`
`_________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_________
`
`SAMSUNG ELECTRONMICS AMERICA, INC., and
`SAMSUNG ELECTRONICS CO. LTD.,
`Petitioner,
`
`and
`
`APPLE INC.,
`Petitioner,
`
`v.
`
`SMARTFLASH LLC,
`Patent Owner.
`
`_________
`
`Case CBM2014-001901
`
`Patent 7,334,720 B2
`
`_________
`
`
`
`PATENT OWNER’S REQUEST FOR REHEARING
`
`
`
`
`1 CBM2015-00118 (U.S. Patent 7,334,720 B2) was consolidated with this
`proceeding. Paper 31, 6–7.
`
`
`
`
`
`TABLE OF CONTENTS
`
`
`STATEMENT OF PRECISE RELIEF REQUESTED ................................... 2
`I.
`BACKGROUND ............................................................................................. 2
`II.
`III. ARGUMENT ................................................................................................... 5
`Like the Claims in Enfish and DDR Holdings, the Challenged Claims
`A.
`Are Patent Eligible Because They Are Directed to a Specific Solution
`to a Novel Problem Presented by Digital Commerce ........................... 5
`The Challenged Claims Do Not Resemble Those in Alice ................. 10
`1.
`The Challenged Claims Are Directed to a Specific Device and a
`Specific Method, Not an Abstract Idea ..................................... 11
`The Challenged Claims Contain “Additional Features”
`Demonstrating That They Do Not Cover an Abstract Idea ...... 13
`IV. CONCLUSION .............................................................................................. 15
`
`
`B.
`
`2.
`
`
`
`i
`
`
`
`The Board’s final written decision in this covered business method patent
`
`review misapprehends the Federal Circuit’s and Supreme Court’s guidance on
`
`patent eligible subject matter under 35 U.S.C. § 101 and overlooks the Federal
`
`Circuit’s decision in Enfish, LLC v. Microsoft Corp., No. 2015-2044 (Fed. Cir.
`
`May 12, 2016). The challenged claims are directed to a novel content delivery
`
`system for distributing digital content over the Internet while reducing piracy—a
`
`pressing problem at the time of invention. Like the claims at issue in Enfish, DDR
`
`Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 125 (Fed. Cir. 2014), Apple,
`
`Inc. v. Mirror World Techs., LLC, Case CBM2016-00019 (Paper 12, May 26,
`
`2016), and Google Inc. v. ContentGuard Holdings, Inc., Case CBM2015-00040
`
`(Paper 9, June 24, 2015), the inventions improve the functioning of computers by
`
`teaching improved devices and methods for downloading, storing, and accessing
`
`data. “[T]he focus of the claims is on the specific asserted improvement in
`
`computer capabilities” – not on an “‘abstract idea’ for which computers are
`
`invoked merely as a tool.” Enfish, slip op. at 11. Whether considered at step one
`
`or step two of the Alice inquiry, the claims’ specific elements put them squarely in
`
`the realm of patent-eligible subject matter.
`
`The Board concluded otherwise because it failed to address the claim
`
`language and the specific limitations governing organization and processing of
`
`specific data types. By characterizing the claims (at 8) as “directed to performing
`
`
`
`1
`
`
`
`the fundamental economic practice of conditioning and controlling access to
`
`content based on payment,” the Board “describe[d] the claims at . . . a high level of
`
`abstraction and untethered from the language of the claims,” thereby “all but
`
`ensur[ing] that the exceptions to § 101 swallow the rule.” Enfish, slip op. at 9; see
`
`also Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2354 (2014) (warning
`
`against “construing this exclusionary principle [to] swallow all of patent law”).
`
`Patent Owner requests rehearing to correct these errors. See 37 C.F.R. § 42.71(d).
`
`I.
`
`STATEMENT OF PRECISE RELIEF REQUESTED
`
`Patent Owner requests that the Board reverse its original decision (Paper 47,
`
`May 26, 2016) and hold that challenged claims 13 and 14 are patent eligible.
`
`II. BACKGROUND
`
`1.
`
`Distribution of digital content over the Internet “introduces a problem
`
`that does not arise” with content distributed on physical media. DDR Holdings,
`
`LLC v. Hotels.com, L.P., 773 F.3d 1245, 125 (Fed. Cir. 2014). By the late 1990s,
`
`improved data compression and increasing bandwidth for Internet access enabled
`
`content providers, for the first time, to offer content data for purchase over the
`
`Internet; at the same time, unprotected data files could be easily pirated and made
`
`available “essentially world-wide.” Ex. 1001, 1:32-33. Conventional operation of
`
`the Internet does not solve the problem of data piracy: on the contrary, the Internet
`
`facilitates the distribution of data without restriction or protection. Id. 1:49-55.
`
`
`
`2
`
`
`
`Content providers faced piracy before—a CD can be copied onto another
`
`CD and the pirated copy sold—but the problem presented by widespread
`
`distribution of pirated content over the Internet was unprecedented. There had
`
`never before been a way to make free, identical, and flawless copies of physical
`
`media available to millions of people instantaneously at virtually no incremental
`
`cost. See generally Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545
`
`U.S. 913, 929-30 (2005). The Internet gave rise to an urgent need to address data
`
`piracy associated with digital content distribution over the Internet.
`
`
`
`The inventor devised a data storage and access system for downloading and
`
`paying for data, described in the specification and claimed in this patent and others,
`
`comprising specific elements designed to overcome problems inherent in making
`
`digital content available over the Internet and in accessing that content. Ex. 1001,
`
`at 1 (Abstract). The relevant claims of the ’720 patent are directed to two aspects
`
`of that system: a “data access terminal for retrieving data from a data supplier and
`
`providing the retrieved data to a data carrier” id. 26:41-42; 28:1, and “a method of
`
`providing data from a data supplier,” id. 28:5.
`
`Claim 3, from which claim 13 depends, requires the “data access terminal”
`
`to include a “first interface for communicating with the data supplier”; “a data
`
`carrier interface for interfacing with the data carrier”; a “program store”; and a
`
`“processor . . . for implementing the stored code,” “the code comprising: [(1)]
`
`
`
`3
`
`
`
`code to read payment data from the data carrier and to forward the payment data to
`
`a payment validation system; [(2)] code to receive payment validation data from
`
`the payment validation system; [(3)] code responsive to the payment validation
`
`data to retrieve data from the data supplier and to write the retrieved data into the
`
`data carrier; and [(4)] code responsive to the payment validation data to receive at
`
`least one access rule from the data supplier and to write the at least one access rule
`
`into the data carrier, the at least one access rule specifying at least one condition
`
`for accessing the retrieved data . . . the at least one condition being dependent upon
`
`the amount of payment.” Ex. 1001, 26:43-65. Challenged Claim 13 adds that the
`
`terminal be integrated with a computer, mobile communications device, or like
`
`devices. Id. at 28:1-4. Claim 14 describes a related method. Id. 28:5-20.
`
`
`
`2.
`
`The Board found the challenged claims to be patent ineligible. First,
`
`the Board found (at 8) that the challenged claims “are drawn to an abstract idea,”
`
`that is, “performing the fundamental economic practice of conditioning and
`
`controlling access to content based on payment.” The Board also found “that the
`
`additional elements . . . are generic features of a computer,” id. at 11, and
`
`distinguished DDR Holdings because “[d]ata piracy exists in contexts other than
`
`the Internet,” “the solutions provided by [the challenged claims] are not rooted in
`
`specific computer technology,” and the “result” does not “override[] the routine
`
`and conventional use of the recited devices and functions.” Id. at 16-17.
`
`
`
`4
`
`
`
`III. ARGUMENT
`
`The Board should reverse its decision in this case and find the claims
`
`directed to statutory subject matter because, in evaluating whether challenged
`
`claims 13 and 14 comply with § 101, the Board failed to give effect to the actual
`
`language of the claims and their specific limitations.2 The actual claim language,
`
`read in light of the specification, reflects a specific and concrete technical solution
`
`to a novel problem associated with distribution of digital content over the Internet.
`
`Such a technological advance is patent eligible.
`
`A. Like the Claims in Enfish and DDR Holdings, the Challenged
`Claims Are Patent Eligible Because They Are Directed to a
`Specific Solution to a Novel Problem Presented by Digital
`Commerce
`
`1.
`
`The claims of the ’720 patent are patent eligible because they embody
`
`concrete aspects of a particular solution to the Internet-specific problem of digital
`
`piracy – “a specific improvement to the way computers operate.” Enfish, slip op.
`
`at 12. This is not a patent that simply claims “use of the Internet” or a computer to
`
`perform an established business method. Cf. Ultramercial, Inc. v. Hulu, LLC, 772
`
`
`2 The Board disregarded the text of the claims, using nearly identical language in
`
`all the final written decisions of the covered business method reviews that concern
`
`the patents related to the ’720 patent, even though the challenged claims varied
`
`dramatically in their coverage. See, e.g., CBM2015-00029; CBM2014-00192.
`
`
`
`5
`
`
`
`F.3d 709, 716 (Fed. Cir. 2014). This is no digital telephone book. Cf. Paper 47, at
`
`19. On the contrary, the challenged claim limitations reflect specific technical
`
`choices involving the storage, transmission, and organization of specific data types.
`
`For example, by storing payment data on the data carrier – rather than
`
`requiring the user to enter payment data manually into the data access terminal
`
`with each purchase – the invention improves the function of user devices over prior
`
`systems that required separate submission of payment information or post-use
`
`billing. See Ex. 1001, 4:26-28. By transmitting payment validation data to the
`
`data access terminal and having the terminal retrieve the digital content from the
`
`data supplier in response, the patent inventively allows the same data carrier to be
`
`compatible with independent and integrated validation systems. See id. 8:64-9:5.
`
`By writing onto the data carrier “access rules” that are dependent on the amount of
`
`payment, the invention limits a user’s ability to make unauthorized copies and
`
`allows for different levels of access to downloaded digital content. See, e.g., Ex.
`
`1001 at 15:13-17; see also ’772 patent, cl. 25 (“use status data and use rules”).
`
`“[T]he claimed solution amounts to an inventive concept for resolving this
`
`particular Internet-centric problem.” DDR Holdings, 773 F.3d at 1259.
`
`The claims teach specific technical solutions to a problem associated with
`
`distribution of digital content through specific organization of distinct data types,
`
`implemented on a specific device. There is no risk that the patents monopolize
`
`
`
`6
`
`
`
`“fundamental economic concepts,” as the Board held (at 8-10). The claims are not
`
`directed to any way of conditioning and controlling access to content but to
`
`specific devices and methods involving a novel organization of designated data
`
`types. Recognizing the patent-eligibility of these claims will not “impede
`
`innovation” or “improperly t[ie] up . . . building blocks of human ingenuity.”
`
`Alice, 134 S. Ct. at 2354. On the contrary, each claim teaches a “specific way” to
`
`control access to stored digital content; the claims do not attempt to “preempt
`
`every application of the idea.” DDR Holdings, 773 F.3d at 1259.
`
`2.
`
`The Board rejected Patent Owner’s reliance on DDR Holdings (at 16),
`
`holding that the challenged claims were not “rooted in computer technology in
`
`order to overcome a problem specifically arising in the realm of computer
`
`networks.”3 That is incorrect: the claim discusses specific computer functions and
`
`interactions to perform a specific series of operations. Indeed, the Board’s own
`
`summary of the ’720 patent (at 3) states:
`
`The ’720 patent describes providing portable data storage
`together with a means for conditioning access to that data upon
`validated payment. . . . This combination allows data owners to
`make their data available over the internet without fear of data
`pirates.
`
`3 Pursuant to 37 C.F.R. § 42.71(d), whether the challenged claims were similar to
`
`those in DDR Holdings was previously addressed. See PO Resp. 11-20.
`
`
`
`7
`
`
`
`The specification further explains that the purpose of the invention is to
`
`“make . . . data available . . . over the internet without fear of loss of revenue.” Ex.
`
`1001, 2:1-2. “The growing prevalence of so-called data pirates” is a problem that
`
`arises by virtue of “increasingly wide use of the internet.” Id. 1:15-17. Because
`
`the Internet facilitates “essentially world-wide” distribution of flawless, identical
`
`copies of digital content data, the data piracy problems it creates are qualitatively
`
`different from the problem of copying of physical media (videotapes, CDs,
`
`software, books), which necessarily takes time, imparts imperfections, and imposes
`
`incremental costs. See Grokster, Ltd., 545 U.S. at 929-30.
`
`Rather than generically claiming use of the Internet to perform an abstract
`
`business practice, the claims solve problems faced by digital content providers in
`
`the Internet Era and teach “an improvement to computer functionality itself.”
`
`Enfish, slip op. at 12; Mirror Worlds, Paper 12, at 15. Another PTAB Panel
`
`reached the same conclusion in refusing to initiate a CBM review of another patent
`
`involving digital rights management in ContentGuard. That patent claimed a
`
`method and system for transferring rights associated with an item, involving
`
`obtaining a “meta-right” specifying a right that can be created when the meta-right
`
`is exercised and determining, by a repository, whether the consumer is entitled to
`
`the right specified by the meta-right. Although it found that the claims involved no
`
`novel technological feature, the panel nevertheless held that, rather than merely
`
`
`
`8
`
`
`
`reciting a “fundamental economic or longstanding commercial practice,” the
`
`claims “are directed to a particular way of creating and enforcing rights
`
`associated with digital works that is ‘necessarily rootted in computer technology’
`
`and ‘specifically arises in the realm of computer networks.’” Paper 9, at 29
`
`(emphasis added). And the panel also found that “implementation of digital rights
`
`management required by the challenged claims . . . is specific enough that it does
`
`not preempt all other ways of ensuring that an owner of a digital work can enforce
`
`the rights associate therewith.” Id. That same analysis applies here.
`
`The Board also held (at 17) that the challenged claims contained
`
`limitations—unlike the claims in DDR Holdings—that were “specified at a high
`
`level of generality.” But the challenged claims and the specification discuss a
`
`specific organization of data types to carry out transactions according to a
`
`particular scheme, not mere generalities. “Payment data,” “payment validation
`
`data” and “access rules” are described in the ’720 patent and are at least as specific
`
`as the claims terms in DDR Holdings. See 773 F.3d at 1249 (reciting “link,”
`
`“source page,” “commerce object” and “visually perceptible elements”).
`
`
`
` Finally, the Board held (at 14) that the claims could be performed by “a
`
`general purpose computer.” But that is generally true of software inventions, and
`
`“[s]oftware can make non-abstract improvements to computer technology just as
`
`hardware improvements can.” Enfish, slip op. at 11. These claims teach a specific
`
`
`
`9
`
`
`
`scheme for storing payment data, content data, and access rules on a data carrier
`
`and using those data types to control and condition access to content data
`
`according to a specific transaction sequence. As the specification explains, when
`
`digital data is sent over the Internet operating in its normal, expected manner and
`
`stored by a recipient, the content owner has no means to exert further control over
`
`access to downloaded content. The claims provide a specific mechanism to ensure
`
`that content, once downloaded, can only be accessed only in accordance with
`
`associated access rules. Just as the claims in DDR Holdings “specify how
`
`interactions with the Internet are manipulated to yield a desired result,” 773 F.3d at
`
`1258, the claims here specify how manipulation of specific data types facilitates
`
`convenient and secure provision of digital content, a result that neither the Internet
`
`nor unimproved computers can produce. See Enfish, slip op. at 15; ContentGuard,
`
`Paper 9, at 29. The patent “improve[s] the functioning” of data access terminals
`
`and data carriers, which likewise improves the functioning of data communications
`
`networks used for digital content distribution. Alice, 134 S. Ct. at 2359.
`
`
`
`B.
`
`The Challenged Claims Do Not Resemble Those in Alice
`
`The claims do not fit the mold of the patent-ineligible claims of Alice. They
`
`do not recite an “abstract idea” and, in any event, teach a specific “combination of
`
`elements” that amounts to “significantly more” than any ineligible concept.
`
`
`
`10
`
`
`
`1.
`
`The Challenged Claims Are Directed to a Specific Device
`and a Specific Method, Not an Abstract Idea
`
`The Board’s determination that the claims were directed to an abstract idea
`
`is incorrect because the claims are directed to a concrete machine with specific
`
`hardware and software components (Claim 13) and to a method of using such a
`
`device (Claim 14) and not merely to the abstract idea of controlling access to
`
`content.4 As the Board acknowledged (at 7) the claims at issue “recite[] a
`
`‘machine,’ (“a data access terminal”), and . . . a “process” (“[a] method”) under
`
`§ 101.” Both claims involve the use of specific software to read and transmit
`
`payment data; receive payment validation data; retrieve content data and write it to
`
`a data carrier; and receive access rules and write those rules onto the data carrier.
`
`The Board apparently focused on the problem the inventions were designed
`
`to solve and treated that problem as the abstract idea to which the claims were
`
`directed. Thus, the Board held (at 8) that “the challenged claims are directed to
`
`performing the fundamental economic practice of conditioning and controlling
`
`access to content based on payment.” But while the claims provide a mechanism
`
`
`4 Pursuant to 37 C.F.R. § 42.71(d), the issue of whether the claims are directed to
`
`patent eligible subject matter was previously addressed. See PO Resp. 11-33.
`
`Enfish makes clear that arguments concerning whether claims are directed to an
`
`abstract idea are also relevant to step two of the Alice framework. Slip op. 18.
`
`
`
`11
`
`
`
`that can be used to condition and control access to content, thus combatting
`
`problems of data piracy, see Ex. 1001, 1:6-42, that does not fairly describe the
`
`claims, which, as explained, provide a specific solution to an aspect of the problem
`
`of the piracy of digital content distributed over the Internet. See Enfish, slip op. at
`
`14-15; Mirror World, Paper 12 at 17; ContentGuard, Paper 9 at 29.
`
`There is a fundamental difference between claiming a specific device or
`
`method that can be used to accomplish an economic practice and claiming the
`
`practice itself. As an example, all relational databases address the problem of
`
`“storing, organizing, and retrieving memory in a logical table” or “organizing
`
`information using tabular formats.” See Enfish, slip op. at 14. Nevertheless, a
`
`claim that teaches a specific way to store and organize information may be
`
`patentable even though a claim on storing and organizing data itself would not be.
`
`Compare Enfish, slip op. at 14, with In re: TLI Comm’ns LLC Patent Litig., No.
`
`2015-1372, et al., slip op. at 10 (Fed. Cir. May 17, 2016) (patent directed to
`
`“abstract idea of classifying and storing digital images in an organized manner”).
`
`The Board’s decision equates a claim on a specific way to control and condition
`
`access to content with a claim on the economic task itself, which risks turning all
`
`software into patent-ineligible abstract ideas. This is the problem Enfish and Alice
`
`warned against. “At some level, all inventions ... embody, use, reflect, rest upon,
`
`or apply laws of nature, natural phenomena, or abstract ideas. Thus, an invention
`
`
`
`12
`
`
`
`is not rendered ineligible for patent simply because it involves an abstract
`
`concept.” Alice, 134 S. Ct. at 2354; see Enfish, slip op. at 10.
`
`2.
`
`The Challenged Claims Contain “Additional Features”
`Demonstrating That They Do Not Cover an Abstract Idea
`
`The Board was incorrect to find that the challenged claims did not contain
`
`“additional features” to ensure that they were more than a drafting effort designed
`
`to monopolize the abstract idea. On the contrary, because the challenged claims
`
`are not limited to generic computer implementation, they contain an inventive
`
`concept sufficient to establish patent eligibility.5
`
`The challenged claims do not “simply stat[e] an abstract idea while adding
`
`the words ‘apply it’ or ‘apply it with a computer.’” Versata Development Group,
`
`Inc. v. SAP America, Inc., 793 F.3d 1306, 1332 (Fed. Cir. 2015). True, the claims
`
`depend on software code. But the limitations specify a way in which to control and
`
`condition access to content. They do not claim the general idea of controlling
`
`access to content. The Board concluded otherwise by failing to consider the
`
`various claim limitations as an ordered combination reflecting distinct
`
`technological choices and advantages. See also Enfish, slip op. at 11; Mirror
`
`
`5 Pursuant to 37 C.F.R. § 42.71(d), the issue of whether the challenged claims
`
`contain “additional features” beyond an abstract idea was previously addressed.
`
`See PO Resp. 17, 20.
`
`
`
`13
`
`
`
`World, Paper 12, at 17 (“the claims are not directed generically to organizing and
`
`storing data but instead to the particular use” of types of data).
`
`The Board held (at 12-14) that each specific limitation constituted a “generic
`
`computer implementation[]” and, with respect to the claimed software limitations,
`
`that the claims lack “any inventive concept … related to the way the recited data
`
`types are constructed or used.” But that basic methodology is flawed; it is not
`
`proper to look at individual limitations and determine if each is conventional in
`
`isolation. See Mirror World, Paper 12, at 15 (Petitioner’s analysis “is flawed”
`
`because it “should consider the claims as a whole”). “[I]nventions in most, if not
`
`all, instances rely upon building blocks long since uncovered, and claimed
`
`discoveries almost of necessity will be combinations of what, in some sense, is
`
`already known.” KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 418-19 (2007).
`
`As explained above, the ’720 patent claims a “data access terminal” and
`
`“method” for retrieving and storing content data and access rules according to a
`
`novel and non-obvious organization of payment data, payment validation data,
`
`content data, and access rules. The Board’s conclusion that this approach to data
`
`storage and access was merely conventional is unsupported and incorrect.
`
`The Board acknowledged (at 18) that a combination of elements may
`
`provide an inventive concept. It also acknowledged (at 19) that the claims teach
`
`storing “two specific types of information—content and the conditions for
`
`
`
`14
`
`
`
`providing access to the content – . . . in the same place or on the same storage
`
`device.” But the Board overlooked the storage of payment data, which enhances
`
`user convenience, and use of payment validation data, which reduces risk of non-
`
`payment. See supra p 6. Instead, the Board simply stated that it was “not
`
`persuaded” that this configuration of data is “an inventive concept.”
`
`The Board then asserted that this idea was known in the prior art, citing U.S.
`
`Patent Nos. 5,530,235 and 5,629,980 (Ex. 1012; 1013). But this hardly suggests
`
`that a particular concept, if deployed as part of a novel configuration, is
`
`conventional. Moreover, the references do not disclose the type of data storage
`
`and manipulation that the ’720 patent claims. By separately storing content data,
`
`on the one hand, and associated access rules on the other, the system and method
`
`of the challenged claims can provide greater access to content without
`
`downloading the content again. Thus, a comparison to that prior art actually
`
`confirms the patent eligibility of the claims.
`
`IV. CONCLUSION
`
`The Board should reverse its original decision and hold challenged
`
`claims 13 and 14 patent-eligible.
`
`
`
`
`
`
`
`15
`
`
`
` /
`
` Michael R. Casey /
`
`
`Michael R. Casey
`Registration No. 40,294
`Davidson Berquist Jackson &
`
`Gowdey, LLP
`8300 Greensboro Dr., Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7700
`Fax : (571) 765-7200
`Email: mcasey@dbjg.com
`
`
`
`
`
`16
`
`
`Dated: June 27, 2016
`
`
`
`
`
`
`
`
`
`
`
`
`
`CERTIFICATE OF SERVICE
`
`The undersigned hereby certifies that this PATENT OWNER’S REQUEST
`
`FOR REHEARING in CBM2014-00190 was served today by emailing a copy to
`
`counsel for the Petitioners as follows:
`
`W. Karl Renner (renner@fr.com)
`Thomas Rozylowicz (rozylowicz@fr.com)
`CBM39843-0003CP1@fr.com
`Attorneys for Petitioners Samsung Electronics Co., Ltd. and Samsung Electronics
`America, Inc.
`
`J. Steven Baughman (steven.baughman@ropesgray.com)
`James R. Batchelder (james.batchelder@ropesgray.com)
`Megan Raymond (megan.raymond@ropesgray.com
`ApplePTABService-SmartFlash@ropesgray.com
`Attorneys for Petitioner Apple Inc.
`
`
`
`
`
` /
`
` Michael R. Casey /
`
`
`Michael R. Casey
`Registration No. 40,294
`Davidson Berquist Jackson &
`
`Gowdey, LLP
`8300 Greensboro Dr., Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7700
`Fax : (571) 765-7200
`Email: mcasey@dbjg.com
`Attorney for Patent Owner
`
`17
`
`
`
`Dated: June 27, 2016