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XAP’S REPLY ISO ITS POST-TRIAL PROPOSED FINDINGS OF FACT
SCHWABE, WILLIAMSON & WYATT, P.C.Attorneys at LawPacwest Center
1211 SW 5th Ave., Suite 1900Portland, OR 97204
Telephone 503.222.9981
PDX/117132/154237/CKO/2858111.6
David W. Axelrod, OSB #750231Email [email protected] E. Mansfield, OSB #05539Email [email protected] E. Tingleaf, OSB #054463Email [email protected], Williamson & Wyatt, P.C.Pacwest Center1211 SW 5th Ave., Suite 1900Portland, OR 97204Telephone 503.222.9981Fax 503.796.2900
Of Attorneys for Defendant, Xap Corporation
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
COLLEGENET, INC.,
Plaintiff,
vs.
XAP CORPORATION,
Defendant.
No. 03-1229-BR
XAP CORPORATION’S REPLY IN SUPPORT OF ITS POST-TRIAL PROPOSED FINDINGS OF FACT
Case 3:03-cv-01229-BR Document 824 Filed 08/18/08 Page 1 of 32 Page ID#: 7108
Page 1 - XAP’S REPLY ISO ITS POST-TRIAL PROPOSED FINDINGS OF FACT
SCHWABE, WILLIAMSON & WYATT, P.C.Attorneys at LawPacwest Center
1211 SW 5th Ave., Suite 1900Portland, OR 97204
Telephone 503.222.9981
PDX/117132/154237/CKO/2858111.6
I. INTRODUCTION AND ORGANIZATION OF THIS REPLY
CollegeNET’s (“CN”) 70-page responses on top of their 60 pages of authorized briefing
present a blizzard of contentions not unlike the blizzard of materials dumped on the Patent Office
in reexamination. CN employs a number of tactics. Many of its fact statements have no record
citation. Other of its record citations simply are unrelated to the claims made for the actual
evidence or the story that CN attributes to the actual evidence, particularly the testimony from
Dr. Maier. Arguments that CN now makes for documents that are admitted without any witness
testimony in fact contradict CN’s fact contentions. Thirty pages is insufficient to detail these
errors, so examples will have to suffice and the decision to not respond to an individual
contention contrary to Xap’s contentions is due to lack of space, not agreement.
II. XAP’S INEQUITABLE CONDUCT CLAIM
A. ApplyWeb 1: Reply ISO Xap’s Post-trial PFF, ¶¶ 1-18
1. ¶¶ 4, 5. Proof that the “ns-home” directory software cannot reflect the
“production” code used in the public AW1 system in the six months prior to the Critical Date lies
in three facts that CN admits or ignores: First, despite having an automatic revision control
system, CN contends (CN Resp. to ¶ 4) that it did not maintain an identifiable production code
used in the public system. Second, because CN contends that it had to constantly modify the
production version of app.pl throughout the six months prior to the Critical Date to customize
forms, the “last modified” August 28, 1996 and December 5, 1996 programs in “ns-home” could
not reflect “production” code changes implemented in 1997. See example of Golden Gate
University (GGU) below. These 1997 modifications to both app.pl and to ques.pl necessarily
had to be in the public system as they were necessary to support online application forms
processed by CN (PTX 3042). See id., Xap Post-trial PFF, ¶ 5. Third, the post-trial stipulated
fact that the app.pl program was split into two programs app.pl and ques.pl in the aw.test library,
coupled with the proof that these programs supported forms that were online in early 1997,
Case 3:03-cv-01229-BR Document 824 Filed 08/18/08 Page 2 of 32 Page ID#: 7109
Page 2 - XAP’S REPLY ISO ITS POST-TRIAL PROPOSED FINDINGS OF FACT
SCHWABE, WILLIAMSON & WYATT, P.C.Attorneys at LawPacwest Center
1211 SW 5th Ave., Suite 1900Portland, OR 97204
Telephone 503.222.9981
PDX/117132/154237/CKO/2858111.6
confirms these programs are the best and only evidence of the production code.1
One example disproves many of CN’s arguments, particularly Hitchcock’s 2008
testimony that multi-page forms were not ready for patenting prior to the Critical Date. Golden
Gate University (GGU) contracted for AW1 service on August 1, 1996. DTX 2006, p. 1. While
creating the GGU forms, a change was made to ques.pl on April 11, 1997 to add a new field
category with the attribute name: VISA_TYPE_APPLY. 2 PTX 3159 version 1.21; PTX 1058. No
version of app.pl contains this new field category. DTX 2036, 2037, 2047. It is only present in
ques.pl and mg_ques.pl, a version of ques.pl that Mr. Hitchcock worked on to develop multi-
page capability. PTX 1058, lines 1390-1393; XAPSC04/aw.test/RCS/ques.pl,v at lines 5977-
5980. The online3 GGU applications all had multi-page capability, as evidenced by the directive
1 The sophistry of CN’s position is exemplified by its reference (¶ 5) to “Xap’s own
admission that AW1 operated . . . before the initial creation of ques.pl. . . .” CN plays this game as well (CN ¶ 14) with the keygen.pl program. Both ques.pl and keygen.pl were, prior to early 1997, subprograms within app.pl. See citations infra pp.7-8. They were pulled out (“refactored” in Mr. Hitchcock’s parlance) as separate programs, as reflected in the engineering notes CN cites (PTX 3007), for enhancement. Ques.pl contains the questions for form field labeling. CN cannot contend that the questions in ques.pl (before or after its separation into a separate program) are not necessary to the public system. Xap never asserted that no version of process.pl was in the older ns-home libraries (and CN gives not citation for this straw man assertion), only that there is no version or process.pl in the August 28, 1996 version on which Dr. Maier based most of his opinions.
2 The specific lines of code added were:sub VISA_TYPE_APPLY {
&ISELECT(“For which visa type will you be applying? “, “VISA_TYPE_APPLY”,1,””,””,”F-1”,”J-1”,”Other”);
&ITEXT(“ if other, please specify: “,”VISA_TYPE_APPLY_OTHER”,20,40);}And the accompanying RCS comment was: @changes for GGU app. PTX 3159 version 1.21; PTX 1058.
3 Before applications could be used to submit data, the application must be added to the key_update.pl program, so that the key values of the application, fee information, and recipient e-mail addresses could be placed in the application database. The use of key_update.pl to create the institution keys file is confirmed by DTX 2035 (activate_app.doc and addkey.doc) and by DTX 2184 (aw_arch.doc from xapsco4\aw.test\docs) as well as DTX 2078, a version of aw_arch.doc with Hitchcock's handwritten annotations. The pre-critical date code of key_update.pl shows that ggu.in, ggugd.in, ggugm.in, ggui.in, and ggun.in were in use as of the critical date. DTX 2074-E. All five of these .in files bear comments that they were “put online” on 05-06-97.
Case 3:03-cv-01229-BR Document 824 Filed 08/18/08 Page 3 of 32 Page ID#: 7110
Page 3 - XAP’S REPLY ISO ITS POST-TRIAL PROPOSED FINDINGS OF FACT
SCHWABE, WILLIAMSON & WYATT, P.C.Attorneys at LawPacwest Center
1211 SW 5th Ave., Suite 1900Portland, OR 97204
Telephone 503.222.9981
PDX/117132/154237/CKO/2858111.6
“MULTIPAGE/nn” in all GGU’s .in files that were online. DTX 2051-56; PTX 342.4 The
degree and non-degree GGU applications went online on or after May 5, 1997. See, e.g.,
comments to RCS entries for ggu.in and gggun.in (DTX 2053, 2054); PTX 342. CN processed
GGU applications for the first time in May 1997 on the public system, based on records CN
repeatedly cites to this Court. PTX 3042. These records contradict (1) Hitchcock’s 2008 story
that multi-page capability did not exist pre-Critical Date, (2) Wolfston/Maier stories that changes
in aw.test were not used in the production code, and (3) CN’s arguments that it has no
knowledge of when ques.pl was used in production. These records also cast doubt on the
credibility of CN and its witnesses on all other contested facts and issues.
CN’s reliance on the aw.test library code to prove modifications made to the public
system in early 1997 (e.g., PTX 3159), coupled with its admitted failure to maintain any other
copy of the production code warrants a finding that the aw.test/RCS code reflects the production
capabilities prior to the Critical Date. CN’s contention that the records may have been lost
before litigation was contemplated in March 1998 (CN Memo, 25-26) denies the admitted fact
that the Smart Loan service was still in use and it was only 6 months after the college
applications service was restyled as AW2. 7/8/08 Supp. Agreed Facts, ¶¶ 1, 7. A finding of bad
faith or improper conduct is not required to permit the Court to exercise its inherent authority to
make judgments about the lost evidence. Glover v. BIC Corp., 6 F.3d 1318, 1329 (9th Cir.
1993); Unigard Sec. Ins. Co. v. Lakewood Eng’g & Mfg. Corp., 982 F.2d 363, 365, 368, 369 (9th
Cir. 1992). In the absence of an explanation and with a duty to preserve the code, an inference
that the lost code would have been adverse to CN is warranted. See eSpeed, Inc. v. BrokerTec
USA, L.L.C., 417 F. Supp. 2d 580, n.9 (D. Del. 2006).
2. ¶ 6. In the face of (1) DTX 2072, (2) the descriptions in the patent applications of the
importance of separating the function of generating the form from the application instructions
and the use of an independent naming methodology for user data (DTX 2079, ‘278 patent, 5:61-
4 None of the .in files for any GGU application were modified after May of 1997. SeeDTX 2179 (directory list for pre-Critical Date files of XAPSC04\aw.test\RCS at lines 181-186).
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Page 4 - XAP’S REPLY ISO ITS POST-TRIAL PROPOSED FINDINGS OF FACT
SCHWABE, WILLIAMSON & WYATT, P.C.Attorneys at LawPacwest Center
1211 SW 5th Ave., Suite 1900Portland, OR 97204
Telephone 503.222.9981
PDX/117132/154237/CKO/2858111.6
63, 6:54-60, 7:29-8:03, 10:40-63, 11:22-25, claims 2, 14, 23, 24, 32), and (3) lengthy arguments
to the Patent Office in October 2001 regarding what the prior did not teach (DTX 2093 at 3-7), it
takes some chutzpah to assert that the Batcheller architecture and naming methodology was in
the prior art in the context of processing multiple forms for multiple institutions by a third party
forms processor. CN’s evidence? An uncorroborated one-line statement from Dr. Maier who
claims he referred to it in his Ph.D thesis. Maier Tr. 718:10-18.
3. ¶ 8. CN’s opposition proves that AW1 had substantial capability to customize forms.
CN concedes that prior to the Critical Date the AW1 library included over 500 sharable field
choices and that as many as 1200 school-specific fields had been created to customize forms. It
identifies no respect in which a school was unable to select the information that it wanted, in the
order that it wanted it, and separately branded to the school rather than a “common” form. It also
acknowledges that under the AW1 architecture, once created, these fields could be used in the .in
files to add to or modify forms without making any further changes to the forms engine. None of
this information or capability was disclosed to the Patent Office.
Nor does CN dispute: that the public AW1 system had the proven capability to share data
and pre-populate forms between applications whenever the attribute name used to characterize
the user data was the same between forms, that the customized pre-Critical Date forms (e.g.,
Mercer and Virginia Tech) share as many as 30 such identical fields, and that CN advertised this
capability widely. None of this information was disclosed to the Patent Office.
Instead, CN argues first that it was time consuming to create these different form fields
and that the common fields (not the school specific #! fields) required additional coding to the
forms engine so that they would thereafter be available for any later school application. Second,
CN argues that, if the customization was implemented with new but slightly different labeling
through the addition of new sharable fields, data sharing would not be optimized. There are two
complete rejoinders to these arguments.
Nothing in the patent claims coverage sought by CN conditions customization on
Case 3:03-cv-01229-BR Document 824 Filed 08/18/08 Page 5 of 32 Page ID#: 7112
Page 5 - XAP’S REPLY ISO ITS POST-TRIAL PROPOSED FINDINGS OF FACT
SCHWABE, WILLIAMSON & WYATT, P.C.Attorneys at LawPacwest Center
1211 SW 5th Ave., Suite 1900Portland, OR 97204
Telephone 503.222.9981
PDX/117132/154237/CKO/2858111.6
optimizing data sharing. Data sharing is subservient in the alleged inventive system, because
that function is met if there is any data sharing (“some” in the language of claims 1-20 of the
‘278 patent). Nor do instances of computer bugs that required fixing or limitations on the early
attribute naming structure justify a wholesale denial of the capabilities of the prior art.
More importantly, here as with the related misrepresentations concerning “hard-coding”
and metadata, CN avoids discussing the alleged inventive solution that is identified in the patent.
See Xap Reply to CN Post-trial Memo, pp. 6-9. That solution—programming the forms engine
to accept arguments that would override the default labeling and field parameters in the forms
engine with instructions from the application information file—was used in the AW1 system.
Id.; see also Xap Post-trial PFF, ¶ 37; Frederiksen Tr. 203:25 - 210:15, 220:4 - 230:6, and was
simply extended to more and more form fields after Mr. Batcheller left and prior to the Critical
Date. There is no dispute about that fact. Id. The game that CN plays to avoid this fatal defect in
its defense is telling.
At trial, Dr. Maier delivers CN’s argument that the preferred embodiment of the
invention is different, in these respects, from the prior art AW1 system. Dr. Maier opines:
It talks about the user attribute table, which if you read about it elsewhere is not a blob, its structured individual fields. And the application data file can optionally supply arguments to directives. I read that as saying[,] for any directive, the application data file has the option of giving an argument to it, and I don’t see those in ApplyWeb 1. Tr. 722:22-723:03 (emphasis added).
Dr. Maier is technically correct that AW1 did not have this solution available “for any directive,”
because the technique was used in AW 1 only with selected form fields calls and thereafter
extended—but the alleged inventive solution is in the prior art. Dr. Maier’s sophistic technique
is to read into the patent an unexpressed restriction requiring this alleged inventive solution to be
available “for any directive,” otherwise he will opine that it need not be disclosed. There is no
such requirement anywhere in the patent. By these techniques, reflective of the semantics that
Wolfston used with the Patent Office, CN seeks to justify its failure to disclose these key features
of the prior art to the Patent Office.
Case 3:03-cv-01229-BR Document 824 Filed 08/18/08 Page 6 of 32 Page ID#: 7113
Page 6 - XAP’S REPLY ISO ITS POST-TRIAL PROPOSED FINDINGS OF FACT
SCHWABE, WILLIAMSON & WYATT, P.C.Attorneys at LawPacwest Center
1211 SW 5th Ave., Suite 1900Portland, OR 97204
Telephone 503.222.9981
PDX/117132/154237/CKO/2858111.6
4. ¶ 9. See infra ¶ 6 (discussing CN Resp. to ¶¶ 11-17 re: processing user information).
5. ¶ 10. See infra ¶ 16 (discussing CN Resp. to ¶¶ 44-46 re: data sharing).
6. ¶¶ 11-17. See also infra ¶ 17. These paragraphs of Xap’s proposed findings walk
through the capability of AW1 to process user data. Wolfston represented AW1 had no
capability to process user data for transfer to the college in a requested format and could only
send a stored flat text file.
CN seeks to divorce, from Wolfston’s duty to disclose, all of the cndb.pl routines that
operated in AW1, in communication with a commercial Illustra RDBMS, to store and
manipulate (i.e., process) applicant information. The software restructures the BLOB of user
data into an associative array or index table. The index separately lists each field with the user
information and the metadata characterization that identifies what that information is. This is an
“atomistic” listing (compare CN Resp. to ¶ 11), though that term is nowhere used in the patent.
That the additional software routines of the cndb.pl library provide the capability, rather than the
RDBMS database software, is irrelevant to Wolfston’s duty to disclose the capabilities of the
AW1 system. CN is simply wrong when it asserts that the AW1 system did not link tables of
applicant information because it did not use an RDBMS call but instead used cndb.pl routines
that accessed the tables through the user i.d. Frederiksen, Tr. 248:01-254:02, 311:21-313:08.
Similarly, CN does not meet the substance of Xap’s proof regarding the processing of
user data. From the time the AW1 system processed a user’s request to submit an application
until the time the application was submitted and receipt acknowledged in the Log table, the AW1
system does not touch the application form, the .in file, or the programs used to present the form.
Xap agrees that the .in file is used, in conjunction with the key_update.pl program, to create the
“keys” listing, a file that is then maintained in the Institution table. The CMDS SIS option
exemplifies that AW1 had the capability to create that “keys” file separately from the .in file and
thereby to select different fields and/or a different ordering, if desired, or invoke (or add to) the
format options queried every time the key_update.pl program was run. The relevant points are
Case 3:03-cv-01229-BR Document 824 Filed 08/18/08 Page 7 of 32 Page ID#: 7114
Page 7 - XAP’S REPLY ISO ITS POST-TRIAL PROPOSED FINDINGS OF FACT
SCHWABE, WILLIAMSON & WYATT, P.C.Attorneys at LawPacwest Center
1211 SW 5th Ave., Suite 1900Portland, OR 97204
Telephone 503.222.9981
PDX/117132/154237/CKO/2858111.6
that 1) the pre-generated “keys” file was independent of the .in file and was thus not affected by
the customization of forms and 2) the AW1 system had the capability to process user data.
The capabilities programmed into and available on the public system to a contracting
party like CMDS are prior art under 35 U.S.C. § 102(b), whether or not commercially used. Xap
Reply ISO Post-trial Memo, 10. Nor is it relevant that CMDS did or did not implement a
capability to receive the electronic downloads that the AW1 system was capable of delivering.
The claims of the ‘278 patent refer to the features and capabilities of the third party forms
servicer’s system and are not dependent on whether the customer has purchased a computer or
software with which to receive that electronic information. None of CN’s arguments excuse the
failure to disclose the actual capabilities of the AW1 system in these respects.
CN argues that Hitchcock knew nothing of these processing capabilities. It represents to
the Court that keygen.pl was not created until May 20, 1997 (when it was put on what is the only
evidence of the public system) but neglects to state that keygen.pl was a “refactoring” of the
app.pl program created by Jon Batcheller.5 The momentous (CN’s and Maier’s characterization)
May 20 merger adding the refactored keygen was described in Hitchcock’s words at the time as
“minor migration mods.” PTX 3156. Nor did Hitchcock merely “touch” (CN’s characterization)
these files. He refactored, in versions that CN fails to cite, the CMDSAPP.in (DTX 2074-C) file
in the same way that he broke out keygen.pl. He modified the key_update.pl program to enable
it to handle multi-page forms processing as part of what was obviously a system-wide
conversion. DTX 2074-Y, lines 293-295 and 2093-2103, making three times the revisions to this
important program as CN admits. DTX 2074-Y at lines 174, 199, 214, 229, and 294. He could
not have made these refactorings beginning in January 1997 without observing the plain-as-day
structure of the key_update.pl program (DTX 2074-E, consisting of only eleven pages) or the
5 See Hitchcock Tr. 432:24-433:6. DTX 2037, lines 206-212 and 3158-3164 invoke and then run the “write_keys” routines in the earliest public system. The same code is simply carried forward with Hitchcock’s “refactoring” into two different programs. PTX 3141 (keygen.pl) p. 4-5 for the write keys code, p. 3 for the invocation and p.2 for comments on how the keys are written, and the role of key_update.pl to save the keys file to the Institution table, all from the 1996 versions of app.pl.
Case 3:03-cv-01229-BR Document 824 Filed 08/18/08 Page 8 of 32 Page ID#: 7115
Page 8 - XAP’S REPLY ISO ITS POST-TRIAL PROPOSED FINDINGS OF FACT
SCHWABE, WILLIAMSON & WYATT, P.C.Attorneys at LawPacwest Center
1211 SW 5th Ave., Suite 1900Portland, OR 97204
Telephone 503.222.9981
PDX/117132/154237/CKO/2858111.6
distinct field ordering and selection of the CMDS keys file that he put on the AW1 system.
Most importantly, these records and capabilities could have been identified, if Hitchcock or
Wolfston had decided to review the records of AW1 before filing the Wolfston Declaration.
A simple comparison of the AW1 system capabilities with the information disclosed in
the Wolfston Declaration makes clear that highly material information was withheld and that
there is no plausible explanation.
7. ¶ 18. See infra ¶ 22 (CN Resp. to ¶¶ 72-73 re: Non-disclosure of Jon Batcheller as
possible inventor).
B. The Sallie Mae Smart Loan Contract: Reply ISO Xap’s Post-trial PFF, ¶¶ 19-28
8. ¶¶ 19-23. CN’s contentions that it need not disclose the Smart Loan because it did
not embody the alleged invention, because it was immaterial solely for the reason that it did not
involve “multiple institutions,” and because the contract was not completed and the service
delivered prior to the Critical Date delivered are erroneous legal contentions rebutted in the Xap
Reply ISO Post-trial Memo at pp. 1-6 and need not be repeated here.
CN’s assertion that the Smart Loan contract did not require the tracking of state is wrong.
It required tracking the condition of the application form so that an applicant could complete the
application over multiple sessions, if desired, and it required notification to the applicant of
delivery of the application data to Sallie Mae. DTX 2149, Exhibit B; DTX 2236 (Ratliff depo.),
36:14-21. Fulfillment of these contract conditions requires tracking the state of the application.
CN’s effort to dismiss Smart Loan because it did not use ApplyWeb 1 software is irrelevant.
What is important were the previously undisclosed (and denied, DTX 2093, pp. 4-7) features of
the prior art that the Smart Loan contract taught. Again, CN’s behavior in 1997 makes
abundantly clear that the importance of Smart Loan to the college applications processing service
was obvious. A combination of Smart Loan and a true disclosure of AW1 was information of
the highest materiality.
9. ¶¶ 24-28. Mr. Ratliff testified that: he knew of no respect in which the logical order of
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SCHWABE, WILLIAMSON & WYATT, P.C.Attorneys at LawPacwest Center
1211 SW 5th Ave., Suite 1900Portland, OR 97204
Telephone 503.222.9981
PDX/117132/154237/CKO/2858111.6
development process set forth in CN’s implementation schedule (DTX 2154) was not followed
(DTX 2236 at 49:18-50:04); the category of “testing on browsers/platforms” was the category in
which he tested his work to confirm that it functioned for its intended purpose (Id. at 50:20-
52:24, 57:23-58:7); and the presentation code and JavaScript implementing the verification
functions were completed before the review of the form presentation with Sallie Mae on May 21,
1997 (Id. at 78:22-79:07, 82:16-84:05; DTX 2159). The test of the data upload (“Live Data
Test”) originally scheduled for April 18, 1997 (DTX 2154) recites: “The interface and database
will now be hooked together ready for the actual submission of an application in order to test the
data submission, receipt by Sallie Mae, and acknowledgment to [CN].” CN presented no
evidence suggesting in any way that the confirming test was not performed, did not work as
intended or was in any respect other than a routine implementation of a data transfer. A test
system being used by Sallie Mae for purposes corresponding to “Sallie Mae Ongoing Review”
and “Final Cleanup and Testing” was operating over the Internet by the Critical Date. DTX
2163, 2164.
The Court can review these records and evaluate whether, in light of CN’s failure to
maintain records of the Smart Loan™ software, Xap has shown that the important system
components—data uploads per Sallie Mae’s specification, data checking, or multi-page
capability—had or had not been shown to work for their intended purpose by the Critical Date.
The verification function was, by Mr. Ratliff’s own acknowledgement, ready for patenting when
the contract was signed because implementation in the context of the Smart Loan service was
well known in the art. Tr. 597:18 to 598:3.
The JavaScript verification code is part of the HTML code and accompanies the
transmittal of the form code to the user’s browser. See PTX 3066-C; DTX 2236, at 29:5-25.
Without any explanation, Dr. Maier gives a conclusory opinion that sending such script with the
similar transmission of HTML code from the AW1 system would be “difficult or impossible”
(CN’s characterization in its brief, CN Resp. to ¶ 26). The behavior of CN’s CEO and its Vice
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SCHWABE, WILLIAMSON & WYATT, P.C.Attorneys at LawPacwest Center
1211 SW 5th Ave., Suite 1900Portland, OR 97204
Telephone 503.222.9981
PDX/117132/154237/CKO/2858111.6
President of Marketing in spring 1997, preparing and publishing offers to provide the Smart
Loan verification service to colleges and describing Smart Loan as the same technology as used
in the college forms system, is an effective rebuttal to Dr. Maier’s uncorroborated opinions.
C. The Patent Applicants and the ‘278 and ‘042 Prosecution Histories: Reply ISO Xap’s Post-trial PFF, ¶¶ 29-32
10. ¶¶ 29-32. CN’s argument to the Patent Office at DTX 2093, pp. 4-7, listing the
many features of the claimed inventions that CN asserted were not taught in the prior art speaks
for itself. The Court does not need the parties’ extended argument to compare CN’s argument to
the examiner with the undisclosed features of the AW1 and Smart Loan systems, or to CN’s
2008 trial argument that it had no duty to accurately disclose those systems because individual
features were, CN now argues, well know in the art.
CN incorrectly states that Xap agrees that Scharmer did not teach sharing user
information across forms. The examiner found, and Ms. Frederiksen agrees, that Scharmer does
teach storing user data in a database and pre-populating later forms with some of that
information. See Xap Post-trial PFF, ¶ 92. CN did not stand pat and argue that point to the
examiner, but instead amended its claims. As elsewhere, CN makes a number of unsupported
claims and attributions, including the incorrect contention that changing the template form
rendered by the DataBlade engine required re-programming that engine. The arguments CN
otherwise makes here are repetitions of arguments made and rebutted elsewhere.
D. The Wolfston Declaration
1. Paragraph 10: Reply ISO Xap’s Post-trial PFF, ¶¶ 33-37
11. ¶ 34. Xap addressed CN’s contentions and tactics in defense of paragraph 10 in Xap
Resp. to CN Post-trial Memo at pp. 6-9 in Xap Resp. to CN Post-trial PFF, section II.G, and in
part in paragraph 3 (response to ¶¶ 4-5), above. Xap incorporates those responses.
Mr. Wolfston is sophisticated in computer science and the examiners are persons of skill
in the art. Both know the difference between a computer software program and a text file, such
as the application data file (aka, application information file) that figures prominently in the ‘278
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SCHWABE, WILLIAMSON & WYATT, P.C.Attorneys at LawPacwest Center
1211 SW 5th Ave., Suite 1900Portland, OR 97204
Telephone 503.222.9981
PDX/117132/154237/CKO/2858111.6
and ‘042 patents. With evidence of the true capabilities and architecture of the AW1 system of
the forms engine— including AW1’s programming of the forms engine to accept arguments to
directives from the “.in files”—it is the Court’s role to determine whether Wolfston fully
disclosed the prior art to the Patent Office.
CN’s assertion that the purported limitations of AW1 were overcome by the preferred
embodiment is rubbish, as detailed in the references above. AW1 already used the technique of
arguments to directives to provide customized field labeling and parameters, through such
controls as TableText and Itext that were reviewed in detail by Barbara Frederiksen. Frederiksen
Tr. 203:25 - 210:15, 220:4 - 230:6. The only improvement made was to simply extend this
technique to additional fields. Now CN seeks to assert that the inventive aspect was to list the
attribute names for the fields in an Attribute Table with unidentified additional information. This
is grasping at straws. The system architecture and attribute naming structure of AW1 is what is
described in the preferred embodiment and claimed in the patents.
CN makes an additional misstatement, perhaps inadvertent, that warrants correction. CN
asserts that “labels” had to be identical to permit sharing in AW1. This is incorrect. Sharing
occurred whenever the attribute name (e.g., person_name_last_(1)) assigned to the user data was
the same. It did not matter whether the label for a field was “Father” or “Guardian,” if the
attribute name for both was the same, sharing took place. See Xap Post-trial PFF, ¶¶ 9, 44.
12. ¶ 35. See supra, ¶ 11. Many of CN’s claimed facts have no citation. While CN
concedes here that changes to a college application could be made without re-programming the
forms engine—highly material information that it kept from the Patent Office—it grossly
exaggerates, without citation, the frequency of those changes. CN now seeks to include as
changes made to an application, here and in paragraph 36, all of the code changes made to
correct grammatical errors in forms labeling, to add new sharable fields, and to enhance the
AW1 system capabilities by programming the forms engine to accept arguments for directives—
an alleged inventive feature of the patents. All of these additions, and very few changes to the
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forms engine for school-specific application issues, are what make up version 1.75 of DTX 2037.
Lines 1002 and 1035 of DTX 2037 are examples of modifying the forms engine program to
accept arguments to directives—on the pre December 5, 1996 system that CN contends was a
production program at that time. Frederiksen Tr. 204:23-206:22.
Changes to the forms engine to add system-wide capabilities for all forms or to correct
punctuation in default labeling have nothing to do with the claim element “allowing new form
data fields corresponding to applicant information not previously requested to be added to an
application form without requiring alterations of existing application forms or programs that
access the database.” ‘278 patent, claim 1. Creating a program with 575 sharable directives by
the Critical Date simply confirms the capability to customize forms. These fields are not created
for the 60-80 forms then in the CN system but by definition are available for the tens or hundreds
of forms that follow. Such apples to oranges comparisons underlie each of CN’s contentions and
Dr. Maier’s demonstrative exhibits. Xap incorporates here its discussion of the faulty Dr. Maier
testimony, paragraph 3, above.
13. ¶ 36. See supra, ¶ 12. CN’s comparison of apples to oranges does not reduce the
teaching of the AW1 functions. An exemplary instance again comes from the Golden Gate
University forms that were put online in May 1997. See supra ¶ 3.
14. ¶ 37. Though CN now admits that AW1 had the capability and taught the technique
of using arguments to directives to improve customization of forms and to add or modify
additional fields without re-programming, CN’s argument to dismiss this teaching and its failure
to disclose this capability to the Patent Office is made of whole cloth. The application of iText
and Tabletext arguments to directives is precisely the technique claimed as the important feature
of the patent architecture that improves data sharing and customization. The Court can readily
determine from its own reading of the Wolfston Declaration whether this admitted capability
(admitted by CN only because faced with incontrovertible proof in the CN source code) was
disclosed by Wolfston. If it was not, as Xap submits, that alone is inequitable conduct and the
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continuing cover-up of that capability is clear and convincing evidence that it was intentional.
2. Paragraph 6: Reply ISO Post-trial PFF, ¶¶ 39-41
15. ¶¶ 39-41. See Xap Response to CN Post-Trial PFF, section II.B. CN argues that it
could not provide the customization required by its customers because online applications did
not look exactly like paper applications. The patent specification and claims, however, do not
require this level of customization. They require customization in the selection of the content of
information requested of applicants, the order and selection of the content, and/or branding with
the institution name and/or logo. DTX 2079, ‘278 patent, 6:5-9, (claim 1) 22:34-39, (claim 5)
23:36-39; see also Xap Resp. to CN Post-trial PFF, p. 4 (limits on customization attributed to
limits of HTML technology, not AW1), Nusbaum Tr. 342:14-343:01.
According to CN, to consider Wolfston’s representations in light of the patent
specification and claims constitutes inappropriate claim construction. CN Resp. to ¶ 39. The
descriptions of customization need no construction, however, or one would have been provided
at this stage of this litigation. The examiner viewed Wolfston’s Declaration (the only material he
was given regarding AW1) in light of the applied-for patent to determine patentability. This is
exactly how the Court must view Wolfston’s representation in order to determine whether it was
false or misleading. Wolfston failed to tell the PTO that AW1 could do exactly what was
claimed in the patent.
CN argues that there is a direct connection between customization of application forms
and data sharing (i.e., that increased customization led to less data sharing), a subject that is not
explained to the examiner in paragraph 6. See CN Resp. to ¶ 41. Whether customization affects
data sharing is irrelevant to determining inequitable conduct. Customization cannot be denied if
“some” data sharing still occurs, even if it reduces data sharing. See infra ¶ 16. Optimizing data
sharing is not a limitation of any patent application claims. CN’s argument is no justification to
deny AW1’s customization capability to the PTO.
CN also incorrectly argues that there is a dependency between customization and the
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ability to upload data to institutions in a format specified. In AW1, application forms were
created in response to directives from an application data file. Customization occurred before an
applicant ever entered data (i.e., the form had the same questions, layout and order, and
branding, whether a user had entered data or not). The user data was stored separately from the
forms and could be culled by individual tag names corresponding to the form field information
for uploading to the institutions. When user data was selected for transfer to an institution, the
AW1 programs did not interact with the .in files, the application form, or the programs that
created them. The user data was searched and retrieved through separate programs using a pre-
configured “keys” file. The software that configured the keys file (which determined the
selection order of data in the data uploads) used the .in file as a default input by choice. The
development of the CMDS SIS option that results in a different selection and ordering of the pre-
configured keys file demonstrates that the system had the capability to implement other
orderings if desired. CN’s alleged dependency is created not from a limitation of AW1 but from
a desire to justify Wolfston’s concealment of AW1’s flexibility. See Xap Resp. to CN Post-trial
PFF, p. 4
CN does not address the fact that Wolfston told the PTO that AW1 could not provide the
customization required by its customers, yet, with Wolfston’s direct oversight (Tr. 567:25-
568:9), told actual and potential customers the exact opposite throughout the lengthy period that
he now asserts the “toy” system did not work. Xap Post-trial PFF, ¶¶ 40-41. Customers were
directed to websites of Mercer, Virginia Tech, and other universities to view forms that were
“fully tailored to the individual specifications of each college client.” DTX 2018 at CNA71250
(emphasis original); see also 2004, 2013, 2023. Deposition of Kelly Queijo, former Va. Tech
administrator and current CN employee at 12:5-20, 31:13-19, 36:4-6, 38:15-17, attached as
Exhibit 1 to Declaration of Johnathan E. Mansfield (“Mansfield Decl.”) (CN provided in 1996 a
custom application that looked like the Virginia Tech undergraduate application); see also id. at
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46:19-48:13 (presented the AW1 service, including its customization ability, at a conference).6
The fact that AW1 was capable of providing customization would have been material to a
reasonable patent examiner in determining patentability. This materiality is shown by the facts
that AW1 performed what is required by the patent; that CN heavily marketed the customization
ability to its customers and its customers chose AW1, in part because of its customization ability;
and that during prosecution, the applicants distinguished Scharmer, in part, because Scharmer
lacked “branding.” DTX 2093, p. 5; CN Resp. to Xap Post-trial PFF, ¶ 30.
3. Paragraph 5: Reply ISO Xap’s Post-trial PFF, ¶¶ 44-46
16. ¶¶ 44-46. See Xap Resp. to CN Post-Trial PFF, section II.A. CN misstates Xap’s
position. Xap is not arguing that CN did not disclose a “theoretical” data-sharing capability of
AW1. CN clearly did make this misleading disclosure. “Theoretical” conveys to the examiner
that it is not tested, proven, or publicly available. The statement is misleading and false because
of what CN failed to disclose about AW1’s data-sharing capability: data sharing was publicly
available for a year prior to the Critical Date; that the data-sharing was tested and proven by
Wolfston himself (Tr. 507:17-508:7; CN Resp. to Xap Post-trial PFF, ¶ 10) and by CN every
time an application was put online (Tr. 93:3-15); and that data sharing was widely advertised to
students to drive traffic to CN’s website (see, e.g., DTX 2012-15, 2019 at CNA79030, 2023,
2028). Even in this litigation, CN has admitted that AW1 had the capability of sharing data
between fields that had the same attribute designation. See CN Resp. to Xap Post-trial PFF, ¶
10. This is more than CN told the PTO.
For the reasons stated above, there is no dependency between data sharing and either the
customization of forms or the processing of user data for transfer to a school that makes these
false statements accurate. Optimizing data sharing at the expense of customization or data
transfer is not a subject of the patent and is contradicted by the requirement of the patent claims
6 Xap maintains its objection to CN’s submission of deposition testimony of Queijo, who,
as a CN employee, should have been made to appear live (in person, via video, or otherwise) so she could be asked about documents identified by CN since her deposition.
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that only “some” data share. This is an after-the-fact argument created to justify Wolfston’s
blanket denial of key functions of the prior art AW1 service.
CN now tries to rely on an alleged oral conversation between Wolfston and the PTO
examiner about data sharing. This testimony is incompetent and thus cannot be relied upon for
the inequitable conduct analysis. All communications with the PTO must be on the record, and
claims of unrecorded oral disclosures to the PTO cannot be considered to determine whether the
applicants engaged in inequitable conduct. Litton Sys., Inc. v. Whirlpool Corp., 728 F.2d 1423,
1439 (Fed. Cir. 1984) (“No attention will be paid to any alleged oral promise, stipulation, or
understanding in relation to which there is disagreement or doubt.’ 37 C.F.R. § 1.2 []”).
As it does throughout its responses, CN fails to address the voluminous marketing
materials touting the data-sharing (see, e.g., DTX 2012, 2013, 2014, 2015, 2019 at CNA79030,
2023, 2028) and other capabilities of AW1, except to say that it thought the data-sharing
capability existed so it advertised it. Contrary to CN’s assertion that “there is no evidence that
Mr. Wolfston was responsible for all marketing literature and solicitations” (CN Resp. to Xap
Post-trial PFF, ¶ 85), Wolfston admitted at trial that he supervised the marketing group, that his
practice was to review marketing material before it was publicized, and that there was only one
instance in which marketing literature was publicized without his approval. Tr. 567:25-568:9. A
reasonable examiner, having been presented with information suggesting that data sharing was
only conceptual and not proven, would have found CN’s starkly different view of data sharing,
as presented in its marketing literature, to be highly material: “some” data sharing was an
element of all claims of the ‘278 patent and a function that CN argued distinguished its invention
from the “best” prior art reference before the examiner at the time that the Wolfston declaration
was submitted—the Scharmer patent. DTX 2093, p. 6.
4. Paragraphs 6 and 12: Reply ISO Xap’s Post-trial PFF, ¶¶ 47-52
17. ¶¶ 47-52. See Xap Reply to CN Post-trial Memo, pp. 9-11; Xap Resp. to CN Post-
trial PFF, section II.C. CN’s unsupported assertion—that it was not allegedly new for a third
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party forms servicer to create a customized form for an institution and provide it to users over the
Internet, to collect and store the applicant’s data, and then to provide that data to the institution in
a format specified by the institution that was different than the format provided by the same
forms servicer to other institutional customers—might have credibility if CN or the patent
applicants had told that to the Patent Office. Instead, they told the Patent Office the opposite.
DTX 2093, p. 6 (e.g., “[A]pplicants submit that Scharmer does not teach transmitting the
applicant information from the completed form to any institution.”) CN makes these claims for
the first time in this Court in an effort to avoid its obligation to have disclosed material
information when prosecuting the patent applications.
Similarly, CN simply ignores its obligation to disclose pre-Critical Date contracts, such
as the admitted agreement to supply user data to Carnegie Mellon in EDI format using AW1. A
contract for sale does not cease to be prior art simply because the contract is terminated in the
midst of scheduling the installation. CN raises no fact in these paragraphs, as distinguished from
unsupported argument, that is not addressed in the referenced papers, above.
5. Paragraph 11: Reply ISO Xap’s Post-trial PFF, ¶¶ 53-57
18. ¶¶ 54-57. See Xap Resp. to CN Post-trial PFF, section II.H. Wolfston’s Declaration
asserts that AW1 “could not … determine whether an application was in process, complete, or
transmitted to the school.” DTX 2094, ¶ 11. AW1, however, did exactly that. AW1 had a Log
table that stored a record of steps in the processing of an application, including whether a given
application was in process, complete and saved, paid, transmitted to the institution, and
acknowledged by the institution. DTX 2035, p. 6; 2072; Tr. 99-103, 138-140. Batcheller, the
architect of AW1, described AW1’s maintenance of state in his architectural record. This record
explains with respect to state that, for example, a save operation ultimately results in a log entry
made representing the save, and a save and send operation ultimately results in a log entry made
representing the send. DTX 2072, p. 2. John Stedman confirmed that AW1 kept track of
payments paid and other operations in order to determine the status of operations. Tr. 499:17-
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501:10. What AW1 did is exactly what is described in the patent specifications and exactly what
CN describes in its post-trial response briefing—a given operation results in a given state.
CN appears to argue that, because AW1 relied upon an email communication back from
the college acknowledging receipt of the application which AW1 then automatically logged to
the User’s Internet-accessible account, that AW1 had no state capability. CN Resp. to Xap Post-
trial PFF, ¶ 55 (citing in part, Batcheller’s trial testimony at p. 13).7 This is a baseless argument,
because nothing in the patent specification requires all states to be automatic, and CN’s own
documentation of AW1 shows that the maintenance of states was automatic.8 The patents
broadly describe the maintenance of state, and what the patents describe is precisely what AW1
did. DTX 2079 (‘278 patent), 9:13-16, 13:64-66, 14:32-37, 18:35-43, 20:36-40; see also
corresponding provisions in DTX 2098 (‘042 patent).
Once again, CN ignores its marketing literature that confirmed the ability of AW1 to
maintain state. Students and institutions both were told that the status of an application could be
tracked through the AW1 system and that students could view the status online. DTX 2018 at
CNA71259-60; 2019 at CNA79030; DTX 2015. AW1 maintained the status of applications as a
result of operations, whether they occurred automatically or not. This is exactly what the patents
describe, and exactly what CN said AW1 did not do in the Wolfston declaration.
While the state maintenance feature is not separately claimed as an invention, CN used
7 Page 13 of the 2008 trial transcript is part of the pre-trial transcript, has no testimony
from Batcheller, and pertains to prosecution history estoppel and not maintenance of state.8 While the acknowledged “state” required the school to act to acknowledge receipt of the
application, AW1 still automatically showed the user the result of this operation—that the application was acknowledged—in response to the school’s act. DTX 2078 at CNA07552 (Batcheller’s architectural recording explaining that ackbot responds automatically to the receipt of an e-mail and tells the student user that his or her application has been received and “sendbot will find the ack and stop re-sending the data”). Also, CN cites DTX 2035 for the statement that “[a]utohandle expired apps and acks” was in the queue for development, but ignores the following statement in this exhibit showing that state maintenance did occur automatically in AW1: “Done!! x Sendbot reads AK log to terminate additional sends.” DTX 2035 also does not support CN’s contention that “acknowledgement by the school (‘ack’) was an ‘operation’ and not a ‘state’ as reflected in the state machine.” CN Resp. to Xap Post-trial PFF, ¶ 55 (citing DTX2035).
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the lack of state to support its misrepresentation of AW1’s capability to store and process
applicant information. See DTX 2094, ¶ 11. The truth respecting AW1’s capability to track
state was information that would be important to a reasonable examiner and is thus material.
6. Paragraph 8: Reply ISO Xap’s Post-trial PFF, ¶¶ 58-61
19. ¶¶ 59-61. See Xap’s Reply to CN’s Post-trial Memo, pp. 9-10; Xap Resp. to CN
PFF, section II.E. CN repeats unsupported claims made and addressed previously. The “flat text
file” that it attributes to AW1 was only in the pre-Illustra prototype system. Tr. 92:8-17. CN
never disclosed to the Patent Office the AW1 software capability of converting the binary large
object files of user data into an associative array that enables individual searching and retrieval,
as it now asserts (CN Resp. to ¶59) without any reference. Contrary to its attribution to Dr.
Maier (id.), Dr. Maier conceded on cross-examination that a flat text file and a structured file
coupled with software programmed to manipulate the structured data file are very different
animals. Tr. 735-39. CN simply refuses to compare what the AW1 system could do in fact with
what Wolfston and the applicants disclosed.
7. Paragraph 7: Reply ISO Xap’s Post-trial PFF, ¶¶ 62-67
20. ¶¶ 63-67. See Xap Resp. to CN PFF, section II.D. CN’s denials of multi-page
capability fall apart in the face of the evidence of the Golden Gate University applications that
were processed on the public system in May, 1997. See supra ¶ 3. CN ignores Mr. Hitchcock’s
own architecture record that documents the operation by April 17, 1997 of the multi-page
program (mp_app.pl, later merged with app.pl) that he developed in early 1997. DTX 2074-T.
These programs were running prior to May 20, according to CN’s own documentation of
“ApplyWeb 1.0.” While CN asserts without any reference that other programs had to be
developed to support multi-page capability, it never identifies such programs, never
demonstrates when they were put online, and never submits any evidence that multi-page
capability was put into production at any different time. CN’s documents disprove CN’s
contention and Mr. Hitchcock’s “belief” that now contradicts his 2004 deposition testimony.
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8. Paragraph 9: Reply ISO Xap’s Post-trial PFF, ¶¶ 68-71
21. ¶¶ 69-71. Wolfston made separate representations that (1) AW1 did not store
metadata, i.e., “information about the data fields,” and (2) AW1 was “incapable of performing
data checking.” DTX 2094, ¶ 9. The statement regarding metadata is independent of the denial
of data checking capability. CN incorrectly argues a dependency between the two sentences in
order to contend that the denial of metadata only applies to metadata used for data checking. But
the denial of metadata stands alone and, in the context of the patent applications that claim
metadata for many uses other data validation, can only be understood for its plain and clear
meaning. CN is also wrong when it argues that the attribute name of a name:value pair is not
metadata. CN Resp. to Xap Post-trial PFF, ¶¶ 69, 71. Both of CN’s arguments are inconsistent
with the patent specification.
As defined in the ‘278 and ‘042 patent specifications, metadata is “information that
characterizes the applicant data.” DTX 2079, ‘278 patent, 2:27-34. The patent applicants
claimed a number of uses of “metadata” to secure the broadest scope of protection from the PTO,
including “describing” the user data (‘278 patent claim 18) and “sharing [the user data] between
applications” (‘278 patent claim 20). The only example of metadata in the patent is the attribute
name used to characterize user data (‘278 patent, 16:1-35), precisely the use found in AW1. No
examples of metadata used for data checking are disclosed in the patent; it is only described as a
general function or goal. By claiming these broad uses of metadata, Wolfston contradicts his
intent to use the narrower definition of “metadata” in his Declaration.
Wolfston’s attempt to reconcile his conduct is hopelessly conflicted. He admits that
“metadata” should be understood as described in the patent specification. Tr. 543:10-544:03.
But because the patent does not support his representation that metadata was limited to data
checking, he then narrows the definition of “metadata” by testifying that he was not representing
that “all kinds of metadata” were absent in AW1, only “[m]etadata pertaining to data fields” if it
was used for data validation. Id. The PTO cannot be expected to know his subjective and
undisclosed definition of “metadata.” See Therasense, Inc. v. Becton, Dickson & Co., 2008 U.S.
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Dist. LEXIS 48638, at *70 (N.D. Cal. June 24, 2008). Nor is there any basis in the specification
or claims of the patent application for Dr. Maier’s opinion that a reasonable examiner would
understand this unexpressed limitation. Tr. 701:11-702:18. The testimony of both Wolfston
and Dr. Maier is driven by a desire to avoid the consequences of inequitable conduct for this
representation and should be rejected. See Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer,
Inc., 326 F.3d 1226, 1238 (Fed. Cir. 2003) (quotations and citation omitted) (assertion of
immateriality of prior art was unpersuasive due to “self-serving testimony of an interested
witness” and lack of objective evidence and expert testimony).
There is clear and convincing evidence that the AW1 system stored metadata to
characterize user data and the data fields for a number of purposes. The primary use was to
implement the attribute naming functions that control sharing of user information between forms.
This methodology was conceived by Jon Batcheller, as described in his architecture record (DTX
2072).9 Batcheller, the “architect” of AW1, testified that applicant data was stored in
name:value pairs. The “name” (e.g., “person_name_last(1)”) describes the data (e.g.,
“Minetto”), so that the data could be correctly placed in the form and sharing could be
controlled. Tr. 91-92, 104, 249. Compare the metadata described for the same purpose in the
‘278 patent specification at 16:11-35. The “pound bang” (i.e., “#!”) metadata of AW1 was used
with form fields to designate those that were limited to one or a group of schools. This and other
metadata were stored in the .in files and in the user data BLOB to implement the very functions
claimed in the ‘278 patent claims 18 and 20—functions unrelated to using metadata for data
checking. Xap Post-trial PFF, ¶¶ 9, 30, 44, 59, 69-71. Ms. Frederiksen also testified that the
“name” of a name:value pair serves as metadata:
9 CN never offers evidence that another conceived of these features. The metadata
identified in the patent specification is used to implement the forms generating architecture that Batcheller created. That architecture is discussed at length in Xap’s responses because it is, at the least, one of the key elements of the alleged inventions as objectively determined from the patent specification. See Xap Resp. to CN Post-trial Memo, p. 6-9; Xap Post-trial PFF, ¶¶ 6, 18, 35, 44, 54, 63, 72.
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[W]ithin the blob, there are these separate fields delineated via a delimiter. And each one is labeled with the appropriate name. Now that name also serves as the metadata whereby sharing is controlled[.] Tr. 253:02-06 (emphasis added).
The evidence demonstrates that metadata was used in AW1 as described in the patent.
Wolfston had to conceal the presence and use of metadata in the prior art AW1 system to ensure
that broad claims involving metadata (e.g., ‘278 patent claims 18 and 20) would issue. This
intentional concealment of material information to patentability is inequitable conduct.
E. Jon Batcheller Should Have Been Disclosed as an Inventor of CN’s Patents-in-Suit: Reply ISO Xap’s Post-trial PFF, ¶¶ 72-73
22. ¶¶ 72-73. CN does not dispute that Jon Batcheller is the “architect” of the AW1
system. CN Resp. to Xap Post-trial PFF, ¶ 18. The disagreement lies in whether AW1 is the
subject matter of any part of the patents claims in suit. CN Memo, 16. “[T]he
misrepresentations concern inventorship, and while falsehoods regarding inventorship do not
ordinarily affect patentability of the claimed subject matter, inventorship is nonetheless a critical
requirement for obtaining a patent.” Applied Materials, Inc. v. Multimetrixs, LLC, 2008 U.S.
Dist. LEXIS 55635, at *14-*15 (N.D. Cal. July 18, 2008). Omission of an inventor “calculated
to ‘obfuscate the threshold issue of inventorship’” is material, and that alone can support a
finding of inequitable conduct. Id. at *15 (quoting Perseptive Biosystems, Inc. v. Pharmacia
Biotech, Inc., 225 F.3d 1315, 1321-22. (Fed. Cir. 2000). Xap has presented clear and convincing
evidence that Batcheller’s individual contribution to the AW1 system is the subject matter of at
least two exemplary claims in the patents-in-suit and, based on key claims limitations attributed
solely to his work, found in numerous claims of the ‘042 and ‘278 patents.
Batcheller, a neutral party with nothing to gain from this lawsuit (Tr. 77:07-09), testified
extensively about his development of the features of AW1 that are present in the claims of the
patents. One of the key features of the patented inventions is the separation of the application
data file (.in file, the “strength of the ApplyWeb[1] system”, Tr. 85, discussing DTX 2072) from
the forms engine (app.pl). Batcheller conceived of this architecture and wrote the code to
implement this AW1 feature, only later described in the patent applications of others. Tr. 85-86,
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98. In both the ‘278 and ‘042 patents, the interaction between the .in file and app.pl is
diagrammed in Figure 13—a schematic of claim 1—and claimed separately in claim 2 of the
‘278 patent. Batcheller described how each component in Figure 13 of the invention
corresponded to a component in AW1 and in many of the elements of the combination of
functions claimed by the ‘278 and ‘042 patents. Tr. 95:13-98:07. Through his work on AW1,
Batcheller confirmed that he conceived and implemented (i.e., wrote the code) nearly all of the
limitations of claim 1 in the ‘278 patent. Tr. 117:11-122:05. For example, Batcheller conceived
and implemented the data sharing limitation in claim 1 of the ‘278 patent by using “keys” (e.g.,
attribute naming method) in the .in file. This methodology of using “keys” allowed data to share
between common keys of two different forms. Data sharing is a key step and element of every
one of the claims of the ‘278 patent. Batcheller wrote the code to implement this feature of
AW1. Tr. 85:12-89:08, 121:05-25.
CN asserts, through only the unsupported statement of Dr. Maier, that this architecture
was in the prior art. Were there such art, CN should have identified it to the Patent Office or to
this Court. CN also disputes that Batcheller “conceived” of this architecture as described in the
patents. CN Resp. to Xap Post-trial PFF, ¶ 18. However, the trial testimony that CN cites
actually contradicts its position if one reads just a few lines past the snippet that CN proffers. Tr.
97:20-98:01, 119:14:25. It is also notable that CN has not presented any corroborated evidence
that any named inventor conceived of the architecture and features that Batcheller testified to
conceiving.
Whether Mr. Batcheller is an inventor or not was an issue for the Patent Office to
determine. Nusbaum Tr. 370–372. There is substantial evidence that he is, obligating CN (as
assignee of the patent applications) and the other applicants to identify him. By omitting
Batcheller as a co-inventor, Wolfston downplayed the importance and sophistication of the prior
art AW1 system that was in public use before the Critical Date and concealed material
information about the true inventorship that would have been important to the examiner’s
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responsibilities. See Applied Materials, 2008 U.S. Dist. LEXIS 55635, at *15. Failure to
identify Batcheller as a possible co-inventor on the patents with intent to deceive is inequitable
conduct. See Frank’s Casing Crew & Rental Tools v. PMR Techs., Ltd., 292 F.3d 1363, 1376
(Fed. Cir. 2002).
F. The Reexamination of the ‘042 Patent: Reply ISO Xap’s Post-trial PFF, ¶¶ 74-83
23. ¶ 74. See Xap Reply to CN Post-trial Memo, pp. 11-13; Xap’s Response to CN’s
PFF, section IV. One cannot read the ‘042 reexamination file record without the clear and
unmistakable conviction that the patentability of every claim hinged on one element. That is
certainly how Mr. Wolfston understood it, from page 148 of his January 23, 2008 deposition:
Q. Now, it appears from the examiner's interview summary that the patentee's position at this point boiled down to the one contention, that the references do not teach providing data in an institution "In a format specified by the institution. Do you see that?”A. Yes. Correct. Q. Is that accurate? A. Yes.
24. ¶ 75. CN’s effort now to quibble that the snippet that Wolfston presented to the PTO
as an accurate description of Xap’s prior art offering came from a proposal to contract (that CN
knows was fulfilled) and not a contract speaks volumes for CN’s defense. Wolfston testified that
he used the Texas proposal because it was the best evidence. DTX 2239. The Court and the
parties know he could have used the CSU Mentor contract that was in evidence at the 2006 trial
and that was signed and fulfilled in 1996, but it would only prove again that the snippet
submitted was false and misleading.
25. ¶ 76-77. See Xap Response to CN PFF, section IV. Wolfston now argues that the
proof that the snippet was false was on the single page that he left with a group of 48 other
pages, never filed as or with an IDS, never called out to the examiners, and never presented in
his PowerPoint in the first place. The full page does not as clearly prove the falsity of
Wolfston’s representations as does the clear delineation only two pages earlier in Xap’s proposal
of the multiple formats offered. But what defense is it to say “I misled the Patent Office and
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slipped into their file something closer, but not fully truthful, than what I expressly said in a
carefully prepared PowerPoint presentation”? This contention only makes clear that Wolfston
intended to mislead when he culled the snippet and presented it. See infra ¶ 29.
26. ¶ 78. Xap made a typographical error. The CSU contract is a 1996 contract, not a
1997 contract. It was signed in August 1996 and performed by November 1996, as CN is aware.
DTX 2009; DTX 2229 (excerpt of 2006 trial testimony of Dr. Frank Tansey). That Xap offered
both electronic flat file delivery formats and EDI 189 and delivered multiple formats in
fulfillment of the contract, all as testified in the 2006 trial, is inconsistent only with Mr.
Wolfston’s effort to mislead the Patent Office into thinking that CN was the first to offer
customers a choice of formats for the transfer of user data.
27. ¶ 79-80. CN’s arguments are baseless. Proven contracts introduced at a trial after
lengthy discovery and supported by sworn deposition and Court testimony, and confirmed by a
jury’s verdict that necessarily found this key element (“in a format specified”) met by these prior
art systems, are the antithesis of “uncorroborated” rumors. This is truly a desperate argument, as
is the contention that the fact that Xap did not call Mr. Shin to the 2008 trial has any relevance.
The test of Wolfston’s representation is what was in the trial record and thus known to Mr.
Wolfston as contrasted with what Wolfston presented to the PTO in a carefully scripted
PowerPoint presentation designed to mislead the examiners into believing that no prior art
vendor offered customers a choice among the formats that CN belatedly offered. Mr. Shin’s
testimony was presented at the 2006 trial, confirming that CollegeEDGE offered a comma
delimited flat file delivery and also offered EDI 189 if any college was prepared to use it. 2006
Tr. 1198-99, 1223-24, (Exh. 2 Mansfield Decl.) Colleges could specify fixed or variable fields
and select the order of fields, all of which are different formats as described in the ‘042 patent
(DTX 2098), 21:1-6 and new claims 50 and 51. That is what Wolfston would have told the
Patent Office had he been truthful. Finally, CN’s continued assertion that it fulfilled its duty to
disclose by including the transcript of the trial in 17,000 pages of undifferentiated material shows
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that submission for what it is, a trial tactic for use in this Court. See Xap Resp. to CN PFF,
section IV.
III. MATERIALITY: Reply ISO Xap’s Post-trial PFF, ¶ 84
28. ¶ 84. CN’s simple response that “Xap is incorrect” offers, and requires, little to
reply in terms of materiality. Each of Wolfston and CN’s misrepresentations and concealment of
important information, as discussed in all of Xap’s post-trial briefings, would be important to a
reasonable examiner. Nusbaum Tr. 329-335, 340-341. In particular, false statements in the
Wolfston declaration are inherently material. “In finding inequitable conduct on the basis of
false affidavits, the Federal Circuit has repeatedly commented that ‘[i]n contrast to cases where
allegations of fraud are based on the withholding of prior art, there is no room to argue that
submission of false affidavits is not material.’” Applied Materials, 2008 U.S. Dist. LEXIS
55635, at *16-17 (citing cases) (emphasis added); see also eSpeed, Inc. v. BrokerTec USA,
L.L.C., 480 F.3d 1129, 1136 (Fed. Cir. 2007).
IV. INTENT: Reply ISO Xap’s Post-trial PFF, ¶¶ 85-90
29. ¶¶ 85-90. CN’s arguments against intent to deceive the Patent Office are
contradictory. Specifically, CN claims that Wolfston did not know AW1 at a “detailed level,”
relying on Batcheller and Hitchcock for information (CN Resp. to ¶ 85) and that Hitchcock was
never “fully familiar” with the AW1 code either (CN Resp. to ¶ 86). But then CN argues that
“neither Mr. Hitchcock nor Mr. Wolfston felt the need to review” their own records to verify the
truthfulness of the Wolfston Declaration (CN Resp. to ¶ 88). Wolfston and Hitchcock had six
months between the submission of the IDS and the Declaration to refresh their recollections. A
review of Hitchcock’s work or Batcheller’s architecture records—at a broad, not “detailed” code
level—would have disproved a majority of the statements in the Declaration. The duty of
disclosure to the Patent Office is absolute, as Wolfston testified he and Hitchcock were keenly
aware. Tr. 530:25-531:09. There is no excuse for untruthful statements based on facts that were
“reasonably remembered” (CN. Resp. to ¶ 86) because that conduct falls short of the duty owed
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to the Patent Office. Contrary to CN’s contention in ¶ 87, specific motivation to conceal highly
material information in order to obtain a patent can be a factor for finding intent to deceive. See
Cargill Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1366-67 (Fed. Cir. 2007).
Wolfston testified that all marketing literature and press releases for CN (except for one
unidentified instance) went public only with his approval. Tr. 567:25-568:09. The discrepancy
of what Wolfston offered the public and what he disclosed to the Patent Office is too stark a
contrast. The pre-Critical Date marketing statements are clear and convincing evidence that
Wolfston and CN intentionally concealed the true capabilities of AW1 and the Smart Loan
service/contract. See Cognex Corp. v. VCode Holdings, Inc., 2008 U.S. Dist. LEXIS 40370, at
*91 (D. Minn. May 19, 2008) (annual report disclosed material information that was concealed
from the Patent Office).
This intent to deceive continued during the Reexamination. Far from “accurately and
fairly” disclosing the trial testimony of Dr. Tansey and Mr. Shin (CN Resp. to ¶ 89), Wolfston
and CN continued their intentional concealment of highly material information. CN Resp. to ¶¶
78-80. CN repeatedly insists that it provided full disclosure by submitting 17,000 pages for the
Examiner to review (CN Resp. to ¶ 89, referencing its responses to ¶¶ 79, 80). Without
providing any guidance as to where relevant pages were located, the disclosure was anything but
accurate and fair. This conduct is clear and convincing evidence of intent to deceive. See
eSpeed, 480 F.3d at 1138 (burying material reference in 1139 pages is intent to deceive); see also
Cognex, 2008 U.S. Dist. LEXIS 40370, at *88-89 (identification of reference in IDS without
guidance to Examiner is lack of disclosure) (citing Li Second Family L.P. v. Toshiba Corp., 231
F.3d 1373, 1379 (Fed. Cir. 2000). CN cannot counter this point of law.
V. BALANCING OF INTENT AND MATERIALITY: Reply ISO Xap’s Post-trial PFF, ¶ 91
30. ¶ 91. CN offers nothing in this rebuttal that is not already addressed. Prior art
cannot be withheld from the Patent Office because an applicant contends it did not function
efficiently or was not commercially competitive—a contention that can be alleged to apply to
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virtually all prior art products and services. Ciba-Geigy Corp. v. Alza Corp., 864 F. Supp. 429
(D. N.J. 1994), aff'd in relevant part, 68 F.3d 487 (Fed. Cir. 1995); F.B. Leopold Co., Inc. v.
Roberts Filter Mfg. Co., 1997 U.S. App. LEXIS 16233, at *6 (Fed. Cir. July 2, 1997)(reference
cannot be ignored “simply because it fails to disclose a device that works as well as the patented
device”), Graham v. Gun-Munro, 2001 U.S. Dist. LEXIS 7110, *13 (N.D Cal. May 22, 2001)
(“A prior art reference does not have to work as effectively as the patented invention (or even
function at all) to qualify as prior art for the purpose of an obviousness inquiry.”)
VI. PROSECUTION HISTORY ESTOPPEL: Reply ISO Xap’s Post-trial PFF, ¶¶: 92-95
31. ¶¶ 92-95. See Xap Reply to CN Post-trial Memo, section IV and Xap Resp. to CN
Post-trial PFF, section VII. CN ignores the “records” amendment in arguing that the rationale
for “the amendment” is merely tangentially related to Xap’s accused equivalent database—a
structure that does not have the claimed “records” structure. CN’s new argument (its prior
argument was that Scharmer does not have a database, despite clear language in Scharmer that it
does) is that the important distinction is that Scharmer has a database that does not stored user-
entered information, while CN’s alleged invention does. CN says this means the comparison is a
database versus no database for user-entered information, instead of a comparison of the
database in Scharmer versus the database in CN’s alleged invention.
First, CN is trying to ignore Scharmer’s database while saying that it is not. If Scharmer
has a database that stores client data, and the Scharmer patent expressly states that it does, then
CN’s distinction must have been that its database for storage of applicant data was different, and
CN used the records limitations, in part, to show this distinction. Even accepting CN’s theory
that one distinction from Scharmer is the storage of user-entered information, the records
limitations explain how CN’s invention enters the user-entered information into the database,
and CN made these amendments to overcome the Scharmer prior art rejection. CN cannot ignore
the records limitations by saying that this amendment was not necessary.
Second, the objective record does not show that Scharmer did not have a database to store
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user-entered information. The objective record must consider what the examiner found during
prosecution, and cannot be determined by relying solely upon the applicants’ arguments.
Although CN asserts that “the Examiner correctly noted that certain pre-existing applicant
information is drawn from a database and automatically inserted into new forms” such that the
Examiner did not find that Scharmer claimed storing user-entered data in a database, the
objective record shows otherwise, which is presumably why CN fails to quote what the
Examiner actually said. See CN Resp. to ¶ 92. The Examiner actually said that Scharmer shows
“posting the application on the server and storing the applicant information in the database is
described in col. 2, lines 29-44 and col 5, lines 40-48” and “automatically inserting into some of
the data fields of the second application form the data storage is described in col. 2, lines 50-65.”
DTX 2087, 3-4 (emphasis added). The Examiner did not find that Scharmer did not disclose a
database storing user-entered information.
Finally, CN offers no reason for the amendment adding the records limitations, but
instead just ignores the amendment. Even if CN were correct that the rationale for distinguishing
Scharmer had nothing to do with the records limitations, this cannot overcome the presumption
of prosecution history estoppel for two reasons, as a matter of law. First, a patentee cannot argue
post hoc that the amendment at issue was not necessary to overcome the examiner’s rejection.
Int’l Rectifier v. Ixys, 515 F.3d 1353, 1359 (Fed. Cir. 2008); see also Schwarz Pharma, Inc. v.
Paddock Labs., Inc., 504 F.3d 1371, 1377-78 (Fed. Cir. 2007). Second, if there is no objective
reason for an amendment, the presumption of prosecution history estoppel is irrebuttable. Festo
v. Shoketsu Kinzoku Kabushiki, 344 F.3d 1359, 1371-72 (Fed. Cir. 2003) (en banc); see also
Biagro W. Sales v. Grow More, 423 F.3d 1296, 1306 (Fed. Cir. 2005).
By again ignoring the records limitations added by amendment, CN seeks to argue that
static versus dynamic allocation is a non-issue, when in fact the claim language makes it the
central issue in determining whether the accused equivalent is merely tangentially related to the
reason for the amendment. CN chose to add the records limitations, claiming only records with
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“each record capable of storing information corresponding to each of the database fields.” DTX
2079, ‘278 patent, 22:51-52. CN does not even quote the language of the amendment (which is
the only amendment at issue) in its analysis. The language of the amendment implements,
together with the fields limitation,10 the result achieved as stated in the “thereby” clause (one of
CN’s purported rationales for the amendment) and distinguishes the Scharmer database, which
stored applicant data, from the CN database. Even if CN did not have to claim static allocation,11
it chose to do so, and the public has a right to rely upon that. Xap’s database uses dynamic
allocation (finding memory as data needs to be stored, wherever the memory is located). The
reason for the amendment and the accused equivalent are directly related, and CN fails to rebut
the presumption of prosecution history estoppel.
Finally, CN argues that Xap’s assertion—that an accused product or service that does not
literally infringe cannot infringe under the doctrine of equivalents when prosecution history
estoppel applies—has been rejected by the U.S. Supreme Court. CN Resp. to ¶ 94. CN states
Xap’s assertion correctly, but has the law wrong. The Supreme Court held exactly what CN says
Xap is asserting. Unless a patentee can rebut the presumption of prosecution history estoppel
(and CN fails to do so here), the limitation that was amended for reasons of patentability cannot
be infringed under the doctrine of equivalents and must be infringed literally. This is what
prosecution history estoppel is about. Festo, 344 F.3d at 1367.
10 CN asserts that Xap improperly attempts to make the “fields” limitation an issue in
determining tangentiality. CN Resp. to Xap Post-trial PFF, ¶ 93. Xap merely cites the “fields” limitation to explain that it, like the “records” limitations, defines the structure of CN’s database. The “field” limitation has no bearing on the relationship of the rationale for the “records” limitations to Xap’s accused equivalent, and Xap’s analysis does not depend on the “fields” limitation.
11 Dr. Maier’s testimony (see CN Resp. to Xap PFF, ¶ 94) that user-entered data can be stored in a database just as easily by either static or dynamic allocation, and that the use of static or dynamic allocation has no bearing on a system’s ability to change forms without reprogramming, is simply a variant of the argument that CN did not have to claim static allocation to overcome the Scharmer rejection and could instead have claimed storage of records without defining the type of memory allocation. Overwhelming case precedent now rejects thatargument as a matter of law. It does not, however, rebut that CN chose to do so and cannot rebut the presumption of prosecution history estoppel by arguing merely that it did not need to do so.
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Dated this 18th day of August, 2008.
Respectfully submitted,
Schwabe, Williamson & Wyatt, P.C.
By: s/ David W. AxelrodDavid W. Axelrod, OSB #750231Johnathan E. Mansfield, OSB #05539Yvonne E. Tingleaf, OSB #054463Telephone 503.222.9981Of Attorneys for Defendant Xap
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