions, (6) adding a 1 to said first position, and (7) shifting the signals to the right by at least three positions in preparation for a succeeding binary 1 in the second position of said register. Claim 1, like the Benson claims, recites no more than a numerical conversion involving format manipulation, rounding, and computation. Indeed, Uniloc does not even dispute the dispositive fact that, like the Benson claims, Claim 1 discloses a mental process that could be performed as a person would do it by head and hand. Benson, 409 U.S. at 65; Pl. Opp. Br. at 7-9; see also Vacation Exchange, No. 12-cv-04229 at 1-3 (dismissing complaint where claimed method was indistinguishable from the tasks that a human would perform manually.). A person could readily perform the format conversions, rounding and arithmetic required by Claim 1. Unilocs brief confirms as much by recognizing that the floating point numbers to be 5 processed can be as elementary as 2.1, and the operation can be as basic as addition, multiplication, or division. Pl. Opp. Br. at 3, 7; see also id., Ex. A at 9 (describing how a version of floating-point arithmetic generates results . . . as people expect them, identical to what would be obtained using pencil and paper.). 2. Unilocs Argument That Claim 1 is Less Specific Than the Benson

Claims Confirms that Claim 1 is Not Patentable Uniloc argues that Claim 1 is less abstract than the claims invalidated in Benson because Claim 1 is less specific, does not disclose any particular formula, and is not limited to any discrete mathematical operation. Pl. Opp. Br. at 7-8. This argument defies logic and stands precedent on its head. Arguing that less specificity makes a claim less abstract fails to distinguish Claim 1 from Benson for at least two reasons. First, the argument misconstrues Benson. The Benson claims did not recite a particular mathematical formula. Instead, they disclosed a generalized formulation for programs . . . of converting one form of numerical representation to another. Benson, 409 U.S. at 65. Claim 1 purports to patent precisely the same thing: a program for generally processing a type of number by converting it from one form of numerical representation to another. Pl. Opp. Br. at 6-7. With its step-by-step instructions for rounding and performing an arithmetic computation to arrive at a new value, Claim 1 falls squarely within the Supreme Courts definition of a mathematical algorithm, as  a procedure for solving a given type of mathematical problem. Benson, 409 U.S. at 65. Whether or not a specific equation can be extracted from either the Benson claims or Claim 1 is irrelevant; under the Supreme Courts definitionwhich Uniloc itself citesboth are unpatentable mathematical algorithms. See Pl. Opp. Br. at 7. Second, Uniloc can cite no support for its claim that a lack of specificity somehow renders a claim less abstract. The Benson claims were not held abstract because they were too 6 specific or particular. To the contrary, the Court expressed concern that the claims would unduly preempt further progress in the field because they were so abstract and sweeping. Benson, 409 U.S. at 68 (emphasis added). This risk of broad preemption requires meaningful limits on the claims scope. In re Bilski, 545 F.3d at 961; see Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1333 (Fed. Cir. 2012) (patent lacked meaningful limits to survive § 101 analysis because the claim failed to specify how the computer hardware and database are specially programmed to perform the steps claimed in the patent); Bancorp, 687 F.3d at 1278 (computer employed for repetitive calculations . . . does not impose meaningful limits on the scope of [the] claims.); Glory Licensing, 2011 WL 1870591 at *4-5 (granting motion to dismiss under § 101 where the patentee failed to show that the patent held meaningful claim limitations.); OIP Technologies, No. 12-cv-01233 at 26-27 (granting motion to dismiss because claims allowing for quicker, more efficient calculations in a general purpose computer did not impose meaningful limits on the claim). As this Court has similarly recognized, it is important . . . to determine whether the scope of claims are sufficiently limited so that they do not exclude others from what is rightfully available to all of mankind. Prompt Medical Systems, L.P. v. Allscriptsmysis Healthcare, No. 6:10-cv-71, 2012 WL 678216 at *6 (E.D. Tex. Feb. 13, 2012) (Davis, J.). In the face of this black-letter law, Uniloc asserts that Claim 1 is not limited to any particular formula, program, or mathematical operation. Pl. Opp. Br. at 7. To uphold such a claim because it lacks meaningful limits would turn Benson on its head. This Court is charged with protecting the onward march of science and confin[ing] the patent monopoly within rather definite bounds by refusing to enforce a monopoly on what Claim 1 presents: a generalized formulation for converting numbers. 409 U.S. at 68-69. 7 3. Claim 1 Is Not Limited to any Specific Applications or Improvements After arguing for three pages that Claim 1 should be deemed patentable because it lacks a specific mathematical formula, Uniloc reverses direction and argues that Claim 1 is not abstract because it offers specific applications or improvements to technologies in the marketplace. Pl. Opp. Br. at 10 (quoting Research Corp. Techs. v. Microsoft Corp. 627 F.3d 859, 869 (Fed. Cir. 2010)). But as Benson confirms, the programmed conversion of numerical information is, by its nature, not limited to specific applications. Instead, such claims disclose only a generic formulation, which could form the basis for a broad array of specific applications. Benson, 409 U.S. at 65. This potential for the future development of myriad applications is yet another reason to hold such claims unpatentable, because the exclusionary rights that would result from such a patent would reach into vast arenas. As Benson recognized, the end use may . . . vary from the operation of a train to verification of drivers licenses to researching the law books for precedents. Id. at 68. Indeed, the article Uniloc attaches to its opposition brief in Exhibit A explicitly confirms that a method for converting floating point numbers would operate not in a specific application, but across broad realms. Pl. Opp. Br., Ex. A at 2 (floating point operations are not restricted to scientific, CAD, and other math-intensive applications. Its also communications, security, graphics, and games.). Claim 1, like the Benson claims, is not restricted to specific applications that could set meaningful limits on an otherwise abstract claim. Instead, it reflects the drafters efforts to secure a monopoly of impermissible breadth. Benson similarly forecloses Unilocs related argument that its method for processing floating-point numbers is a patentable improvement[] to technologies in the marketplace. Pl. Opp. Br. at 10. The Benson claims, too, offered a potential improvement to marketplace 8> technologythey had a practical application in digital computers. Benson, 409 U.S. at 71. The Supreme Court nonetheless found that the programmed conversion of numerical information in a general purpose computer is not a patentable improvement to technology because it is not limited to any particular art or technology. Benson, 409 U.S. at 64. Such claims are not confined to any particular apparatus or machinery, or to any particular end use. Id. Claim 1, like the Benson claims, is not limited to any particular technology, machinery, or end use. The end uses are vast, from NASAs control of satellite rockets to Silicon Valleys creation of a video game character throwing an axe. Pl. Opp. Br., Ex. A at 1-3. Unilocs argument that the claim covers a purported technological improvement to the algorithms described in [the IEEE] Standard serves only to confirm what Uniloc elsewhere deniesthat it seeks to patent a mathematical algorithm. Pl. Opp. Br. at 10.3 Finally, Uniloc suggests that the Federal Circuits decision in Research Corp. rescues Claim 1 from abstraction. But the Research Corp. claims were held patentable because they disclosed a tangible technological improvement (a higher-quality halftone image) that was dependent upon specific, disclosed computer components, such as a blue noise mask. See, e.g., Bancorp, 687 F.3d at 1279 (distinguishing Research Corp.); Cybersource, 654 F.3d at 1376 (same). Claim 1, in contrast, is a pure abstraction. It recites nothing more than mathematical steps for a numerical conversion. Even if a general purpose computer were read into Claim 1, the claim would nonetheless disclose at most the use of a computer for . . . making calculations or computations. Bancorp, 687 F.3d at 1278. Under black letter law established by Benson, ________________________ Unilocs speculation that rounding before operating could one day be implemented in a product does not make that algorithm patentable. Parker v. Flook, 437 U.S. 584, 590 (1978) (the Pythagorean theorem would not have been patentable . . . because a patent application contained a final step indicating that the formula . . . could be usefully applied to existing surveying techniques.). 9 this use of a general purpose computer fails to circumvent the prohibition against patenting abstract ideas and mental processes. Bancorp, 687 F.3d at 1279 (citing Benson). C. Uniloc Does Not Dispute That Claim 1 Also Fails The Machine-or-

Transformation Test Uniloc does not even attempt to argue that Claim 1 meets the Federal Circuits machineor- transformation test, which the Supreme Court has described as a useful and important clue for determining patent-eligible subject matter and the Federal Circuit has applied in cases, like this one, involving Information Age technologies. Bilski, 130 S.Ct. at 3227; see also Bancorp, 687 F.3d at 1278 (affirming application of the test for claims reciting the use of computers); Cybersource, 654 F.3d at 1375 (holding the machine prong unsatisfied by the software implementation of a purely mental process).4 Although this test is by no means exclusive, the fact that Claim 1 does not even arguably involve a machine or transformation further confirms that the claim is not patentable under § 101. III. CONCLUSION Unilocs efforts to distinguish Claim 1 from Benson are not factually accurate, logically coherent, or legally sound. Claim 1 recites a mathematical algorithm and abstract idea that is not patentable as a matter of law. The Court accordingly should dismiss the Complaint for failure to state a claim upon which relief can be granted. ________________________ The Supreme Court in Bilski further warned that where Information Age technologies are directed toward more efficient mathematical calculations . . . [i]f a high enough bar is not set . . . patent examiners and courts could be flooded with claims that would put a chill on creative endeavor and dynamic change. 130 S.Ct. at 3229. 10 September 24, 2012 Respectfully submitted, /s/ William F. Lee, with permission by Mic