`
`_________
`
`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 CBM2014-001941
`
`Patent 8,118,221 B2
`
`_________
`
`
`
`PATENT OWNER’S REQUEST FOR REHEARING
`
`
`
`
`1 CBM2015-00117 (Patent 8,118,221 B2) was consolidated with this proceeding.
`
`
`
`TABLE OF CONTENTS
`
`
`
`INTRODUCTION ........................................................................................... 1
`
`STATEMENT OF PRECISE RELIEF REQUESTED ................................... 2
`
`I.
`
`II.
`
`III. BACKGROUND ............................................................................................. 2
`
`IV. ARGUMENT ................................................................................................... 4
`A.
`Like the Claims in DDR Holdings, Claim 32 Is Patent Eligible
`Because It Teaches a Specific Solution to a Novel Problem Presented
`By Digital Commerce ............................................................................ 5
`B. The Challenged Claim Does Not Resemble the Claims in Alice ....... 10
`1. Claim 32 Is Directed to a Specific Device, Not an Abstract Idea
` ................................................................................................... 10
`2. Claim 32 Contains Numerous “Additional Features” That
`Demonstrate That It Does Not Cover an Abstract Idea ............ 12
`
`CONCLUSION .............................................................................................. 15
`
`
`V.
`
`
`
`i
`
`
`
`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 32 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. Claim 32 contains significant and
`
`meaningful limitations which are both inventive and technological, which, when
`
`taken in ordered combination, amount to more than the idea of “conditioning and
`
`controlling access to data 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 contains 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 51, March 29, 2016) and hold challenged claim 32 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 that is 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” without authorization. Ex. 1001, 1:32-33. The
`
`conventional operation of the Internet does not solve this problem: 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.
`
`2
`
`
`
`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 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 32 of the ’221 patent is directed to one aspect of that system: namely, a
`
`“data access terminal”—for example, a mobile multi-media player—for “retrieving
`
`data from a data supplier.” Id. at 28:22-25. Related patents cover other aspects of
`
`the system and interactions explained in the specification.
`
`Claim 32 requires the “data access terminal” to be coupled to a “data
`
`carrier,” and to include a “data carrier interface,” a “first interface” for
`
`“communicating with the data supplier,” a “program store,” and a “processor.”
`
`The “program store” on the device stores code that allows the machine to “read
`
`payment data from the data carrier,” “to forward the payment data to a payment
`
`validation system,” to “receive payment validation data” from that system, to
`
`“retrieve data from the data supplier,” to “write the retrieved data into the data
`
`3
`
`
`
`carrier,” to “receive at least one access rule from the data supplier” that is
`
`“responsive to the payment validation data”; and to “retrieve from the data supplier
`
`and output . . . identifier data and associated value data and use rule data.”
`
`
`
`2.
`
`The Board found the challenged claim to be patent ineligible. First,
`
`the Board found (at 9) that the challenged claim was “drawn to a patent-ineligible
`
`abstract idea,” that is, “performing the fundamental economic practice” of
`
`“conditioning and controlling access to content based upon payment.” The Board
`
`also found (at 13) that “the potentially technical elements of the claim are nothing
`
`more than ‘generic computer implementations’ and perform functions that are
`
`‘purely conventional.’” 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
`
`“result does not override[] the routine and conventional use of the recited devices
`
`and functions.” Id. at 15-16.
`
`IV. ARGUMENT
`
`The Board should reverse its decision and find claim 32 directed to statutory
`
`subject matter because, in evaluating whether claim 32 complies with the
`
`requirements of § 101, the Board failed to give effect to the actual language of the
`
`claim and its specific limitations. The actual claim language, read in light of the
`
`specification, reflects a specific and concrete solution to a novel problem
`
`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 32 Is Patent Eligible
`Because It Teaches a Specific Solution to a Novel Problem
`Presented By Digital Commerce
`1.
`
`Claim 32 of the ’221 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. Final Written Decision, Paper 51 at 18-19. On the
`
`contrary, the challenged claim limitations reflect specific technical choices: a
`
`“data carrier,” coupled to a “data access terminal,” that includes functionality to
`
`send and receive “payment data” and “payment validation data” from and to the
`
`“data carrier,” and functionality to write access rules into that data carrier.
`
`That particular configuration of elements provides distinct advantages over
`
`alternatives. For example, by storing “payment data” on the data carrier – rather
`
`than (for example) requiring the user to enter payment data manually into the data
`
`access terminal with each purchase – the invention makes purchase of content
`
`convenient and ensures that payment functionality is linked to content storage. Ex.
`
`1001, 4:26-34. By transmitting payment validation data to the data access terminal
`
`5
`
`
`
`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. Id. at 8:63-9:5. By writing onto
`
`the data carrier “access rules,” the invention limits a user’s ability to make
`
`unauthorized copies and allows for different levels of access or rights to
`
`downloaded digital content. Id. at 14:65-15:4. And by storing the access rules on
`
`the data carrier rather than (for example) on the access device, the invention
`
`ensures that a portable data carrier can be used with various access terminals
`
`without losing the ability to control access to the stored data. Indeed, the basic
`
`insight reflected in the claim—that a single data carrier can store content data,
`
`payment data, and access rules and can interface with a data access terminal with
`
`functionality to (1) send, receive, read, and write this data and (2) communicate
`
`with a data supplier and a payment validation system—is itself inventive.
`
`Because claim 32 teaches specific technical solutions to one problem
`
`associated with distribution of digital content through specific organization of
`
`distinct data types, implemented on specific devices, there is no risk that the claim
`
`monopolizes “fundamental economic practice[s],” 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, each challenged
`
`6
`
`
`
`claim teaches a “specific way” to control access to stored digital content based on
`
`payment; the claim 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 15), holding that the challenged claim was not “rooted in computer technology
`
`in order to overcome a problem specifically arising in the realm of computer
`
`networks.”2 That is incorrect: the claim discusses specific computer functions and
`
`interactions, including with data carriers, to perform a defined series of operations.
`
`Indeed, the Board’s own summary of the ’221 patent (at 4) states:
`
`The ’221 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.
`
`Because the Internet facilitates the “essentially world-wide” distribution of
`
`flawless, identical copies of content data, the piracy problems it creates are
`
`qualitatively different from copying physical media, 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
`
`
`2 Pursuant to 37 C.F.R. § 42.71(d), the issue of whether the challenged claims were
`
`similar to those in DDR Holdings was previously addressed. See PO Resp. 12-13.
`
`7
`
`
`
`abstract business practice, the claim solves problems faced by digital content
`
`providers in the Internet Era, improving the functioning of the computer itself.3
`
`The Board also held (at 17) that the challenged claim contained
`
`limitations—unlike the claims in DDR Holdings—that were “specified at a high
`
`level of generality.” This is incorrect. The challenged claim and the specification
`
`discuss specific data stored in specific places, not mere generalities. There is
`
`“payment data” stored on the data carrier, “payment validation data” received from
`
`a payment validation system and, in response to that data, data is retrieved from a
`
`data supplier. There are “access rules” written into the carrier from that data
`
`supplier and those access rules are dependent on the payment data sent to the
`
`payment validation system. See Ex. 1001 28:31-46. Compare DDR Holdings,
`
`773 F.3d at 1249 (reciting “links,” “source page,” and “web page”). The device
`
`3 Claim 32 does not expressly recite Internet transactions; rather, the claim is
`
`directed to a data access terminal, coupled to a data carrier, and that machine’s
`
`interactions with a data supplier. However, even if not limited to the Internet, the
`
`claim “aris[es] in the realm of computer networks” because it defines an
`
`interaction between computers that solves a technological problem inherent in the
`
`conventional operation of those interactions. The claim is also directed towards an
`
`Internet-specific problem – that is, it offers a way to pay for, store, and control
`
`access to content data that is sold separately from a storage medium.
`
`8
`
`
`
`must thus transfer, receive, and act on different specific data in a particular way.
`
`The claim therefore 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 challenged claim that made it patent-eligible.
`
`
`
` Finally, the Board held (at 13) that claim 32 could be performed by “a
`
`general-purpose computer.” But, again, this ignores the limitations of the claim,
`
`which, as explained above, requires specific configurations of distinct data types
`
`and defined interactions among system components to facilitate secure access to
`
`data 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 the access
`
`rule, dependent on the transmitted payment data, confirms that access is
`
`authorized. Just as the claims in DDR Holdings “specif[ied] 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
`
`9
`
`
`
`nor unimproved computers can produce. The patent “improve[s] the functioning”
`
`and the functionality of digital media players, which, likewise improves the
`
`functioning of data communications networks used for digital content distribution.
`
`Alice, 134 S. Ct. at 2359.
`
`B. The Challenged Claim Does Not Resemble the Claims in Alice
`
`Claim 32 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 “combination of
`
`elements” that amounts to “significantly more” than any ineligible concept.
`
`1. Claim 32 Is Directed to a Specific Device, Not an Abstract
`Idea
`
`The Board’s determination that claim 32 was directed to an abstract idea is
`
`incorrect because it is directed to a concrete machine with specific hardware and
`
`software components and not merely to the abstract idea of controlling access to
`
`content based on payment. As the Board acknowledged (at 6) “claim 32 recites a
`
`‘machine,’ i.e., a ‘data access terminal” with defined components. It contains an
`
`interface for communicating with a data supplier, a data carrier interface, memory,
`
`and a processor. The machine runs specific software to, among other things, send
`
`payment data, receive payment validation data, and write access rules on to the
`
`10
`
`
`
`data carrier based on the validated payment data. The patent specification
`
`emphasizes that the patent is on a machine. See, e.g., Ex. 1001 at 1:20-28.4
`
`In finding this claimed machine was directed to an abstract idea, the Board
`
`apparently focused on the problem that the machine was designed to solve and
`
`treated the problem itself as the abstract idea to which the claim was directed.
`
`Specifically, the Board held (at 8) that “claim 32 is directed to performing the
`
`fundamental economic practice of controlling access to content based on
`
`payment.”5 But while the claimed machine provides a specific mechanism that can
`
`be used to control access to content based on payment, thus combatting problems
`
`of data piracy, see Ex. 1001, 1:20-2:15, that does not provide a fair description of
`
`the claim, which 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
`
`4 The issue of whether the claim 32 is an abstract idea was previously addressed.
`
`See 37 C.F.R. § 42.71(d); PO Resp. 11-28; see also Tr. 46:21-47:11.
`
`5 The Board identified the abstract idea without explaining its methodology, which
`
`itself merits rehearing. Cf. Avago Techs. Gen. IP (Singapore) Pte Ltd. v. Asustek
`
`Comp., Inc., No. 15-cv-04525, at 10-11 (N.D. Cal. Apr. 25, 2016).
`
`11
`
`
`
`specification, if not included in the claims, are not per se limitations . . . .”). As an
`
`example, a cash register is a physical device that is 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. 134 S. Ct. at 2354.
`
`2. Claim 32 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. On the contrary, because the challenged
`
`claim is not limited to generic computer implementation, it contains an inventive
`
`concept sufficient to establish patent eligibility. 6
`
`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
`
`
`6 The issue of whether the Claim 32 contains “additional features” was previously
`
`addressed. See 37 C.F.R. § 42.71(d); PO Resp. 8-9; 25-36.
`
`12
`
`
`
`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. But these limitations are not merely
`
`instructions to apply the idea of controlling access based on payment; the
`
`limitations specify a way in which the machine pays for, retrieves, and controls
`
`access to stored data to the user. See infra at 3, 5-6. 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 11-13) 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 claim 32 lacked “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
`
`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
`
`13
`
`
`
`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, the ’221 patent claims a data access terminal used with a data
`
`carrier storing data from a data supplier, payment data, payment validation data,
`
`and access rules. This combination enables (for example) a portable “Smartflash”
`
`card to securely store downloaded content—a technological invention. See Ex.
`
`1001, 24:13-16. Nothing in the Board’s opinion supports its conclusion that this
`
`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 18) 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 that the claim teaches storing “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.
`
`Citing two prior art patents, (Exs. 1004, 1005), the Board then asserted that
`
`this idea was known in the prior art. As an initial matter, when looking for an
`
`14
`
`
`
`“inventive concept,” § 101 requires a comparison between the claim limitations
`
`and the proposed abstract idea, not between the claim and all prior art. But, in any
`
`event, even if these isolated prior art references indicate that it was “known” to
`
`“store both content and conditions for providing access to the content” on a device,
`
`this ignores most of the challenged claim. These references hardly prove that this
`
`particular concept, if deployed as part of a novel configuration, is conventional;
`
`just as significant, the reference does not disclose the type of data storage and
`
`manipulation that the ’221 patent claims. On the contrary, both patents teach
`
`having the content owner attach usage rights as part of the content item. Ex. 1004
`
`at 4:40-41 (“Usage rights are attached to digital works . . .”); Ex. 1005, Abstract
`
`(“the owner . . . attaches usage rights to that work”). That makes it impossible to
`
`provide greater access without downloading the content again. By contrast, the
`
`’221 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 claim 32.
`
`
`
`V. CONCLUSION
`
`The Board should reverse its original decision and hold challenged
`
`claim 32 patent-eligible.
`
`
`
`
`
`15
`
`
`
` /
`
` Michael R. Casey /
`
`
`Michael R. Casey
`Registration No. 40,294
`Davidson Berquist Jackson & Gowdey, LLP
`8300 Greensboro Drive
`Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7705
`Fax: (571) 765-7200
`Email: mcasey@dbjg.com
`Attorney for Patent Owner
`
`
`Dated: April 28, 2016
`
`
`
`
`
`16
`
`
`
`
`
`CERTIFICATE OF SERVICE
`
`The undersigned hereby certifies that this PATENT OWNER’S REQUEST
`
`FOR REHEARING in CBM2014-00194 was served, by agreement of the parties,
`
`April 28, 2016 by emailing copies to counsel for the Petitioners as follows:
`
`W. Karl Renner (renner@fr.com)
`Thomas Rozylowicz (rozylowicz@fr.com)
`CBM39843-0007CP1@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 Drive
`Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7705
`Fax: (571) 765-7200
`Email: mcasey@dbjg.com
`Attorney for Patent Owner
`
`
`
`Dated: April 28, 2016
`
`
`
`17