`
`_________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_________
`
`SAMSUNG ELECTRONICS AMERICA, INC. and
`SAMSUNG ELECTRONICS CO. LTD.,
`Petitioner
`
`and
`
`APPLE INC.,
`Petitioner,
`
`v.
`
`SMARTFLASH LLC,
`Patent Owner.
`
`_________
`
`Case CBM2014-001931
`
`Patent 8,061,598 B2
`
`_________
`
`
`
`PATENT OWNER’S REQUEST FOR REHEARING
`
`
`
`
`1 CBM2015-00120 (Patent 8,061,598 B2) was consolidated with this proceeding.
`
`
`
`
`
`
`I.
`
`
`II.
`
`TABLE OF CONTENTS
`
`INTRODUCTION ........................................................................................... 1
`
`STATEMENT OF PRECISE RELIEF REQUESTED ................................... 2
`
`
`III. BACKGROUND ............................................................................................. 2
`
`
`IV. ARGUMENT ................................................................................................... 4
`
`A.
`
`Like the Claims in DDR Holdings, Claim 7 Is Patent Eligible Because
`It Teaches a Specific Solution to a Novel Problem Presented By
`Digital Commerce ................................................................................. 5
`
`B.
`
`Claim 7 Does Not Resemble Those in Alice ....................................... 10
`
`1. Claim 7 Is Directed To A Specific Device, Not An Abstract Idea
` ....................................................................................................... 10
`
`2. Claim 7 Contains Numerous “Additional Features” That
`Demonstrate That It Does Not Cover An Abstract Idea ............... 12
`
`CONCLUSION .............................................................................................. 15
`
`i
`
`
`V.
`
`
`
`
`
`
`
`I.
`
`INTRODUCTION
`
`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. Claim 7 covers a specific
`
`physical device operating within a novel content delivery system that facilitates
`
`distribution of digital content over the Internet while helping to reduce piracy—a
`
`pressing problem at the time of invention. The claim contains meaningful
`
`limitations that are both inventive and technological, which, when taken in ordered
`
`combination, amount to more than the idea of “conditioning and controlling access
`
`to content based on payment” and do not pre-empt the field. Furthermore, the
`
`claim improves the functioning of computers used to download, store, and access
`
`data thereby effecting a technological improvement in the relevant field.
`
`The Board wrongly determined that this claim on a physical device actually
`
`covered an abstract idea and ignored the claim’s specific combination of hardware
`
`and software to hold that the claim contained no inventive concept. Under the
`
`Board’s analysis, any device used in an economic transaction that contains
`
`conventional components would be patent ineligible. This error is exactly what the
`
`Supreme Court cautioned against in Alice. See Alice Corp. Pty. Ltd. v. CLS Bank
`
`Int’l, 134 S. Ct. 2347, 2354 (2014) (warning against “construing this exclusionary
`
`
`
`1
`
`
`
`principle [to] swallow all of patent law”). Patent Owner respectfully requests
`
`rehearing to correct these errors. See 37 C.F.R. § 42.71(d).
`
`II.
`
`STATEMENT OF PRECISE RELIEF REQUESTED
`
`Patent Owner requests that the Board reverse its original decision (Paper 45,
`
`March 30, 2016) and hold that challenged claim 7 is patent eligible.
`
`III. BACKGROUND
`
`1.
`
`The opportunities and challenges associated with 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, as a result of improved
`
`data compression and increasing bandwidth for Internet access, content providers,
`
`for the first time, had the ability to offer 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. The 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.
`
`Content providers had faced the issue of piracy before—a CD can be copied
`
`onto a cassette tape or onto another CD and the pirated copy sold—but the problem
`
`of 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
`
`
`
`2
`
`
`
`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 advent of the Internet thus gave rise to an
`
`urgent need to address the problem of data piracy.
`
`
`
`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 the problems inherent in
`
`making digital content available over the Internet. Ex. 1001, at 1 (Abstract).
`
`Claim 7 of the ’598 patent is directed to one aspect of that system: namely, a
`
`“portable data carrier.” Id. at 25:54. Related patents cover other aspects of the
`
`system and interactions explained in the specification.
`
`Claim 1, on which challenged claim 7 depends, requires the “portable data
`
`carrier” to include an “interface for reading and writing data from and to the
`
`portable data carrier”; “content data memory”; “use rule memory”; a “program
`
`store”; and a “processor . . . for implementing code in the program store,” “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. 1001, 25:54-
`
`67.
`
`
`
`2.
`
`The Board found claim 7 to be patent ineligible. First, the Board
`
`found (at 8) “that the challenged claim is drawn to a patent-ineligible abstract
`
`
`
`3
`
`
`
`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 10. And the
`
`Board distinguished DDR Holdings because “[d]ata piracy exists in contexts other
`
`than the Internet,” “the solution provided by the challenged claim is not rooted in
`
`specific computer technology,” and the Board was “not persuaded that [the
`
`challenged claim addresses data piracy on the Internet] by achieving a result that
`
`overrides the routine and conventional use of the recited devices and functions.”
`
`Id. at 14-15.
`
`IV. ARGUMENT
`
`The Board should reverse its decision in this case and find Claim 7 directed
`
`to statutory subject matter because, in evaluating whether it complies with the
`
`requirements of § 101, the Board failed to give effect to the actual language of the
`
`claim and its specific limitations.2 The actual claim language, read in light of the
`
`specification, reflects a specific and concrete solution to a novel problem
`
`
`2 The Board disregarded the actual text of the claims, using nearly identical
`
`language in all the final written decisions of the covered business methods that
`
`concern the patents related to the ’598 patent, even though the challenged claims
`
`varied dramatically in their coverage. See CBM2015-00017.
`
`
`
`4
`
`
`
`associated with distribution of digital content over the Internet. Such a
`
`technological advance is patent eligible.
`
`A. Like the Claims in DDR Holdings, Claim 7 Is Patent Eligible
`Because It Teaches a Specific Solution to a Novel Problem
`Presented By Digital Commerce
`
`1.
`
`Claim 7 of ’598 patent is patent eligible because it embodies
`
`one concrete aspect of a particular solution to the Internet-specific problem of
`
`digital piracy. 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 F.3d 709, 716 (Fed. Cir. 2014). This is no digital telephone book.
`
`Cf. Paper 45, at 17. On the contrary, the claim limitations reflect specific technical
`
`choices: a “portable data carrier” that includes “content data memory” and “use
`
`rule memory,” “payment data memory,” and “processor” capable of storing
`
`content data, payment data, and use rules.
`
`That particular configuration of elements provides distinct advantages over
`
`alternatives. For example, by storing “use rules” in a “use rule memory” on the
`
`data carrier—rather than (for example) including any use rules as part of the
`
`content file—the invention allows for different levels of usage of the same digital
`
`content. This permits, for example, both rental and sale rather than just sale of
`
`particular content data; it also allows for provision of enhanced access without
`
`downloading the content data anew. Ex. 1001, 22:49-51. By including a processor
`
`
`
`5
`
`
`
`on the portable data carrier, the claimed invention enhances the functionality of the
`
`data carrier, providing more than just storage. Indeed, the basic insight reflected in
`
`the claim—that a portable data carrier can include functionality to read and write
`
`content data, payment data, and use rules in distinct memories—is itself inventive.
`
`Because the claim teaches 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 “fundamental economic practice,” as the Board held (at 8).
`
`Consequently, there is no concern that recognizing the patent-eligibility of this
`
`claim will “impede innovation” or “improperly t[ie] up . . . building blocks of
`
`human ingenuity,” Alice, 134 S. Ct. at 2354. On the contrary, the claim teaches a
`
`“specific way” to control access to stored digital content; it does 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 14), holding that Claim 7 was 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
`
`
`3 Pursuant to 37 C.F.R. § 42.71(d), the issue of whether the claim was similar to
`
`those in DDR Holdings was previously addressed. See PO Resp. 1, 10-12.
`
`
`
`6
`
`
`
`to perform a defined series of operations. Indeed, the Board’s own summary of the
`
`’598 patent (at 3) states:
`
`The ’598 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.
`
`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, 2:13-15. The specification notes that “the growing prevalence of so-called
`
`data pirates” is a problem that arises by virtue of “increasingly wide use of the
`
`internet.” Id. 1:29-30. Because the Internet facilitates “essentially world-wide”
`
`distribution of flawless, identical copies of 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 claim solves problems faced by digital content providers in
`
`the Internet Era and improves the functioning of the computer itself.4
`
`
`4 The claims of the ’598 patent do not directly involve Internet transactions; rather,
`
`they are directed to a portable data carrier for reading and writing content data and
`
`use rules as well as store and provide payment data. The claims nevertheless are
`
`
`
`7
`
`
`
`The Board also held (at 15) that Claim 7 contained limitations—unlike the
`
`claims in DDR Holdings—that were “specified at a high level of generality.” But
`
`the claim and the specification discuss specific data stored in specific places, not
`
`mere generalities. There is “content data,” “use rules,” and “payment data” stored
`
`on the carrier. See Ex. 1001 25:54-67; 26:25-28. These phrases are uniquely used
`
`in the ’598 patent and do not have the broad acceptance that the words in the DDR
`
`Holding patent did. See DDR Holdings, 773 F.3d at 1249 (reciting “links,” “source
`
`page,” and “web page”). These limitations are not “specified at a high level of
`
`generality.”
`
`The fact that the patentee uses its own lexicography does not mean that the
`
`claim limitations are not precisely described. Here, the device must be able to
`
`read, write, and store specific data, namely, content data items and associated use
`
`rules. The claim does not “merely recite the performance of some business
`
`practice known from the pre-Internet world along with the requirement to perform
`
`it on the Internet.” DDR Holdings, LLC, 773 F.3d at 1257. By ignoring these
`
`limitations, the Board erred in holding that there were not “additional features”
`
`present in the claim that made it patent-eligible.
`
`
`directed towards an Internet-specific problem – that is, storing and controlling
`
`access to content data sold separately from a storage medium.
`
`
`
`8
`
`
`
`
`
` Finally, the Board held (at 12) that the claim could be performed by “a
`
`general-purpose computer.” But, again, this ignores the limitations of the claim,
`
`which, as explained above, require specific configurations of distinct memories
`
`and data types and defined interactions facilitate secure access to content data
`
`items stored on a data carrier. As the specification makes clear, when digital data
`
`is sent over the Internet operating in its normal, expected manner and stored by a
`
`recipient, the content data are insecure; the content owner has no means to exert
`
`further control over access. The claim provides a specific mechanism to ensure
`
`that content, once downloaded and stored, can be accessed only when access is
`
`authorized in accordance with associated use 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, so too the claim here specifies how manipulation
`
`of specific data facilitates convenient and secure provision of digital content, a
`
`result that neither the conventional Internet nor unimproved computers can
`
`produce. The patent “improve[s] the functioning” and the functionality of portable
`
`data carriers, which, as the specification makes clear, likewise improves the
`
`functioning of data communications networks used for digital content distribution.
`
`Alice, 134 S. Ct. at 2359.
`
`
`
`9
`
`
`
`B. Claim 7 Does Not Resemble Those in Alice
`
`Claim 7 does not fit the mold of the patent-ineligible claims of Alice. It does
`
`not recite an “abstract idea” and, in any event, teaches a specific “combination of
`
`elements” that amounts to “significantly more” than any ineligible concept.
`
`1.
`
`Claim 7 Is Directed To A Specific Device, Not An Abstract
`Idea
`
`The Board’s determination that the claim was directed to an abstract idea is
`
`incorrect because the claim is directed to a concrete machine with specific
`
`hardware and software components and not merely to the abstract idea of
`
`conditioning and controlling access to content based on payment.5 As the Board
`
`acknowledged (at 6) “the challenged claim recites a ‘machine,’ i.e., a ‘portable data
`
`carrier” with defined components. See Ex. 1001, 25:54-67. It contains an
`
`interface, distinct memories, and a processor. The machine runs specific software
`
`to store content data items, associated use rules governing whether a user may
`
`access data on the data carrier, and payment data for use with a payment validation
`
`system. The patent specification emphasizes that the patent is on a machine. See,
`
`
`5 Pursuant to 37 C.F.R. § 42.71(d), the issue of whether Claim 7 is directed to an
`
`abstract idea was previously addressed. See PO Resp. 9-20; see also Tr. 46:21-
`
`47:11.
`
`
`
`10
`
`
`
`e.g., id. 1:21-25; see also 35 U.S.C. § 101 (allowing for patents on “processes,
`
`machines, manufactures, and compositions of matter”).6
`
`In finding this claimed machine was directed to an abstract idea, the Board
`
`apparently focused on the problem that the patented machine was designed to solve
`
`and treated the problem itself as the abstract idea to which the claim is directed.
`
`Specifically, the Board held (at 8) that “the challenged claim is directed to
`
`performing the fundamental economic practice of conditioning and controlling
`
`access to content based on payment.” But while it is true that the claimed machine
`
`provides a specific mechanism that can be used to condition and control access to
`
`content based on payment, thus combatting problems of data piracy, see Ex. 1001,
`
`1:20-55, that does not provide a fair description of the claim, which, as explained,
`
`provides a specific solution to an aspect of the problem.
`
`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. See Brookhill-Wilk 1, LLC v. Intuitive Surgical, Inc., 326 F.3d
`
`1215, 1223 (Fed. Cir. 2003) (“Advantages described in the body of the
`
`specification, if not included in the claims, are not per se limitations to the claimed
`
`6 The Board identified the abstract idea without explaining its methodology, which
`
`itself merits rehearing. Cf. Avago Techs. Gen. IP (Singapore) Pte Ltd. v. Asustek
`
`Computer, Inc., No. 15-cv-04525-EMC, at 10-11 (N.D. Cal. Apr. 25, 2016).
`
`
`
`11
`
`
`
`invention.”). As an example, a cash register is a physical device used to perform a
`
`fundamental economic practice, namely, collecting, storing, and tracking payment.
`
`A claim on a specific novel device—with specific circuit boards, keys, and cash
`
`drawers—may be patentable even though a claim on collecting and storing
`
`payment itself would not be. The Board’s decision equates a claim on a machine
`
`that may be used to perform an economic task with a claim on the economic task
`
`itself, which risks turning all devices used in commerce into abstract ideas. This is
`
`the problem that the Supreme Court warned against in Alice. “At some level, all
`
`inventions ... embody, use, reflect, rest upon, or apply laws of nature, natural
`
`phenomena, or abstract ideas. Thus, an invention is not rendered ineligible for
`
`patent simply because it involves an abstract concept.” Alice, 134 S. Ct. at 2354.
`
`2.
`
`Claim 7 Contains Numerous “Additional Features” That
`Demonstrate That It Does Not Cover An Abstract Idea
`
`In any event, the Board was incorrect to find that the challenged claim did
`
`not contain “additional features” to ensure that it was more than a drafting effort
`
`designed to monopolize the abstract idea.7 On the contrary, because the claim is
`
`
`7 Pursuant to 37 C.F.R. § 42.71(d), the issue of whether the claim contains
`
`“additional features” beyond an abstract idea was previously addressed. See PO
`
`Resp. 11-12.
`
`
`
`12
`
`
`
`not limited to generic computer implementation, it contains an inventive concept
`
`sufficient to establish patent eligibility.
`
`Just as the claim does not purport to cover an abstract idea, it also does 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). It is, of course, true that the claimed machine has
`
`several components, including computer code. Some of that code allows the
`
`machine to store “payment data,” “content data items,” and associated “use rules.”
`
`And, after evaluating these specific pieces of data, the machine can provide access
`
`to the content data items. But these limitations specify a way in which the machine
`
`controls access to stored data. It does not claim the general idea of conditioning
`
`and controlling access to content based on payment. The Board came to a different
`
`conclusion by failing to consider the various claim limitations as an ordered
`
`combination reflecting distinct technological choices and advantages.
`
`The Board held (at 10-11) that each specific limitation was a “generic
`
`computer component” such as a program store or a processor and, with respect to
`
`the claimed software limitations, that the claim lacks “any inventive concept …
`
`related to the way these data types are constructed or used.” But that basic
`
`methodology is flawed, because it is not proper to look at individual limitations
`
`and determine if each specified component of the machine is conventional in
`
`
`
`13
`
`
`
`isolation. “[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). The fact that a machine uses individual well-known pieces
`
`does not mean that the particular combination of elements lacks an inventive
`
`concept. A novel cash register will likely be made of well-known circuitry or
`
`plastics, but that does not mean that the combination is not technological. See
`
`Alice, 134 S. Ct. at 2359 (a claim may be patentable if it “effect an improvement in
`
`any other technology or technical field”).
`
`As explained above, the ’598 patent claims a portable data carrier storing
`
`payment data, content data items, and associated use rules; that combination
`
`enables (for example) a portable “Smartflash” card to pay for and securely store
`
`downloaded content—a technological invention. See Ex. 1001, 24:16-18. Nothing
`
`in the Board’s opinion supports its conclusion that such an approach to data storage
`
`and access was merely conventional—which, in any event, should be a question of
`
`substantive validity, not patent eligibility.
`
`The Board acknowledged (at 12) that a combination of elements may
`
`provide an inventive concept under the Alice analysis. But in doing so, the Board
`
`not only improperly focused on a single aspect of the invention, it also drew the
`
`wrong conclusion. The Board acknowledged (at 17) that the claim teaches storing
`
`
`
`14
`
`
`
`“two specific types of information—content and the conditions for providing
`
`access to the content – . . . in the same place or on the same storage device.” The
`
`Board then simply pronounced itself “not persuaded” that this particular
`
`configuration of data is “an inventive concept” —no reason given.
`
`The Board then asserted that this idea was known in the prior art, citing two
`
`patents (Exs. 1006, 1004). But this hardly suggests that a particular concept, if
`
`deployed as part of a novel configuration, is conventional; just as significant, the
`
`references do not disclose the type of data storage and manipulation that the ’598
`
`patent claims. On the contrary, both teach having the content owner embed or
`
`attach usage rights as part of the content item. See Ex. 1006 11:25-27 (“The
`
`application embeds a digital code in every copy . . .”); Ex. 1004 at 4:40-41 (“Usage
`
`rights are attached to digital works . . .”). That makes it impossible to provide
`
`greater access without downloading the content again. By contrast, the ’598
`
`patent, by teaching separate storage of content data items, on the one hand, and
`
`associated use rules on the other, solves this very problem. Thus a comparison to
`
`that prior art actually confirms the patent eligibility of the claim.
`
`V. CONCLUSION
`
`The Board should reverse its original decision and hold challenged
`
`claim 7 patent-eligible.
`
`
`
`
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`15
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`
`
`/ 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: April 29, 2016
`
`
`
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`
`
`
`
`
`CERTIFICATE OF SERVICE
`
`The undersigned hereby certifies that this PATENT OWNER’S REQUEST
`
`FOR REHEARING was served, by agreement of the parties, by email on April 29,
`
`2016, to the following addresses:
`
`
`W. Karl Renner (renner@fr.com)
`Thomas Rozylowicz (rozylowicz@fr.com)
`CBM39843-0006CP1@fr.com
`
`J. Steven Baughman (steven.baughman@ropesgray.com)
`James R. Batchelder (james.batchelder@ropesgray.com)
`Megan Raymond (megan.raymond@ropesgray.com
`ApplePTABService-SmartFlash@ropesgray.com
`
`
` /
`
` 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
`
`
`
`Dated: April 29, 2016
`
`
`
`
`
`17