Covered Business Method Patent Review
`United States Patent No. 8,061,598
`
`
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`Petitioner: Apple Inc.
`
`Attorney Docket No.:
`
` 104677-5008-810
`Customer No. 28120
`
`§
`Inventor: Racz et al.
`United States Patent No.: 8,061,598 §
`Formerly Application No.: 13/012,541 §
`Issue Date: November 22, 2011
`§
`Filing Date: January 24, 2011
`§
`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. 8,061,598 PURSUANT TO 35 U.S.C. § 321,
`37 C.F.R. § 42.304
`
`
`
`

`

`
`
` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`
`TABLE OF CONTENTS
`
`B. 
`
`
`INTRODUCTION ....................................................................................................... 1 
`I. 
`II.  OVERVIEW OF FIELD OF THE CLAIMED INVENTION ......................... 4 
`III.  PETITIONER HAS STANDING .......................................................................... 13 
`A. 
`The ’598 Patent Is a Covered Business Method Patent ............................. 13 
`1. 
`Exemplary Claim 7 Is Financial In Nature ...................................... 14 
`2. 
`Claim 7 Does Not Cover A Technological Invention ................... 18 
`Related Matters; Petitioner Is a Real Party In Interest Sued for and
`Charged With Infringement ........................................................................... 23 
`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 ............................ 24 
`A. 
`Claim Construction .......................................................................................... 24 
`B. 
`The Challenged Claims Are Invalid Under §§ 102 and/or 103 ................ 29 
`1. 
`Overview of Ginter .............................................................................. 29 
`2. 
`Motivation to Combine Ginter with Poggio.................................... 33 
`3. 
`Motivation to Combine Ginter with Stefik ...................................... 36 
`4. 
`Motivation to Combine Ginter with Poggio and Stefik ................. 41 
`5. 
`Motivation to Combine Ginter with Sato ........................................ 41 
`6. 
`Claims 1, 2, 7, 13, 15, 26, and 31 are Anticipated by Ginter
`(Ground 1) and Obvious in Light of Ginter (Ground 2);
`Claims 1, 2, 7, 13, 15, and 26 are Obvious in Light of
`Ginter in View of Stefik (Ground 3) and Obvious in Light
`of Ginter in View of Sato (Ground 4); Claim 7 is Obvious
`in Light of Ginter in View of Poggio (Ground 5) and
`Obvious in Light of Ginter in View of Poggio and Stefik
`(Ground 6) ............................................................................................ 43 
`CONCLUSION........................................................................................................... 79 
`
`V. 
`
`
`
`ii
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`

`

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`EXHIBIT LIST
`1101
`
`1102
`
`1103
`
`1104
`
`1105
`
`1106
`
`1107
`
`1108
`
`1109
`
`1110
`
`1111
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`1112
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`1113
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`1114
`
`1115
`
`1116
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`1117
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`1118
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`1119
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`1120
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`
`U.S. Patent No. 8,061,598
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`Plaintiffs’ First Amended Complaint
`
`File History for U.S. Patent No. 8,033,458
`
`File History for U.S. Patent No. 8,118,221
`
`File History for U.S. Patent No. 8,336,772
`
`U.S. Patent No. 4,999,806
`
`U.S. Patent No. 5,675,734
`
`U.S. Patent No. 4,878,245
`
`U.S. Patent No. 7,334,720
`
`U.S. Patent No. 7,942,317
`
`File History for U.S. Patent No. 8,061,598
`
`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 Frank-Peter
`Heider, “The Secure Distribution of Digital Contents,” IEEE
`(1997)
`
`iii
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`

`

` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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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
`
`U.S. Patent No. 8,033,458
`
`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
`
`EXHIBIT LIST
`1121
`
`1122
`
`1123
`
`1124
`
`1125
`
`1126
`
`1127
`
`1128
`
`1129
`
`iv
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`

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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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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, 2, 7, 13, 15, 26, and 31 of U.S. Pa-
`
`tent No. 8,061,598 (“the ’598 patent”), issued to Smartflash Technologies Limited and
`
`currently assigned to Smartflash LLC (“Smartflash,” also referred 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, 7, 13, 15,
`
`26, and 31 as invalid under 35 U.S.C. §§ 102 and 103.1
`
`As discussed in Section III.B, infra, Petitioner has concurrently filed a Petition
`
`seeking covered business method review of the ’598 patent, requesting judgment
`
`against these same claims based on different prior art. Petitioner notes that the Direc-
`
`tor, 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 ’598 patent merely recite steps and corresponding
`
`
`1 Petitioner is demonstrating, in pending litigation, that these claims are invalid for
`
`numerous additional reasons. All emphasis herein added unless otherwise noted.
`
`
`
`

`

`systems well-known in the field of data storage and access, including use of a “porta-
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`
`ble data carrier.” Ex. 1101 1:20-24; Abstract, claims 1, 26, 31. Claim 1, for example,
`
`recites five rudimentary components of a portable data carrier (e.g., smart card)—(A)
`
`an interface, (B and C) content data and use rule memory, (D) a program store
`
`storing code implementable by a processor, and (E) a processor . . . for implementing
`
`code. The recited code is similarly elementary, storing content data and a use rule in
`
`memory (F):
`
`1. A portable data carrier comprising:
`[A] an interface for reading and writing data from and to the portable
`data carrier;
`[B] content data memory, coupled to the interface, for storing one or
`more content data items on the carrier;
`[C] use rule memory to store one or more use rules for said one or more
`content data items;
`[D] a program store storing code implementable by a processor;
`[E] and a processor coupled to the content data memory, the use rule
`memory, the interface and to the program store for implementing code
`in the program store,
`[F] wherein the code comprises code for storing at least one content data
`item in the content data memory and at least one use rule in the use rule
`memory.
`Ex. 1101. And dependent claim 7, for instance, adds certain express financial
`
`components to claim 1:
`
`7. A portable data carrier as claimed in claim 1, further comprising
`
`2
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`[G] payment data memory to store payment data and code to
`provide the payment data to a payment validation system.
`
`Ex. 1101. But the ’598 patent’s earliest claimed priority date, these simple elements
`
`and their combination would have been 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. 1101 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
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`of purchasing digital data for payment was similarly well-known. See, e.g., Ex. 1107.
`
`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 an interface, non-volatile memory, and program
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`store/processor—which the patent itself concedes was well known and entirely
`
`commonplace at the time. See e.g., Ex. 1101 11:28-29 (“standard smart card”), 3:37,
`
`4:7-13, 6:19-21, 11:27-44, 17:6-18:4, Figs. 2, 9. The use rules of claim 1 “may be
`
`linked to payments made from the card to provide payment options such as access to
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`buy content data outright; [or] rental access . . .” Id. 5:1-8. Thus, as the intrinsic rec-
`
`ord reflects, claim 1 recites nothing more than a system for reading and writing data
`
`while restricting access to that data. Indeed, the ’598 patent states that “[t]he physical
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`3
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`embodiment of the system is not critical and a skilled person will understand that the
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`terminals, data processing systems and the like can all take a variety of forms.” See, e.g.,
`
`Ex. 1101 Fig 1; 12:29-32. And the variations presented in the other challenged system
`
`claims add nothing that was not already well-known. Dependent claim 7, for exam-
`
`ple,2 simply adds to claim 1 the ability to store and provide payment data. Similarly,
`
`the challenged method claim, claim 31, relating to “controlling access to content da-
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`ta,” recites nothing more than the steps implemented by the portable data carrier that
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`restrict access to data. See id. Fig. 13. It is thus little surprise that, as detailed herein,
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`each and every element of the challenged claims of the ’598 patent and their claimed
`
`combinations have been disclosed in the prior art, either by individual references, or
`
`by those references or systems in combination. Accordingly, each of the challenged
`
`claims is invalid under 35 U.S.C. §§ 102 and/or 103.
`
`II. OVERVIEW OF FIELD OF THE CLAIMED INVENTION
`By October 25, 1999, electronic sale, distribution, and content protection for
`
`2 Claim 2 merely adds to claim 1 the well-known notion of providing access to data
`
`based on a use rule. Claims 13 and 15 add to claim 1 only the use of content location
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`data and the storage of a PIN number, respectively. Claim 26, the other independent
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`claim directed to a portable data carrier, adds nothing to claim 1 other than the recita-
`
`tion of a “Subscriber Identity Module,” which was well-known. Ex. 1101 4:9-13. See
`
`also Ex. 1111 at 108.
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`4
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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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 (Wechselberger Decl.) Secs. V, VI. For example, nearly a decade earlier,
`
`on March 12, 1991, U.S. Patent No. 4,999,806 (“Chernow”), “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. After verifying the credit card information, the station calls the purchaser
`
`back and continues with the transaction only after receiving the acceptance code.”); 1:67-2:9 (ob-
`
`jects of the claimed invention include “provid[ing] a means for selling and distributing
`
`protected software using standard telephone lines for transferring the software from
`
`the seller to the purchaser,” “permit[ting] the purchaser to rent the protected software
`
`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 ¶ 31.
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`5
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`for a period of time after which it will self destruct,” and “to rent the protected soft-
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`ware for a specific number of runs which would be useful, e.g., if the software were a
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`game.”). As illustrated above, Chernow discloses making different types of access available,
`
`such as purchase versus rental. Further, Chernow discloses a Control Transfer Pro-
`
`gram and a Primary Protection Program that ensure the computer receiving a down-
`
`loaded program does not have another program present that could create unauthor-
`
`ized copies. See Ex. 1106 Abstract (“The central station . . . transmits a Control
`
`Transfer Program and Initialization Program to the purchaser, [which] executes 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 Protection
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`program for ensuring that no memory resident copying programs are running”); see
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`also id. 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 Proprietor,” issued, disclosing storing data about customer use of digital
`
`products so a customer can be charged according to its use. E.g., Ex. 1112 1:64-2:17:
`
`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-
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`6
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`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
`
`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”), “Virtual vending system and method for
`
`managing the distribution, licensing and rental of electronic data.” See Ex. 1116.
`
`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
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`7
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`

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`and the associated license fees and rental periods, to receive the product upon receipt of a cor-
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`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. 1120. In its introduction, von Faber made the well-known ob-
`
`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 proposed a system where customers purchase keys required to utilize distribut-
`
`ed encrypted content. See, e.g., id. (“The basic idea of one possible solution is to dis-
`
`tribute 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 distribution.”); id. at 8 (“The Content Provider
`
`provides digital contents in encrypted form being distributed by the Content Distribu-
`
`tor. 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 decrypted 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
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`be used with a variety of known content distribution and payment methods. See, e.g.,
`
`id. at 13 (“Different methods can be used to distribute the encrypted contents (stand-
`
`ard techniques). This includes broadcasting, point-to-point networking, as well as offering disks.
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`Different electronic payment methods can be integrated independent from the number of
`
`protocol steps needed. This includes credit card based systems as well as electronic purses.
`
`This flexibility leads to the fact that totally different authorisation methods can be integrated.”).
`
`Von Faber further addressed the known issue of payment distribution to content pro-
`
`viders. See, e.g., id. 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 (pay-
`
`ments) and guarantees that the money is transferred to each Content Provider”).
`
`Also in 1997, the second of two Stefik patents issued, incorporating the first by
`
`reference. U.S. Patent No. 5,530,235, “Interactive Contents Revealing Storage De-
`
`vice” (“Stefik ’235,” filed Feb. 16, 1995 and issued June 25, 1996) incorporates by
`
`reference U.S. Patent No. 5,629,980, “System for Controlling the Distribution and
`
`Use of Digital Works” (“Stefik ’980,” filed Nov. 23, 1994 and issued May 13, 1997).
`
`See Ex. 1113 2:47-52 (“The currently preferred embodiment of a DocuCard is an in-
`
`stance of a repository, as defined in co-pending application . . . herein incorporated by ref-
`
`erence.”). Stefik ’235 and Stefik ’980 will be referred to collectively herein as “Stefik.”4
`
`4 Because Stefik ’235 incorporates Stefik ’980 by reference, they should be considered
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`United States Patent No. 8,061,598
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`Stefik discloses “[a] Document Card (DocuCard) for storing documents and
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`which is content revealing. The DocuCard is a transportable unit having a nonvolatile
`
`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, including the protection of content
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`with “usage rights.” See, e.g., Ex. 1114 Abstract (“A system for controlling use and
`
`distribution of digital works. In the present invention, the owner of a digital work at-
`
`taches usage rights to that work.”); Ex. 1114 Abstract (“Usage rights are granted by
`
`a single reference. For clarity in citing to disclosures, however, separate cites are pro-
`
`vided to the Stefik ’235 and ’980 Exhibits (Exs. 1113 and 1114, respectively). To the
`
`extent Stefik ’235 (Ex. 1113) and Stefik ’980 (Ex. 1114) are argued to be separate ref-
`
`erences, there is explicit motivation to implement the repository disclosed by Stef-
`
`ik ’980 using the Document Card (DocuCard) of Stefik ’235. See, e.g., Ex. 1113 2:47-53;
`
`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 ¶ 44,
`
`App’x D.
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`the ‘owner’ of a digital work to ‘buyers’ of the digital work. [and] define how a digital
`
`work may be used and further distributed 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.”). Stefik’s digital works are stored in a “repository”
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`that processes requests for access—e.g., for such actions as utilizing content (viewing,
`
`executing, or printing) or transporting content (copying, borrowing, or transferring)—
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`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 pro-
`
`cess each request to access a digital work by examining the corresponding usage
`
`rights . . . Access to digital works for the purposes of transporting between reposito-
`
`ries (e.g. copying, borrowing or transfer) is carried out using a digital work transport
`
`protocol. Access [for] replay by a digital work playback device (e.g. printing, displaying
`
`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 Aug. 26, 1999) discloses a cel-
`
`lular phone as a user device for storing digital content in non-volatile memory and ac-
`
`cessing that content. E.g., Ex. 1117 5 (“Because of its integration into the cellular
`
`phone, the digital entertainment module can share components already present in the
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`cellular phone. Such savings would not be available if a CD player were simply aggre-
`
`gated with the phone. Further, the use of solid state RAM or ROM, as opposed to
`
`disc storage, eliminates the need for bounce control circuitry[, enabling the] invention
`
`to provide cellular communications and entertainment during leisure activities.”). In
`
`addition, JP Patent Application Pub. No. H11-164058 (“Sato,” pub’d June 18, 1999),
`
`“Portable Music Selection and Viewing System,” discloses storing media content onto
`
`mobile user devices 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.
`
`1118 ¶ 9 (“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
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`magnetic card, a magnetic tape, a CD, a DVD, or an IC card. The user, after down-
`
`loading the music software to the storage device (medium) 76 . . . can enjoy this music
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`software on a display 72 or a receiver 74 of . . . device 70, and can also enjoy higher
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`quality music playback by removing this storage device (medium) and inserting it into another au-
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`dio unit. Further, the user can store the music software from another audio unit into
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`the storage device 76”); ¶ 13 (“A music storage medium 250 such as . . . 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 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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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`morialized in the challenged claims of the ’598 patent. Long before the ’598 patent’s
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`first purported October 25, 1999 priority date, disclosures abounded of the very fea-
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`tures that Smartflash now seeks to claim as its exclusive property. As outlined in more
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`detail below, the challenged claims are therefore invalid under §§ 102 and/or 103.
`
`III. PETITIONER HAS STANDING
`A.
`Petitioner certifies that the ’598 patent is available for review under 37 C.F.R. §
`
`The ’598 Patent Is a Covered Business Method Patent
`
`42.304(a). The ’598 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-
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`hough in fact numerous claims of the ’598 patent qualify, a patent with even one claim
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`covering a covered business method is considered a CBM patent. See CBM 2012-
`
`00001, Paper 36 at 26; 77 Fed. Reg. 48,709 (Aug. 14, 2012). Accordingly, Petitioner
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`addresses here exemplary Claim 7, which depends from claim 1 (Ex. 1101):
`
`1. A portable data carrier comprising:
`[A] an interface for reading and writing data from and to the portable da-
`ta carrier;
`[B] content data memory, coupled to the interface, for storing one or
`more content data items on the carrier;
`[C] use rule memory to store one or more use rules for said one or more
`content data items;
`[D] a program store storing code implementable by a processor;
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`[E] and a processor coupled to the content data memory, the use rule
`memory, the interface and to the program store for implementing code
`in the program store,
`[F] wherein the code comprises code for storing at least one content data
`item in the content data memory and at least one use rule in the use rule
`memory.
`7. A portable data carrier as claimed in claim 1, further comprising
`
`[G] payment data memory to store payment data and code to
`provide the payment data to a payment validation system.
`1.
`A “covered business method patent” is “a patent that claims a method or corre-
`
`Exemplary Claim 7 Is Financial In Nature
`
`sponding apparatus for performing data processing or other operations used in the practice, admin-
`
`istration, or management of a financial product or service, except that the term does not in-
`
`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
`
`drafted to encompass patents claiming activities that are financial in nature, incidental to a
`
`financial activity or complementary to a financial activity.’” 77 Fed. Reg. 48,734, 48,735 (Aug.
`
`14, 2012) (citing 157 Cong. Rec. S5432 (daily ed. Sept. 8, 2011) (stmt. of Sen. Schum-
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`er)). “[F]inancial product or service” is to be interpreted broadly, id., and the term
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`“financial . . . simply means relating to monetary matters”—it does not require any
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`link to traditional financial industries such as banks. See, e.g., CBM2012-00001, Paper
`
`36 at 23. This Board has previously found, for example, that a claim for “transferring
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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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 9-10. See also,
`
`e.g., CBM2013-00017, Paper 8 at 5-6 (finding patent sufficiently financial based on ref-
`
`erence in the specification to e-commerce and the fact that a POSITA “would have
`
`understood that [one of the claim limitations] may be associated with financial ser-
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`vices”).
`
`As discussed above, the ’598 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
`
`§ 18(d)(1); 37 C.F.R. § 42.301(a); Ex. 1101. The ’598 patent alleges that this allows
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`content owners to make content available to users without the fear of loss of revenue.
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`Ex. 1101 2:11-15; see also id. cl. 31 (“A method of controlling access to content data, the
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`method comprising: receiving a data access request from a user for a content data
`
`item, reading the use status data and one or more use rules from parameter memory
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`that pertain to use of the requested content data item; evaluating the use status data
`
`using the one or more use rules to determine whether access to the content data item
`
`is permitted; and enabling access to the content data item responsive to a determina-
`
`tion that access to the content data item is permitted”). More generally, the patent is
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`about “[d]ata storage and access systems [that] enable downloading and paying for da-
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`ta . . .” Id. Abstract. “The combination of payment data and stored content data and
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`use rule data helps reduce the risk of unauthorized access to data.” Id. And in seek-
`
`ing to enforce the ’598 patent in litigation, Smartflash itself conceded that the alleged
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`invention relates to a financial activity or transaction, stating that “[t]he patents-in-suit
`
`generally cover a portable data carrier for storing data and managing access to the data
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`via payment information and/or use status rules. The patents-in-suit also generally
`
`cover a computer network . . . that serves data and manages access to data by, for ex-
`
`ample, validating payment information.” Ex. 1102 ¶ 17.
`
`Indeed, the specific