Trials@uspto.gov
`Tel: 571-272-7822
`
`Paper 7
`Entered: March 30, 2015
`
`
`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.
`
`CBM2014-00198
`Patent 8,061,598 B2
`
`
`
`
`
`
`
`
`
`Before JENNIFER S. BISK, RAMA G. ELLURU, GREGG I. ANDERSON,
`MATTHEW R. CLEMENTS, and PETER P. CHEN,
`Administrative Patent Judges.
`
`CLEMENTS, Administrative Patent Judge.
`
`DECISION
`Denying Institution of Covered Business Method Patent Review
`37 C.F.R. § 42.208
`
`
`
`
`Tel: 571-272-7822
`
`Paper 7
`Entered: March 30, 2015
`
`
`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.
`
`CBM2014-00198
`Patent 8,061,598 B2
`
`
`
`
`
`
`
`
`
`Before JENNIFER S. BISK, RAMA G. ELLURU, GREGG I. ANDERSON,
`MATTHEW R. CLEMENTS, and PETER P. CHEN,
`Administrative Patent Judges.
`
`CLEMENTS, Administrative Patent Judge.
`
`DECISION
`Denying Institution of Covered Business Method Patent Review
`37 C.F.R. § 42.208
`
`
`
`
`
`CBM2014-00198
`Patent 8,061,598 B2
`
`INTRODUCTION
`
`A. Background
`Samsung Electronics America, Inc. and Samsung Electronics Co.,
`Ltd. (“Petitioner”)1 filed a Petition requesting covered business method
`patent review of claim 7 (the “challenged claim”) of U.S. Patent No.
`8,061,598 (Ex. 1001, “the ’598 patent”) pursuant to § 18 of the Leahy-Smith
`America Invents Act (“AIA”).2 Paper 2 (“Pet.”). Smartflash LLC (“Patent
`Owner”) filed a Preliminary Response. Paper 5 (“Prelim. Resp.”). We have
`jurisdiction under 35 U.S.C. § 324, which provides that a covered business
`method patent review may not be instituted “unless . . . it is more likely than
`not that at least 1 of the claims challenged in the petition is unpatentable.”
`After considering the Petition and Preliminary Response, we
`determine that the ’598 patent is a covered business method patent, but that
`Petitioner has not demonstrated that it is more likely than not that the
`challenged claim is unpatentable. Accordingly, we deny institution of a
`covered business method patent review of claim 7 of the ’598 patent.
`
`B. Asserted Grounds
`Petitioner contends that claim 7 is unpatentable under 35 U.S.C.
`§ 102(b) as anticipated by Ginter.3 Pet. 3. Petitioner also provides a
`declaration from Jeffrey A. Bloom, Ph.D (“the Bloom Declaration”). Ex.
`1003.
`
`
`1 Samsung Telecommunications America, LLC is listed as a real party-in-
`interest in the Petition, but merged with and into Samsung Electronics
`America, Inc., after the filing of the Petition. Paper 6, 1.
`2 Pub. L. No. 112-29, 125 Stat. 284, 296–07 (2011)
`3 U.S. Patent No. 5,915,019 (Ex. 1023) (“Ginter”).
`
`2
`
`
`
`CBM2014-00198
`Patent 8,061,598 B2
`
`C. Related Matters
`The parties indicate that the ’598 patent is the subject of the following
`district court cases: Smartflash LLC v. Apple Inc., Case No. 6:13-cv-447
`(E.D. Tex.); Smartflash LLC v. Samsung Electronics Co., Case No. 6:13-cv-
`448 (E.D. Tex.). Pet. 1; Paper 4, 2-3. Patent Owner also indicates that the
`’598 patent is the subject of a third district court case: Smartflash LLC v.
`Google, Inc., Case No. 6:14-cv-435 (E.D. Tex.). Paper 4, 3. Patents
`claiming priority back to a common series of applications are currently the
`subject of CBM2014-00102, CBM2014-00106, CBM2014-00108, and
`CBM2014-00112, filed by Apple Inc. See Paper 4, 2–3.
`Petitioner filed a concurrent petition for covered business method
`patent review of the ’598 patent: CBM2014-00193 (“the 193 Petition”).4 In
`addition, Petitioner filed eight other Petitions for covered business method
`patent review challenging claims of other patents owned by Patent Owner
`and disclosing similar subject matter: CBM2014-00190; CBM2014-00192;
`CBM2014-00194; CBM2014-00196; CBM2014-00197; CBM2014-00199;
`CBM2014-00200; and CBM2014-00204.
`
`D. The ’598 Patent
`The ’598 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,
`
`4 Patent Owner argues that the multiple petitions filed against the ’598 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 a petition requesting covered business method patent review is 80
`pages (37 C.F.R. § 42.24(a)(iii)), and each of this Petition and the 193
`Petition meets that requirement.
`
`3
`
`
`
`CBM2014-00198
`Patent 8,061,598 B2
`
`have an urgent need to address the prevalence of “data pirates” who make
`proprietary data available over the internet without authorization. Id. at
`1:29–55. The ’598 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 without fear of data pirates. 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 a data supplier. Id. The data on the portable storage
`device can be retrieved and output from a mobile device. Id. at 2:1–5. The
`’598 patent makes clear that the actual implementation of these components
`is not critical, and the alleged invention may be implemented in many ways.
`See, e.g., id. at 25:49–52 (“The skilled person will understand that many
`variants to the system are possible and the invention is not limited to the
`described embodiments.”).
`
`E. Challenged Claim
`Petitioner challenges claim 7 of the ’598 patent. Claim 7 depends
`from claim 1. Claims 1 and 7 recite the following:
`1.
`A portable data carrier comprising:
`an interface for reading and writing data from and to the portable data
`carrier;
`content data memory, coupled to the interface, for storing one or more
`content data items on the carrier;
`use rule memory to store one or more use rules for said one or more
`content data items;
`a program store storing code implementable by a processor;
`
`4
`
`
`
`CBM2014-00198
`Patent 8,061,598 B2
`
`and a processor coupled to the content data memory, the use rule
`memory, the interface and to the program store for implementing
`code in the program store,
`wherein the code comprises code for storing at least one content data
`item in the content data memory and at least one use rule in the use
`rule memory.
`Ex. 1001, 25:54–67.
`
`A portable data carrier as claimed in claim 1, further
`7.
`comprising payment data memory to store payment data and code to
`provide the payment data to a payment validation system.
`Id. at 26:25–28.
`
`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); see also In re Cuozzo Speed Techs., LLC, 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 ’598 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
`construe the claim term “use rule.”
`The term “use rule” is recited in independent claim 1. Neither party
`proposes a construction of “use rule.” The ’598 patent describes “use rules”
`as “for controlling access to the stored content” (Ex. 1001, Abstract) and as
`“indicating permissible use of data stored on the carrier” (id. at 9:14-16).
`
`5
`
`
`
`CBM2014-00198
`Patent 8,061,598 B2
`
`The ’598 patent also describes “evaluating the use status data using the use
`rules to determine whether access to the stored data is permitted.” Id. at
`6:38-40; see also id. at 21:48-53 (“[E]ach 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.”). Accordingly, for purposes
`of this decision, we construe “use rule” as a rule specifying a condition
`under which access to content is permitted.
`
`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 “covered
`business method patent” is a patent that “claims 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,
`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,
`77 Fed. Reg. 48,734, 48,736 (Aug. 14, 2012) (“CBM Rules”) (Comment 8).
`
`1. Financial Product or Service
`Petitioner asserts that “the purported data carrier and payment
`validation system of claim 7 unquestionably are used for data processing in
`the practice, administration and management of financial products and
`services; specifically, for processing payments for data downloads.” Pet. 8.
`Based on this record, we agree with Petitioner that the subject matter recited
`by claim 7 is directed to activities that are financial in nature, namely, data
`
`6
`
`
`
`CBM2014-00198
`Patent 8,061,598 B2
`
`access conditioned on payment validation. Claim 7 recites “payment data
`memory to store payment data and code to provide the payment data to a
`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 ’598 patent, which confirms claim 7’s connection to financial activities
`by stating that the invention “relates to a portable data carrier for storing and
`paying for data.” Ex. 1001, 1:21–23. The Specification also states
`repeatedly that the disclosed invention involves managing access to data
`based on payment validation. See, e.g., Ex. 1001, 1:59–67; 6:60–64; 20:50–
`54.
`
`Patent Owner disagrees that Claim 7 satisfies the financial-in-nature
`requirement of AIA § 18(d)(1), arguing that section should be interpreted
`narrowly to cover only technology used specifically in the financial or
`banking industry. Prelim. Resp. 3–7. Patent Owner cites to various portions
`of the legislative history as support for its proposed interpretation. Id.
`Although we agree with Patent Owner 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 Patent Owner 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 Patent Owner’s view of the legislative
`history, the legislative history indicates that the phrase “financial product or
`
`7
`
`
`
`CBM2014-00198
`Patent 8,061,598 B2
`
`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 financial in nature, incidental to a financial
`activity or complementary to a financial activity.’” Id. (citing 157 Cong.
`Rec. S5432 (daily ed. Sept. 8, 2011) (statement of Sen. Schumer)).
`In addition, Patent Owner asserts that claim 7 is not directed to an
`apparatus or method that is financial in nature because claim 7 “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
`requirement, nor does Patent Owner point to any other authority that makes
`such a requirement. Prelim. Resp. 7. We determine that because payment is
`required by claim 7, as Patent Owner acknowledges, the financial in nature
`requirement of § 18(d)(1) is satisfied.
`For the reasons stated above, and based on the particular facts of this
`proceeding, we conclude that the ’598 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
`Petitioner asserts that claim 7 does not fall within § 18(d)(1)’s
`exclusion for “technological inventions.” Pet. 10–12. In particular,
`Petitioner argues that claim 7 does not recite a technological feature that is
`novel and unobvious, or solve a technical problem using a technical solution.
`Id. Patent Owner disagrees and argues that claim 7, as a whole, recites at
`least one technological feature that is novel and unobvious over the prior art.
`Prelim. Resp. 8–9.
`
`8
`
`
`
`CBM2014-00198
`Patent 8,061,598 B2
`
`We are persuaded that claim 7 as a whole does not recite a
`technological feature that is novel and unobvious over the prior art. For
`example, claim 1, on which claim 7 depends, recites only limitations such as
`“interface,” “content data memory,” “use rule memory,” “program store,”
`“processor,” “code for storing,” and “code to provide” data, which are not
`novel and unobvious. Claim 7 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, 8:63–65; see also id. at 13:35–47.
`In addition, the ’598 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 ’598 patent
`states that “there is an urgent need to find a way to address the problem of
`data piracy” (id. at 1:52–55), 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 12:29–32). Thus, we determine that claim 7 is merely the
`recitation of a combination of known technologies, which indicates that it is
`not a patent for a technological invention. See Office Patent Trial Practice
`Guide, 77 Fed. Reg. 48,756, 48,764 (Aug. 14, 2012).
`Patent Owner also argues that claim 7 falls within § 18(d)(1)’s
`exclusion for “technological inventions” because it is directed toward
`solving the technological problem of “storing at least one content data item
`in the content data memory and at least one use rule in the use rule memory”
`
`9
`
`
`
`CBM2014-00198
`Patent 8,061,598 B2
`
`with the technological solution of “code for storing at least one content data
`item in the content data memory and at least one use rule in the use rule
`memory.” Prelim. Resp. 8. We are not persuaded by this argument because,
`as Petitioner argues, the problem being solved by claim 7 is a business
`problem—data piracy. Pet. 11. For example, the Specification states that
`“[b]inding the 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, 2:11–15. Thus, based on the particular facts of this
`proceeding, we conclude that claim 7 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 ’598 patent is a covered
`business method patent under AIA § 18(d)(1) and is eligible for review
`using the transitional covered business method patent program.
`
`C. Anticipation by Ginter
`Petitioner argues that claim 7 is unpatentable under 35 U.S.C.
`§ 102(b) as anticipated by Ginter. Pet. 15–37. Ginter discloses a portable
`“virtual distribution environment” (“VDE”) that can “control and/or meter or
`otherwise monitor use of electronically stored or disseminated information.”
`Ex. 1015, Abstract, Fig. 71, 52:26–27.
`In light of the arguments and evidence, Petitioner has not established
`that it is more likely than not that claim 7 is unpatentable as anticipated by
`Ginter. Specifically, we are not persuaded that Petitioner has shown
`sufficiently that Ginter discloses “use rules.”
`
`10
`
`
`
`CBM2014-00198
`Patent 8,061,598 B2
`
`Petitioner identifies in a parenthetical Ginter’s “billing method MDE
`and/or budget method UDE” as the recited “use rules.” Pet. 31–32 (citing
`Fig. 71, 48:65–49:14, 63:34–41, 169:4–6). The cited portions of Ginter,
`however, do not show sufficiently that the billing method map MDE and/or
`budget method UDE reflects “a rule specifying a condition under which
`access to content is permitted,” as we construed “use rules” to mean above.
`Petitioner later cites additional portions of Ginter in connection with “code
`for storing . . . at least one use rule in the use rule memory.” Pet. 33–35.
`However, the examples in the cited portions of Ginter—“e.g., a price list,
`table, or parameters to the billing amount calculation algorithm”—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.” Ex. 1015, 190:45–57.
`Dr. Bloom’s conclusory testimony on this issue (Ex. 1003 ¶ 48) does not
`convince us otherwise.
`On this record, we are not persuaded that Petitioner has established
`that it is more likely than not that claim 7 is unpatentable as 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
`Petitioner would prevail in establishing the unpatentability of claim 7 of the
`’598 patent.
`
`ORDER
`
`For the reasons given, it is:
`ORDERED that the Petition for covered business method review of
`the ’598 patent is denied.
`
`11
`
`
`
`CBM2014-00198
`Patent 8,061,598 B2
`
`PETITIONER:
`
`W. Karl Renner
`Thomas Rozylowicz
`FISH & RICHARDSON P.C.
`CBM39843-0006CP2@fr.com
`
`
`PATENT OWNER:
`
`Michael R. Casey
`J. Scott Davidson
`DAVIDSON BERQUIST JACKSON & GOWDEY LLP
`mcasey@dbjg.com
`jsd@dbjg.com
`docket@dbjb.com
`
`12
`
`
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