Covered Business Method Patent Review
`United States Patent No. 8,033,458
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`Petitioner: Apple Inc.
`
`Attorney Docket No.:
`
` 104677-5008-807
`Customer No. 28120
`
`§
`Inventor: Hulst et al.
`United States Patent No.: 8,033,458 §
`Formerly Application No.: 12/943,847 §
`Issue Date: October 11, 2011
`§
`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. 8,033,458 PURSUANT TO 35 U.S.C. § 321,
`37 C.F.R. § 42.304
`
`
`
`

`

`
`
` Covered Business Method Patent Review
`United States Patent No. 8,033,458
`
`
`TABLE OF CONTENTS
`
`B. 
`
`INTRODUCTION ....................................................................................................... 1 
`I. 
`II.  OVERVIEW OF FIELD OF THE CLAIMED INVENTION ......................... 4 
`III.  PETITIONER HAS STANDING .......................................................................... 12 
`A. 
`The ’458 Patent Is a Covered Business Method Patent ............................. 12 
`1. 
`Exemplary Claim 1 Is Financial In Nature ...................................... 13 
`2. 
`Claim 1 Does Not Cover A Technological Invention ................... 15 
`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 ............................ 21 
`A. 
`Claim Construction .......................................................................................... 22 
`B. 
`The Challenged Claims Are Invalid Under §§ 102 and/or 103 ................ 27 
`1. 
`Overview of Stefik ............................................................................... 27 
`2. 
`Motivation to Combine Stefik with Sato .......................................... 31 
`3. 
`Motivation to Combine Stefik with Poggio ..................................... 34 
`4. 
`Motivation to Combine Stefik with Rydbeck .................................. 37 
`5. 
`Claims 6-8, 10, and 11 are Anticipated by Stefik (Ground 1);
`Claims 1, 6-8, 10, and 11 are Obvious in Light of Stefik
`(Ground 2); Claims 1, 6-8, 10, and 11 are Obvious in Light
`of Stefik in View of Sato (Ground 3); Claims 1, 6-8, 10, and
`11 are Obvious in Light of Stefik in View of Poggio
`(Ground 4); Claims 1, 6-8, 10, and 11 are Obvious in Light
`of Stefik in View of Poggio and Sato (Ground 5); Claim 1 is
`Obvious in Light of Stefik in View of Poggio and Rydbeck
`(Ground 6). ........................................................................................... 38 
`CONCLUSION........................................................................................................... 78 
`
`V. 
`
`
`ii
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`

`

`
`EXHIBIT LIST
`1001
`
`1002
`
`1003
`
`1004
`
`1005
`
`1006
`
`1007
`
`1008
`
`1009
`
`1010
`
`1011
`
`1012
`
`1013
`
`1014
`
`1015
`
`1016
`
`1017
`
`1018
`
`1019
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`1020
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
`
`
`U.S. Patent No. 8,033,458
`
`Plaintiffs’ First Amended Complaint
`
`U.S. Patent No. 8,061,598
`
`File History for U.S. Patent No. 8,033,458
`
`File History for U.S. Patent No. 8,118,221
`
`U.S. Patent No. 4,999,806
`
`U.S. Patent No. 5,675,734
`
`File History for U.S. Patent No. 8,336,772
`
`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. 5,103,392
`
`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)
`
`iii
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`

`

` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`
`Declaration of Anthony J. Wechselberger In Support of Apple
`Inc.’s Petition for Covered Business Method Patent Review
`U.S. Patent No. 5,754,654
`
`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. 8,118,221
`
`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. 8,061,598
`
`EXHIBIT LIST
`1021
`
`1022
`
`1023
`
`1024
`
`1025
`
`1026
`
`1027
`
`1028
`
`1029
`
`iv
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`

`

` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`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, 6-8, 10, and 11 (“the challenged
`
`claims”) of U.S. Patent No. 8,033,458 (“the ’458 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, 6-8, 10 and 11 as invalid under 35 U.S.C. §§ 102 and/or 103.1
`
`As discussed in Section III.B, infra, Petitioner has concurrently filed a Petition
`
`seeking covered business method review of the ’458 Patent, requesting judgment
`
`against these same claims 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 proceedings involving the same
`
`patent, is appropriate.
`
`The challenged claims of the ’458 Patent merely recite “[d]ata storage and ac-
`
`
`1 Petitioner is demonstrating, in pending litigation, that these claims are invalid for
`
`numerous additional reasons. All emphasis herein added unless otherwise noted.
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`cess systems [that] enable downloading and paying for data,” including a well-known
`
`“portable data carrier” and a “data access device for retrieving stored data from a data
`
`carrier.” Ex. 1001 at Abstract, claims 1 and 6. Independent Claim 1, for example, re-
`
`cites six rudimentary components of a portable data carrier (e.g., smart card)—(A) an
`
`interface, (B and C) non-volatile memory, (D) a program store storing code im-
`
`plementable by a processor, (E) a processor . . . for implementing code, and (F) a
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`SIM (subscriber identity module) portion. The recited code is similarly elementary,
`
`outputting payment data and providing external access to data memory (F):
`
`1. A portable data carrier comprising:
`[A] an interface for reading and writing data from and to the carrier;
`[B] non-volatile data memory, coupled to the interface, for storing da-
`ta on the carrier;
`[C] non-volatile payment data memory, coupled to the interface, for
`providing payment data to an external device;
`[D] a program store storing code implementable by a processor;
`[E] a processor, coupled to the content data memory, the payment data
`memory, the interface and to the program store for implementing code
`in the program store; and
`[F] a subscriber identity module (SIM) portion to identify a subscrib-
`er to a network operator
`[F] wherein the code comprises code to output payment data from the
`payment data memory to the interface and code to provide external
`access to the data memory.
`Ex. 1001. But at the ’458 Patent’s earliest claimed priority date, these simple elements
`
`2
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`and their combination would have been all well known to any person of ordinary skill
`
`(“POSITA”). Indeed, the patent itself acknowledges that the idea of 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., Ex. 1001 5:9-12 (“where the data carrier stores … music, the pur-
`
`chase outright option may be equivalent to the purchase of a compact disc (CD), preferably
`
`with some form of content copy protection such as digital watermarking”). The idea
`
`of purchasing digital data for payment was similarly well known. See, e.g., Ex. 1007.
`
`And, as demonstrated herein, the prior art was teeming with disclosures of this basic
`
`concept and its straightforward implementation in physical systems.
`
`Moreover, as its language makes clear, Claim 1 involves no “technology” at all oth-
`
`er than a “portable data carrier” with interface, non-volatile memory, program
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`store/processor, and SIM features—which the patent itself concedes was well known
`
`and entirely commonplace at the time. See e.g., Ex. 1001 11:28-29 (“standard smart
`
`card”), 3:37, 4:9-13, 6:19-11, 11:27-44, 17:6-18:4, Figs. 2, 9. Thus, as the intrinsic rec-
`
`ord reflects, Claim 1 recites nothing more than a system for reading and writing data
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`while outputting payment data. And the other challenged independent claim, relating
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`to a “data access device,” is nothing more than the computer system that retrieves da-
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`ta from the data carrier (smart card), id. 11:22-24, and contains equally generic com-
`
`ponents (such as a user interface, program store, and processor).2 Indeed, the ’458
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`2 Claim 6 further recites code for retrieving use status data, evaluating use status data
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`3
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`Patent states that “[t]he physical embodiment of the system is not critical and a skilled
`
`person will understand that the terminals, data processing systems and the like can all
`
`take a variety of forms.” See, e.g., id. Fig 1; 12:29-32.
`
`It is thus little surprise that, as detailed herein, each and every element of the
`
`challenged claims of the ’458 Patent and their claimed combinations have been dis-
`
`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 invalid as antici-
`
`pated, obvious, or both.
`
`II. OVERVIEW OF FIELD OF THE CLAIMED INVENTION
`By October 25, 1999, electronic sale, distribution, and content protection for
`
`digital products all would have been well-known to a POSITA,3 and their combina-
`
`to determine if access to the data is permitted, and accessing the stored data when ac-
`
`cess is permitted. Dependent claim 7 merely adds to claim 6 the well-known notion
`
`of code for updating use status data. Ex. 1001. Dependent claim 8 merely adds to
`
`claim 6 the well-known notion of code for inputting user access data and receiving
`
`user access permission data. Id. Dependent claim 10 merely adds to claim 6 the well-
`
`known notion of code for retrieving and outputting supplementary data. Id. De-
`
`pendent claim 11 specifies only that the use rules permit partial use of data and corre-
`
`sponding code. Id.
`
`3 All references to a person of ordinary skill in the art (“POSITA”) refer to the
`
`4
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`

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`tion as claimed also would have been well-known or at minimum obvious to a POSI-
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`TA. See, e.g., Ex. 1021 (Wechselberger Decl.) Sec. V. For example, nearly a decade
`
`earlier, on March 12, 1991, U.S. Patent No. 4,999,806 (“Chernow”), entitled “Soft-
`
`ware Distribution System,” issued. See Ex. 1006 (filed Sept. 4, 1987). Chernow dis-
`
`closes a system and method for the sale and distribution of digital products by tele-
`
`phone, with a focus on software, and also discloses content protection for those digi-
`
`tal products. See, e.g., Ex. 1006 Abstract (“A central station distributes software by tel-
`
`ephone. The central station accepts credit card information, transmits an acceptance
`
`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 (objects of the claimed invention include “provid[ing] a means for
`
`selling and distributing protected software using standard telephone lines for transfer-
`
`ring the software from the seller to the purchaser,” “permit[ting] the purchaser to rent
`
`the protected software for a period of time after which it will self destruct,” and “to
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`rent the protected software for a specific number of runs which would be useful, e.g.,
`
`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. See Ex. 1021 ¶ 25.
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`5
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`if the software were a game.”). As illustrated above, Chernow discloses making dif-
`
`ferent types of access available, such as purchase versus rental. Further, Chernow dis-
`
`closes a Control Transfer Program and a Primary Protection Program that ensure the
`
`computer receiving a downloaded program does not have another program present
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`that could create unauthorized copies. See Ex. 1006 Abstract; 2:65-3:23.
`
`In April 1992, U.S. Patent No. 5,103,392 (“Mori,” filed Dec. 5, 1990), “System
`
`for Storing History of Use of Programs Including User Credit Data and Having Ac-
`
`cess by the Proprieter,” issued, disclosing storing information about customer use of
`
`digital products so that a customer can be charged according to its use. See, e.g., Ex.
`
`1012 1:64-2:17 (filed Dec. 5, 1990):
`
`The data processing apparatus includes user-specific credit data storage
`means for storing data identifying the user of the data processing appa-
`ratus and indicating credit for payment capacity, use time length, or the
`like of the user of the data processing apparatus. Also included is use de-
`cision means for determining permission to use the program on the data pro-
`cessing apparatus on the basis of program-specific data supplied from the pro-
`gram storage means or user-specific credit data supplied from the user-
`specific credit data storage means, the use decision means delivering ei-
`ther an affirmative or negative signal corresponding to results of the de-
`cision. Also included is program use history storage means connected 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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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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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.
`
`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
`
`for managing the distribution, licensing and rental of electronic data.” See Ex. 1016.
`
`Poggio—published November 26, 1997—discloses a “virtual vending machine” sys-
`
`tem for the sale and distribution of digital products. See, e.g., id. Abstract (“A virtual
`
`vending machine manages a comprehensive vending service for the distribution of li-
`
`censed electronic data (i.e., products) over a distributed computer system. . . . The vir-
`
`tual vending machine distributes licenses for the electronic data for the complete
`
`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
`
`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, IEEE published “The Secure Distribution of Digital Contents,”
`
`(“von Faber”). See Ex. 1020. In its introduction, von Faber made the well-known ob-
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`servation 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 way which cannot be bypassed.” See id. at 7. Von
`
`Faber proposes a system where 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 trans-
`
`formed into a problem of key distribution.”); 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 Au-
`
`thorisation System permits the distribution of the appropriate key after settling of the fees payable
`
`by the Customer, who will enjoy the decrypted digital contents. The role of the Content
`
`Distributor is not essential for the subsequent discussion but, of course, for the busi-
`
`ness to take place.”); see also Ex. 1020 at Fig. 1. Von Faber also notes that its system
`
`could be used for a variety of known content distribution and payment methods. See,
`
`e.g., Ex. 1020 at 13 (“The outlined system has the following characteristics: Different
`
`methods can be used to distribute the encrypted contents (standard techniques). This
`
`includes broadcasting, point-to-point networking, as well as offering disks. Different
`
`electronic payment methods can be integrated independent from the number of pro-
`
`tocol steps needed. This includes credit card based systems as well as electronic purses.
`
`8
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`This flexibility leads to the fact that totally different authorisation methods can be in-
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`tegrated.”). Von Faber further addressed the known issue of payment distribution to
`
`content providers. See, e.g., Ex. 1020 at 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 guarantees that the money is transferred to each Con-
`
`tent Provider whose product has been integrated into the package.”).
`
`Moreover, on June 22, 1999, U.S. Patent No. 5,915,019 (“Ginter”), entitled
`
`“Systems and Methods for Secure Transaction Management and Electronic Rights
`
`Protection,” issued. See Ex. 1015 (filed on January 8, 1997). Ginter similarly discloses
`
`“systems and methods for secure transaction management and electronic rights pro-
`
`tection.” See, e.g., id. Abstract. Ginter describes a “virtual distribution environment”
`
`(termed a “VDE”) to “control and/or meter or otherwise monitor use of electronical-
`
`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,
`
`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-
`
`ample, utilizing the ‘electronic highway.’” See, e.g., id. Ginter discloses that the various
`
`entities that comprise the VDE can flexibly take on any of the roles within the VDE.
`
`See, e.g., id. 255:22-23 (“All participants of VDE 100 have the innate ability to partici-
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`9
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`pate in any role.”); 255:23-43. Ginter thus highlights the known flexibility in such dis-
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`tribution systems, underscoring that a POSITA would have known that combinations
`
`between and among disclosures of such distribution systems would have been obvi-
`
`ous to a POSITA. See also, e.g., Ex. 1021 ¶ 39.
`
`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.
`
`1017. Rydbeck discloses a cellular phone as user device for storing digital content in
`
`non-volatile memory and accessing that content. See, e.g., Ex. 1017 p. 5 (“Because of
`
`its integration 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
`
`entertainment during leisure activities.”). In addition, JP Patent Application Publica-
`
`tion No. H11-164058 (“Sato”), entitled “Portable Music Selection and Viewing Sys-
`
`tem,” published June 18, 1999, discloses storing media content onto mobile user de-
`
`vices and playing the media content from these mobile devices. Sato further discloses
`
`storing that media content on a removable IC card. See, e.g., Ex. 1018 ¶ 9 (“The port-
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`able music selection and 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. . . an IC
`
`card. The user, after downloading the music software to the storage device (medium)
`
`76 of the portable music selection and viewing device 70 by operating the push but-
`
`tons or the like on the main body 71, can enjoy this music software on a display 72 or
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`a receiver 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-
`
`other audio unit. Further, the user can store the music software from another audio unit
`
`into the storage device 76 and enjoy music by inserting this storage unit 76 into this
`
`portable music selection and viewing device 70.”); ¶ 13 (“A music storage device 240
`
`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
`
`such as an IC card stores the music software, and this storage medium 250 can be re-
`
`moved and used on other audio units.”).
`
`Thus, as these background examples and the additional prior art detailed below
`
`in Section IV.B(including the primary prior art Stefik patent) illustrate, the prior art
`
`was rife with awareness and discussion of the same supposed “invention” now me-
`
`morialized in the challenged claims of the ’458 patent. Long before the ’458 patent’s
`
`first purported October 25, 1999 priority date, disclosures abounded of the very fea-
`
`tures that Smartflash now seeks to claim as its exclusive property. As outlined in more
`
`11
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`detail below, the challenged claims are therefore invalid under §§ 102 and/or 103.
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`
`III. PETITIONER HAS STANDING
`A.
`Petitioner certifies that the ’458 Patent is available for review under 37 C.F.R.
`
`The ’458 Patent Is a Covered Business Method Patent
`
`§ 42.304(a). The ’458 Patent is a “covered business method patent” under § 18(d)(1)
`
`of the Leahy-Smith America Invents Act, Pub. L. 112-29 (“AIA”) and § 42.301. Alt-
`
`hough in fact numerous claims of the ’458 Patent qualify, a patent with even one
`
`claim covering a covered business method is considered a CBM patent. See CBM
`
`2012-00001, Doc. 36 at 26; 77 Fed. Reg. 48,709 (Aug. 14, 2012). Accordingly, Peti-
`
`tioner addresses here exemplary claim 1 (Ex. 1001):
`
`1. A portable data carrier comprising:
`[A] an interface for reading and writing data from and to the carrier;
`[B] non-volatile data memory, coupled to the interface, for storing data
`on the carrier;
`[C] non-volatile payment data memory, coupled to the interface, for
`providing payment data to an external device;
`[D] a program store storing code implementable by a processor;
`[E] a processor, coupled to the content data memory, the payment data
`memory, the interface and to the program store for implementing code
`in the program store; and
`[F] a subscriber identity module (SIM) portion to identify a subscriber to
`a network operator
`[F] wherein the code comprises code to output payment data from
`the payment data memory to the interface and code to provide external
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`access to the data memory.
`1.
`Exemplary Claim 1 Is Financial In Nature
`A “covered business method patent” is “a patent that claims a method or corre-
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`sponding apparatus for performing data processing or other operations used in the practice, admin-
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`istration, or management of a financial product or service, except that the term does not in-
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`clude patents for technological inventions.” AIA § 18(d)(1); 37 C.F.R. § 42.301. “The
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`‘legislative history explains that the definition of covered business method patent was
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`drafted to encompass patents claiming activities that are financial in nature, incidental
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`to a financial activity or complementary to a financial activity.’” 77 Fed. Reg. 48,734,
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`48,735 (Aug. 14, 2012) (citing 157 Cong. Rec. S5432 (daily ed. Sept. 8, 2011) (state-
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`ment of Sen. Schumer)). “[F]inancial product or service” is to be interpreted broadly,
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`id., and the term “financial . . . simply means relating to monetary matters”—it does
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`not require any link to traditional financial industries such as banks. See, e.g.,
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`CBM2012-00001, 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
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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. 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] person of ordinary
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`skill in the art would have understood that [one of the claim limitations] may be asso-
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`ciated with financial services”).
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`As discussed above, the ’458 Patent includes claims directed to a “portable data
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`carrier” (such as a standard smart card) that stores content, use rules, payment data,
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`and code that provides payment data to a payment validation system. See AIA
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`§ 18(d)(1); 37 C.F.R. § 42.301(a). The ’458 Patent alleges that this allows content
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`owners to make content available to users without fearing loss of revenue. Ex. 1001
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`at 2:11-15. More generally, the patent is about “[d]ata storage and access systems [that]
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`enable downloading and paying for data . . .” Id. Abstract. “The combination of
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`payment data and stored content data and use rule data helps reduce the risk of unau-
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`thorized access to data.” Id. And in seeking to enforce the ’458 Patent in litigation,
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`Smartflash itself conceded that the alleged invention relates to a financial activity or
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`transaction, stating that “[t]he patents-in-suit generally cover a portable data carrier for
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`storing data and managing access to the data via payment information and/or use sta-
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`tus rules. The patents-in-suit also generally cover a computer network . . . that serves
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`data and manages access to data by, for example, validating payment information.”
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`Ex. 1002 ¶ 17.
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`Indeed, the specification confirms that the “portable data carrier” of the inven-
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`tion is “for storing and paying for data.” Ex. 1001 1:22. Claim 1 further requires
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`memory to store payment data and code to “output payment data from the payment
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`data memory to the interface . . . .” Id. 26:1-3. Thus Claim 1, which explicitly de-
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`scribes storing and providing payment data to a payment validation system, clearly concerns
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`a computer system (corresponding to methods discussed and claimed elsewhere in the
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`patent family) for performing data processing and other operations used in the prac-
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`tice, administration, or management of a financial activity and service. Exs. 1010 cl.
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`14; 1025 cl. 12. Indeed, claim 1 expressly recites software to perform data processing
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`and other operations in connection with the recited providing and outputting of
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`“payment data.” See CBM2013-00020, Paper 14 at 9-10 (“the electronic transfer of
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`money is a financial activity, and allowing such a transfer amounts to providing a fi-
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`nancial service.”). See also AIA § 18(d)(1); 37 C.F.R. § 42.301(a). See also 77 Fed. Reg.
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`48,734, 48,735 (Aug. 14, 2012) (“[T]he definition of [CBM] was drafted to encompass
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`patents ‘claiming activities that are financial in nature, incidental to a financial activity
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`or complementary to a financial activity.’”) (citation omitted).
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`2.
`Further, claim 1 is not a “technological invention” that would trigger the excep-
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`Claim 1 Does Not Cover A Technological Invention
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`tion in AIA § 18(d)(1), because it does not claim “subject matter as a whole [that] re-
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`cites 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 ’458 patent
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`itself makes clear that its claimed “portable data carrier” was a commonplace device
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`that could be implemented using well-known industry standards.
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`(a) Claim 1 Does Not Recite A Technological Feature
`That Is Novel and Unobvious
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`First, no “technological feature” of claim 1 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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`ware, communication or computer networks, software, memory, computer-readable
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`storage medium, scanners, display devices or databases, or specialized machines, such
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`as an ATM or point of sale device,” or “[r]eciting the use of known prior art technol-
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`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.,
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`77 Fed. Reg. 48,756 48,764 (Aug. 14, 2012).
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`As its language makes clear, claim 1 requires no particularized hardware. It re-
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`lates to the ide