IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
` Covered Business Method Patent Review
`United States Patent No. 8,118,221
`
`Petitioner: Apple Inc.
`
`Attorney Docket No.:
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` 104677-5008-801
`Customer No. 28120
`
`§
`Inventor: Racz et al.
`United States Patent No.: 8,118,221 §
`Formerly Application No.: 12/943,872 §
`Issue Date: February 21, 2012
`§
`Filing Date: November 10, 2010
`§
`Former Group Art Unit: 2887
`§
`Former Examiner: Thien M. Le
`§
`
`For: Data Storage and Access Systems
`
`MAIL STOP PATENT BOARD
`Patent Trial and Appeal Board
`United States Patent and Trademark Office
`Post Office Box 1450
`Alexandria, Virginia 22313-1450
`
`PETITION FOR COVERED BUSINESS METHOD PATENT REVIEW OF
`UNITED STATES PATENT NO. 8,118,221 PURSUANT TO 35 U.S.C. § 321,
`37 C.F.R. § 42.304
`
`
`
`i
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
`
`Petitioner: Apple Inc.
`
`Attorney Docket No.:
`
` 104677-5008-801
`Customer No. 28120
`
`§
`Inventor: Racz et al.
`United States Patent No.: 8,118,221 §
`Formerly Application No.: 12/943,872 §
`Issue Date: February 21, 2012
`§
`Filing Date: November 10, 2010
`§
`Former Group Art Unit: 2887
`§
`Former Examiner: Thien M. Le
`§
`
`For: Data Storage and Access Systems
`
`MAIL STOP PATENT BOARD
`Patent Trial and Appeal Board
`United States Patent and Trademark Office
`Post Office Box 1450
`Alexandria, Virginia 22313-1450
`
`PETITION FOR COVERED BUSINESS METHOD PATENT REVIEW OF
`UNITED STATES PATENT NO. 8,118,221 PURSUANT TO 35 U.S.C. § 321,
`37 C.F.R. § 42.304
`
`
`
`i
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
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`
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`TABLE OF CONTENTS
`
`INTRODUCTION ....................................................................................................... 1
`I.
`II. OVERVIEW OF FIELD OF THE CLAIMED INVENTION ......................... 4
`III. PETITIONER HAS STANDING .......................................................................... 11
`A.
`The ’221 Patent Is a Covered Business Method Patent ............................. 11
`B.
`Related Matters; Petitioner Is a Real Party In Interest Sued for and
`Charged With Infringement ........................................................................... 20
`IV. DETAILED EXPLANATION OF REASONS FOR RELIEF REQUESTED,
`SHOWING IT IS MORE LIKELY THAN NOT THAT AT LEAST ONE
`OF THE CHALLENGED CLAIMS IS UNPATENTABLE ............................ 20
`A.
`Claim Construction .......................................................................................... 21
`B.
`The Challenged Claims Are Invalid Under 35 U.S.C. §§ 102 and 103 .... 26
`CONCLUSION........................................................................................................... 79
`
`V.
`
`
`
`i
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`
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`EXHIBIT LIST
`1001
`
`1002
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`1003
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`1004
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`1005
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`1006
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`1007
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`1008
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`1009
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`1010
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`1011
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`1012
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`1013
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`1014
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`1015
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`1016
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`1017
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`1018
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`1019
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`1020
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
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`U.S. Patent No. 8,118,221
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`Plaintiffs’ First Amended Complaint
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`File History for U.S. Patent No. 8,061,598
`
`File History for U.S. Patent No. 8,336,772
`
`U.S. Patent No. 5,675,734
`
`U.S. Patent No. 4,999,806
`
`U.S. Patent No. 4,878,245
`
`U.S. Patent No. 7,334,720
`
`U.S. Patent No. 7,942,317
`
`U.S. Patent No. 5,754,654
`
`File History for U.S. Patent No. 8,118,221
`
`U.S. Patent No. 5,103,392
`
`U.S. Patent No. 5,530,235
`
`U.S. Patent No. 5,629,980
`
`U.S. Patent No. 5,915,019
`
`European Patent Application, Publication No. EP0809221A2
`
`PCT Application Publication No. WO 99/43136
`
`JP Patent Application Publication No. H11-164058 (transla-
`tion)
`JP Patent Application Publication No. H10-269289 (transla-
`tion)
`Eberhard von Faber, Robert Hammelrath, and Franz-Peter
`Heider, “The Secure Distribution of Digital Contents,” IEEE
`(1997)
`
`ii
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`
`
`EXHIBIT LIST
`1021
`
`1022
`
`1023
`
`1024
`
`1025
`
`1026
`
`1027
`
`1028
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`1029
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
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`
`Declaration of Anthony J. Wechselberger In Support of Apple
`Inc.’s Petition for Covered Business Method Patent Review
`Declaration of Michael P. Duffey In Support of Apple Inc.’s
`Petition for Covered Business Method Patent Review
`Declaration of Flora D. Elias-Mique In Support of Apple
`Inc.’s Petition for Covered Business Method Patent Review
`U.S. Patent No. 8,033,458
`
`U.S. Patent No. 8,061,598
`
`U.S. Patent No. 8,336,772
`
`File History for U.S. Patent No. 7,334,720
`
`File History for U.S. Patent No. 7,942,317
`
`File History for U.S. Patent No. 8,033,458
`
`iii
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
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`I.
`
`INTRODUCTION
`
`Pursuant to 35 U.S.C. § 321 and 37 C.F.R. § 42.304, the undersigned, on behalf
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`of and acting in a representative capacity for petitioner, Apple Inc. (“Petitioner” and
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`the real party in interest), hereby petitions for review under the transitional program
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`for covered business method patents of claims 1, 2, 11-14, and 32 (“the challenged
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`claims”) of U.S. Patent No. 8,118,221 (“the ’221 Patent”), issued to Smartflash Tech-
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`nologies Limited and currently assigned to Smartflash LLC (“Smartflash,” also re-
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`ferred to as “Applicant,” “Patent Owner,” or “Patentee”). Petitioner hereby asserts
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`that it is more likely than not that at least one of the challenged claims is unpatentable
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`for the reasons set forth herein and respectfully requests review of, and judgment
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`against, claims 1, 2, 11-14, and 32 as unpatentable under 35 U.S.C. § 102 as anticipated
`
`and § 103 as obvious.1
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`As discussed in Section III.B, infra, Petitioner has concurrently filed a Petition
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`seeking covered business method review of the ’221 Patent, requesting judgment
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`against these same claims under §§ 102 and 103 based on different prior art references.
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`Petitioner notes that the Director, pursuant to Rule 325(c), may determine at the
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`proper time that merger of these proceedings, or at minimum coordination of pro-
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`ceedings involving the same patent, is appropriate.
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`1 Petitioner is demonstrating, in pending litigation, that these claims are invalid for
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`numerous additional reasons.
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`1
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`United States Patent No. 8,118,221
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`The challenged claims of the ’221 Patent merely recite steps and corresponding
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`systems well-known in the field of data storage and access, including the use of a
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`“portable data carrier for storing and paying for data and to computer systems for
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`providing access to data to be stored.” E.g., Ex. 1001 1:20-23. The patent’s inde-
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`pendent Claim 12, for example, recites four rudimentary steps relating to data storage
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`and access—(A) reading payment data from a data carrier, (B) forwarding that data
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`to a payment validation system, (C) retrieving data from a data supplier, and (D)
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`writing the retrieved data to the data carrier:
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`12. A method of providing data from a data supplier to a data carrier,
`the method comprising:
`reading payment data from the data carrier;
`forwarding the payment data to a payment validation system;
`retrieving data from the data supplier; and
`writing the retrieved data into the date carrier.
`
`Ex. 1001. But at the time of the earliest claimed priority date for the ’221 Patent,
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`these simple elements and their combination would have been all well known to any
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`person of ordinary skill (“POSITA”). Indeed, the ’221 Patent itself acknowledges that
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`the idea of providing access to data in exchange for a payment (e.g., purchase of music
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`on a CD) was well known at the time. E.g., id. 5:9-12 (“where the data carrier stores,
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`for example, music, the purchase outright option may be equivalent to the purchase of a
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`compact disc (CD), preferably with some form of content copy protection such as digital
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`2
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`United States Patent No. 8,118,221
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`watermarking”). And, as demonstrated herein, the prior art was teeming with disclo-
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`sures of this basic concept.
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`Moreover, as its language makes clear, Claim 12 involves no “technology” at all
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`other than “a payment validation system” and “a data carrier”—both of which the pa-
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`tent itself concedes were well known and entirely commonplace at the time. E.g., Ex.
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`1001 3:37, 8:63-65, 11:27-44, 13:35-47, 56-57, 17:6-18:4, 18:20, Figs. 2, 9. Thus, as the
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`intrinsic record reflects, Claim 12 recites nothing more than a method for retrieving
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`and storing data from a data supplier while reading and forwarding payment data for
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`validation. And the other challenged claims are nothing but variations on this same
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`simple and well-known theme, with the addition, in the challenged “system” claims, of
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`equally generic components (such as data terminals with interfaces, processors, pro-
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`gram stores and code).2 See, e.g., id. 12:29-32 (“The physical embodiment of the sys-
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`tem is not critical and a skilled person will understand that the terminals, data pro-
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`cessing systems and the like can all take a variety of forms.”); Fig. 4(b).
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`2 Claim 13, for example, simply adds additional steps involving receiving payment
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`validation data from the validation system and transmitting at least a portion to the
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`data supplier, and claim 14 adds that the payment validation system comprises a
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`payment processor at the data supplier. Claims 1, 2, 11, and 32, in turn, simply recite
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`a “data access terminal” with interfaces, a processor, a program store and “code” to
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`perform similar steps, along with the application of access and use rules.
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`3
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`It is thus little surprise that, as detailed herein, each and every element of the
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`challenged claims of the ’221 Patent and their claimed combinations have been dis-
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`closed in the prior art, either by individual references, or by those references or sys-
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`tems in combination. Accordingly, each of the challenged claims is anticipated and
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`obvious.
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`II. OVERVIEW OF FIELD OF THE CLAIMED INVENTION
`By October 25, 1999, electronic sale, distribution, and content protection for
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`digital products all would have been well-known to a POSITA,3 and their combina-
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`tion as claimed also would have been well-known or at minimum obvious to a POSI-
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`TA. See, e.g., Ex. 1021 (Wechselberger Decl.) ¶¶ 27-45. For example, nearly a decade
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`earlier, on March 12, 1991, U.S. Patent No. 4,999,806 (“Chernow”), entitled “Soft-
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`ware Distribution System,” issued. See Ex. 1006 (filed September 4, 1987). Chernow
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`discloses a system and method for the sale and distribution of digital products by tele-
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`phone, with a focus on software, and also discloses content protection for those digi-
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`3 All references to a person of ordinary skill in the art (“POSITA”) refer to the
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`knowledge or understanding of a person of ordinary skill in the art as of October 25,
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`1999, unless specifically noted. A POSITA would have at least a Bachelor of Science
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`degree in electrical engineering, computer science or a telecommunications related
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`field, and at least three years of industry experience that included client-server
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`data/information distribution and management architectures. See Ex. 1021 ¶ 24.
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`4
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`tal products. See, e.g., Ex. 1006 Abstract (“A central station distributes software by tel-
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`ephone. The central station accepts credit card information, transmits an acceptance
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`code to a caller and then terminates the call. After verifying the credit card information, the
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`station calls the purchaser back and continues with the transaction only after receiving the acceptance
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`code.”); 1:67-2:9 (“It is an object of this invention to provide a means for selling and
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`distributing protected software using standard telephone lines for transferring the
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`software from the seller to the purchaser. Another object of this invention is to per-
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`mit the purchaser to rent the protected software for a period of time after which it
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`will self destruct. Another object of this invention is to permit the purchaser to rent
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`the protected software for a specific number of runs which would be useful, e.g., if
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`the software were a game.”). As illustrated above, Chernow discloses making differ-
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`ent types of access available, such as purchase versus rental. Further, Chernow dis-
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`closes a Control Transfer Program and a Primary Protection Program that ensure the
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`computer receiving a downloaded program does not have another program present
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`that could create unauthorized copies of that downloaded program. See Ex. 1006 Ab-
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`stract; 2:65-3:23.
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`In April, 1992, U.S. Patent No. 5,103,392 (“Mori”), entitled “System for Stor-
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`ing History of Use of Programs Including User Credit Data and Having Access by the
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`Proprieter,” issued. See Ex. 1012 (filed on December 5, 1990). Mori discloses storing
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`information about customer use of digital products so that a customer can be charged
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`5
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`
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`according to its use. See, e.g., id. 1:64-2:17:
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`In accordance with a fundamental aspect of the present invention, there
`is provided a system for storing data on the history of use of programs,
`including a data processing apparatus used by a user and program stor-
`age means for storing a program acquired from a proprietor and pro-
`gram-specific data. The data processing apparatus includes user-specific
`credit data storage means for storing data identifying the user of the data
`processing apparatus and indicating credit for payment capacity, use time
`length, or the like of the user of the data processing apparatus. Also in-
`cluded is use decision means for determining permission to use the program on
`the data processing apparatus on the basis of program-specific data supplied
`from the program storage means or user-specific credit data supplied from
`the user-specific credit data storage means, the use decision means deliv-
`ering either an affirmative or negative signal corresponding to results of
`the decision. Also included is program use history storage means con-
`nected to the use decision means for storing program use history data
`derived from the program-specific data or the user-specific credit data.
`Mori’s emphasis on determining whether a user has permission to access a program
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`and making sure program providers are compensated for the use of their programs
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`underscores this existing focus in the art on digital rights management (“DRM”), over
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`eight years before Smartflash’s claimed October 25, 1999 priority date.
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`Another prior art example of a secure content distribution system with content
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`protection is EP0809221A2 (“Poggio”), entitled “Virtual vending system and method
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`for managing the distribution, licensing and rental of electronic data.” See Ex. 1016.
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`6
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`Poggio—published on November 26, 1997—discloses a “virtual vending machine”
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`system for the sale and distribution of digital products. See, e.g., id. Abstract (“A virtu-
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`al vending machine manages a comprehensive vending service for the distribution of
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`licensed electronic data (i.e., products) over a distributed computer system. . . . The
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`virtual vending machine distributes licenses for the electronic data for the complete
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`product or for components thereof and for a variety of time frames, including perma-
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`nent licenses and rental period licenses. The virtual vending machine provides client
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`computers with the capability to obtain information regarding the available products
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`and the associated license fees and rental periods, to receive the product upon receipt of a cor-
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`responding electronic payment, and to reload the product during the term of the license.”). Like
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`Chernow, Poggio discloses different types of access, including rentals, and re-
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`download capabilities for already-purchased content. See, e.g., id.
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`Also in 1997—the same year Poggio was published—IEEE published “The
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`Secure Distribution of Digital Contents,” (“von Faber”). See Ex. 1020. In its intro-
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`duction, von Faber made the well-known observation that “[e]lectronic commerce
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`systems dealing with the distribution of digital contents like software or multimedia
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`data have to couple the use of the provided digital goods with a prior payment for the goods in a
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`way which cannot be bypassed.”4 See id. at 7. Von Faber proposes a system where
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`customers purchase keys required to utilize distributed encrypted content. See, e.g., id.
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`4 All emphasis herein added unless otherwise noted.
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`7
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`(“The basic idea of one possible solution is to distribute the contents in encrypted form, and to
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`have the customer pay for the key which he needs to transform the encrypted content in an usable form.
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`The security problem can in this way be transformed into a problem of key distribu-
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`tion.”); Id. at 8 (“The Content Provider provides digital contents in encrypted form
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`being distributed by the Content Distributor. The Key Management System holds the
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`keys for the contents to be decrypted. The Authorisation System permits the distribution
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`of the appropriate key after settling of the fees payable by the Customer, who will enjoy the de-
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`crypted digital contents. The role of the Content Distributor is not essential for the
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`subsequent discussion but, of course, for the business to take place.”); see also Ex.
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`1020 at Fig. 1. Von Faber also notes that its system could be used for a variety of
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`known content distribution and payment methods. See, e.g., Ex. 1020 at 13 (“The out-
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`lined system has the following characteristics: Different methods can be used to dis-
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`tribute the encrypted contents (standard techniques). This includes broadcasting,
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`point-to-point networking, as well as offering disks. Different electronic payment
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`methods can be integrated independent from the number of protocol steps needed.
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`This includes credit card based systems as well as electronic purses. This flexibility
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`leads to the fact that totally different authorisation methods can be integrated.”). Von
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`Faber further addressed the known issue of payment distribution to content providers.
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`See, e.g., Ex. 1020 at 13 (“The system will support re-selling in a simple way. Re-sellers
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`can integrate other manufacturer’s products into own packages without the need of
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`8
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`signing any extra contract. The system automatically divides the package price (pay-
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`ments) and guarantees that the money is transferred to each Content Provider whose
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`product has been integrated into the package.”).
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`Moreover, on June 22, 1999, U.S. Patent No. 5,915,019 (“Ginter”), entitled
`
`“Systems and Methods for Secure Transaction Management and Electronic Rights
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`Protection,” issued. See Ex. 1015 (filed on January 8, 1997). Ginter similarly discloses
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`“systems and methods for secure transaction management and electronic rights pro-
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`tection.” See, e.g., id. Abstract. Ginter describes a “virtual distribution environment”
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`(termed a “VDE”) to “control and/or meter or otherwise monitor use of electronical-
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`ly stored or disseminated information.” See, e.g., id. Ginter’s system “help[s] to ensure
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`that information is accessed and used only in authorized ways, and maintain the integrity,
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`availability, and/or confidentiality of the information.” See, e.g., id. Further, Ginter’s
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`“techniques may be used to support an all-electronic information distribution, for ex-
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`ample, utilizing the ‘electronic highway.’” See, e.g., id. Ginter discloses that the various
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`entities that comprise the VDE can flexibly take on any of the roles within the VDE.
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`See, e.g., id. 255:22-23 (“All participants of VDE 100 have the innate ability to partici-
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`pate in any role.”); 255:23-43. Ginter thus highlights the known flexibility in such dis-
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`tribution systems, underscoring that a POSITA would have known that combinations
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`between and among disclosures of such distribution systems would have been obvi-
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`ous to a POSITA. See also, e.g., Ex. 1021 ¶ 38.
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`9
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`Storage and utilization of content stored on portable devices, including mobile
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`communication devices such as cellular phones, was also well-known before Smart-
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`flash’s claimed October 25, 1999 priority date. As one example, PCT Application
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`Publication No. WO 99/43136 (“Rydbeck”) published on August 26, 1999. See Ex.
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`1017. Rydbeck discloses a cellular phone as user device for storing digital content in
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`non-volatile memory and accessing that content. See, e.g., Ex. 1017 5: 7-13 (“Because
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`of its integration into the cellular phone, the digital entertainment module can share
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`components already present in the cellular phone. Such savings would not be available
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`if a CD player were simply aggregated with the phone. Further, the use of solid state
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`RAM or ROM, as opposed to disc storage, eliminates the need for bounce control
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`circuitry. This enables the disclosed invention to provide cellular communications and
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`entertainment during leisure activities.”). In addition, JP Patent Application Publica-
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`tion No. H11-164058 (“Sato”), entitled “Portable Music Selection and Viewing Sys-
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`tem,” published June 18, 1999, discloses storing media content onto mobile user de-
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`vices and playing the media content from these mobile devices. Sato further discloses
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`storing that media content on a removable IC card. See, e.g., Ex. 1018 ¶9 (“The porta-
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`ble music selection viewing device 70 provides a removable storage device 76 on a main
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`body 71. This storage device 76 is a memory card similar to, for example. . . an IC card.
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`The user, after downloading the music software to the storage device (medium) 76 of
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`the portable music selection and viewing device 70 by operating the push buttons or
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`10
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`the like on the main body 71, can enjoy this music software on a display 72 or a re-
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`ceiver 74 of the portable music selection and viewing device 70, and can also enjoy
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`higher quality music playback by removing this storage device (medium) and inserting it into an-
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`other audio unit. Further, the user can store the music software from another audio unit
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`into the storage device 76 and enjoy music by inserting this storage unit 76 into this
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`portable music selection and viewing device 70.”); ¶13 (“A music storage device 240
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`connected to the music control unit 200 stores the music software. A music storage
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`medium 250 such as a magnetic card, magnetic tape, a CD, a DVD, or a memory card
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`such as an IC card stores the music software, and this storage medium 250 can be re-
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`moved and used on other audio units.”).
`
`Thus, as these background examples and the additional prior art detailed below
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`in Section IV.B (including the primary prior art Stefik patent) illustrate, the prior art
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`was rife with awareness and discussion of the same supposed “invention” now me-
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`morialized in the challenged claims of the ’221 Patent. Long before the ’221 Patent’s
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`first purported October 25, 1999 priority date, disclosures abounded of the very fea-
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`tures that Smartflash now seeks to claim as its exclusive property. As outlined in more
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`detail below, the challenged claims are therefore invalid under §§ 102 and/or 103.
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`III. PETITIONER HAS STANDING
`A.
`Petitioner certifies that the ’221 Patent is available for review under 37 C.F.R.
`
`The ’221 Patent Is a Covered Business Method Patent
`
`§ 42.304(a). The ’221 Patent is a “covered business method patent” under § 18(d)(1)
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`11
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`of the Leahy-Smith America Invents Act, Pub. L. 112-29 (“AIA”) and § 42.301. Alt-
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`hough in fact numerous claims of the ’221 Patent qualify, a patent with even one
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`claim covering a covered business method is considered a CBM patent. See CBM
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`2012-00001, Doc. 36 at 26; 77 Fed. Reg. 48,709 (Aug. 14, 2012). Accordingly, Peti-
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`tioner addresses here exemplary claim 12:
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`12. A method of providing data from a data supplier to a data carrier,
`the method comprising:
`reading payment data from the data carrier;
`forwarding the payment data to a payment validation system;
`retrieving data from the data supplier; and
`writing the retrieved data into the date carrier.
`1.
`Exemplary Claim 12 Is Financial In Nature
`A “covered business method patent” is “a patent that claims a method or cor-
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`responding apparatus for performing data processing or other operations used in the
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`practice, administration, or management of a financial product or service, except that
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`the term does not include patents for technological inventions.” AIA § 18(d)(1); 37
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`C.F.R. § 42.301. “The ‘legislative history explains that the definition of covered busi-
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`ness method patent was drafted to encompass patents claiming activities that are fi-
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`nancial in nature, incidental to a financial activity or complementary to a financial ac-
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`tivity.’” Id. (citing 157 Cong. Rec. S5432 (daily ed. Sept. 8, 2011) (statement of Sen.
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`Schumer)). “[F]inancial product or service” is to be interpreted broadly, id., and the
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`term “financial . . . simply means relating to monetary matters”—it does not require
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`12
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`any link to traditional financial industries such as banks. See, e.g., CBM2012-00001,
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`paper 36 at 23.
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`This Board has previously found, for example, that a claim for “transferring
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`money electronically via a telecommunication line to the first party . . . from the sec-
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`ond party” met the financial product or service requirement, concluding that “the
`
`electronic transfer of money is a financial activity, and allowing such a transfer
`
`amounts to providing a financial service.” CBM2013-00020, paper 14 at 9-10. 5 See
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`also, e.g., CBM2013-00017, paper 8 at 5-6 (finding patent sufficiently financial based on
`
`reference in the specification to e-commerce and the fact that “[a] person of ordinary
`
`skill in the art would have understood that [one of the claim limitations] may be asso-
`
`ciated with financial services”).
`
`As discussed above, the ’221 Patent relates to the idea of providing electronic
`
`data in exchange for payment. See AIA § 18(d)(1); 37 C.F.R. § 42.301(a); Ex. 1001
`
`2:11-15. Indeed, in seeking to enforce the ’221 Patent in litigation, Smartflash itself
`
`
`5 Indeed, these aspects of claim 12 are generally similar to those of the claim found to
`
`convey CBM standing in CBM2013-00020, which recited: “A method for transmitting
`
`a desired digital audio signal stored on a first memory of a first party to a second
`
`memory of a second party comprising the steps of: transferring money electron-
`
`ically . . . connecting electronically via a telecommunications line . . . transmitting the
`
`desired digital audio signal . . . and storing the digital signal.” Id. at 10-17.
`
`13
`
`
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
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`conceded that the alleged invention relates to a financial activity or transaction, stating
`
`that “[t]he patents-in-suit generally cover a portable data carrier for storing data and
`
`managing access to the data via payment information and/or use status rules. The pa-
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`tents-in-suit also generally cover a computer network . . . that serves data and manages
`
`access to data by, for example, validating payment information.” Ex. 1002 ¶17.
`
`The ‘221 patent emphasizes “payment” in summarizing the claimed invention:
`
`According to the present invention there is therefore provided a method
`of providing portable data comprising providing a portable data storage
`device comprising downloaded data storage means and payment vali-
`dation means; providing a terminal for internet access; coupling the
`portable data storage device to the terminal; reading payment infor-
`mation from the payment validation means using the terminal; validat-
`ing the payment information; and downloading data into the portable
`storage device from a data supplier.”
`Ex. 1001 1:59-68. Indeed, the specification confirms that the “portable data carrier”
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`of the invention is “for storing and paying for data,” id. 1:20-22, and the “payment da-
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`ta” forwarded to the “payment validation system” “may either be data relating to an
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`actual payment made to the data supplier, or it may be a record of a payment made to an e-payment
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`system.” Id. 6:60-64. “Payment for the data item or items requested may either be
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`made directly to the system owner or may be made to an e-payment system.” Id.
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`20:50-54. “E-payment systems [] are coupled to banks” and may be provided in accord-
`
`ance with cash compliant standards such as MONDEX, Proton, and/or Visa. Id.
`
`14
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`
`
`13:35-46.
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
`
`
`Thus because claim 12 explicitly describes electronically transferring money and
`
`allowing such a transfer, it clearly relates to a financial activity and providing a finan-
`
`cial service. See CBM2013-00020, paper 14 at 9-10 (“the electronic transfer of money
`
`is a financial activity, and allowing such a transfer amounts to providing a financial
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`service.”). See also AIA § 18(d)(1); 37 C.F.R. § 42.301(a). See also 77 Fed. Reg. 48,734,
`
`48,735 (Aug. 14, 2012) (“[T]he definition of [CBM] was drafted to encompass patents
`
`‘claiming activities that are financial in nature, incidental to a financial activity or com-
`
`plementary to a financial activity.’”) (citation omitted).6
`
`2.
`Further, claim 12 is not a “technological invention” that would trigger the ex-
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`Claim 12 Does Not Cover A Technological Invention
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`ception in AIA § 18(d)(1), because it does not claim “subject matter as a whole [that]
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`recites a technological feature that is novel and unobvious over the prior art[] and solves a
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`technical problem using a technical solution.” § 42.301(b). To the contrary, the ’221 patent
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`itself makes clear that its claimed “data carrier” and payment validation systems were
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`commonplace and could be implemented using well-known industry standards.
`
`(a) Claim 12 Does Not Recite A Technological Feature
`That Is Novel and Unobvious
`
`First, no “technological feature” of claim 12 is novel and unobvious. The PTO
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`has confirmed that “[m]ere recitation of known technologies, such as computer hard-
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`6 Claims 13 and 14 add additional financial limitations to Claim 12. Ex. 1001.
`
`15
`
`
`
` Covered Business Method Patent Review
`United States Patent No. 8,118,221
`
`ware, communication or computer networks, software, memory, computer-readable
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`storage medium, scanners, display devices or databases, or specialized machines, such
`
`as an ATM or point of sale device,” or “[r]eciting the use of known prior art technol-
`
`ogy to accomplish a process or method, even if that process or method is novel and
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`non-obvious” will “not typically render a patent a technological invention.” See, e.g.,
`
`77 Fed. Reg. 48,756 48,764 (Aug. 14, 2012).
`
`As its language makes clear, claim 12 requires no particularized hardware. It re-
`
`lates to the idea of providing electronic data in exchange for payment. The claim in-
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`volves no “technology” at all other than, at most, the use of a data carrier and a payment
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`validation system. Ex. 1001. And the patent confirms that this data carrier is in no
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`way novel or unobvious, explaining it may be based on a “standard smart card” (id.
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`11:28-29), an “electronic memory card” (3:36-37), or a so-called “smart Flash card,”
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`(17:7), which were commonplace at the time, see 11:28-29; 13:56-57. Indeed, the pa-
`
`tent explains that a smart Flash card is “an IC card . . . incorporating a processor and
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`Flash data memory, preferably of large capacity” (id. 17:8-11), and incorporates by ref-
`
`erence, for additional details on “smart cards,” the ISO series of standards. Id. 17:11-
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`15; see also, e.g. id. Figs. 2, 9; 11:27-44; 17:16-18:4; 12:29-32 (“The physical embodiment
`
`of the system is not critical and a skilled person will understand that the terminals, da-
`
`ta processing systems and the like can all take a variety of forms.”).
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`Payment validation systems were also well-known. See Ex. 1001 13:35-47. The
`
`16
`
`
`
`patent explains that “[t]he payment validation system may be part of the data suppli-
`
` Covered Business Method Patent Review
`United States Patent No. 8,118,221
`
`
`er’s computer systems or it may be a separate e-payment system.” Id. 8:63-65. “E-
`
`payment systems. . .are coup
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