Covered Business Method Patent Review
`United States Patent No. 8,118,221
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`Petitioner: Apple Inc.
`
`Attorney Docket No.:
`
` 104677-5008-802
`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
`
`
`
`

`

` Covered Business Method Patent Review
`United States Patent No. 8,118,221
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`
`
`TABLE OF CONTENTS
`
`(b) 
`
`B. 
`
`
`INTRODUCTION ....................................................................................................... 1 
`I. 
`II.  OVERVIEW OF FIELD OF THE CLAIMED INVENTION ......................... 4 
`III.  PETITIONER HAS STANDING .......................................................................... 13 
`A. 
`The ’221 Patent Is a Covered Business Method Patent ............................. 13 
`1. 
`Exemplary Claim 12 Is Financial In Nature .................................... 14 
`2. 
`Claim 12 Does Not Cover A Technological Invention ................. 17 
`(a) 
`Claim 12 Does Not Recite A Technological
`Feature That Is Novel and Unobvious .............................. 17 
`Claim 12 Does Not Solve A Technical Problem
`Using A Technical Solution ................................................. 20 
`Related Matters; Petitioner Is a Real Party In Interest Sued for and
`Charged With Infringement ........................................................................... 21 
`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 ............................ 22 
`A. 
`Claim Construction .......................................................................................... 23 
`B. 
`The Challenged Claims Are Invalid Under 35 U.S.C. § 103 ..................... 28 
`1. 
`Overview of Ginter .............................................................................. 28 
`2. 
`Motivation to combine Ginter with Poggio..................................... 32 
`3. 
`Motivation to Combine Ginter with Stefik ...................................... 36 
`4. 
`Motivation to Combine Ginter with Sato ........................................ 41 
`5. 
`Motivation to Combine Ginter with Poggio and Stefik ................. 43 
`6. 
`Claims 1, 2, 11-14, and 32 are obvious in light of Ginter
`(Ground 1), obvious in light of Ginter in view of Poggio
`(Ground 2), obvious in light of Ginter in view of Stefik
`(Ground 3), obvious in light of Ginter in view of Sato
`(Ground 4), obvious in light of Ginter in view of Poggio
`and Stefik (Ground 5). ......................................................................... 44 
`CONCLUSION........................................................................................................... 79 
`
`V. 
`
`
`i
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`

`

`
`EXHIBIT LIST
`1101
`
`1102
`
`1103
`
`1104
`
`1105
`
`1106
`
`1107
`
`1108
`
`1109
`
`1110
`
`1111
`
`1112
`
`1113
`
`1114
`
`1115
`
`1116
`
`1117
`
`1118
`
`1119
`
`1120
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
`
`U.S. Patent No. 8,118,221
`
`Plaintiffs’ First Amended Complaint
`
`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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` 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
`
`EXHIBIT LIST
`1121
`
`1122
`
`1123
`
`1124
`
`1125
`
`1126
`
`1127
`
`1128
`
`1129
`
`iii
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`

`

` Covered Business Method Patent Review
`United States Patent No. 8,118,221
`
`I.
`
`INTRODUCTION
`
`Pursuant to 35 U.S.C. § 321 and 37 C.F.R. § 42.304, the undersigned, on behalf
`
`of and acting in a representative capacity for petitioner, Apple Inc. (“Petitioner” and
`
`the real party in interest), hereby petitions for review under the transitional program
`
`for covered business method patents of claims 1, 2, 11-14, and 32 (“the challenged
`
`claims”) of U.S. Patent No. 8,118,221 (“the ’221 Patent”), issued to Smartflash Tech-
`
`nologies Limited and currently assigned to Smartflash LLC (“Smartflash,” also re-
`
`ferred to as “Applicant,” “Patent Owner,” or “Patentee”). Petitioner hereby asserts
`
`that it is more likely than not that at least one of the challenged claims is unpatentable
`
`for the reasons set forth herein and respectfully requests review of, and judgment
`
`against, claims 1, 2, 11-14, and 32 as unpatentable under 35 U.S.C. § 103 as obvious.1
`
`As discussed in Section III.B, infra, Petitioner has concurrently filed a Petition
`
`seeking covered business method review of the ’221 Patent, requesting judgment
`
`against these same claims under §§ 102 and 103 based on different prior art references.
`
`Petitioner notes that the Director, pursuant to Rule 325(c), may determine at the
`
`proper time that merger of these proceedings, or at minimum coordination of pro-
`
`ceedings involving the same patent, is appropriate.
`
`The challenged claims of the ’221 Patent merely recite steps and corresponding
`
`
`1 Petitioner is demonstrating, in pending litigation, that these claims are invalid for
`
`numerous additional reasons.
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`1
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
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`systems well-known in the field of data storage and access, including the use of a
`
`“portable data carrier for storing and paying for data and to computer systems for
`
`providing access to data to be stored.” E.g., Ex. 1101 1:20-23. The patent’s inde-
`
`pendent Claim 12, for example, recites four rudimentary steps relating to data storage
`
`and access—(A) reading payment data from a data carrier, (B) forwarding that data
`
`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:
`
`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. 1101. But at the time of the earliest claimed priority date for the ’221 Patent,
`
`these simple elements and their combination were all well known to a person of ordi-
`
`nary skill (“POSITA”). Indeed, the ’221 Patent itself acknowledges that the idea of
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`providing access to data in exchange for a payment (e.g., purchase of music on a CD)
`
`was well known at the time. E.g., id. 5:9-12 (“where the data carrier stores, for exam-
`
`ple, music, the purchase outright option may be equivalent to the purchase of a compact
`
`disc (CD), preferably with some form of content copy protection such as digital wa-
`
`termarking”). And, as demonstrated herein, the prior art was teeming with disclosures
`
`of this basic concept.
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`2
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
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`Moreover, as its language makes clear, Claim 12 involves no “technology” at all
`
`other than “a payment validation system” and “a data carrier”—both of which the pa-
`
`tent itself concedes were well known and entirely commonplace at the time. E.g., Ex.
`
`1101 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., Ex. id. 12:29-32 (“The physical embodiment of the
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`system is not critical and a skilled person will understand that the terminals, data pro-
`
`cessing systems and the like can all take a variety of forms.”); Fig. 4(b).
`
`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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`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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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
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`closed in the prior art, either by individual references, or by those references or sys-
`
`tems in combination. Accordingly, each of the challenged claims is obvious.
`
`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 would have been well-known to a POSITA,3 and their combination as
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`claimed also would have been well-known or at minimum obvious to a POSITA. See,
`
`e.g., Ex. 1121 ¶¶27-46. For example, nearly a decade earlier, on March 12, 1991, U.S.
`
`Patent No. 4,999,806 (“Chernow”), entitled “Software Distribution System,” issued.
`
`See Ex. 1106 (filed September 4, 1987). Chernow discloses a system and method for
`
`the sale and distribution of digital products by telephone, with a focus on software,
`
`and also discloses content protection for those digital products. See, e.g., id. Abstract
`
`(“A central station distributes software by telephone. The central station accepts credit
`
`card information, transmits an acceptance code to a caller and then terminates the call.
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`After verifying the credit card information, the station calls the purchaser back and continues
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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,
`
`1999, unless specifically noted. A POSITA would have at least a Bachelor of Science
`
`degree in electrical engineering, computer science or a telecommunications related
`
`field, and at least three years of industry experience that included client-server
`
`data/information distribution and management architectures. Ex. 1121 ¶25.
`
`4
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
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`with the transaction only after receiving the acceptance code.”); 1:67-2:9 (“It is an object of this
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`invention to provide a means for selling and distributing protected software using
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`standard telephone lines for transferring the software from the seller to the purchaser.
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`Another object of this invention is to permit the purchaser to rent the protected soft-
`
`ware for a period of time after which it will self destruct. Another object of this inven-
`
`tion is to permit the purchaser to rent the protected software for a specific number of
`
`runs which would be useful, e.g., if the software were a game.”). As illustrated above,
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`Chernow discloses making different types of access available, such as purchase versus
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`rental. Further, Chernow discloses a Control Transfer Program and a Primary Protec-
`
`tion Program that ensure the computer receiving a downloaded program does not
`
`have another program present that could create unauthorized copies of that down-
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`loaded program. See Ex. 1106 Abstract (“The central station then transmits a Control
`
`Transfer Program and Initialization Program to the purchaser, and the purchaser exe-
`
`cutes the Initialization Program to turn over control of the purchaser computer to the
`
`central station. The Control Transfer Program is then executed to transfer first a Pro-
`
`tection program for ensuring that no memory resident copying programs are running,
`
`than [sic] a Storing Program for modifying the purchased program for storage at the
`
`purchaser computer, and finally the requested program itself.”); see also id. 2:65-3:23.
`
`In April, 1992, U.S. Patent No. 5,103,392 (“Mori”), entitled “System for Stor-
`
`ing History of Use of Programs Including User Credit Data and Having Access by the
`
`5
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
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`Proprieter,” issued. See Ex. 1112 (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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`according to its use. See, e.g., id. 1:64-2:17:
`
`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
`
`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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`6
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
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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. 1116.
`
`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-
`
`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
`
`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-
`
`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
`
`and the associated license fees and rental periods, to receive the product upon receipt of a cor-
`
`responding electronic payment, and to reload the product during the term of the license.”). Like
`
`Chernow, Poggio discloses different types of access, including rentals, and re-
`
`download capabilities for already-purchased content. See, e.g., id.
`
`Also in 1997—the same year Poggio was published—IEEE published “The
`
`Secure Distribution of Digital Contents,” (“von Faber”). See Ex. 1120. In its intro-
`
`duction, von Faber made the well-known observation that “[e]lectronic commerce
`
`systems dealing with the distribution of digital contents like software or multimedia
`
`data have to couple the use of the provided digital goods with a prior payment for the goods in a
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`7
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
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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.
`
`(“The basic idea of one possible solution is to distribute the contents in encrypted form, and to
`
`have the customer pay for the key which he needs to transform the encrypted content in an usable form.
`
`The security problem can in this way be transformed into a problem of key distribu-
`
`tion.”); Id. at 8 (“The Content Provider provides digital contents in encrypted form
`
`being distributed by the Content Distributor. The Key Management System holds the
`
`keys for the contents to be decrypted. The Authorisation System permits the distribution
`
`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
`
`subsequent discussion but, of course, for the business to take place.”); see also id. at Fig.
`
`1. Von Faber also notes that its system could be used with a variety of known con-
`
`tent distribution and payment methods. See, e.g., id. at 13 (“The outlined system has
`
`the following characteristics: Different methods can be used to distribute the encrypt-
`
`ed contents (standard techniques). This includes broadcasting, point-to-point net-
`
`working, as well as offering disks. Different electronic payment methods can be inte-
`
`grated independent from the number of protocol steps needed. This includes credit
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`card based systems as well as electronic purses. This flexibility leads to the fact that to-
`
`tally different authorisation methods can be integrated.”). Von Faber further ad-
`
`4 All emphasis herein added unless otherwise noted.
`
`8
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`United States Patent No. 8,118,221
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`dressed the known issue of payment distribution to content providers. See, e.g., id. at
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`13 (“The system will support re-selling in a simple way. Re-sellers can integrate other
`
`manufacturer’s products into own packages without the need of signing any extra
`
`contract. The system automatically divides the package price (payments) and guaran-
`
`tees that the money is transferred to each Content Provider whose product has been
`
`integrated into the package.”).
`
`Also in 1997, the second of two Stefik patents—one which incorporates an ear-
`
`lier patent by reference—issued. U.S. Patent No. 5,530,235, entitled “Interactive
`
`Contents Revealing Storage Device,” filed February 16, 1995 and issued June 25, 1996
`
`(“Stefik ’235”), incorporates by reference U.S. Patent No. 5,629,980, entitled “System
`
`for Controlling the Distribution and Use of Digital Works,” filed November 23, 1994
`
`and issued May 13, 1997 (“Stefik ’980”). See Ex. 1113 2:48-53 (“The currently pre-
`
`ferred embodiment of a DocuCard is an instance of a repository, as defined in co-
`
`pending application entitled ‘System for Controlling the Distribution and Use of Digi-
`
`tal Works,’. . . which is herein incorporated by reference.”). Stefik ’235 and Stefik ’980 will be
`
`referred to collectively herein as “Stefik.”5
`
`5 Because Stefik ’235 incorporates Stefik ’980 by reference, they should be considered
`
`a single reference. For clarity in citing to disclosures, however, separate citations are
`
`provided to the Stefik ’235 and Stefik ’980 Exhibits (Exs. 1113 and 1114, respectively).
`
`To the extent Stefik ’235 (Ex. 1113) and Stefik ’980 (Ex. 1114) are argued to be sepa-
`
`9
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`Stefik discloses “[a] Document Card (DocuCard) for storing documents and
`
`which is content revealing. The DocuCard is a transportable unit having a nonvolatile
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`storage means for storing information in a digital form, a control processor for pro-
`
`cessing user initiated functions; an I/O port for interfacing to external devices for
`
`reading and writing digital information, and a user interface for allowing a user to di-
`
`rectly interact with the DocuCard.” See, e.g., Ex. 1113 Abstract; see also, e.g., Ex. 1114
`
`Abstract (“Digital work playback devices, coupled to the repository containing the
`
`work, are used to play, display or print the work.”).
`
`Stefik also discloses a broader framework within which the DocuCard is used,
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`including the protection of content with “usage rights.” See, e.g., Ex. 1114 Abstract
`
`(“A system for controlling use and distribution of digital works. In the present inven-
`
`rate references, there is explicit motivation to implement the repository disclosed by
`
`Stefik ’980 using the Document Card (DocuCard) of Stefik ’235. See, e.g., Ex. 1113
`
`2:47-52 (“The currently preferred embodiment of a DocuCard is an instance of a re-
`
`pository, as defined in co-pending application entitled ‘System for Controlling the
`
`Distribution and Use of Digital Works’, serial number not yet assigned, which is as-
`
`signed to the assignee of the present invention and which is herein incorporated by
`
`reference.”); Ex. 1114 16:56-58 (“For example, the repository could be embedded in a
`
`‘card’ that is inserted into an available slot in a computer system.”); See also, e.g., Ex.
`
`1121 ¶37, App’x D.
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`tion, the owner of a digital work attaches usage rights to that work.”); Ex. 1114 Ab-
`
`stract (“Usage rights are granted by the ‘owner’ of a digital work to ‘buyers’ of the dig-
`
`ital work. The usage rights define how a digital work may be used and further distrib-
`
`uted by the buyer. Each right has associated with it certain optional specifications
`
`which outline the conditions and fees upon which the right may be exercised.”). Stef-
`
`ik’s digital works are stored in a “repository” that processes requests for access—
`
`including for such actions as utilizing content (viewing, executing, or printing) or
`
`transporting content (copying, borrowing, or transferring)—and evaluates the relevant
`
`usage rights to determine whether such access is permitted. See, e.g., id. Abstract
`
`(“Digital works are stored in a repository. A repository will process each request to
`
`access a digital work by examining the corresponding usage rights . . . Access to digital
`
`works for the purposes of transporting between repositories (e.g. copying, borrowing
`
`or transfer) is carried out using a digital work transport protocol. Access to digital
`
`works for the purposes of replay by a digital work playback device (e.g. printing, dis-
`
`playing or executing) is carried out using a digital work playback protocol.”).
`
`Storage and utilization of content stored on portable devices, including mobile
`
`communication devices such as cellular phones, was also well-known before Smart-
`
`flash’s claimed October 25, 1999 priority date. As one example, PCT Application
`
`Publication No. WO 99/43136 (“Rydbeck”) published on August 26, 1999. See Ex.
`
`1117. Rydbeck discloses a cellular phone as a user device for storing digital content in
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`11
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`non-volatile memory and accessing that content. See, e.g., id. 3 (“Because of its integra-
`
`tion into the cellular phone, the digital entertainment module can share components
`
`already present in the cellular phone. Such savings would not be available if a CD
`
`player were simply aggregated with the phone. Further, the use of solid state RAM or
`
`ROM, as opposed to disc storage, eliminates the need for bounce control circuitry.
`
`This enables the disclosed invention to provide cellular communications and enter-
`
`tainment during leisure activities.”). In addition, JP Patent Application Publication
`
`No. H11-164058 (“Sato”), entitled “Portable Music Selection and Viewing System,”
`
`published June 18, 1999, discloses storing media content onto mobile user devices
`
`and playing the media content from these mobile devices. Sato further discloses stor-
`
`ing that media content on a removable IC card. See, e.g., Ex. 1118 ¶9 (“The portable
`
`music selection viewing device 70 provides a removable storage device 76 on a main body
`
`71. This storage device 76 is a memory card similar to, for example, a magnetic card, a
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`magnetic tape, a CD, a DVD, or an IC card. The user, after downloading the music
`
`software to the storage device (medium) 76 of the portable music selection and view-
`
`ing device 70 by operating the push buttons or the like on the main body 71, can en-
`
`joy this music software on a display 72 or a receiver 74 of the portable music selection
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`and viewing device 70, and can also enjoy higher quality music playback by removing this
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`storage device (medium) and inserting it into another audio unit. Further, the user can store the
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`music software from another audio unit into the storage device 76 and enjoy music by
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`inserting this storage unit 76 into this portable music selection and viewing device
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`70.”); ¶13 (“A music storage device 240 connected to the music control unit 200
`
`stores the music software. A music storage medium 250 such as . . . a memory card such
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`as an IC card stores the music software, and this storage medium 250 can be removed
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`and used on other audio units.”).
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`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 Ginter 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 § 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.
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`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) of
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`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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`13
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`

`

`tioner addresses here exemplary claim 12:
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
`
`
`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.
`A “covered business method patent” is “a patent that claims a method or cor-
`
`Exemplary Claim 12 Is Financial In Nature
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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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`any link to traditional financial industries such as banks. See, e.g., CBM2012-00001,
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`paper 36 at 23.
`
`This Board has previously found, for example, that a claim for “transferring
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`14
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
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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
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`electronic transfer of money is a financial activity, and allowing such a transfer
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`amounts to providing a financial service.” CBM2013-00020, paper 14 at 11-12. 6 See
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`also, e.g., CBM2013-00017, paper 8 at 5-6 (finding patent sufficiently financial based on
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`reference in the specification to e-commerce and the fact that a POSITA “would have
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`understood that [one of the claim limitations] may be associated with financial ser-
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`vices”).
`
`As discussed above, the ’221 Patent relates to the idea of providing electronic
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`data in exchange for payment. See AIA § 18(d)(1); 37 C.F.R. § 42.301(a); Ex. 1101
`
`2:11-15. Indeed, in seeking to enforce the ’221 Patent in litigation, Smartflash itself
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`conceded that the alleged invention relates to a financial activity or transaction, stating
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`that “[t]he patents-in-suit generally cover a portable data carrier for storing data and
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`managing access to the data via payment information and/or use status rules. The pa-
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`6 Indeed, these aspects of claim 12 are generally similar to those of the claim found to
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`convey CBM standing in CBM2013-00020, which recited: “A method for transmitting
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`a desired digital audio signal stored on a first memory of a first party to a second
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`memory of a second party comprising the steps of: transferring money electron-
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`ically . . . connecting electronically via a telecommunications line . . . transmitting the
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`desired digital audio signal . . . and storing the digital signal.” Id. at 10-17.
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`15
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` Covered Business Method Patent Review
`United States Patent No. 8,118,221
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`tents-in-suit also generally cover a computer network . . . that serves data and manages
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`access to data by, for example, validating payment information.” Ex. 1102 ¶ 17.
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`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 dev