CBM2014-00102
`Patent 8,118,221 B2
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`______________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`______________________
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`APPLE INC.,
`Petitioner
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`v.
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`SMARTFLASH LLC,
`Patent Owner
`______________________
`
`Case CBM2014-001021
`Patent 8,118,221 B2
`______________________
`
`Before the Honorable JENNIFER S. BISK, RAMA G. ELLURU, JEREMY M.
`PLENZLER, and MATTHEW R. CLEMENTS, Administrative Patent Judges.
`
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`PETITIONER APPLE INC.’S
`MOTION TO EXCLUDE UNDER 37 C.F.R. §§ 42.62 AND 42.64
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`1 Case CBM2014-00103 has been consolidated with the instant proceeding.
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`Patent 8,118,221 B2
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`______________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`______________________
`
`APPLE INC.,
`Petitioner
`
`v.
`
`SMARTFLASH LLC,
`Patent Owner
`______________________
`
`Case CBM2014-001021
`Patent 8,118,221 B2
`______________________
`
`Before the Honorable JENNIFER S. BISK, RAMA G. ELLURU, JEREMY M.
`PLENZLER, and MATTHEW R. CLEMENTS, Administrative Patent Judges.
`
`
`PETITIONER APPLE INC.’S
`MOTION TO EXCLUDE UNDER 37 C.F.R. §§ 42.62 AND 42.64
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`
`
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`
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`1 Case CBM2014-00103 has been consolidated with the instant proceeding.
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`CBM2014-00102
`Patent 8,118,221 B2
`Petitioner, Apple Inc. (“Petitioner”), respectfully submits this Motion to Ex-
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`clude pursuant to 37 C.F.R. §§ 42.62 and 42.64, and the Revised Scheduling Order
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`(Paper 15 at 6). As an initial matter, Petitioner respectfully submits that the Board,
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`sitting as a non-jury tribunal with administrative expertise, is well-positioned to de-
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`termine and assign the appropriate weight to be accorded to the evidence presented
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`by both Petitioner and Patent Owner Smartflash LLC (“Patent Owner”) in this pa-
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`tentability trial without the need for formal exclusion. See, e.g., S.E.C. v. Guenth-
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`ner, 395 F. Supp. 2d 835, 842 n.3 (D. Neb. 2005) (admitting expert testimony over
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`objections; “Trial courts should be more reluctant to exclude evidence in a bench
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`trial than a jury trial. . . . [E]vidence should be admitted and then sifted [and] the
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`trial court is presumed to consider only the competent evidence and to disregard all
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`evidence that is incompetent”; “‘the better course’ is to ‘hear the testimony, and
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`continue to sustain objections when appropriate’”; “[T]he court has admitted the
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`testimony . . . and has accorded it appropriate weight.” (citations omitted)); Build-
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`ers Steel Co. v. Comm’r of Internal Revenue, 179 F.2d 377, 379 (8th Cir. 1950)
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`(vacating Tax Court decision for exclusion of competent and material evidence;
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`“In the trial of a nonjury case, it is virtually impossible for a trial judge to commit
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`reversible error by receiving incompetent evidence . . . . On the other hand, a trial
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`judge who, in the trial of a nonjury case, attempts to make strict rulings on the ad-
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`missibility of evidence, can easily get his decision reversed by excluding evidence
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`1
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`CBM2014-00102
`Patent 8,118,221 B2
`which is objected to, but which, on review, the appellate court believes should
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`have been admitted.”). Petitioner accordingly submits that it is, as a general mat-
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`ter, better for the Board to have before it a complete record of the evidence submit-
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`ted by the parties than to exclude particular pieces of it and thereby risk improper
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`exclusion that could later be assigned as error. See, e.g., Builders Steel, 179 F.2d
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`at 379; Donnelly Garment Co. v. Nat’l Labor Relations Bd. (“NLRB”), 123 F.2d
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`215, 224 (8th Cir. 1942) (finding NLRB’s refusal to receive testimonial evidence
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`amounted to a denial of due process; “One who is capable of ruling accurately up-
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`on the admissibility of evidence is equally capable of sifting it accurately after it
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`has been received, and, since he will base his findings upon the evidence which he
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`regards as competent, material and convincing, he cannot be injured by the pres-
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`ence in the record of testimony which he does not consider competent or material. .
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`. . [I]f evidence was excluded which [the reviewing] court regards as having been
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`admissible, a new trial or rehearing cannot be avoided.”). See also, e.g., Samuel H.
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`Moss, Inc. v. F.T.C., 148 F.2d 378, 380 (2d Cir. 1945), cert. denied, 326 U.S. 734
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`(1945) (observing that, “if the case was to be tried with strictness, the examiner
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`was right . . . [but w]hy [the examiner] or the Commission’s attorney should have
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`thought it desirable to be so formal about the admission of evidence, we cannot
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`understand. Even in criminal trials to a jury it is better, nine times out of ten, to
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`admit, than to exclude, evidence . . . [W]e take this occasion to point out the danger
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`2
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`CBM2014-00102
`Patent 8,118,221 B2
`always involved in conducting such a proceeding in such a spirit, and the absence
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`of any advantage in depriving either the Commission or ourselves of all evi-
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`dence”).
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`However, to the extent that the Board intends to apply the Federal Rules of
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`Evidence strictly in these proceedings, cf. 77 Fed. Reg. 48,612, 48,616 (Aug. 14,
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`2012) (“42.5(a) and (b) permit administrative patent judges wide latitude in admin-
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`istering the proceedings to balance the ideal of precise rules against the need for
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`flexibility to achieve reasonably fast, inexpensive and fair proceedings”), Petitioner
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`respectfully submits that Patent Owner’s testimonial submissions from its purport-
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`ed expert witness, Dr. Jonathan Katz, do not meet these standards and should be
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`excluded.2 For the same reasons, any reference to or reliance on Dr. Katz’s testi-
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`monial submissions in Patent Owner’s Response (Paper 26) should be excluded as
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`well. Petitioner’s objections to Dr. Katz’s opinions were previously set forth in Pe-
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`2 Petitioner also maintains its objections to pp. 364-384 of Exhibit 2025 (“Wech-
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`selberger Deposition Transcript, December 10, 2014 – December 11, 2014”) for
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`the reasons set forth in Petitioner’s Motion to Strike Portions of the Deposition
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`Transcript of Anthony Wechselberger Concerning Petitioner’s Products and For
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`Costs (Paper 21) and Petitioner’s Reply in Support of its Motion to Strike Portions
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`of the Deposition Transcript of Anthony Wechselberger Concerning Petitioner’s
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`Products and For Costs (Paper 28).
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`3
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`CBM2014-00102
`Patent 8,118,221 B2
`titioner’s Objections to Patent Owner Smartflash, LLC’s Exhibits (Ex. 1033),
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`served March 6, 2015 pursuant to 37 C.F.R. § 42.64(b)(1), and in Petitioner’s Re-
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`ply to Patent Owner’s Response (Paper 34 at 20-24), and are further explained be-
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`low pursuant to 37 C.F.R. § 42.64(c).
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`I.
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`Legal Standard
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`Under Rule 702 of Federal Rules of Evidence, which apply to this proceed-
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`ing (37 C.F.R. § 42.62), “[a] witness who is qualified as an expert by knowledge,
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`skill, experience, training, or education may testify in the form of an opinion or
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`otherwise if: (a) the expert’s scientific, technical, or other specialized knowledge
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`will help the trier of fact to understand the evidence or to determine a fact in issue;
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`(b) the testimony is based on sufficient facts or data; (c) the testimony is the prod-
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`uct of reliable principles and methods; and (d) the expert has reliably applied the
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`principles and methods to the facts of the case.” F.R.E. 702. The proponent of ex-
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`pert testimony must demonstrate admissibility by a preponderance of the evidence.
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`See Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 592 n.10 (1993).
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`II. Dr. Katz Is Not Qualified To Opine Under F.R.E. 702
`Because Dr. Katz is unable to opine on what a person of ordinary skill in the
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`art (“POSITA”) would have understood at the relevant time period, his testimo-
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`ny—submitted to address this very subject, but clearly resting on no specialized
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`CBM2014-00102
`Patent 8,118,221 B2
`knowledge of this “expert”—would not help the trier of fact under F.R.E. 702 and
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`should be excluded.
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`Dr. Katz alleges in his declaration that he is “qualified to opine on what
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`those of ordinary skill in the art would have understood at the time of the filing of
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`the patent and what he/she would or would not have been motivated to do” (Ex.
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`2028 ¶ 10) and provided conclusory, unsupported testimony that he was a POSITA
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`at the priority date of the patents when questioned by Patent Owner’s counsel (Ex.
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`1031 at 184:3-6). But neither Dr. Katz’s chemistry and mathematics degrees (Ex.
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`2028 at App’x A) nor his just over one year of classes relating to computer science
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`and a few months’ experience as a security consultant (Ex. 1031 at 183:20-185:17)
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`as of the Patent Owner’s claimed priority date of October 25, 1999 qualifies him as
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`a POSITA under either party’s definition. See Ex. 2028 ¶ 9 (Dr. Katz’s definition
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`of a POSITA); Extreme Networks, Inc. v. Enterasys Networks, Inc., 395 F. App’x
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`709, 715 (Fed. Cir. 2010) (opinion from expert who was not a POSITA was
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`properly excluded); see also Paper 34 at 20.
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`Dr. Katz’s inability to opine on what a POSITA would have understood at
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`the priority date was apparent at his deposition, where he was repeatedly unable to
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`answer whether a POSITA would have known or understood various basic princi-
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`ples and technologies pertinent to the ’221 patent in the relevant time period. For
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`example, Dr. Katz testified he was “not sure” whether in the prior art time period a
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`CBM2014-00102
`Patent 8,118,221 B2
`POSITA would have “known how to carry out an electronic payment to sell digital
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`content” or “known how to implement an electronic sale of digital content” (Ex.
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`1031 at 21:12-16, 23:2-15), even though these concepts are plainly fundamental to
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`the ’221 patent. See, e.g., Ex. 1001 at Abstract (“Data storage and access systems
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`enable downloading and paying for data such as audio and video data, text, soft-
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`ware, games and other types of data.”).3 He also testified that he was not sure
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`whether, for example:
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` payment happens before or after receipt of content in embodiments de-
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`scribed in the ’221 patent (Ex. 1031 at 107:18-21, 109:8-22, 110:7-111:4);
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`the ’221 patent discloses alternative embodiments in which payment can be
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`made before or after content is received (id. at 86:4-12);
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` a POSITA would have a reason for validating payment after payment was
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`made (id. at 26:16-20);
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`in the prior art time period, digital content was bought and sold over the In-
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`ternet, or whether a POSITA would have understood that digital content
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`could be bought and sold over a network or the Internet (id. at 13:16-14:3,
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`16:2-5); and
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`3 All emphasis herein is added unless otherwise indicated.
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`CBM2014-00102
`Patent 8,118,221 B2
` a POSITA would have known how to implement systems where payment is
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`made before or after content is received, or what a “prepayment” was (id. at
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`33:11-15, 33:16-19, 86:16-21, 89:7-11, 89:18-21).
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`See also, e.g., id. at 21:8-11 (whether POSITA knew what activating a credit ac-
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`count was); 38:2-5 (whether “try and buy” software was known in prior art); 44:9-
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`14 (whether POSITA would have understood SIM cards could be used for billing).
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`In addition, despite acknowledging in his declaration that “the scope and
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`content of the prior art” is a relevant consideration for obviousness (Ex. 2028 ¶ 7),
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`Dr. Katz was “not sure” how a POSITA would have interpreted various passages
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`of the cited prior art, including passages explicitly addressed in his declaration.
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`For example, with respect to prior art Ginter, Dr. Katz states in his declaration that
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`“to change from post-usage tracking to pre-purchase processing would change the
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`principle upon which Ginter works, which I understand indicates nonobviousness”
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`and that “[b]ecause of this post-usage versus pre-purchase distinction, it also would
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`not have been obvious to use pre-purchase processing, as the principle of operation
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`would have to be changed.” Ex. 2028 ¶¶ 36-37. However, at his deposition, Dr.
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`Katz was not sure if Ginter’s disclosures fit his characterization of “pre-purchase
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`processing” even after consulting all of his declarations. See Ex. 1031 at 124:10-
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`128:11. When questioned by his own counsel, Dr. Katz testified that he did not
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`CBM2014-00102
`Patent 8,118,221 B2
`even know what was meant by the term “pre-purchase processing”—the very term
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`that he himself uses in his declaration. See id. at 190:14-20.
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`Dr. Katz was also unable to answer whether a POSITA would have under-
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`stood payment concepts that he uses in his declaration to differentiate the prior art
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`from the challenged claims. For example, Dr. Katz states in his declaration that
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`“‘real-time debits’ and post-usage audits in Ginter operate using different princi-
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`ples,” Ex. 2028 ¶ 39, and that the 00103 Petition “confuses ‘real-time debits from
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`bank accounts’ and ‘sufficient credit from an authorized source’ in that the cited
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`portions are discussing different embodiments, one using credit and the other using
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`realtime debit,” id. ¶ 44. However, at his deposition, Dr. Katz was not sure wheth-
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`er debit, debit transactions, or debit processing were in the prior art or if, even to-
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`day, debit cards are used to pay for goods electronically. Ex. 1031 at 31:14-17,
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`18:1-7, 18:15-20, 30:15-19, 32:5-14, 33:5-10. Dr. Katz also was not sure whether
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`a POSITA would have “understood the differences between debit and credit trans-
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`actions.” Id. at 31:3-13.
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`Dr. Katz was similarly unable to answer questions related to his criticisms of
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`Ginter’s disclosure of “payment data” and the order of payment and content access
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`in Ginter. For example, Dr. Katz states in his declaration that “the audit infor-
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`mation [in Ginter] is for tracking post-usage information, not current purchase in-
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`formation,” Ex. 2028 ¶ 36, and “[i]f the 00103 Petition intended the ‘administrative
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`CBM2014-00102
`Patent 8,118,221 B2
`response’ to relate to the responsive administrative objects discussed in 162:38-61,
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`that section does not describe purchases, nor does the 00103 Petition explain why
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`absent the disclosure of purchases an administrative reply itself would render a
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`purchase obvious.” Id. ¶ 38. Dr. Katz’s declaration also states that the 00103 Peti-
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`tion “ignores those same pre- and post-usage principles when it alleges in footnote
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`24 on page 58 that a ‘POSITA would have understood that applying Ginter’s
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`teaching of requiring “that sufficient credit from an authorized source must be con-
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`firmed as available” before a transaction occurs, when applied to the real-time deb-
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`it system also disclosed in Ginter, at minimum renders obvious retrieving data re-
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`sponsive to Ginter’s administrative response confirming that the transmitted audit
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`information has been validated.’” Id. ¶ 39. Regarding “payment data,” however,
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`Dr. Katz was not sure whether credit and financial records—disclosed in the very
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`same cited portion of Ginter that he criticized—can include payment data. Ex.
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`1031 at 131:6-8, 132:2-16; cf. Ex. 1015 at 162:51-58; Ex. 2028 ¶ 38. And regard-
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`ing the order of payment and content access, Dr. Katz was not sure whether any-
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`thing in prior art Ginter would preclude payment occurring before access to a VDE
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`object is granted, Ex. 1031 at 94:4-13, or whether a POSITA would have under-
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`stood that the “prepayments,” “credits,” “debits,” and “currency token deposit ac-
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`counts” referred to in Ginter could be used to pay for a VDE object, id. at 119:5-
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`21, 120:13-18, 120:19-121:6, 121:22-122:9; cf. Ex. 1015 at 63:34-40.
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`CBM2014-00102
`Patent 8,118,221 B2
`Dr. Katz was also unable to answer questions regarding the disclosures of
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`the Stefik prior art that he criticizes in his declaration. For example, Dr. Katz stat-
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`ed that “there is no disclosure [in prior art Stefik ’235] of what it means to ‘activate
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`credit accounts,’ and neither the 00102 Petition nor Mr. Wechselberger clearly de-
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`fine what this is supposed to mean.” Ex. 2028 ¶ 23. However, when questioned
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`about this prior art disclosure at his deposition, Dr. Katz was unable to answer
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`whether a POSITA would have already known “what activating a credit account
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`was.” Ex. 1031 at 21:8-11. And, although Dr. Katz states in his declaration that
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`the disclosure “does not mean that any payments are actually made [at step 303 of
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`Stefik ’235, Figure 3] or even that any fees are yet known” and that “no fee infor-
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`mation is known in step 303 because no document or function has yet been select-
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`ed that might incur a fee,” Ex. 2028 ¶ 24, at his deposition Dr. Katz was not sure
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`(1) whether Figure 3 involves accessing a desired document and payment of fees
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`for that desired document or digital work, Ex. 1031 at 60:1-4, 63:15-17, 73:14-17;
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`Ex. 1013 at Fig. 3; (2) what role a credit account would have in Figure 3 as that
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`term is used in describing Figure 3, Ex. 1031 at 70:8-11, 74:21-75:7; cf. Ex. 1013
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`at 6:60-65; see also Ex. 1031 at 61:8-62:13, 65:5-10; and (3) whether in prior art
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`Stefik ’235 the credit card number used in connection with the transaction in Fig-
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`ure 3 could be “payment data,” Ex. 1031 at 71:12-17, 73:2-9.
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`CBM2014-00102
`Patent 8,118,221 B2
`Dr. Katz’s testimony demonstrates, at best, confusion about whether or not
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`the prior art discloses certain concepts, and at worst a willingness to adjust his tes-
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`timony in unsupported ways. Whatever the reason, this further confirms his testi-
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`mony is fundamentally unreliable and without foundation, and fails the test for
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`admissibility under Rule 702. For example, Dr. Katz unequivocally confirmed that
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`the Poggio prior art discloses a payment validation system and payment validation
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`data, id. at 138:10-17, then briefly reversed and contradicted this position when
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`questioned by his own counsel, id. at 178:4-179:1 (testifying that the Poggio prior
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`art does not disclose payment validation data), before once more switching back
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`and confirming, when further questioned by Petitioner’s counsel, that the Poggio
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`prior art does in fact disclose data that confirms payment validation has taken
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`place, id. at 201:18-202:7.
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`As demonstrated by the foregoing examples, Dr. Katz lacks the necessary
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`“scientific, technical, or other specialized knowledge [to] help the trier of fact to
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`understand the evidence or to determine a fact in issue” both because (1) he is not
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`sufficiently knowledgeable about what a POSITA would have known or under-
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`stood in the relevant time period, and (2) in his deposition he was unable to defend
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`his conclusory declaration testimony. His testimony is fundamentally flawed and
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`unsupported, and his opinions should be excluded. F.R.E. 702.
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`CBM2014-00102
`Patent 8,118,221 B2
`Dated: May 19, 2015
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`Ching-Lee Fukuda (backup counsel)
`Reg. No. 44,334
`Ropes & Gray LLP
`1211 Avenue of the Americas
`New York, NY 10036
`P: 212-596-9336/ F:212-596-9000
`Ching-Lee.Fukuda@ropesgray.com
`
`Respectfully submitted,
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`
`
`By: /J. Steven Baughman/
`
`J. Steven Baughman (lead counsel)
`Reg. No. 47,414
`
`Megan F. Raymond
`Reg. No. 72,997
`Ropes & Gray LLP
`One Metro Center
`700 12th St. – Ste. 900
`Washington, D.C. 20005-3948
`P: 202-508-4606/ F: 202-383-8371
`Steven.Baughman@ropesgray.com
`Megan.Raymond@ropesgray.com
`
`Mailing address for all correspondence: ROPES & GRAY LLP, IPRM –
`Floor 43, Prudential Tower, 800 Boylston Street, Boston, MA 02199-3600
`
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`CBM2014-00102
`Patent 8,118,221 B2
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`CERTIFICATE OF SERVICE
`
`The undersigned hereby certifies that a copy of the foregoing PETITIONER
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`APPLE INC.’S MOTION TO EXCLUDE UNDER 37 C.F.R. §§ 42.62 AND 42.64
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`was served on May 19, 2015, to the following Counsel for Patent Owner via e-
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`mail, pursuant to the parties’ agreement concerning service:
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`Michael R. Casey
`J. Scott Davidson
`DAVIDSON BERQUIST JACKSON & GOWDEY LLP
`8300 Greensboro Drive, Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7700
`Facsimile: (571) 765-7200
`mcasey@dbjg.com
`jsd@dbjg.com
`docket@dbjg.com
`
`Attorneys for Patent Owner Smartflash LLC
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`/Megan Raymond/
`Megan F. Raymond
`
`ROPES & GRAY LLP
`
`
`
`
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