`
`UNITED STATES PATENT AND TRADEMARK OFFICE
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`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`____________
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`SAMSUNG ELECTRONICS AMERICA, INC., et al.,
`
`Petitioners
`
`v.
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`SMARTFLASH LLC
`
`Patent Owner
`
`____________
`
`Case CBM2014-00197
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`Patent 8,033,458
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`____________
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`PATENT OWNER’S PRELIMINARY RESPONSE
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`
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`
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`
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`TABLE OF CONTENTS
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`PATENT OWNER’S LIST OF EXHIBITS ............................................................. ii
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`I.
`
`II.
`
` OVERVIEW OF U.S. PATENT NO. 8,033,458 ............................................ 1
`
` THE CHALLENGED CLAIM IS NOT DIRECTED TO A FINANCIAL
`PRODUCT OR SERVICE .............................................................................. 3
`
`
`III. THE CHALLENGED CLAIM OF THE ‘458 PATENT IS A
`TECHNOLOGICAL INVENTION EXEMPT FROM CBM REVIEW ........ 8
`
`
`IV. THE MULTIPLE PETITIONS AGAINST THE ‘458 PATENT SHOULD
`BE TREATED AS A SINGLE PETITION HAVING A LENGTH IN
`VIOLATION OF 37 CFR 42.24(a)(iii) ........................................................... 9
`
`
`V.
`
`
`
`INVALIDITY IN LIGHT OF GINTER HAS ALREADY BEEN RAISED
`IN ANOTHER PROCEEDING ..................................................................... 12
`
`
`VI. CONCLUSION .............................................................................................. 13
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`- i -
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`PATENT OWNER’S LIST OF EXHIBITS
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`Exhibit Number
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`Exhibit Description
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`2001
`
`2002
`
`Congressional Record - House, June 23, 2011, H4480-4505
`
`Congressional Record - Senate, Sep. 8, 2011, S5402-5443
`
`2003-2023
`
`Reserved
`
`2024
`
`Samsung’s Motion To Stay Litigation Pending CBM Review
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`- ii -
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`Patent Owner sets forth below, in its Preliminary Response, why no Covered
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`Business Method (CBM) review should be instituted for the patent-at-issue.
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`Arguments presented herein are presented without prejudice to presenting
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`additional arguments in a later response should the PTAB institute a CBM review.
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`
`
`I.
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`OVERVIEW OF U.S. PATENT NO. 8,033,458
`
`Although the claims define the actual scope of coverage of the patent, as
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`described in the first paragraph of the BACKGROUND OF THE INVENTION,
`
`the patent-at-issue, U.S. Patent No. 8,033,458 (hereinafter “the ‘458 patent”)
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`generally describes “data storage and access systems ... [and] is particularly useful
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`for managing stored audio and video data, but may also be applied to storage and
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`access of text and software, including games, as well as other types of data.” Col.
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`1, lines 20-28.
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`Preferred embodiments described in the last full paragraph of col. 15
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`illustrate this further: “FIG. 7 ... shows a variety of content access terminals for
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`accessing data supply computer system 120 over internet 142. The terminals are
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`provided with an interface to a portable data carrier or ‘smart Flash card’ (SFC) as
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`generally described with reference to FIG. 2 and as described in more detail below.
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`In most embodiments of the terminal the SFC interface allows the smart Flash card
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`data carrier to be inserted into and removed from the terminal, but in some
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`embodiments the data carrier may be integral with the terminal.” Exemplary
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`terminals include, but are not limited to, set-top boxes 154, CD/DVD Players 170
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`and mobile communications devices 152. Col. 16, lines 4-17.
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`Referring to preferred embodiments, the ‘458 patent discloses that a data
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`supply system may provide users with a seamless purchase and content delivery
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`experience. Col. 23, line 63 - col. 24, line 1. Users are able to purchase content
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`from a variety of different content providers even if they do not know where the
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`content providers are located or how the content is delivered. See id. The
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`exemplary system is operated by a “content data supply ‘system owner,’” who may
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`act as an intermediary between a user seeking to purchase content and content
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`providers, such as record labels, movie studios, and software providers. See col.
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`13, lines 60-67. When a user accesses the system, he or she is able to select
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`content to purchase or rent from a variety of different content providers. See col. 4,
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`line 64 - col. 5, line 8. If the user finds a content item to buy, his or her device will
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`transmit stored “payment data” to a “payment validation system” to validate the
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`payment data. See col. 8, lines 3-6. The payment validation system returns proof
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`that the payment data has been validated, in the form of “payment validation data,”
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`and the user is able to retrieve the purchased content from the content provider.
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`See col. 8, lines 7-9.
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`II.
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`THE CHALLENGED CLAIM IS NOT DIRECTED TO A FINANCIAL
`PRODUCT OR SERVICE
`
`Samsung Electronics America, Inc., et al. (collectively “Petitioner”) has
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`cited claim 11 as being the basis for requesting that a covered business method
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`review be instituted. Petition at 6. Since claim 11 does not, in fact, meet the
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`requirements for instituting a review, the Petition should be denied.
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`As set forth in 37 CFR 42.301(a), to be eligible for CBM review, claim 11
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`must be found to be claiming “a method or corresponding apparatus for performing
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`data processing or other operations used in the practice, administration, or
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`management of a financial product or service.” In the publication of the Final
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`Rules for “Transitional Program for Covered Business Method Patents -
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`Definitions of Covered Business Method Patent and Technological Invention,” the
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`PTO stated:
`
`The definition set forth in § 42.301(a) for covered business
`method patent adopts the definition for covered business method
`patent provided in section 18(d)(1) of the AIA. In administering the
`program, the Office will consider the legislative intent and history
`behind the public law definition and the transitional program itself.
`For example, the legislative history explains that the definition of
`covered business method patent was drafted to encompass patents
`“claiming activities that are financial in nature, incidental to a
`financial activity or complementary to a financial activity.” 157
`CONG. REC. S5432 (daily ed. Sept. 8, 2011) (statement of Sen.
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`Schumer). This remark tends to support the notion that “financial
`product or service” should be interpreted broadly.
`
`
`Regardless of this explanation, it is improper for this tribunal to rely on the
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`legislative history of the AIA to determine the specific issue before it, i.e., whether
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`trial should be instituted on the present petition. The Supreme Court has “stated
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`time and again that courts must presume that a legislature says in a statute what it
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`means and means in a statute what it says. When the words of a statute are
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`unambiguous, then, this first canon of construction is also the last: judicial inquiry
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`is complete.” Connecticut Nat’l Bank v. Germain, 503 U.S. 249, 253–54 (1992).
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`“[W]hen the language of the statute is plain, legislative history is irrelevant.”
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`Zedner v. United States, 547 U.S. 489, 510–11 (2006) (Scalia, J., concurring-in-
`
`part). This long standing rule is based on the constitutional limitation that
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`legislators cannot achieve through floor statements what “they were unable to
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`achieve through the statutory text.” Exxon Mobil Corp. v. Allapattah Servs., Inc.,
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`545 U.S. 546, 568 (2005). Because Section 18 is unambiguously limited to
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`“financial product[s] and service[s],” there is no reason to look to the statements of
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`a single Senator to re-tool text that was approved by both houses of Congress and
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`signed by the President.
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`Moreover, the PTO’s synopsis of the legislative history is an improper
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`oversimplification and does not address that “financial product or service” was
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`intended to be interpreted narrowly. In fact, when the House of Representatives
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`debated Congressman Schock’s Amendment to remove Section 18 in its entirety
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`from the America Invents Act, several members of Congress discussed their
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`understanding of that narrower interpretation. For example, Mr. Schock himself
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`discussed at the beginning of his remarks that “Section 18 carves out a niche of
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`business method patents covering technology used specifically in the financial
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`industry and would create a special class of patents in the financial services field
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`subject to their own distinctive post-grant administrative review.” (Exhibit 2001,
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`Congressional Record - House, June 23, 2011, H4496.) (Emphasis added.)
`
`Similarly, Congressman Shuster expressly discussed his understanding of
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`the narrow interpretation of the legislation. He stated:
`
`Mr. Chair, I would like to place in the record my understanding
`that the definition of ‘‘covered business method patent,’’ Section
`18(d)(1) of H.R. 1249, the America Invents Act, is intended to be
`narrowly construed to target only those business method patents that
`are unique to the financial services industry in the sense that they are
`patents which only a financial services provider would use to
`furnish a financial product or service. The example that I have been
`given is a patent relating to electronic check scanning, which is the
`type of invention that only the financial services industry would
`utilize as a means of providing improved or more efficient banking
`services. In contrast, Section 18 would not encompass a patent that
`can be used in other industries, but which a financial services
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`provider might also use. Lastly, it is also my understanding from
`discussions with the Committee that Section 18 is targeted only
`towards patents for non-technological inventions.
`
`
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`Id. at H4497. (Emphasis added.) It was based on that understanding that
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`Congressman Shuster then voted to keep Section 18 in the bill. (See Id. at H4503.)
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`
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`Likewise, Congresswoman Waters discussed that Section 18 was directed to
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`cost savings measures in the banking industry when she stated “too-big-to-fail
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`banks ... are now coming to Congress in hopes that [Congress] will help them steal
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`a specific type of innovation and legislatively take other financial services-related
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`business method patents referenced in H.R. 1249, section 18. ... Financial
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`services-related business method patents have saved financial services companies
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`billions of dollars.” Id. at H4496. See also Exhibit 2002, 157 Cong. Rec. S5428
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`(Rep. Pryor) (“It is of crucial importance to me that we clarify the intent of the
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`[AIA § 18] process and implement it as narrowly as possible.”)
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`In contrast to the banking or other financial products or services patents,
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`claim 6 recites:
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`6. A data access device for retrieving stored data from a data
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`carrier, the device comprising:
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`a user interface;
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`a data carrier interface;
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`a program store storing code implementable by a processor; and
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`a processor coupled to the user interface, to the data carrier
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`interface and to the program store for implementing the stored code,
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`the code comprising:
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`code to retrieve use status data indicating a use status of data
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`stored on the carrier, and use rules data indicating permissible use of
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`data stored on the carrier;
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`code to evaluate the use status data using the use rules data to
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`determine whether access is permitted to the stored data; and
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`code to access the stored data when access is permitted.
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`
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`Claim 11 depends from claim 6 and recites “11. A data access device according to
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`claim 6 wherein said use rules permit partial use of a data item stored on the carrier
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`and further comprising code to write partial use status data to the data carrier when
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`only part of a stored data item has been accessed.” Rather than recite the “practice,
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`administration, or management of a financial product or service,” claim 11 actually
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`makes no mention of payment or specifics of how payment is made and focuses on
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`technical aspects of accessing data on a data carrier, e.g., code on a data access
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`device. Claim 11, therefore, does not recite a “financial product or service” when
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`that phrase is properly construed, both under its plain meaning and in light of the
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`legislative history showing Congress’ intent of the narrow meaning of that phrase.
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`
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`III. THE CHALLENGED CLAIM OF THE ‘458 PATENT IS A
`TECHNOLOGICAL INVENTION EXEMPT FROM CBM REVIEW
`
`As set forth in 37 CFR 42.301(a), even if claim 11 was considered to be
`
`claiming “a method or corresponding apparatus for performing data processing or
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`other operations used in the practice, administration, or management of a financial
`
`product or service,” Petitioner must show that claim 11 does not meet the
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`exception of being directed to a technological invention. Section 42.301(b) sets
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`forth that a claim is directed to a technological invention (and therefore not the
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`basis for instituting a CBM review) if “the claimed subject matter as a whole
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`recites a technological feature that is novel and unobvious over the prior art; and
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`solves a technical problem using a technical solution.”
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`Claim 11, as a whole, recites at least one technological feature that is novel
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`and unobvious over the prior art and solves a technical problem using a technical
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`solution. At least one technological problem solved by the data access device of
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`claim 11 is retrieving stored data from a data supplier into a data carrier.
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`Moreover, it does so using a technical solution, by using “code to evaluate the use
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`status data using the use rules data to determine whether access is permitted to the
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`stored data” and “code to access the stored data when access is permitted.”
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`Sections III.D. and E. of the Petition also do not allege, much less prove, that
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`“code to evaluate the use status data using the use rules data to determine whether
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`access is permitted to the stored data” and “code to access the stored data when
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`access is permitted” were known at the time of the invention of the patent-at-issue.
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`Thus, as previously held in Epsilon Data Management, LLC et al. v. RPOST
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`Comm. Ltd., CBM2014-00017, paper 21, page 8, any analysis in any other portion
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`of the Petition (other than the portion relating to whether CBM review is proper)
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`need not be considered in determining that the Petitioner has not met its burden of
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`proving that the claim at issue is a covered business method patent. Id. (“In
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`addition, although Patent Owner addresses the analysis in the Declaration of
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`[Petitioner’s Declarant] (id. at 19), which Petitioner submitted with the Petition,
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`this analysis was not included in the relevant portion of the Petition (Pet. 2-6), and
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`need not be considered in determining that the ... Patent[-at-issue] is a covered
`
`business method patent.”) Thus, Petitioner has not proven that claim 11 of the
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`‘458 patent is not directed to a technological invention exempt from CBM review.
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`
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`IV. THE MULTIPLE PETITIONS AGAINST THE ‘458 PATENT SHOULD
`BE TREATED AS A SINGLE PETITION HAVING A LENGTH IN
`VIOLATION OF 37 CFR 42.24(a)(iii)
`
`The Petition under consideration (in CBM2014-00197) is one of two
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`Petitions filed by Petitioner on the same day against the same patent (i.e., the ‘458
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`- 9 -
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`patent). (The second Petition was filed in CBM2014-00192.) Both Petitions
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`include a substantial amount of overlap and are at least directed to issues of
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`invalidity in light of alleged prior art including the anticipation and obviousness of
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`claims in the ‘458 patent. However, instead of filing a single Petition addressing
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`all the prior art issues within the page limits set by the PTAB, Petitioner seeks to
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`circumvent the page limits of 37 CFR 42.24(a)(1)(iii) by filing two separate but
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`overlapping Petitions.
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`If the Petitioner was unable to file its Petition within the page limits set forth
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`by 37 CFR 42.24(a)(1), then the Petitioner was free to file a motion to waive the
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`page limits. Section 42.24(a)(2) specifically sets forth that “Petitions to institute a
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`trial must comply with the stated page limits but may be accompanied by a motion
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`to waive the page limits. The Petitioner must show in the motion how a waiver of
`
`the page limits is in the interests of justice and must append a copy of the proposed
`
`petition exceeding the page limit to the motion. If the motion is not granted, the
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`proposed petition exceeding the page limit may be expunged or returned.”
`
`However, the Petitioner here instead effectively sought to grant its own motion by
`
`filing two allegedly separate petitions, each within the 80-page limit and without
`
`showing “how a waiver of the page limits is in the interests of justice.” Clearly, if
`
`there is no requirement for the Petitioner to file its allegations of invalidity over
`
`alleged prior art in a single Petition meeting the page limits set forth by the PTAB,
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`- 10 -
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`the requirements of Section 42.24(a)(2) are meaningless. Thus, Petitioner’s two
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`Petitions in CBM2014-00197 and -00192 should be treated as a single Petition
`
`beyond the page limits set forth by 37 CFR 42.24(a)(1) and each should be denied
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`on that basis alone.
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`Moreover, allowing more than one CBM request on the same patent by a
`
`single Petitioner is counter to “the just, speedy, and inexpensive resolution of every
`
`proceeding” and invites an unending stream of Petitions filed by Petitioners in an
`
`effort to drown the Patent Owner’s patents in administrative proceedings, as indeed
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`has happened in the case of this patent family. The PTAB has previously allowed
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`another petitioner to file multiple CBMs against a single patent in the patent family
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`of the patent under review. See CBM2014-00102 and -00103 for 8,118,221,
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`CBM2014-00104 and -00105 for 7,334,720, CBM2014-00106 and -00107 for
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`8,033,458 (the patent under review), CBM2014-00108 and -00109 for 8,061,598,
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`CBM2014-00110 and -00111 for 8,336,772 and CBM2014-00112 and -00113 for
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`7,942,317. However, the result has been a continuing barrage of filings such that
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`the other petitioner subsequently filed another 9 petitions against the same six
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`patents – at least one additional petition for each patent, and, in the cases of
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`7,334,720 and 8,336,772, two and three more petitions each, respectively.
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`Together with the ten petitions for the present Petitioner, the six patents in the
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`patent family under review have now been subject to 31 different petitions. Thus,
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`- 11 -
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`of the 277 petitions filed through the end of 2014, 31/277 or more than 11% of all
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`CBMs ever filed have targeted only six patents belonging to the same assignee.
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`Clearly, the PTAB should enforce the single Petition requirements in order to meet
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`the requirements of 37 C.F.R. 42.1 that requires “the just, speedy, and inexpensive
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`resolution of every proceeding.”
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`
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`V.
`
`INVALIDITY IN LIGHT OF GINTER HAS ALREADY BEEN RAISED
`IN ANOTHER PROCEEDING
`
`Petitioner contends that Ginter (i.e., U.S. Patent No. 5,915,019) anticipates
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`claim 11. However, the invalidity of claim 11 in light of Ginter has already been
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`raised in CBM2014-00107, and the PTAB denied instituting a review of claim 11
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`in that petition. Given that the PTAB already denied review of claim 11 in
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`CBM2014-00107 where only obviousness was raised as to claim 11, there is no
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`evidence to support that Petitioner can meet the higher burden of proving
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`anticipation in the present proceeding.
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`Furthermore, when enacting the post-grant review proceedings, Congress
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`explicitly sought to protect patent owners from serial attacks, such as this one, by
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`including 35 U.S.C. 325(d) that provides in pertinent part “In determining whether
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`to institute or order a proceeding …, the Director may take into account whether,
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`and reject the petition or request because, the same or substantially the same prior
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`art or arguments previously were presented to the Office.” In this case, the same
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`prior art, Ginter, has been applied to the same claim in both the current
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`proceedings and CBM2014-00107. Indeed, Petitioner was not only aware of the
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`contents of the CBM2014-00107 Petition prior to filing this Petition, Petitioner
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`even agreed in litigation to be bound by the results of that proceeding if the Texas
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`litigation was to stayed. See footnote 4, page 3 of Exhibit 2024 (“should the Court
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`grant Defendants’ Motion To Stay Pending CBM review, the present Defendants
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`would stipulate to be bound to the same extent as Apple is under § 18(a)(1)(D) of
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`the America Invents Act”). Thus, the Director should reject the petition under 35
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`U.S.C. 325(d) as well.
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`VI. CONCLUSION
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`
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`The Petition does not set forth a basis upon which to institute a CBM review,
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`the invalidity of the claims in light of Ginter has already been raised in another
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`proceeding (CBM2014-00107), and Petitioner’s Petition should be denied.
`
` /
`
` Michael R. Casey /
`
`
`Michael R. Casey
`Registration No. 40,294
`Davidson Berquist Jackson &
`
`Gowdey, LLP
`4300 Wilson Blvd, Suite 700
`Arlington, VA 22203
`Telephone: (703) 894-6406
`Fax: (703) 894-6430
`Email: mcasey@dbjg.com
`
`
`Dated: January 6, 2015
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`
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`- 13 -
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`CERTIFICATE OF SERVICE
`
`
`The undersigned hereby certifies that this PATENT OWNER’S
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`PRELIMINARY RESPONSE (including Patent Owner’s List of Exhibits) and
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`Exhibits 2001-2002 and 2024 in CBM2014-00197 were served, by agreement of
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`the parties, January 6, 2015 by emailing copies to counsel for the Petitioner as
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`follows:
`
`W. Karl Renner (krenner@fr.com)
`Thomas Rozylowicz
`CBM39843-0005CP2@fr.com
`
`
` /
`
` Michael R. Casey /
`
`
`Michael R. Casey
`Registration No. 40,294
`Davidson Berquist Jackson &
`
`Gowdey, LLP
`4300 Wilson Blvd, Suite 700
`Arlington, VA 22203
`Telephone: (703) 894-6406
`Fax: (703) 894-6430
`Email: mcasey@dbjg.com
`Attorney for Patent Owner
`
`
`
`Dated: January 6, 2015
`
`
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`- 14 -
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