UNITED STATES PATENT AND TRADEMARK OFFICE
`
`_________
`
`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 NOTICE OF APPEAL
`
`
`
`
`1 CBM2015-00117 (Patent 8,118,221 B2) was consolidated with this proceeding.
`
`
`
`_________
`
`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 NOTICE OF APPEAL
`
`
`
`
`1 CBM2015-00117 (Patent 8,118,221 B2) was consolidated with this proceeding.
`
`
`
`Notice is hereby given, pursuant to 37 C.F.R. § 90.2(a), that Patent Owner
`
`Smartflash LLC hereby appeals to the United States Court of Appeals for the
`
`Federal Circuit from the Final Written Decision entered on March 29, 2016 (Paper
`
`51), the Decision Denying Request for Rehearing entered on June 10, 2016 (Paper
`
`53) and from all underlying orders, decisions, rulings and opinions regarding U.S.
`
`Patent No. 8,118,221 (“the ’221 Patent”) including the Decision - Institution of
`
`Covered Business Method Patent Review entered on March 30, 2015 (Paper 9).
`
`For the limited purpose of providing the Director with the information
`
`requested in 37 C.F.R. § 90.2(a)(3)(ii), Patent Owner anticipates that the issues on
`
`appeal may include the following, as well as any underlying findings,
`
`determinations, rulings, decisions, opinions, or other related issues:
`
` Whether the Board erred in finding that claim 32 of the ’221 Patent is
`
`unpatentable under 35 U.S.C. § 101;
`
` Whether the Board erred in denying Patent Owner’s Motion to
`
`Exclude (Paper 34); and
`
` Whether the Board erred in finding that the subject matter of the ‘221
`
`Patent is directed to activities that are financial in nature and in
`
`instituting Covered Business Method review of the ‘221 Patent.
`
`
`
`1
`
`
`
`Copies of this Notice of Appeal are being filed simultaneously with the
`
`Director, the Patent Trial and Appeal Board, and the Clerk of the United States
`
`Court of Appeals for the Federal Circuit.
`
`Any required fee may be charged to Deposit Account No. 501860.
`
`
`Dated: August 9, 2016
`
`/ 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
`
`
`
`
`2
`
`
`
`CERTIFICATE OF SERVICE
`
`The undersigned hereby certifies that this PATENT OWNER’S NOTICE
`OF APPEAL was filed with the Patent Trial and Appeal Board using the E2E
`System and was served, by agreement of the parties, by emailing copies to counsel
`for the Petitioner 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
`
`The undersigned hereby further certifies that on August 9, 2016 this
`PATENT OWNER’S NOTICE OF APPEAL (and its three attached decisions)
`were filed with the Federal Circuit via CM/ECF (along with one courtesy copy by
`hand delivery) and two (2) copies were served on the U.S. Patent and Trademark
`Office via in-hand delivery as follows:
`
`
`Director of the United States Patent and Trademark Office
`c/o Office of the General Counsel
`Madison Building East, 10B20
`600 Dulaney Street
`
`Dated: August 9, 2016
`
`
`
`
`
`Alexandria, VA 22314‐5793
`
`
`/ 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
`
`3
`
`
`
`
`
`
`
`
`
`
`
`Trials@uspto.gov
`Tel: 571-272-7822
`
`Paper 53
`Entered: June 10, 2016
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`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
`
`Before JENNIFER S. BISK, RAMA G. ELLURU,
`JEREMY M. PLENZLER, and MATTHEW R. CLEMENTS,
`Administrative Patent Judges.
`
`BISK, Administrative Patent Judge.
`
`
`DECISION
`Denying Patent Owner’s Request for Rehearing
`37 C.F.R. § 42.71
`
`
`
`
`
`1 CBM2015-00117 (Patent 8,118,221 B2) has been consolidated with this
`proceeding.
`
`
`
`CBM2014-00194
`Patent 8,118,221 B2
`
`INTRODUCTION
`Samsung Electronics America, Inc., Samsung Electronics Co., Ltd.,
`and Samsung Telecommunications America, LLC (“Samsung”),2 filed a
`Corrected Petition to institute covered business method patent review of
`claims 2, 11, and 32 of U.S. Patent No. 8,118,221 B2 (Ex. 1001, “the ’221
`patent”) pursuant to § 18 of the Leahy-Smith America Invents Act (“AIA”).3
`Paper 4 (“Pet.”). On March 30, 2015, we instituted a covered business
`method patent review (Paper 9, “Institution Decision” or “Inst. Dec.”) based
`upon Samsung’s assertion that claims 2, 11, and 32 are directed to patent
`ineligible subject matter under 35 U.S.C. § 101. Inst. Dec. 19.
`On April 30, 2015, Apple Inc. (“Apple”) filed a Petition to institute
`covered business method patent review of the same claims of the ’221 patent
`based on the same grounds. Apple Inc. v. Smartflash LLC, Case CBM2015-
`00117 (Paper 2, “Apple Pet.”). Apple simultaneously filed a “Motion for
`Joinder” of its newly filed case with Samsung’s previously instituted case.
`CBM2015-00117 (Paper 3, “Apple Mot.”). On August 8, 2015, we granted
`Apple’s Petition and consolidated the two proceedings. Paper 32; Apple Inc.
`v. Smartflash LLC, Case CBM2015-00117, slip. op. at 6–7 (PTAB Aug. 8,
`2015) (Paper 11).
`Subsequent to institution, Smartflash LLC (“Patent Owner”) filed a
`Patent Owner Response (Paper 23, “PO Resp.”) and Samsung and Apple
`
`
`2 Samsung Telecommunications America, LLC, a petitioner at the time of
`filing, merged with and into Samsung Electronics America, Inc. as of
`January 1, 2015. Paper 8.
`3 Pub. L. No. 112-29, 125 Stat. 284, 296–07 (2011).
`
`2
`
`
`
`CBM2014-00194
`Patent 8,118,221 B2
`
`(collectively, “Petitioner”) filed a Reply (Paper 31, “Reply”) to Patent
`Owner’s Response.
`In our Final Decision, we determined that Petitioner had established,
`by a preponderance of the evidence, that claim 32 (“the challenged claim”)
`of the ’221 patent is unpatentable.4 Paper 51 (“Final Dec.”), 30.
`Patent Owner requests rehearing of the Final Decision. Paper 52
`(“Request” or “Req. Reh’g”). Having considered Patent Owner’s Request,
`we decline to modify our Final Decision.
`
`STANDARD OF REVIEW
`In covered business method review, the petitioner has the burden of
`showing unpatentability by a preponderance of the evidence. 35 U.S.C.
`§ 326(e). The standard of review for rehearing requests is set forth in 37
`C.F.R. § 42.71(d), which states:
`The burden of showing a decision should be modified lies with
`the party challenging the decision. The request must specifically
`identify all matters the party believes the Board misapprehended
`or overlooked, and the place where each matter was previously
`addressed in a motion, an opposition, or a reply.
`
`ANALYSIS
`Patent Owner’s Request is based on a disagreement with our
`determination that claim 32 is directed to patent-ineligible subject matter.
`Req. Reh’g 2. In its Request, Patent Owner presents arguments directed to
`
`
`4 Claims 2 and 11 were canceled in a Final Written Decision of another
`proceeding—CBM2014-00102. Apple Inc. v. Smartflash LLC, Case
`CBM2014-00102, (PTAB Sept. 25, 2015) (Paper 52). Because the Federal
`Circuit dismissed Patent Owner’s appeal of that decision, leaving claims 2
`and 11 cancelled, we did not address those claims in the Final Written
`Decision of this proceeding. Final Dec. 3–4.
`
`3
`
`
`
`CBM2014-00194
`Patent 8,118,221 B2
`
`alleged similarities between the challenged claim and those at issue in DDR
`Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014) (Req.
`Reh’g 5–10) and alleged differences between the challenged claim and those
`at issue in Alice Corp. Pty. Ltd. v. CLS Bank Int’l., 134 S. Ct. 2347 (2014)
`(id. at 10–15).
`As noted above, our rules require that the requesting party
`“specifically identify all matters the party believes the Board
`misapprehended or overlooked, and the place where each matter was
`previously addressed in a motion, an opposition, or a reply.” 37 C.F.R.
`42.71(d) (emphasis added). In its Request, however, Patent Owner does not
`identify any specific matter that we misapprehended or overlooked. Rather,
`the only citation to Patent Owner’s previous arguments are general citations,
`without explanation as to how we misapprehended or overlooked any
`particular matter in the record. For example, with respect to Patent Owner’s
`arguments regarding DDR Holdings, Patent Owner simply notes that “the
`issue of whether the claim was similar to those in DDR Holdings was
`previously addressed. See PO Resp. 12–13.” Request 7 n.2. Similarly, in
`Patent Owner’s arguments regarding Alice, Patent Owner simply notes that
`“the issue of whether 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” (id. at
`11 n.4) and “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”
`(id. at 12 n.6). These generic citations to large portions of the record do not
`identify, with any particularity, specific arguments that we may have
`misapprehended or overlooked.
`
`4
`
`
`
`CBM2014-00194
`Patent 8,118,221 B2
`
`Rather than providing a proper request for rehearing, addressing
`particular matters that we previously misapprehended or overlooked, Patent
`Owner’s Request provides new briefing by expounding on argument already
`made. Patent Owner cannot simply allege that an “issue” (e.g., whether the
`claims are directed to an abstract idea) was previously addressed, generally,
`and proceed to present new argument on that issue in a request for rehearing.
`See 37 C.F.R. § 42.71.
`Patent Owner’s arguments are either new or were addressed in our
`Final Decision. For example, Patent Owner’s argument that the challenged
`claims are not directed to an abstract idea (Req. Reh’g 10–12) is new, and
`therefore, improper in a request for rehearing, because Patent Owner did not
`argue the first step of the analysis articulated in Mayo and Alice in its Patent
`Owner Response (see PO Resp. passim (arguing only the second step of the
`Mayo and Alice test)). To the extent portions of the Request are supported
`by Patent Owner’s argument in the general citations to the record, we
`considered those arguments in our Final Decision, as even Patent Owner
`acknowledges. See, e.g., Req. Reh’g 7 (citing Final Dec. 15) (“The Board
`rejected Patent Owner’s reliance on DDR Holdings (at 15), holding that
`Claim 7 was not ‘rooted in computer technology in order to overcome a
`problem specifically arising in the realm of computer networks.’”). For
`example, Patent Owner’s arguments about inventive concept (Req. Reh’g 5–
`7, 12–15) were addressed at pages 10–13 and 18–20 of our Final Decision,
`Patent Owner’s arguments about preemption (Req. Reh’g. 6–7) were
`addressed at pages 20–22 of our Final Decision, and Patent Owner’s
`arguments about DDR Holdings (Req. Reh’g. 7–10) were addressed at pages
`
`5
`
`
`
`CBM2014-00194
`Patent 8,118,221 B2
`
`14–18 of our Final Decision. Mere disagreement with our Final Decision
`also is not a proper basis for rehearing.
`Accordingly, Patent Owner’s Request does not apprise us of sufficient
`reason to modify our Final Decision.
`
`
`ORDER
`
`Accordingly, it is:
`ORDERED that Patent Owner’s Request is denied.
`
`
`
`PETITIONER:
`Walter Renner
`Thomas Rozylowicz
`Fish & Richardson P.C.
`axf@fr.com
`cbm39843-0006cp1@fr.com
`
`PATENT OWNER:
`
`Michael Casey
`DAVIDSON BERQUIST JACKSON & GOWDEY LLP
` smartflash-cbm@dbjg.com
`
`6
`
`
`
`Trials@uspto.gov
`Tel: 571-272-7822
`
`Paper 51
`Entered: March 29, 2016
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`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
`
`
`
`
`
`
`
`
`
`Before JENNIFER S. BISK, RAMA G. ELLURU,
`JEREMY M. PLENZLER, and MATTHEW R. CLEMENTS,
`Administrative Patent Judges.
`BISK, Administrative Patent Judge.
`
`
`FINAL WRITTEN DECISION
`35 U.S.C. § 328(a) and 37 C.F.R. § 42.73
`
`
`
`
`
`1 CBM2015-00117 (Patent 8,118,221 B2) was consolidated with this
`proceeding.
`
`
`
`CBM2014-00194
`Patent 8,118,221 B2
`
`INTRODUCTION
`
`A. Background
`Samsung Electronics America, Inc., Samsung Electronics Co., Ltd.,
`and Samsung Telecommunications America, LLC (“Samsung”),2 filed a
`Corrected Petition to institute covered business method patent review of
`claims 2, 11, and 32 of U.S. Patent No. 8,118,221 B2 (Ex. 1001, “the ’221
`patent”) pursuant to § 18 of the Leahy-Smith America Invents Act (“AIA”).
`Paper 4 (“Pet.”). On March 30, 2015, we instituted a covered business
`method patent review (Paper 9, “Institution Decision” or “Inst. Dec.”) based
`upon Petitioner’s assertion that claims 2, 11, and 32 are directed to patent
`ineligible subject matter under 35 U.S.C. § 101. Inst. Dec. 20.
`On April 30, 2015, Apple Inc. filed a Petition to institute covered
`business method patent review of the same claims of the ’221 patent based
`on the same grounds. Apple Inc. v. Smartflash LLC, Case CBM2015-00117
`(Paper 2, “Apple Pet.”). Apple simultaneously filed a “Motion for Joinder”
`of its newly filed case with Samsung’s previously instituted case.
`CBM2015-00117 (Paper 3, “Apple Mot.”). On August 8, 2015, we granted
`Apple’s Petition and consolidated the two proceedings.3 Paper 32; Apple
`Inc. v. Smartflash LLC, Case CBM2015-00117, slip. op. at 6–7 (PTAB Aug.
`8, 2015) (Paper 11).
`This Final Written Decision is issued pursuant to 35 U.S.C. § 328(a)
`and 37 C.F.R. § 42.73. For the reasons that follow, we determine that
`
`
`2 Samsung Telecommunications America, LLC, a petitioner at the time of
`filing, merged with and into Samsung Electronics America, Inc. as of
`January 1, 2015. Paper 8.
`3 For purposes of this decision, we will cite only to Samsung’s Petition.
`
`2
`
`
`
`CBM2014-00194
`Patent 8,118,221 B2
`
`Petitioner has shown by a preponderance of the evidence that claim 32 of the
`’221 patent is directed to patent ineligible subject matter under 35 U.S.C.
`§ 101.
`B. Related Matters and Estoppel
`In a previous covered business method patent review, CBM2014-
`00102, we issued a Final Written Decision determining claims 1, 2, and 11–
`14 unpatentable under 35 U.S.C. § 103. Apple Inc. v. Smartflash LLC, Case
`CBM2014-00102, (PTAB Sept. 25, 2015) (Paper 52). On March 18, 2016,
`however, Patent Owner filed an authorized motion to terminate this
`proceeding as to claims 2 and 11 stating that “[o]n March 4, 2016, pursuant
`to Fed. R. App. P. 42(b), the United States Court of Appeals for the Federal
`Circuit dismissed [Patent Owner’s] appeal of [the final written decision in
`CBM2014-00102 determining] that claims 2 and 11 of the ’221 Patent are
`unpatentable.” Paper 50, 2. 4
`We are persuaded that the particular facts of this proceeding now
`counsel termination of our consideration of claims 2 and 11. 37 C.F.R.
`§ 42.72. Claims 2 and 11 of the ’221 patent have been finally cancelled and
`any decision we might reach in this proceeding regarding the patentability of
`these claims would be moot and purely advisory. We do not see how the
`just, speedy, and inexpensive resolution of every proceeding (37 C.F.R.
`§ 42.1(b)) would be secured by rendering a final written decision regarding
`these claims. Accordingly, we terminate this review as to claims 2 and 11
`and consider below only the remaining challenged claim—claim 32.
`
`
`4 Fed. R. App. P. 42 provides for dismissal of an appeal at the request of the
`parties or on motion by the appellant.
`
`3
`
`
`
`CBM2014-00194
`Patent 8,118,221 B2
`C. The ’221 Patent
`The ’221 patent relates to “a portable data carrier for storing and
`paying for data and to computer systems for providing access to data to be
`stored” and the “corresponding methods and computer programs.” Ex. 1001
`1:21–25. Owners of proprietary data, especially audio recordings, have an
`urgent need to address the prevalence of “data pirates” who make
`proprietary data available over the Internet without authorization. Id. at
`1:29–56. The ’221 patent describes providing portable data storage together
`with a means for conditioning access to that data upon validated payment.
`Id. at 1:59–2:11. This combination allows data owners to make their data
`available over the Internet with less fear of data piracy. Id. at 2:11–15.
`As described, the portable data storage device is connected to a
`terminal for Internet access. Id. at 1:59–67. The terminal reads payment
`information, validates that information, and downloads data into the portable
`storage device from the data supplier. Id. The data on the portable storage
`device can be retrieved and output from a mobile device. Id. at 2:1–4. The
`’221 patent makes clear that the actual implementation of these components
`is not critical and may be implemented in many ways. See, e.g., id. at
`25:41–44 (“The skilled person will understand that many variants to the
`system are possible and the invention is not limited to the described
`embodiments . . . .”).
`D. Challenged Claim
`Petitioner challenges claim 32 of the ’221 patent. Claim 32 is
`independent and recites the following:
`
`32. A data access terminal for retrieving data from a data
`supplier and providing the retrieved data to a data carrier, the
`terminal comprising:
`
`4
`
`
`
`CBM2014-00194
`Patent 8,118,221 B2
`
`a first interface for communicating with the data supplier;
`a data carrier interface for interfacing with the data
`carrier;
`a program store storing code; and
`a processor coupled to the first interface, the data carrier
`interface, and the program store for implementing the stored
`code, the code comprising:
`code to read payment data from the data carrier and to
`forward the payment data to a payment validation system;
`code to receive payment validation data from the
`payment validation system;
`code responsive to the payment validation data to retrieve
`data from the data supplier and to write the retrieved data into
`the data carrier;
`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 written into the data carrier, the at least one condition
`being dependent upon the amount of payment associated with
`the payment data forwarded to the payment validation system;
`and
`
`code to retrieve from the data supplier and output to a
`user-stored data identifier data and associated value data and
`use rule data for a data item available from the data supplier.
`Id. at 28:23–50.
`
`ANALYSIS
`
`A. Claim Construction
`In a covered business method patent review, claim terms are given
`their broadest reasonable interpretation in light of the specification in which
`they appear and the understanding of others skilled in the relevant art. See
`37 C.F.R. § 42.300(b). Applying that standard, we interpret the claim terms
`
`5
`
`
`
`CBM2014-00194
`Patent 8,118,221 B2
`
`of the ’221 patent according to their ordinary and customary meaning in the
`context of the patent’s written description. See In re Translogic Tech., Inc.,
`504 F.3d 1249, 1257 (Fed. Cir. 2007). For purposes of this Decision, we
`need not construe expressly any claim term.
`B. Statutory Subject Matter
`Petitioner challenges claim 32 as directed to patent-ineligible subject
`matter under 35 U.S.C. § 101. Pet. 21–34. According to Petitioner, claim
`32 is directed to an abstract idea without additional elements that transform
`the claim into a patent-eligible application of that idea. Id. Petitioner
`submits a declaration from Jeffrey A. Bloom, Ph.D. in support of its
`Petition.5 Ex. 1003. Patent Owner argues that the subject matter claimed by
`claim 32 is statutory because it is “rooted in computer technology in order to
`overcome a problem specifically arising in the realm of computer
`networks—that of digital data piracy.” Paper 24, (“PO Resp.”) 13.
`
`1. Abstract Idea
`Under 35 U.S.C. § 101, we must first identify whether an invention
`fits within one of the four statutorily provided categories of patent-
`eligibility: “processes, machines, manufactures, and compositions of
`matter.” Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 713–714 (Fed. Cir.
`2014). Here, each claim 32 recites a “machine,” e.g., a “data access
`terminal,” under § 101. Section 101, however, “contains an important
`
`
`5 In its Response, Patent Owner argues that this declaration should be given
`little or no weight. PO Resp. 3–4. Because Patent Owner has filed a Motion
`to Exclude that includes a request to exclude Dr. Bloom’s Declaration in its
`entirety, or in the alternative, portions of the declaration based on essentially
`the same argument, we address Patent Owner’s argument as part of our
`analysis of the motion to exclude, below.
`
`6
`
`
`
`CBM2014-00194
`Patent 8,118,221 B2
`
`implicit exception [to subject matter eligibility]: Laws of nature, natural
`phenomena, and abstract ideas are not patentable.” Alice Corp. Pty. Ltd. v.
`CLS Bank Int’l., 134 S. Ct. 2347, 2354 (2014) (citing Assoc. for Molecular
`Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2116 (2013) (internal
`quotation marks and brackets omitted)). In Alice, the Supreme Court
`reiterated the framework set forth previously in Mayo Collaborative Services
`v. Prometheus Laboratories, Inc., 132 S. Ct. 1289, 1293 (2012) “for
`distinguishing patents that claim laws of nature, natural phenomena, and
`abstract ideas from those that claim patent-eligible applications of those
`concepts.” Alice, 134 S. Ct. at 2355. The first step in the analysis is to
`“determine whether the claims at issue are directed to one of those patent-
`ineligible concepts.” Id.
`According to the Federal Circuit, “determining whether the section
`101 exception for abstract ideas applies involves distinguishing between
`patents that claim the building blocks of human ingenuity—and therefore
`risk broad pre-emption of basic ideas—and patents that integrate those
`building blocks into something more, enough to transform them into specific
`patent-eligible inventions.” Versata Dev. Grp., Inc. v. SAP Am., Inc., 793
`F.3d 1306, 1332 (Fed. Cir. 2015) (emphasis added); accord id. at 1333–34
`(“It is a building block, a basic conceptual framework for organizing
`information . . . .” (emphasis added)). This is similar to the Supreme Court’s
`formulation in Bilski v. Kappos, 561 U.S. 593, 611 (2010) (emphasis added),
`noting that the concept of risk hedging is “a fundamental economic practice
`long prevalent in our system of commerce.” See also buySAFE Inc. v.
`Google, Inc., 765 F.3d 1350, 1353–54 (Fed. Cir. 2014) (stating that patent
`claims related to “long-familiar commercial transactions” and relationships
`
`7
`
`
`
`CBM2014-00194
`Patent 8,118,221 B2
`
`(i.e., business methods), no matter how “narrow” or “particular,” are
`directed to abstract ideas as a matter of law). As a further example, the
`“concept of ‘offer based pricing’ is similar to other ‘fundamental economic
`concepts’ found to be abstract ideas by the Supreme Court and [the Federal
`Circuit].” OIP Tech., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1362 (Fed.
`Cir. 2015) (citations omitted).
`Petitioner argues that claim 32 is directed to the abstract idea of
`“enabling limited use of paid-for/licensed content.” Pet. 23. Although
`Patent Owner does not concede, in its brief, that claim 32 is directed to an
`abstract idea, it does not persuasively explain how the claimed subject
`matter escapes this classification. PO Resp. 11–28; see also Paper 47
`(transcript of oral hearing) 46:21–47:11 (Patent Owner arguing that the
`subject matter does not claim an abstract idea, but conceding this argument
`was not made in the briefs).
`We are persuaded that claim 32 is drawn to a patent-ineligible abstract
`idea. Specifically, claim 32 is directed to performing the fundamental
`economic practice of conditioning and controlling access to content based on
`payment. For example, claim 32 recites “the at least one access rule
`specifying at least one condition for accessing the retrieved data written into
`the data carrier, the at least one condition being dependent upon the amount
`of payment associated with the payment data forwarded to the payment
`validation system.” Furthermore, as discussed above, the ’221 patent
`discusses addressing recording industry concerns of data pirates offering
`unauthorized access to widely available compressed audio recordings. Ex.
`1001, 1:20–55. The patent specification explains that these pirates obtain
`data either by unauthorized or legitimate means and then make the data
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`Patent 8,118,221 B2
`available over the Internet without authorization. Id. The specification
`further explains that once data has been published on the Internet, it is
`difficult to police access to and use of it by internet users who may not even
`realize that it is pirated. Id. The ’221 patent proposes to solve this problem
`by restricting access to data on a portable data carrier based upon payment
`validation. Id. at 1:59–2:4. The ’221 patent makes clear that the crux of the
`claimed subject matter is restricting access to stored data based on supplier-
`defined access rules and validation of payment. Id. at 1:59–2:15.
`Although the specification refers to data piracy on the Internet, claim
`32 is not limited to the Internet. Claim 32 recites code to “read payment
`data from the data carrier,” “forward the payment data to a payment
`validation system,” “receive payment validation data from the payment
`validation system,” “retrieve data from the data supplier,” and “write the
`retrieved data into the data carrier.” The underlying concept of claim 32,
`particularly when viewed in light of the ’221 patent specification, is
`conditioning and controlling access to content based upon payment. As
`discussed further below, this is a fundamental economic practice long in
`existence in commerce. See Bilski, 561 U.S. at 611.
`We are, thus, persuaded, based on the ’221 patent specification and
`the language of claim 32 is directed to an abstract idea. See Alice, 134 S. Ct.
`at 2356 (holding that the concept of intermediated settlement at issue in
`Alice was an abstract idea); Accenture Global Servs., GmbH v. Guidewire
`Software, Inc., 728 F.3d 1336, 1344 (Fed. Cir. 2013) (holding the abstract
`idea at the heart of a system claim to be “generating tasks [based on] rules
`. . . to be completed upon the occurrence of an event”).
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`Patent 8,118,221 B2
`2. Inventive Concept
`“A claim that recites an abstract idea must include ‘additional
`features’ to ensure ‘that the [claim] is more than a drafting effort designed to
`monopolize the [abstract idea].’” Alice, 134 S. Ct. at 2357 (quoting Mayo,
`132 S. Ct. at 1297). “This requires more than simply stating an abstract idea
`while adding the words ‘apply it’ or ‘apply it with a computer.’ Similarly,
`the prohibition on patenting an ineligible concept cannot be circumvented by
`limiting the use of an ineligible concept to a particular technological
`environment.” Versata, 793 F.3d at 1332 (citations omitted). Moreover, the
`mere recitation of generic computer components performing conventional
`functions is not enough. See Alice, 134 S. Ct. at 2360 (“Nearly every
`computer will include a ‘communications controller’ and ‘data storage unit’
`capable of performing the basic calculation, storage, and transmission
`functions required by the method claims.”).
`Petitioner argues “[t]he claims of the ’221 patent . . . cover nothing
`more than the basic financial idea of enabling limited use of paid for and/or
`licensed content using ‘conventional’ computer systems and components.”
`Paper 31, (“Reply 11”) (quoting Ex. 1003 ¶ 126). Petitioner persuades us
`that claim 32 of the ’221 patent does not add an inventive concept sufficient
`to ensure that the patent in practice amounts to significantly more than a
`patent on the abstract idea itself. Alice, 134 S. Ct. at 2355; see also
`Accenture Global Servs., 728 F.3d at 1344 (holding claims directed to the
`abstract idea of “generating tasks [based on] rules . . . to be completed upon
`the occurrence of an event” to be unpatentable even when applied in a
`computer environment and within the insurance industry). Specifically, we
`agree with and adopt Petitioner’s rationale that the additional elements of
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`Patent 8,118,221 B2
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`claim 32 are generic features of a computer that do not bring claim 32 within
`§ 101 patent eligibility. Pet. 24–29; Reply 11–21.
`
`a. Technical Elements
`Petitioner argues that claim 32 is unpatentable because it is directed to
`an abstract idea and any technical elements it recites are repeatedly
`described by the ’221 patent itself as “both ‘conventional’ and as being used
`‘in a conventional manner.’” Pet. 23 (citing Ex. 1001, 4:4–5, 16:46–49,
`21:33–38). Patent Owner disagrees, arguing that claim 32 is patentable
`because it “recite[s] specific ways of using distinct memories, data types,
`and use rules that amount to significantly more than the underlying abstract
`idea.” PO Resp. 18 (quoting Ex. 2049, 19). We agree with Petitioner for the
`following reasons.
`The ’221 patent specification treats as well-known all potentially
`technical aspects of claim 32, including the “data carrier,” “data supplier,”
`“payment validation system,” and “mobile communication device.” See
`Reply 13 (citing Ex. 1003 ¶ 24; Ex. 1001, 4:4–5, 16:46–50, 18:7–11). For
`example, the specification states the recited “data access terminal may be a
`conventional computer,” that the terminal memory “can comprise any
`conventional storage device,” and that a “data device . . . such as a portable
`audio/video player . . . comprises a conventional dedicated computer system
`including a processor . . . program memory . . . and timing and control logic
`. . . coupled by a data and communications bus.” Id. (quoting Ex. 1001, 4:4–
`5, 16:46–50, 18:7–11). In addition, the specification notes that the “data
`carrier” may be a generic device such as a “standard smart card.” Ex. 1001,
`11:28–30; see also id. at 14:25–29 (“[l]ikewise data stores 136, 138 and 140
`may comprise a single physical data store or may be distributed over a
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`Patent 8,118,221 B2
`
`plurality of physical devices and may even be at physically remote locations
`from processors 128-134 and coupled to these processors via internet 142”),
`Fig. 6. The specification further indicates that that the “payment system”
`may be “a signature transporting type e-payment system” or “a third party e-
`payment system.” Id. at 7:11–16, 8:18–22, 13:36–38 (“an e-payment system
`according to, for example, MONDEX, Proton, and/or Visa cash compliant
`standards”). Further, the claimed computer code performs generic computer
`functions, such as reading, receiving, transmitting, and outputting data. See
`Pet. 24–29; Reply 14–16. The recitation of these generic computer functions
`is insufficient to confer specificity. See Content Extraction and
`Transmission LLC v. Wells Fargo Bank, Nat’l Assoc., 776 F.3d 1343, 1347
`(Fed. Cir. 2014) (“The concept of data collection, recognition, and storage is
`undisputedly well-known. Indeed, humans have always performed these
`functions.”).
`Moreover, we are not persuaded that claim 32 “recite[s] specific ways
`of using distinct memories, data types, and use rules that amount to
`significantly more than” conditioning and controlling access to content
`based on payment. See PO Resp. 18. Claim 32 does not
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