UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`SAMSUNG ELECTRONICS AMERICA, INC. AND
`
`SAMSUNG ELECTRONICS CO., LTD.,
`
`Petitioner,
`
`V.
`
`SMARTFLASH LLC,
`
`Patent Owner.
`
`Case CBM2014—00193
`
`Patent 8,061,598
`
`PATENT OWNER’S RESPONSE
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`SAMSUNG ELECTRONICS AMERICA, INC. AND
`
`SAMSUNG ELECTRONICS CO., LTD.,
`
`Petitioner,
`
`V.
`
`SMARTFLASH LLC,
`
`Patent Owner.
`
`Case CBM2014—00193
`
`Patent 8,061,598
`
`PATENT OWNER’S RESPONSE
`
`
`
`TABLE OF CONTENTS
`
`PATENT OWNER’S LIST OF EXHIBITS ............................................................ iii
`
`I. INTRODUCTION ......... 1
`
`II.
`
`STATEIVIENT OF MATERIAL FACTS ........................................................ 3
`
`III.
`
`THE BLOOM DECLARATION SHOULD BE GIVEN LITTLE OR NO
`
`WEIGHT .......................................................................................................... 3
`
`A.
`
`B.
`
`No Evidentiary Standard Is Disclosed in the Bloom Declaration......... 3
`
`Dr. Bloom Is Not a Disinterested Party ................................................ 4
`
`IV.
`
`OVERVIEW OF THE TECHNOLOGY OF US. PATENT NO. 8,061,598 .6
`
`CLAIM 7 IS DIRECTED TO STATUTORY SUBJECT MATTER ............. 9
`
`A.
`
`B.
`
`The Two-Part Test for Statutory Subject Matter .................................. 9
`
`Claim 7 Is Statutory Under the Second Step of Mayo and Alice .......... 9
`
`C.
`
`- Claim 7 Does Not Result in Inappropriate Preemption ...................... 12
`
`1.
`
`2.
`
`Preemption under DDR Holdings ............................................. 12
`
`Preemption under Mayo and Alice ............................................ 15
`
`D.
`
`Evidence Relied Upon by the Bloom Declaration Is Not from the
`Appropriate Timeframe ....................................................................... 18
`
`VI.
`
`PETITIONER HAS ALREADY LOST A CHALLENGE ON THE SAIVIE
`STATUTORY GROUNDS IN ITS LITIGATION WITH PATENT V
`OWNER ......................................................................................................... 1 9
`
`VII.
`
`THE USPTO IS ESTOPPED FROM REVISITING THE ISSUE OF
`
`WHETHER CLAIM 7 IS DIRECTED TO STATUTORY SUBJECT
`
`MATTER ....................................................................................................... 20
`
`
`
`.21
`
`-ii-
`
`
`
`PATENT OWNER’S LIST OF EXHIBITS
`
`
`
`
`
`Exhibit Number
`
`
`2001
`
`Congressional Record - House, June 23, 2011, H4480-4505
`
`Samsung’s Motion To Stay Litigation Pending CBM Review
`
`
`
`Exhibit Description
`
`
`
`2002
`Congressional Record - Senate, Sep. 8, 2011, 85402-5443
`
`
`Reserved
`
`
`2024
`
`Reserved
`
`
`Report and Recommendation (on Defendants’ Motions for
`
`Summary Judgment of Invalidity Pursuant to 35 U.S.C. 101),
` from Smartflaslz LLC et al. V. Apple, Inc, et al, Case No.
`
`
`6:13-CV-447 (ED. Tex.) and Smartflaslz LLC et al. v.
`
`
`
`
`
`
`,Defendants’ MotiOns for Summary Judgment of Invalidity
`
`
`
`Smart/[lash LLC et al. v. Samsung Electronics Co. Ltd, et al. ,
`
`
` 2051-2054
`
`
`
`Deposition Transcript of Jeffrey A. Bloom dated May 19,
`
`20 1 5
`
`
`2003—2023
`
`2025-2048
`
`2049
`
`
`
`
`
`
`
`
`Samsung Electronics Co. Ltd, et al, Case No. 6:13-CV—448
`
`(E.D. Tex.), dated Jan. 21, 2015
`
`Order adopting Report and Recommendation (on
`
`Pursuant to 35 U.S.C. 101), from Smartflaslz LLC et al. v.
`
`Apple, Inc, et al, Case No. 6:13—CV-447 (E.D. Tex.) and
`
`Case No. 6:13-CV—448 (ED. Tex), dated Feb. 13, 2015
`
`~iii-
`
`
`
`2056
`
`Non-Confidential Portion of Deposition Transcript of Jeffrey
`
`A. Bloom dated May 20, 2015
`
`2057
`
`Confidential Portion of Deposition Transcript of Jeffrey A.
`
`Bloom dated May 20, 2015
`
`2058
`
`Memorandum Opinion and Order (on Defendants” Motions
`
`for Stay Pending the Outcome CBMs) from Smarz‘flash LLC
`
`et a]. 12. Apple, Inc, et al., Case No. 6:13-CV—447 (E.D.
`
`Tex), Smarzflash LLC et al. v. Samsung Electronics Co. Ltd,
`
`et a]., Case No. 6: l3-CV—448 (E.D. Tex), Smartflash LLC et
`
`al. v. Google, Inc, et (11., Case No. 6:14—CV—435 (E.D. Tex),
`
`and Smartflash LLC et a]. v. Amazon, Inc, et (1]., Case No.
`
`6: 14-CV-992 (E.D. Tex) dated May 29, 2015
`
`2059—2062
`
`Reserved
`
`2063
`
`Civil Docket Report from Smarzfiash LLC et al. v. Samsung
`
`Electronics Co. Ltd, et (11., Case No. 6:13-CV—448 (ED.
`
`Tex)
`
`2064-2065
`
`Reserved
`
`
`
`
`2066
`
`Declaration of Emily E. Toohey in Support of Patent}
`
`Owner’s Response
`
`2067
`
`Reserved
`
`
`
`-iv-
`
`
`
`I.
`
`INTRODUCTION
`
`Claim 7 of US. Patent 8,061,598 (“the ‘598 Patent”) is directedvto statutory
`
`subject matter because it claims a solution “necessarily rooted in computer
`
`technology in order to overcome a problem specifically arising in the realm of
`
`computer networks.” DDR Holdings, LLC v. Hotels. com, L.P., 773 F.3d 1245,
`
`1257 (Fed. Cir. 2014). In particular, claim 7 of the ‘598 Patent overcomes the
`
`problem of data content piracy on the Internet “[b]y combining digital rights
`
`management with content data storage using a single carrier” such that “the stored
`
`content data becomes mobile and can be accessed anywhere while retaining control
`
`over the stored data for the data content provider or data copyright owner.” EX.
`
`1001, ‘598 Patent at 5:29-33. In other words, claim 7 of the ‘598 patent is directed
`
`to a system that combines on the data carrier the digital content, at least one use
`
`rule, and payment data so that access control to the digital content can be
`
`continuously enforced prior to each access to the digital content and so that
`
`additional content can be legitimately obtained.
`
`Moreover, as demonstrated below, (claim 7 of the ‘598 patent does not result
`
`in inappropriate preemption of “the abstract idea of enabling limited use of paid—
`
`for/licensed information” (Petition at 28), nor is there any evidence that a
`
`disproportionate amount of future innovation is foreclosed by claim 7 of the ‘598
`
`patent.
`
`
`
`
`
`'As set out in detail below, by Order dated February 13, 2015, Petitioner
`
`already lost in Federal Court the exact same purely legal issue the Board is
`
`considering here — Whether claim 7 of the ‘5 98 patent is directed to statutory
`
`subject matter under 35 U.S.C. § 101. See Exhibit 2049, Report and
`
`Recommendation (on Defendants’ Motions for Summary Judgment of Invalidity
`
`Pursuant to 35 U.S.C. 101) (hereinafter “Report and Recommendation”), from
`
`Smartflash LLC et al. vi. Apple, Inc, et (1]., Case No. 6: 13-CV-447 (E.D. Tex.) and
`
`Smartflash LLC et al. v. Samsung Electronics Co. Ltd, et al., Case No. 6:13—CV—
`
`448 (ED. Tex.), dated Jan. 21, 2015, and Exhibit 2050, Order adopting Report and
`
`Recommendation (on Defendants’ Motions for Summary Judgment of Invalidity
`
`Pursuant to 35 U.S.C. 101), from Smartflash'LLC et al. v. Apple, Inc, et (2]., Case
`
`No. 6: 13-CV—447 (E.D. Tex.) and Smartflash LLC et a]. v. Samsung Electronics
`
`Co. Ltd, et a]., Case No. 6:13-CV—448 (E.D. Tex), dated Feb. 13, 2015.
`
`1
`
`Finally, Patent Owner submits that the USPTO has already adjudicated the
`
`threshold question of Whether claim 7 of the ‘598 patent comports With 35 U.S.C. §
`
`101, which is a question of law, during the prosecution of the ‘598 patent. The
`
`USPTO is estopped from re—litigating this purely legal issue already considered
`
`and adjudicated by the USPTO.
`
`In support of this Patent Owner’s Response, reference Will be made to
`
`concurrently filed Exhibits 205 5—205 7: (1) the non-confidential Deposition
`
`-2-
`
`
`
`Transcript of Jeffrey A. Bloom, PhD., dated May 19, 2015, (2) the non-
`
`confidential Deposition Transcript of Jeffrey A. Bloom, PhD., dated May 20, 2015,
`
`and (3) the confidential Deposition Transcript of Jeffrey A. Bloom, PhD., dated
`
`May 20, 2015, respectively. Those deposition transcripts refer to Exhibit 1003, the
`
`Declaration of Jeffrey A. Bloom, Ph.D. (hereinafter “the Bloom Declaration”).
`
`ll.
`
`STATEMENT OF MATERIAL FACTS
`
`1.
`
`The Bloom Declaration does not state that Dr. Bloom’s opinions
`
`presented therein were based on a “preponderance of the evidence” standard.
`
`2.
`
`The Bloom Declaration does not state that Dr. Bloom’s opinions
`
`presented therein were based on a “more likely than not” evidentiary weight
`
`standard.
`
`III.
`
`THE BLOOM DECLARATION SHOULD BE GIVEN LITTLE OR NO
`
`WEIGHT
`
`A.
`
`No Evidentiary Standard ls Disclosed in the Bloom Declaration
`
`The Bloom Declaration does not disclose the underlying facts on which the
`
`opinions are based and is, therefore, entitled to little or no weight. 37 CFR 42.65
`
`(“Expert testimony that does not disclose the underlying facts or data on which the
`
`opinion is based is entitled to little or no weight”). More specifically, the Bloom
`
`-3-
`
`
`
`
`
`
`
`
`
`: l lx llll l
`
`Declaration does not state the evidentiary weight standard (e.g., substantial
`
`evidence versus preponderance of the evidence) that Dr. Bloom used in arriving at
`
`his conclusions. Given that there is no evidence that Dr. Bloom even knows how
`
`much weight need be relied upon to show that a claim is nonstatutory, the PTAB
`
`can only afford little or no weight to the testimony therein. To do otherwise would
`
`be to accept his opinions without knowing “the underlying facts
`
`on which the
`
`opinion is based” (i.e., how much evidence he thinks shows any of his opinions
`
`discussed therein).
`
`For example, when Dr. Bloom opines that he believes a statement to be true
`
`or that he believes an element is inherently present, is that belief based on less than
`
`a preponderance of the evidence, or more? Without his having disclosed what
`
`evidentiary standard he used in forming his opinions, and given that there is no
`
`evidence that he even knew What evidentiary standard he was supposed to be
`
`using, the PTAB cannot rely on his statements. Thus, the PTAB should find that
`
`his declaration is entitled to little. or no weight.
`
`B.
`
`Dr. Bloom Is Not a Disinterested Party
`
`Dr. Bloom has taken the position with respect to patents in the family of
`
`patents being challenged that “The claims of the '221
`
`cover nothing more than
`
`the basic financial idea of enabling limited use of paid for and/or licensed content
`
`-4-
`
`
`
`using conventional computer systems and components.” Exhibit 2055, 81:4-8.
`
`However, as noted in paragraph 5 of the Bloom Declaration, Dr. Bloom is
`
`“currently Director of System Engineering and Software Development for
`
`Conditional Access and Identity Management Systems for SiriusXM radio.” Dr.
`
`Bloom further testified that SiriusXM radio has a product that enables paid for
`
`and/or licensed content to be stored locally and played back later in a disconnected
`
`fashion.
`
`Q. Does SiriusXM have a product or service that enables paid for
`
`and/or licensed content to be stored locally and played back later in a
`
`disconnected fashion from either the Internet or the satellite to which
`
`it received the inf- -- information?
`
`A. Yes, it does.
`
`Q. Can you describe that product for me, please, Without disclosing
`
`any confidential information?
`
`A. On—demand content can be downloaded and stored locally and then
`
`played at a later, off-line time.
`
`Q. What's the name of the product that performs that function?
`
`A. It's a feature in our Internet streaming product.
`
`Q. What's the name of the Internet streaming product?
`
`A. SiriusXM Internet Radio.
`
`
`
`See Exhibit 2056, 17921-20.
`
`Moreover, when Dr. Bloom was questioned about the SiriusXM Internet
`
`Radio product
`
`Dr. Bloom refused to testify about its
`
`operation alleging that the information was confidential. See 6.g., Exhibit 2057,
`
`193:17-194z8; 19525-16. However, similarity between his employer’s products and
`
`the claims of the patent would provide Dr. Bloom with a motivation to be biased
`
`against the claims being found to be statutory subject matter under 35 U.S.C.
`
`§101.
`
`IV. OVERVIEW OF THE TECHNOLOGY OF U.S. PATENT NO. 8,061,598
`
`Although the claims define the actual scope of coverage of the patent, as
`
`described in the first paragraph of the BACKGROUND OF THE INVENTION,
`
`the patent-at-issue, the ‘598 patent generally describes “data storage and access
`
`systems
`
`[and] is particularly useful for managing stored audio and video data,
`
`but may also be applied to storage and access of text and software, including
`
`games, as well as other types of data.” Col. 1, lines 20-28.
`
`Preferred embodiments described in the last full paragraph of col. 15
`
`illustrate this further: “FIG. 7
`
`shows a variety of content access terminals for
`
`accessing data supply computer system 120 over internet 142. The terminals are
`
`provided with an interface to a portable data carrier or ‘smart Flash card’ (SFC) as
`
`—6-
`
`
`
`E i iEii lgg il
`
`
`
`
`
`l i f
`
`,ll
`
`ll
`
`generally described with reference to FIG. 2 and as described in more detail below.
`
`In most embodiments of the terminal the SFC interface allows the smart Flash card.
`
`data carrier to be inserted into and removed from the terminal, but in some
`
`embodiments the data carrier may be integral with the terminal.” Exemplary
`
`terminals include, but are not limited to, set-top boxes 154, CD/DVD Players 170
`
`and mobile communications devices 152. Col. 16, lines 4—17.
`
`Referring to preferred embodiments, the ‘598 patent discloses that a data
`
`supply system may provide users with a seamless purchase and content delivery
`
`experience. Col. 23, line 63 — col. 24, line 1. Users are able to purchase content
`
`from a variety of different content providers even if they do not know where the
`
`content providers are located or how the content is delivered. See id. The
`
`exemplary system is operated by a “content data supply ‘system owner,” who may
`
`act as an intermediary between a user seeking to purchase content and content
`
`providers, such as record labels, movie studios, and software providers. See col.
`
`13, lines 60—67. When a user accesses the system, he or she is able to select
`
`content to purchase or rent from a variety of different content providers. See the
`
`paragraph crossing cols. 4 and 5. If the user finds a content item to buy, his or her
`
`device Will transmit stored “payment data” to a “payment validation system” to
`
`validate the payment data. See col. 8, lines 3-6. The payment validation system
`
`returns proof that the payment data has been validated, in the form of “payment
`
`-7-
`
`
`
`
`
`
`
`l l 2
`
`validation data,” and the user is able to retrieve the purchased content from the
`
`content provider. See col. 8, lines 6—9.
`
`Col. 24, lines 16-18, discloses that “FIG. 13
`
`shows a flow chart for user
`
`access of stored data on a smart Flash card using a data access device such as the
`
`MP3 player of FIG. 1.” Col. 9, lines 20-22, discloses “The data access device uses
`
`. use rules to determine what access is permitted to data stored on the data
`
`carrier.” Col. 4, line 67 — col. 5, line 8 discloses “The carrier may
`
`store content
`
`use rules pertaining to allowed use of stored data items. These use rules may be
`
`linked to payments made from the card to provide payment options such as access,
`
`to buy content data outright; rental access to content data for a time period or for a
`
`specified number of access events; and/or rental/purchase, for example where
`
`rental use is provided together with an option to purchase content data at the
`
`reduced price after rental access has expired.” Thus, as described in col. 5, lines
`
`29-33, “[b]y combining digital rights management with content data storage using
`
`a single carrier, the stored content data becomes mobile and can be accessed
`
`anywhere while retaining control over the stored data for the data content provider
`
`or data copyright owner.” By using a system that combines on the data carrier the
`
`digital content, the use rules, and payment data, access control to the digital
`
`content can be continuously enforced prior to access to the digital content and
`
`additional content can be purchased. By comparison, unlike a system as claimed,
`
`-8-
`
`
`
`when a DVD was physically rented for a rental period, there was no mechanism
`
`associated with the DVD to purchase additional content.
`
`V.
`
`CLAIM 71S DIRECTED TO STATUTORY SUBJECT MATTER
`
`. A.
`
`The Two—Part Test for Statutory Subject Matter
`
`The Supreme Court articulated a two—part test for patentability in Mayo
`
`Collaborative Services v. Prometheus Laboratories, Inc, 132 S. Ct. 1289 (2012),
`
`which has been followed by Alice Corp. Ply. v. CLS Bank [M7, 134 S. Ct. 2347
`
`(2014). The first step in the analysis is to determine whether the claims at issue are
`
`directed to patent—ineligible concepts. If the claims at issue are directed to a
`
`patent—ineligible concept, the second step of the analysis is to determine whether
`
`the limitations of the claims, individually and as ordered combinations, contain an
`
`inventive concept that transforms the nature of the claims into patent—eligible
`
`subject matter. Mayo, 132 S. Ct. at 1294.
`
`B.
`
`Claim 7 Is Statutory Under the Second Step of Mayo and Alice
`
`Post Mayo and Alice, the Federal Circuit has provided guidance on how to
`
`distinguish statutory claims, like that of the ‘598 patent, from non-statutory claims.
`
`In DDR Holdings, the Federal Circuit found the claims to be statutory because “the
`
`claimed solution is necessarily rooted in computer technology in order to overcome
`
`
`
`‘E’
`
`EgEE E a
`
`:
`
`
`
`
`
`
`
`
`
`i;
`E1
`5i
`
`lEilsElsE
`
`a problem specifically arising in the realm of computer networks.” DDR Holdings,
`
`773 F.3d at 1257.
`
`Such is the case here too. Here, claim 7 is not directed to mental processes
`
`or processes performed using pen and paper, rather claim 7 is directed to a
`
`particular device that can download and store digital content into a data carrier
`
`' along with at least one use rule. By using a system that combines on the data
`
`carrier the digital content, at least one use rule, payment data, and “code to provide
`
`the payment data to a payment validation system,” access control to the digital
`
`content can be continuously enforced prior to access to the digital content,
`
`allowing subsequent use (e.g., playback) of the digital content to be portable and
`
`disconnected, and additional content can be obtained.
`
`The Report and Recommendation too acknowledged the statutory nature of
`
`claims in the patent family, finding:
`
`As in DDR Holdings, the patents here do not simply apply a known
`
`business practice from the pre-Internet world to computers or the
`
`Internet. “The claimed solution is necessarily rooted in computer
`
`technology in order to overcome a problem specifically arising in the
`
`realm of computer networks.” Digital Rights Management is a
`
`technology that was developed after Widespread use of the Internet.
`
`Entry into the Internet Era presented new and unique problems for
`
`-10_
`
`
`
`
`
`
`
`l;i
`
`gg ili
`
`digital content providers in combatting unauthorized use and
`
`reproduction of protected media content.
`Report and Recommendation at 19, lines 7—12 (quoting DDR Holdings, 773 F.3d at
`
`1257) (internal citation omitted).
`
`Thus, like in DDR Holdings, when “the limitations ofthe
`
`claims are
`
`taken as [a] combination, the claims recite[] an invention that is not merely the
`
`routine or conventional use of the Internet.” DDR Holdings, 773 F.3d at 1259.
`
`Such a finding was further echoed by the Report and Recommendation when it
`
`held the “asserted claims
`
`recite specific ways of using distinct memories, data
`
`types, and use rules that amount to significantly more than the underlying abstract
`
`idea. Although in some claims the language is functional and somewhat generic,
`
`the claims contain significant limitations on the scope of the inventions.” Report
`
`and Recommendation at 19, lines 1-4.
`
`Page 24 of the Petition alleges with respect to “use rule memory to store one
`
`or more use rules for said one or more content data items” that “[l]everaging
`
`memory for use rules involves nothing more than a mental activity that has been
`
`done for decades.” In support thereof, the Petition cites paragraph 124 of the
`
`Bloom Declaration which cites “The Radio Station: Broadcast, Satellite and
`
`Interne ” by Michael C. Keith. However, as admitted by Dr. Bloom in paragraph
`
`-11-
`
`
`
`124, that article is “not published before the effective filing date of the ‘598
`paten .” Thus, its contents are not relevant.
`
`Similarly, paragraph 125 of the Bloom Declaration, also admits that the
`
`“DMCA ultimately resulted in formal requirements on programming for Internet
`
`radiostations in 2003. These restrictions formalized requirements and limitations
`
`that had been previously informally adopted.” However, ‘since neither the Petition
`
`nor the Bloom declaration allege that the “restrictions” were known prior to the
`
`effective filing date of the patent, they are not relevant to the limitation of claim 7.
`
`Accordingly, claim 7 is directed to statutory subject matter under the two—part test
`
`of Mayo and Alice.
`
`C.
`
`Claim 7 Does Not Result in Inappropriate Preemption
`
`l.
`
`Preemption under DDR Holdings
`
`Claim 7 of the ‘598 patent does not result in inappropriate preemption under
`
`DDR Holdings, Mayo and Alice. Page 27 of the Petition alleges that “Claim 7 of
`
`the ‘5 98 Patent Recites an Abstract Idea, as it Preempts All Effective Uses of the
`
`Abstract Idea of Enabling Limited Use of Paid—for/Licensed Content.” However,
`
`using the analysis of the Federal Circuit in DDR Holdings, claims are statutory
`
`when “the claims
`
`do not attempt to preempt every application of the idea
`
`[relating to the field of the invention]. Rather, they recite a specific way
`
`that
`
`-12-
`
`
`
`incorporates elements from multiple sources in order to solve a problem faced by
`
`[servers] on the Internet.” DDR Holdings, 773 F.3d at 1259. Such a standard is
`consistent with other Supreme Court precedent as well. As cited in Mayo, in
`
`“Bilskz', the Court pointed out that to allow ‘petitioners to patent risk hedging
`
`would [inappropriately] preempt use of this approach in all fields.” Mayo, 132 S.
`
`Ct. at 1301 (citing Bilskz' v. Kappos, 561 US. 612 (2010)).
`
`In fact, even Dr. Bloom agreed that there are alternatives to the portable data
`
`carrier of claim 7 that nonetheless still enable limited use of paid for and/or
`
`licensed content when he testified:
`
`Q.
`
`Could you build a portable data carrier that stores one or more
`
`content data items on the carrier but that does not store one or more
`
`use rules for the one or more content data items?
`
`A. You could build it.
`
`Q. And it -— it wouldn't be met by
`
`the limitations of Claim 1,
`
`correct?
`
`A. Correct.
`
`Q. And you could build a portable data carrier, as we discussed, that
`
`doesn't store one or more use rules, and it still would enable limited
`
`use of paid for and/or licensed content?
`
`-13-
`
`
`
`A. It would be useful in a system that limited use of paid for and/or
`
`licensed content.
`
`Exhibit 2055:110;7—111:1.
`
`Q. Turning to Claim 7, you could build a portable data carrier and use
`
`it in a larger system that enables limited use of paid for and/or
`
`licensed content but that does not include a memory that stores
`
`payment data and code to provide the payment data to a payment
`
`validation system, correct?
`
`A. Correct.
`
`Exhibit 2055:11122—9.
`
`Dr. Bloom further admitted that claim 7 of the ‘598 patent does not result in
`
`inappropriate preemption when he testified:
`
`Q. Would you agree that Claim 7 of the '598 patent, therefore, does
`
`not preempt all the effective uses of systems that enable limited use
`
`for paid for and/or licensed content?
`
`A. Right, yes.
`
`Exhibit 2055, 111210-14.
`
`In fact, the Report and Recommendation found that “the claims do not risk
`
`preempting all future inventions related to exchanging access to data for payment
`
`on the Internet. Instead, when taken as ordered combinations, the claims recite
`
`-14-
`
`
`
`specific ways of combining system components and method steps beyond the
`
`routine use of the Internet.” Report and Recommendation at 20.
`
`Moreover, the Petition’s assertion that “Claim 7 of the ‘598 Patent Recites
`
`an Abstract Idea, as it Preempts All Effective Uses of the ‘Abstract Idea of Enabling
`Limited Use ofPaid—for/Licensed Content,” (Petition at 27) is contradicted by
`
`Petitioner’s litigation assertions (1) that it does not infringe the challenged claim
`
`and (2) that there are non—infringing alternatives to the claim. As described in the
`
`Report and Recommendation, “both Smartflash and Defendants identified
`
`numerous non-infringing alternatives, such as those employed by NetfliX and
`
`Spotify.” Id. at 15. (Emphasis added.) Thus, the Petition’s argument that claim 7
`
`would result in inappropriate preemption is without merit.
`
`2.
`
`Preemption under Mayo and Alice
`
`The Supreme Court’s analyses in Mayo and Alice further confirm that claim
`
`7 does not result in inappropriate preemption.
`
`In Mayo, the Supreme Court
`
`clarified that “the underlying functional concern
`
`is a relative one: how much
`
`future innovation is foreclosed relative to the contribution of the inventor.” Mayo,
`
`132 S. Ct. at 1303. To analyze that issue, the Court looks to the “risk [of]
`
`disproportionately tying up the use of the underlying natural laws, inhibiting their
`
`use in the making of further discoveries.” Id. at 1294. However, in support of the
`
`-15-
`
`
`
`Petition, Dr. Bloom did not even investigate whether there is any future innovation
`
`that is foreclosed. Dr. Bloom testified:
`
`Q. In performing your analysis of the ’221 patent, did you look at
`
`future innovation that would be foreclosed by the claims of the ‘221
`
`patent on a claim-by-claim basis?
`
`A. I'm sorry. What do you mean by "foreclosed"?
`
`Q. Do you have a -- an understanding of what that means?
`
`A. Only in housing and mortgages.
`
`Q. So if I said you did not look at future innovation that would be
`
`foreclosed by the claims of the '221 patent, you would have no reason
`
`to disagree with me?
`
`A. I don't know what it means.
`
`Exhibit 2055, 89:1-14.
`
`Q. Did you do an analysis with respect to any of your declarations in
`
`CBM20l4—00190, -192, -l93 or -l94 on whether any of the claims of
`
`their associated patents would prevent some level of future
`
`innovation?
`
`A. No.
`
`Exhibit 2055, 112:7—12.
`
`When dealing with preemption issue in Alice, the Court held:
`
`-16-
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`i
`
`l i
`
`Accordingly, in applying the § 101 exception, we must
`
`distinguish between patents that claim the “‘building blocks’” of
`
`human ingenuity and those that integrate the building blocks into
`
`something more, ...thereby “transforming” them into a patent—eligible
`
`invention. The former “would risk disproportionately tying up the use
`
`of the underlying” ideas, and are therefore ineligible for patent
`
`protection. The latter pose no comparable risk of pre-emption, and
`
`therefore remain eligible for the monopoly granted under our patent
`
`laws.
`
`Alice, 134 S. Ct. at 2354 (citing Mayo). (Internal citations omitted.) As discussed
`
`above, there are a number of non-infringing alternatives possible with respect to
`
`claim 7. Thus, the Petition has failed to carry its burden of proof that a
`
`disproportionate amount of future innovation is foreclosed. Said differently,
`
`without an analysis of the number of “innovations” that are foreclosed and the
`
`relative contribution of the inventor, and given that there are alternatives, the
`
`Petition fails to prove disproportionality or that the relative preemption results in a
`
`finding of nonstatutory subject matter.
`
`_17_
`
`
`
`D.
`
`Evidence Relied Upon by the Bloom Declaration Is Not from the
`Appropriate Timeframe
`
`The Bloom Declaration (Exhibit 1003) relies upon a document and a set of
`
`rules which are not from prior to the effective filing date of the 5598 patent. As
`
`such, they are irrelevant to showing that any portion of claim 7 was known prior to
`
`the invention. Paragraph 124 of the Bloom declaration states “Although not
`
`published before the effective filing date of the ‘598 patent, I believe that the
`
`following excerpt from ‘The Radio Station: Broadcast, Satellite and Internet’ by
`
`Michael C. Keith [Exhibit 1039] nevertheless describes the manner in which a
`
`program director would plan the programming for the day.” However, given that
`
`Exhibit 1039 is not from prior to the effective filing date of the ‘598 patent, it is
`
`not relevant to the § 101 analysis (or any other analysis of claim 7).,
`
`Paragraph 125 also admits that the “DMCA ultimately resulted in formal
`
`requirements on programming for Internet radio stations in 2003. These restrictions
`
`formalized requirements and limitations that had been previously informally
`
`adopted.” However, since neither the Petition nor the Bloom declaration allege
`
`that the “restrictions” were known prior to the effective filing date of the patent,
`
`they are not relevant to the analysis of claim 7.
`
`_1g_
`
`
`
`VI.
`
`PETITIONER HAS ALREADY LOST A CHALLENGE ON THE SAME
`
`STATUTORY GROUNDS IN ITS LITIGATION WITH PATENT
`
`OWNER *
`
`Petitioner has already lost a Motion for Summary Judgment of Invalidity
`
`Pursuant to 35 U.S.C. § 101 in its litigation with Patent Owner. See Exhibits 2049
`
`and 2050. The Report and Recommendation expressly found that “The asserted
`
`claims are unlike the claims in Alice, Ultramercial II, and Content Extraction that
`
`claimed little more than abstract concepts.
`
`[T]he claimed methods and systems
`
`are patent-eligible under §101.” Exhibit 2049 at 20-21. The Report and
`
`Recommendation was then adopted by the Court. See Exhibit 2050. Given that
`
`Petitioner has already lost its purely legal challenge to the patentability under 3 5
`
`U.S.C. § 101, there is no reason to re-litigate the issue before the PTAB as the
`
`effort, time and cost of such re-litigation will not “secure the just, speedy, and
`
`inexpensive resolution of [this] proceeding” as required by 37 C.F.R. 42.1. In fact,
`
`as the District Court found just last week, “Samsung—like Apple—~does not
`
`appear to have used the PTAB proceedings as an alternative to district court
`
`litigation. Instead, Samsung also appears to have used the PTAB proceedings as a
`
`way to increase the costs of an already burdensome litigation while also
`
`positioning itself for a second shot at the invalidity target.” Exhibit 2058 at 34.
`
`-19-
`
`
`
`VII. THE USPTO IS ESTOPPED FROM REVISITING THE ISSUE OF .
`
`WHETHER CLAIM 7 IS DIRECTED TO STATUTORY SUBJECT
`
`MATTER
`
`‘
`
`The question of Whether claim 7 is directed to statutory subject matter has
`
`already been adjudicated by the USPTO, and the USPTO is estopped from
`
`allowing the issue to be raised in the present proceeding. Inherent in every
`
`examination is a review of Whether the pending claims comport With 35 U.S.C.
`
`101, which is a question of law. As in historical reexamination proceedings, the
`
`PTO’s analysis should be directed to substantial new questions of patentability
`
`arising from previously unapplied prior art, not the relitigation of issues (e.g.,
`
`compliance of the claims With 35 U.S.C. 101 and 112) already considered and
`
`adjudicated by the PTO.
`
`-20-
`
`
`
`VIII. CONCLUSION
`
`The Petition does not prove that claim 7 is directed to patent ineligible
`
`subject matter, and this claim should be found valid.
`
`Dated: June 1, 2015
`
`/ 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
`
`-21-
`
`
`
`
`
`
`
`CERTIFICATE OF SERVICE
`
`
`The undersigned hereby certifies that this PATENT OWNER’S RESPONSE
`
`(including Patent Owner’s List of Exhibits) and Exhibits 2049, 2050, 2055-2058,
`
`2063 and 2066 in CBM2014-00193 were served, by agreement of the parties, June
`
`1, 2015 by emailing copies to counsel for the Petitioner as follows:
`
`W. Karl Renner (renner@fr.com)
`Thomas Rozylowicz (rozylowicz@fr.com)
`CBM39843-0005CP1@fr.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: June 1, 2015
`
`
`
`
`
`
`
`
`- 22 -
`
`
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