`Tel: 571-272-7822
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`Paper 7
`Entered: March 30, 2015
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`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 CBM2014-00196
`Patent 7,334,720 B2
`
`
`
`
`
`
`
`
`
`Before JENNIFER S. BISK, RAMA G. ELLURU, GREGG I. ANDERSON,
`MATTHEW R. CLEMENTS, and PETER P. CHEN,
`Administrative Patent Judges.
`
`ELLURU, Administrative Patent Judge.
`
`DECISION
`
`Denying Institution of Covered Business Method Patent Review
`37 C.F.R. § 42.208
`
`
`
`
`
`CBM2014-00196
`Patent 7,334,720 B2
`
`A. Background
`
`INTRODUCTION
`
`Petitioner, Samsung Electronics America, Inc. and Samsung
`
`Electronics Co., Ltd. (collectively “Samsung”)1, filed a Petition (Paper 2,
`
`“Pet.”) to institute a covered business method patent review of claims 13 and
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`14 (“the challenged claims”) of US Patent No. 7,334,720 B2 (Ex. 1001, “the
`
`’720 patent”) pursuant to § 18 of the Leahy-Smith America Invents Act
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`(“AIA”). 2 Patent Owner, Smartflash LLC (“Smartflash”), filed a
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`Preliminary Response (Paper 5, “Prelim. Resp.”).
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`We have jurisdiction under 35 U.S.C. § 324, which provides that a
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`covered business method patent review may not be instituted “unless . . . it is
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`more likely than not that at least 1 of the claims challenged in the petition is
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`unpatentable.”
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`B. Asserted Grounds
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`Samsung contends that claims 13 and 14 are unpatentable as
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`anticipated by Ginter3 under 35 U.S.C. § 102. Pet. 4. Samsung also
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`provides a declaration from Jeffrey A. Bloom, Ph.D. Ex. 1003.
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`After considering the Petition and Preliminary Response, we
`
`determine that the ’720 patent is a covered business method patent. We
`
`
`1 Samsung provided in its updated mandatory notice that “Samsung
`Electronics America, Inc., and Samsung Electronics Co.,
`Ltd. are now the real-parties-in-interest in this Covered Business Method
`Review. Samsung Telecommunications America, LLC, (“STA”) originally
`a Petitioner and real-party-in-interest at the time of filing the Petition
`requesting Covered Business Method Review, has merged with and into
`Petitioner Samsung Electronics America, Inc. as of January 1, 2015, and
`therefore STA no longer exists as a separate corporate entity.” Paper 6, 1.
`2 Pub. L. No. 112-29, 125 Stat. 284, 296–07 (2011)
`3 U.S. Patent No. 5,915,019 (“Ginter”) (Ex. 1023).
`
`2
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`CBM2014-00196
`Patent 7,334,720 B2
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`further determine, however, that Samsung has not demonstrated that it is
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`more likely than not that at least one of the challenged claims is
`
`unpatentable. Therefore, we do not institute a covered business method
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`patent review of claims 13 and 14 of the ’720 patent.
`
`C. Related Matters
`
`Samsung indicates that the ’720 patent is the subject of the following
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`co-pending district court cases: Smartflash LLC v. Apple Inc., Case No.
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`6:13-cv-447 (E.D. Tex.); and Smartflash LLC v. Samsung Electronics Co.,
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`Case No. 6:13-cv-448 (E.D. Tex.). Pet. 1–2; Paper 4, 2–3. Patent Owner
`
`asserts that related patents claiming priority back to a common series of
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`applications currently are the subject of CBM2014-00102, CBM2014-
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`00108, and CBM2014-00112, filed by Apple Inc. See Paper 4, 2.
`
`Samsung filed a concurrent petition for covered business method
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`patent review of the ’720 patent: CBM2014-00190.4 In addition, Samsung
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`filed eight other Petitions for covered business method patent review
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`challenging claims of other patents owned by Smartflash and disclosing
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`similar subject matter: CBM2014-00192; CBM2014-00193;
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`CBM2014-00194; CBM2014-00197; CBM2014-00198; CBM2014-00199;
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`CBM2014-00200; and CBM2014-00204.
`
`
`4 Smartflash argues that the multiple petitions filed against the ’720 patent
`violate the page limit requirement of 37 C.F.R. § 42.24(a)(iii), but does not
`cite any authority to support its position. Prelim. Resp. 9–12. The page
`limit for petitions requesting covered business method patent review is 80
`pages (37 C.F.R. § 42.24(a)(iii)), and each of the ’190 and ’196 Petitions
`meets that requirement.
`
`
`3
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`CBM2014-00196
`Patent 7,334,720 B2
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`D. The ’720 Patent
`
`The ’720 patent relates to “a portable data carrier for storing and
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`paying for data and to computer systems for providing access to data to be
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`stored” and the “corresponding methods and computer programs.”
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`Ex. 1001, 1:6–10. Owners of proprietary data, especially audio recordings,
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`have an urgent need to address the prevalence of “data pirates,” who make
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`proprietary data available over the Internet without authorization. Id. at
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`1:15–41. The ’720 patent describes providing portable data storage together
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`with a means for conditioning access to that data upon validated payment.
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`Id. at 1:46–62. According to the ’720 patent, this combination of the
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`payment validation means with the data storage means allows data owners to
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`make their data available over the Internet without fear of data pirates. Id. at
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`1:62–2:3.
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`As described, the portable data storage device is connected to a
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`terminal for Internet access. Id. at 1:46–55. The terminal reads payment
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`information, validates that information, and downloads data into the portable
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`storage device from a data supplier. Id. The data on the portable storage
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`device can be retrieved and output from a mobile device. Id. at 1:56–59.
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`The ’720 patent makes clear that the actual implementation of these
`
`components is not critical and the alleged invention may be implemented in
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`many ways. See, e.g., id. at 26:13–16 (“The skilled person will understand
`
`that many variants to the system are possible and the invention is not limited
`
`to the described embodiments.”).
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`E. Challenged Claims
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`Samsung challenges claims 13 and 14 of the ’720 patent. Claim 13
`
`depends from independent claim 3, which is not explicitly challenged in this
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`4
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`
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`CBM2014-00196
`Patent 7,334,720 B2
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`proceeding, and claim 14 is independent. Claims 3 and 14 are illustrative of
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`the claims at issue and recite the following.
`
`A data access terminal for retrieving data from a data supplier
`3.
`and providing the retrieved data to a data carrier, the terminal
`comprising:
`
`a first interface for communicating with the data supplier;
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`a data carrier interface for interfacing with the data carrier;
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`a program store storing code; and
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`a processor coupled to the first interface, the data carrier
`interface, and the program store for implementing the stored code, the
`code comprising:
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`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;
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`code responsive to the payment validation data to retrieve data
`from the data supplier and to write the retrieved data into the data
`carrier; and
`
`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.
`
`Ex. 1001, 26:41–67.
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`14. A method of providing data from a data supplier to a data
`carrier, the method comprising:
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`reading payment data from the data carrier;
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`forwarding the payment data to a payment validation system;
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`retrieving data from the data supplier;
`
`writing the retrieved data into the data carrier;
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`receiving at least one access rule from the data supplier; and
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`5
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`CBM2014-00196
`Patent 7,334,720 B2
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`writing 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.
`
`Id. at 28:5–20.
`
`A. Claim Construction
`
`ANALYSIS
`
`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); see also In re Cuozzo Speed Techs., LLC, No. 2014-
`
`1301, 2015 WL 448667, at *7 (Fed. Cir. Feb. 4, 2015) (“We conclude that
`
`Congress implicitly adopted the broadest reasonable interpretation standard
`
`in enacting the AIA.”). Applying that standard, we interpret the claim terms
`
`of the ’720 patent according to their ordinary and customary meaning in the
`
`context of the patent’s written description. See In re Translogic Tech., Inc.,
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`504 F.3d 1249, 1257 (Fed. Cir. 2007). For purposes of this Decision, we
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`construe the claim term “access rule,” recited in claim 3, from which
`
`challenged claim 13 depends, and claim 14.
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`Independent claim 3 requires “at least one access rule specifying at
`
`least one condition for accessing the retrieved data written into the data
`
`carrier.” Independent claim 14 recites a similar limitation. Similarly, in
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`describing a particular embodiment, the ’720 patent Specification explains
`
`that each content data item has an associated “use rule”5 “to specify under
`
`
`5 The ’720 patent Specification imparts the same meaning to “access rule” as
`“use rule.” For example, when discussing a particular embodiment, the
`Specification states:
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`6
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`CBM2014-00196
`Patent 7,334,720 B2
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`what conditions a user of the smart Flash card is allowed access to the
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`content data item.” Ex. 1001, 22:4–9; see id. at 4:62–63 (a data carrier may
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`store content “use rules pertaining to allowed use of stored data items.”)
`
`(emphasis added). The Specification explains that the data access device
`
`uses the use status data and “use rules” to determine what access is
`
`permitted to data stored on the data carrier. Id. at 9:21–23.
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`Accordingly, pursuant to the claim language and the ’720 patent
`
`Specification, for purposes of this Decision, we construe “access rule” as “a
`
`rule specifying a condition under which access to content is permitted.”
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`B. Covered Business Method Patent
`
`Section 18 of the AIA provides for the creation of a transitional
`
`program for reviewing covered business method patents. A “[c]overed
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`business method patent” is a patent that “claims a method or corresponding
`
`apparatus for performing data processing or other operations used in the
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`practice, administration, or management of a financial product or service,
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`except that the term does not include patents for technological inventions.”
`
`AIA § 18(d)(1); see 37 C.F.R. § 42.301(a). A patent need have only one
`
`claim directed to a covered business method to be eligible for review. See
`
`Transitional Program for Covered Business Method Patents—Definitions of
`
`Covered Business Method Patent and Technological Invention; Final Rule,
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`77 Fed. Reg. 48,734, 48,736 (Aug. 14, 2012) (“CBM Rules”) (Comment 8).
`
`
`[O]ne or more content access rules is received from the system
`owner data supply computer and written to the smart Flash card
`so that each content data item has an associated use rule to
`specify under what conditions a user of the smart Flash card is
`allowed access to the content data item.
`Ex. 1001 at 22:4–9 (emphases added).
`
`7
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`CBM2014-00196
`Patent 7,334,720 B2
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`1. Financial Product or Service
`
`Samsung asserts that claim 14 “unquestionably is used for data
`
`processing in the practice, administration and management of financial
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`products and services; specifically, for processing payments for data
`
`downloads.” Pet. 9. Based on this record, we agree with Samsung that the
`
`subject matter recited by claim 14 is directed to activities that are financial in
`
`nature, namely, data access conditioned on payment validation. Claim 14
`
`recites:
`
`writing 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.
`
`We are persuaded that payment validation is a financial activity, and
`
`conditioning data access based on payment validation amounts to a financial
`
`service. This is consistent with the Specification of the ’720 patent, which
`
`confirms claim 14’s connection to financial activities by stating that the
`
`invention “relates to a portable data carrier for storing and paying for data.”
`
`Ex. 1001, 1:6–7. The Specification also states repeatedly that the disclosed
`
`invention involves managing access to data based on payment validation.
`
`See, e.g., Ex. 1001, 1:46–49, 2:4–19, 3:19–27, 3:50–54, 7:62–8:9, 8:21–35.
`
`Smartflash disagrees that claim 14 satisfies the financial in nature
`
`requirement of AIA § 18(d)(1), arguing that that section should be
`
`interpreted narrowly to cover only technology used specifically in the
`
`financial or banking industry. Prelim. Resp. 3–7. Smartflash cites to
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`various portions of the legislative history as support for its proposed
`
`interpretation. Id.
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`8
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`CBM2014-00196
`Patent 7,334,720 B2
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`Although we agree with Smartflash that the statutory language
`
`controls whether a patent is eligible for a covered business method patent
`
`review, we do not agree that the phrase “financial product or service” is as
`
`limited as Smartflash proposes. The AIA does not include as a prerequisite
`
`for covered business method patent review, a “nexus” to a “financial
`
`business,” but rather a “method or corresponding apparatus for performing
`
`data processing or other operations used in the practice, administration, or
`
`management of a financial product or service.” AIA § 18(d)(1). Further,
`
`contrary to Smartflash’s view of the legislative history, the legislative
`
`history indicates that the phrase “financial product or service” is not limited
`
`to the products or services of the “financial services industry,” and is to be
`
`interpreted broadly. CBM Rules, 77 Fed. Reg. at 48,735–36. For example,
`
`the “legislative history explains that the definition of covered business
`
`method patent was drafted to encompass patents ‘claiming activities that are
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`financial in nature, incidental to a financial activity or complementary to a
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`financial activity.’” Id. (citing 157 Cong. Rec. S5432 (daily ed. Sept. 8,
`
`2011) (statement of Sen. Schumer)).
`
`In addition, Smartflash asserts that claim 14 is not directed to an
`
`apparatus or method that is financial in nature because claim 14 “omits the
`
`specifics of how payment is made.” Prelim. Resp. 7. We are not persuaded
`
`by this argument because § 18(d)(1) of the AIA does not include such a
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`requirement, nor does Smartflash point to any other authority that makes
`
`such a requirement. Id. We determine that because payment data is recited
`
`by claim 14, the financial in nature requirement of § 18(d)(1) is satisfied.
`
`9
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`Patent 7,334,720 B2
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`For the reasons stated above, and based on the particular facts of this
`
`proceeding, we conclude that the ’720 patent includes at least one claim that
`
`meets the financial in nature requirement of § 18(d)(1) of the AIA.
`
`2. Exclusion for Technological Inventions
`
`Samsung asserts that the claims of the ’720 patent do not fall within
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`§ 18(d)(1)’s exclusion for “technological inventions.” Pet. 11–13. In
`
`particular, Samsung argues that the claims do not recite a technological
`
`feature that is novel and unobvious, or solve a technical problem using a
`
`technical solution. Id. Smartflash disagrees and argues that claim 14, as a
`
`whole, recites at least one technological feature that is novel and unobvious
`
`over the prior art. Prelim. Resp. 7–9.
`
`We are persuaded that claim 14 as a whole does not recite a
`
`technological feature that is novel and unobvious over the prior art. Claim
`
`14 does recite a “data carrier.” The claimed “data carrier,” however, is a
`
`generic hardware device known in the prior art. The Specification discloses,
`
`for instance, that a portable data carrier may be a “standard smart card.” See
`
`Ex. 1001, 11:36–39; Pet. 17. Claim 14 also recites a “payment validation
`
`system.” The Specification, however, discloses that the required payment
`
`validation system may be one that is already in use or otherwise
`
`commercially available. For example, “[t]he payment validation system
`
`may be part of the data supplier’s computer systems or it may be a separate
`
`e-payment system.” Ex. 1001, 8:64–66; see id. at 13:46–58.
`
`In addition, the ’720 patent makes clear that the asserted novelty of
`
`the invention is not in any specific improvement of software or hardware,
`
`but in the method of controlling access to data. For example, the ’720 patent
`
`states that “there is an urgent need to find a way to address the problem of
`
`10
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`CBM2014-00196
`Patent 7,334,720 B2
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`data piracy,” (id. at 1:40–41) while acknowledging that the “physical
`
`embodiment of the system is not critical and a skilled person will understand
`
`that the terminals, data processing systems and the like can all take a variety
`
`of forms” (id. at 12:38–41). Thus, we determine that claim 14 is merely the
`
`recitation of a combination of known technologies, which indicates that it is
`
`not a claim for a technological invention. See Office Patent Trial Practice
`
`Guide, 77 Fed. Reg. 48,756, 48,764 (Aug. 14, 2012).
`
`Smartflash also argues that claim 14 falls within § 18(d)(1)’s
`
`exclusion for “technological inventions” because it is directed towards
`
`solving the technological problem of “writing data and at least one access
`
`rule from a data supplier into a data carrier” with the technological solution
`
`of “a data carrier from which payment data is read and to which retrieved
`
`data and at least one access rule from a data supplier are written.” Prelim.
`
`Resp. 8. We are not persuaded by this argument because, as Samsung
`
`argues, the problem being solved by claim 14 is a business problem—data
`
`piracy. Pet. 12–13. For example, the specification states that “[b]inding
`
`data access and payment together allows the legitimate owners of the data to
`
`make the data available themselves over the internet without fear of loss of
`
`revenue, thus undermining the position of data pirates.” Ex. 1001, 1:66–2:3.
`
`Therefore, based on the particular facts of this proceeding, we conclude that
`
`claim 14 does not recite a technological invention and is eligible for a
`
`covered business method patent review.
`
`3. Conclusion
`
`In view of the foregoing, we conclude that the ’720 patent is a covered
`
`business method patent under AIA § 18(d)(1) and is eligible for review
`
`under the transitional covered business method patent program.
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`11
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`CBM2014-00196
`Patent 7,334,720 B2
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`D. Anticipation by Ginter
`
`Samsung asserts that claims 13 and 14 are anticipated by Ginter. Pet.
`
`4. Ginter discloses a portable “virtual distribution environment” (“VDE”)
`
`that can “control and/or meter or otherwise monitor use of electronically
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`stored or disseminated information.” Ex. 1023, Abstract; Fig. 71; 52:26–27.
`
`Claim 3, from which claim 13 depends, recites “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” Ex. 1001, 26:41–67 (emphasis
`
`added). Claim 14 includes a similar limitation. See Pet. 48–50; Ex. 1001,
`
`28:5–20.
`
`Samsung identifies in a parenthetical Ginter’s “billing method MDE
`
`and/or budget method UDE” as the recited “access rule.” Id. at 40. The
`
`quoted portions of Ginter, however, do not show sufficiently that the billing
`
`method map MDE and/or budget method UDE reflect “a rule specifying a
`
`condition under which access to content is permitted,” as we construe
`
`“access rule.”
`
`The quoted portions of Ginter relate to billing for use of a VDE
`
`content object, but not to “a rule specifying a condition under which access
`
`to content is permitted.” See id. (citing Ex. 1023, 190:45–57; 59:17–23).
`
`Ginter describes billing method map MDE as “a price list, table, or
`
`parameters to the billing amount calculation algorithm” (id. at 190:47–50),
`
`and budget method UDE as “limitations on usage of information content
`
`12
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`CBM2014-00196
`Patent 7,334,720 B2
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`304, and how usage will be paid for” (id. at 59:17–20). Petitioner does not
`
`explain sufficiently, however, why a price list (billing method map MDE)
`
`and/or limitations on information content usage (budget method UDE), for
`
`example, disclose “access rule.” Dr. Bloom’s conclusory testimony on this
`
`issue (Ex. 1003 ¶ 96) does not convince us otherwise.
`
`Furthermore, Petitioner has not sufficiently persuaded us that Ginter
`
`discloses the recited “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”
`
`(emphasis added), required by claim 3 and the similar limitation of claim 14.
`
`In support of its assertion that Ginter discloses this limitation, Samsung
`
`asserts the following:
`
`The retrieved access rule (e.g., a billing method MDE
`and/or budget method UDE) specifies at least one condition for
`accessing the retrieved content object, where the at least one
`access rule depends upon the amount of payment associated
`with the payment data forwarded to the payment validation
`system (e.g., clearinghouse); specifying, e.g., a per unit cost of
`accessing the retrieved content object and/or an access limit.
`
`Pet. 49 (citing Ex. 1023, 190:45–57) (emphasis added). Samsung, however,
`
`does not explain how this disclosure—i.e., “a per unit cost of accessing the
`
`retrieved content object” or “access limit”—shows that accessing the data
`
`written into the data carrier is dependent upon the amount of payment
`
`associated with the payment data forwarded to the payment validation
`
`system. Samsung likewise does not sufficiently explain how Ginter’s
`
`“pricing algorithm” (see Pet. 49–50) shows that accessing the data written
`
`into the data carrier is dependent upon the amount of payment associated
`
`13
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`CBM2014-00196
`Patent 7,334,720 B2
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`with the payment data forwarded to the payment validation system. Thus,
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`Samsung has not persuaded us sufficiently that Ginter discloses the
`
`limitations referred to above.6
`
`On this record, we are not persuaded that Petitioner has established
`
`that it is more likely than not that claims 13 and 14 are anticipated by Ginter.
`
`CONCLUSION
`
`For the foregoing reasons, we determine that the information
`
`presented in the Petition does not establish that it is more likely than not that
`
`Samsung would prevail in establishing the unpatentability of claims 13 and
`
`14 as anticipated by Ginter under 35 U.S.C. § 102.
`
`For the reasons given, it is:
`
`ORDER
`
`ORDERED that a covered business method patent review of claims
`
`13 and 14 of the ’720 patent is denied.
`
`
`
`
`
`
`
`
`6 Given that we do not institute a covered business method review based on
`this ground, we need not address Smartflash’s argument that we should
`reject the petition under 35 U.S.C § 325(d). See PO Resp. 12–13.
`
`14
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`15
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`CBM2014-00196
`Patent 7,334,720 B2
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`PETITIONER:
`
`W. Karl Renner
`axf@fr.com
`
`Thomas Rozylowicz
`CBM39843-0003CP2@fr.com
`
`
`PATENT OWNER:
`
`Michael R. Casey
`mcasey@dbjg.com