Case CBM2015-00015
`Patent 8,118,221 B2
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`______________________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`______________________
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`APPLE INC.,
`Petitioner
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`v.
`
`SMARTFLASH LLC,
`Patent Owner
`______________________
`
`Case CBM2015-00015
`Patent 8,118,221 B2
`______________________
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`Before JENNIFER S. BISK, RAMA G. ELLURU, JEREMY M. PLENZLER, and
`MATTHEW R. CLEMENTS, Administrative Patent Judges.
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`PETITIONER’S REPLY TO PATENT OWNER’S RESPONSE
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`Case CBM2015-00015
`Patent 8,118,221 B2
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`TABLE OF CONTENTS
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`INTRODUCTION ........................................................................................... 1
`I.
`PETITIONER’S RESPONSE TO PO’S STATEMENT OF FACTS ............. 3
`II.
`III. THE CHALLENGED CLAIM IS NOT § 101 PATENT ELIGIBLE ............ 3
`A.
`PO Fails to Identify Any Inventive Concept ......................................... 5
`The DDR Claims Are Not Analogous to the Challenged Claim .......... 7
`B.
`1.
`The Challenged Claim Does Not Address an Internet-
`Specific Problem ......................................................................... 9
`The Challenged Claim Does Not “Override” Routine and
`Conventional Computer Action ................................................ 12
`The Challenged Claim Does Not “Parallel” the DDR
`Claims ....................................................................................... 14
`PO’s Preemption Arguments Are Misplaced ...................................... 16
`C.
`IV. PO’S OTHER ARGUMENTS ARE IRRELEVANT TO THE MERITS .... 19
`A. Mr. Wechselberger Was Not Required to Recite the “Preponder-
`ance of the Evidence” Standard ......................................................... 19
`PO’s Construction of “Payment Data” Ignores the Explicit
`Teachings of the ’221 Patent ............................................................... 21
`PO’s “Estoppel” Arguments Are Unfounded ..................................... 22
`1.
`The ’221 Patent’s Prosecution Before the PTO Does Not
`Estop the Board from Considering § 101 Here ........................ 22
`Non-Final § 101 Determinations in District Court Litiga-
`tion Have No Impact On This Proceeding ................................ 23
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`2.
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`3.
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`2.
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`B.
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`C.
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`Case CBM2015-00015
`Patent 8,118,221 B2
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`TABLE OF AUTHORITIES
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`CASES
`Accenture Global Servs., GmbH v. Guidewire Software, Inc.,
`728 F.3d 1336 (Fed. Cir. 2013) ................................................................ 6, 15, 25
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`Page(s)
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`Alice Corp. Pty. Ltd. v. CLS Bank Int’l,
`134 S. Ct. 2347 (2014) .................................................................................passim
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`Ariosa Diagnostics, Inc. v. Sequenom, Inc.,
`788 F.3d 1371 (Fed. Cir. 2015) ...................................................................passim
`
`Arrhythmia Research Tech., Inc. v. Corazonix Corp.,
`958 F.2d 1053 (Fed. Cir. 1992) .......................................................................... 25
`
`Bancorp Servs., L.L.C. v. Sun Life Assurance Co. of Can.,
`687 F.3d 1266 (Fed. Cir. 2012) ................................................................ 5, 15, 19
`
`buySAFE, Inc. v. Google, Inc.,
`765 F.3d 1350 (Fed. Cir. 2014) ................................................................ 6, 12, 14
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`Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat’l Ass’n,
`776 F.3d 1343 (Fed. Cir. 2014) .................................................................. 2, 5, 14
`
`DDR Holdings, LLC v. Hotels.com, L.P.,
`773 F.3d 1245 (Fed. Cir. 2014) ...................................................................passim
`
`Enzo Biochem, Inc. v. Gen-Probe, Inc.,
`424 F.3d 1276 (Fed. Cir. 2005) .......................................................................... 21
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`Ethicon, Inc. v. Quigg,
`849 F.2d 1422 (Fed. Cir. 1988) .................................................................... 24, 25
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`Fresenius USA, Inc. v. Baxter Int’l, Inc.,
`721 F.3d 1330 (Fed. Cir. 2013) .......................................................................... 24
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`Gottschalk v. Benson,
`409 U.S. 63 (1972) .......................................................................................... 1, 11
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`Intellectual Ventures I LLC v. Capital One Bank (USA)
`(“IV”), 792 F.3d 1363 (Fed. Cir. 2015) .......................................................passim
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`Mayo Collaborative Servs. v. Prometheus Labs., Inc.,
`132 S. Ct. 1289 (2012) .................................................................................passim
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`OIP Techs., Inc. v. Amazon.com, Inc.,
`788 F.3d 1359 (Fed. Cir. 2015) ...................................................................passim
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`Suffolk Techs., LLC v. AOL Inc.,
`752 F.3d 1358 (Fed. Cir. 2014) .......................................................................... 21
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`Telebuyer, LLC v. Amazon.com, Inc.,
`No. 2:13-cv-1677, 2015 WL 4493045 (W.D. Wash. July 23, 2015) ................... 6
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`Ultramercial, Inc. v. Hulu, LLC,
`772 F.3d 709 (Fed. Cir. 2014) .....................................................................passim
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`Versata Dev. Grp., Inc. v. SAP Am., Inc.,
`793 F.3d 1306 (Fed. Cir. 2015) .................................................................... 20, 23
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`PTAB RULINGS
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`CBM2012-00007, Papers 15 & 58........................................................................... 25
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`CBM2013-00013, Paper 61 ....................................................................................... 6
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`CBM2014-00079, Paper 28 ................................................................................. 3, 17
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`CBM2014-00102, Paper 8 ....................................................................................... 20
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`CBM2015-00059, Paper 13 ................................................................................. 3, 17
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`IPR2013-00078, Paper 15 ........................................................................................ 21
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`IPR2013-00172, Paper 50 .................................................................................... 3, 20
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`STATUTES & REGULATIONS
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`35 U.S.C. § 101 .................................................................................................passim
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`35 U.S.C. § 324(a) ................................................................................................... 23
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`37 C.F.R. § 42.65 ..................................................................................................... 20
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`Case CBM2015-00015
`Patent 8,118,221 B2
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`LIST OF EXHIBITS
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`Description
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`Exhibit
`1201
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`1202
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`1203
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`1204
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`1205
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`1206
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`1207
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`1208
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`1209
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`1210
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`1211
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`1212
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`1213
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`1214
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`1215
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`1216
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`1217
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`1218
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`1219
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`1220
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`U.S. Patent No. 8,118,221
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`Plaintiffs’ First Amended Complaint
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`File History for U.S. Patent No. 8,061,598
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`File History for U.S. Patent No. 8,336,772
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`U.S. Patent No. 5,675,734
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`U.S. Patent No. 4,999,806
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`U.S. Patent No. 4,878,245
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`U.S. Patent No. 7,334,720
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`U.S. Patent No. 7,942,317
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`U.S. Patent No. 5,940,805
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`File History for U.S. Patent No. 8,118,221
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`U.S. Patent No. 5,103,392
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`U.S. Patent No. 5,530,235
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`U.S. Patent No. 5,629,980
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`U.S. Patent No. 5,915,019
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`European Patent Application, Publication No. EP0809221A2
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`International Publication No. WO 99/43136
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`JP Patent Application Publication No. H11-164058 (translation)
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`International Publication No. WO 95/34857
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`Eberhard von Faber, Robert Hammelrath, and Franz-Peter Heider,
`“The Secure Distribution of Digital Contents,” IEEE (1997)
`iv
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`Case CBM2015-00015
`Patent 8,118,221 B2
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`Exhibit
`1221
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`1222
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`1223
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`1224
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`1225
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`1226
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`1227
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`1228
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`1229
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`1230
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`1231
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`1232
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`1233
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`1234
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`1235
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`1236
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`1237
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`1238
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`1239
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`Description
`Declaration of Anthony J. Wechselberger In Support of Apple Inc.’s
`Petition for Covered Business Method Patent Review
`Declaration of Michael P. Duffey In Support of Apple Inc.’s Peti-
`tion for Covered Business Method Patent Review
`Declaration of Flora D. Elias-Mique In Support of Apple Inc.’s Peti-
`tion for Covered Business Method Patent Review
`U.S. Patent No. 8,033,458
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`U.S. Patent No. 8,061,598
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`U.S. Patent No. 8,336,772
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`File History for U.S. Patent No. 7,334,720
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`File History for U.S. Patent No. 7,942,317
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`File History for U.S. Patent No. 8,033,458
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`Claim Construction Memorandum Opinion from Smartflash LLC v.
`Apple Inc., No. 6:13cv447 (Dkt. 229)
`U.S. Patent No. 4,337,483
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`U.S. Patent No. 7,725,375
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`U.S. Patent No. 5,925,127
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`Excerpts from the Deposition Transcript of Jonathan Katz, Ph.D.
`Vol. 1, April 8, 2015, taken in connection with CBM2014-
`00102, -00106, -00108, and 00112
`Smartflash LLC, et al. v. Apple Inc., et al., No. 6:13-cv-447, Dkt
`585, Order (E.D. Tex. July 8, 2015)
`U.S. Patent No. 8,083,137
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`U.S. Patent No. 7,603,382
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`U.S. Patent No. 7,970,713
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`Declaration of Michael P. Duffey In Support of Petitioner’s Reply
`to Patent Owner’s Response
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`Case CBM2015-00015
`Patent 8,118,221 B2
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`GLOSSARY OF ABBREVIATIONS
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`Description
`Shorthand
`’221 Patent or ’221 United States Patent No. 8,118,221
`§ 101
`35 U.S.C. § 101
`BRI
`Broadest Reasonable Interpretation
`Petition or Pet’n
`Case CBM2015-00015 Corrected Petition, Paper 9
`Decision or Dec
`Case CBM2015-00015 Institution Decision, Paper 23
`PO
`Patent Owner
`POSITA
`Person of ordinary skill in the art
`Response or Resp
`Case CBM 2015-00015 Patent Owner Response, Paper 33
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`Case CBM2015-00015
`Patent 8,118,221 B2
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`I.
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`INTRODUCTION
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`PO does not dispute that the Challenged Claim, Claim 1 of the ’221, is di-
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`rected to an abstract idea under step 1 of the test for patent eligibility provided in
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`Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1296-97
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`(2012) and Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2355 (2014).
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`Instead, PO argues only that the Challenged Claim has an “inventive concept” suf-
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`ficient to satisfy § 101 under step 2 of Mayo. But PO fails to demonstrate that any
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`such inventive concept exists. Indeed, its Response does not identify even one in-
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`ventive concept, let alone one “‘sufficient to ensure that the patent in practice
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`amounts to significantly more than a patent upon the [ineligible concept] itself.’”
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`Alice, 134 S. Ct. at 2355 (quoting Mayo, 132 S. Ct. at 1294).
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`Instead, in an effort to circumvent the Mayo two-step analysis, PO relies ex-
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`clusively on conclusory attorney argument that the invention involves a computer-
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`related problem and solution, and erroneously analogizes the Challenged Claim to
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`the claims in DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 1255-59
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`(Fed. Cir. 2014). But the claims in DDR are entirely distinguishable, and in a failed
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`effort to suggest superficial similarities, PO ignores important case law—ranging
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`in vintage from recent years to decades ago—finding claims similar to the Chal-
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`lenged Claim to be patent ineligible. See, e.g., Alice, 134 S. Ct. 2347; Gottschalk v.
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`Benson, 409 U.S. 63 (1972); Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709 (Fed.
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`Cir. 2014); Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat’l
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`Ass’n, 776 F.3d 1343 (Fed. Cir. 2014); OIP Techs., Inc. v. Amazon.com, Inc., 788
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`F.3d 1359 (Fed. Cir. 2015); Intellectual Ventures I LLC v. Capital One Bank (USA)
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`(“IV”), 792 F.3d 1363 (Fed. Cir. 2015). And, in any case, DDR does not allow PO
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`to circumvent the two-step Mayo inquiry.
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`PO also misapplies the preemption concern underlying the § 101 analysis.
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`PO incorrectly argues that, separate from the two-step inquiry required by Mayo,
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`the Challenged Claim is patent eligible because it does “not result in inappropriate
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`preemption.” Resp15-20. This very same argument—contradicted by Mayo in lan-
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`guage PO fails to mention—has been considered and rejected in recent Federal
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`Circuit decisions, which PO entirely ignores. See, e.g., Ariosa Diagnostics, Inc. v.
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`Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015); OIP, 788 F.3d at 1362-63.
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`Indeed, preemption is not an alternative or addition to the Mayo test, but rather is
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`the motivation that led to that test: it is the “concern that drives” the exclusion of
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`ineligible subject matter from § 101, Alice, 134 S. Ct. at 2354, and the Mayo two-
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`part test acts as a “more easily administered proxy” for making judgments about
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`how much future innovation is preempted. Mayo, 132 S. Ct. at 1303. Indeed, as the
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`Board has correctly recognized, “questions on preemption are inherent in and re-
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`solved by the 101 analysis,” and “[w]here a patent’s claims are deemed only to dis-
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`close patent ineligible subject matter under the Mayo framework . . . preemption
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`concerns are fully addressed and made moot.” Ariosa, 788 F.3d at 1379 (emphases
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`added); CBM2015-00059, Pap. 13 at 5 (discussing Ariosa); CBM2014-00079, Pap.
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`28 at 19. Thus, non-infringement and non-infringing alternatives are irrelevant to
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`the § 101 analysis, as ineligible subject matter is not rendered patentable by the ex-
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`istence of non-infringing alternatives. See, e.g., Ariosa, 788 F.3d at 1379 (“[T]he
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`absence of complete preemption does not demonstrate patent eligibility”); OIP,
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`788 F.3d at 1362-63.
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`Finally, PO’s remaining arguments about claim construction, the weight to
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`accord Petitioner’s unrebutted expert opinions, and alleged estoppel, are legally in-
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`correct and irrelevant. None can alter the ineligibility of the Challenged Claim.
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`II.
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`PETITIONER’S RESPONSE TO PO’S STATEMENT OF FACTS
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`As to PO’s alleged facts (1) and (2), Petitioner admits that the phrases “pre-
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`ponderance of the evidence” and “more likely than not” do not appear in Mr.
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`Wechselberger’s declaration. The evidentiary standard need not be recited in ex-
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`pert declarations. See, e.g., IPR2013-00172, Pap. 50 at 42. Petitioner otherwise de-
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`nies these allegations. Petitioner further states the following material fact: PO did
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`not submit any expert opinion in this proceeding, either in support of its Response
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`or to rebut Petitioner’s expert’s opinions.
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`III. THE CHALLENGED CLAIM IS NOT § 101 PATENT ELIGIBLE
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`PO does not dispute that the Challenged Claim is directed to an abstract idea
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`under part 1 of the Mayo analysis. Cf. Resp9-10.1 Thus, the only remaining ques-
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`tion is whether, under part 2 of the Mayo analysis, the Challenged Claim includes
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`“additional features” amounting to an “inventive concept” that is “significantly
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`more” than the claimed abstract idea. Alice, 134 S. Ct. at 2355, 2357.
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`“[I]mplement[ing] the abstract idea with ‘routine, conventional activit[ies],’ . . . is
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`insufficient to transform the patent-ineligible abstract idea into patent-eligible sub-
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`ject matter.” Ultramercial, 772 F.3d at 716 (quoting Mayo, 132 S. Ct. at 1298). In-
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`1 See also Dec15-17 (“We are persuaded that the challenged claims are more like-
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`ly than not drawn to a patent-ineligible abstract idea. . . . The ’221 Patent makes
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`clear that the heart of the claimed subject matter is restricting access to stored data
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`based on supplier-defined access rules and validation of payment.”); Ex. 2049 17-
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`18 (“The asserted claims recite abstract ideas. . . . [They] recite methods and sys-
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`tems for controlling access to content data, such as various types of multimedia
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`files, and receiving and validating payment data. . . . Therefore, the general pur-
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`pose of the claims—conditioning and controlling access to data based on pay-
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`ment—is abstract and a fundamental building block of the economy in the digital
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`age.”); Ex. 2050 1-2; Ex. 2068 11:16-12:7, 65:16-66:20, 67:1-68:20, 69:8-70:5; cf.
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`Pap. 24 at 3 (“The patent owner is cautioned that any arguments for patentability
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`not raised in the response will be deemed waived.”).
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`deed, “[t]here is no ‘inventive concept’ in [the] use of a generic . . . computer to
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`perform well-understood, routine, and conventional activities commonly used in
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`industry.” Content Extraction, 776 F.3d at 1348 (citing Alice, 134 S. Ct. at 2359);
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`see also Bancorp Servs., L.L.C. v. Sun Life Assurance Co. of Can., 687 F.3d 1266,
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`1278-80 (Fed. Cir. 2012). As discussed below, the Challenged Claim recites only
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`well-known, routine, and conventional computer activities, which is insufficient to
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`show an inventive concept.
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`A.
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`PO Fails to Identify Any Inventive Concept
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`Smartflash fails to identify any “inventive concept” in the Challenged Claim.
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`The most PO states is that the claim “combines on the data carrier both the digital
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`content and payment data that can be forwarded to a payment validation system,
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`and [] respond[s] to payment validation data when obtaining digital content.”
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`Resp11. But simply storing multiple types of data (i.e., “combin[ing]” digital con-
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`tent and payment data) in a conventional data carrier, and “responding to” or “for-
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`ward[ing]” data, are all well-understood, routine, conventional computer activities,
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`not inventive concepts. See, e.g., Ex. 1221 ¶¶ 91-101; Alice, 134 S. Ct. at 2352
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`nn.1-2 (rep. cl. 33), 2360 (no inventive concept in reciting generic computer com-
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`ponents, noting “[n]early every computer . . . [is] capable of performing [] basic
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`calculation, storage, and transmission functions”); Content Extraction, 776 F.3d at
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`1345 (rep. cl. 1), 1347-49 (no inventive concept in routine and conventional activi-
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`ties, including collecting, recognizing, and storing data); Ultramercial, 772 F.3d at
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`712 (rep. cl. 1), 715-16 (no inventive concept in claims that “simply instruct the
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`practitioner to implement the abstract idea with routine, conventional activity,” in-
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`cluding steps performed “in response to” receipt of information); buySAFE, Inc. v.
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`Google, Inc., 765 F.3d 1350, 1351-52, 1355 (Fed. Cir. 2014) (no inventive concept
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`in reciting generic computer functionality (rep. cls. 1, 14), explaining that “a com-
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`puter [that] receives and sends [] information over a network . . . is not even argua-
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`bly inventive”); Accenture Global Servs., GmbH v. Guidewire Software, Inc., 728
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`F.3d 1336, 1338, 1344-46 (Fed. Cir. 2013) (claims (rep. cl. 1) reciting only “gener-
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`alized software components” for “generating tasks [based on] rules . . . to be com-
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`pleted upon the occurrence of an event” unpatentable); CBM2013-00013, Pap. 61
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`at 8, 16 (claims (rep. cl. 1) reciting “an abstract method, i.e., performing a real-time
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`Web transaction,” including “transferring funds (i.e., debiting or crediting) in re-
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`sponse to user signals from an input device” unpatentable); Telebuyer, LLC v. Am-
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`azon.com, Inc., No. 2:13-cv-1677, 2015 WL 4493045, at *1-5, *10-12 (W.D.
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`Wash. July 23, 2015) (no inventive concept in claims directed to “traffic control
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`system [that] uses various types of stored data”).
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`The Challenged Claim recites nothing more than generic computer elements
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`that were well-known, routine, and conventional to a POSITA at the time of filing.
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`See, e.g., Ex. 1221 ¶¶ 91-101; Ex. 2068 14:17-15:1, 69:8-70:5, 77:7-18, 78:6-11,
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`87:19-88:11, 99:7-23, 100:6-101:8; Ex. 1201 4:4-5, 16:46-50, 18:7-11; see also
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`Ex. 2068 96:6-18, 96:25-98:24. PO has submitted no evidence to the contrary and
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`Alice makes clear that, as here, “the mere recitation of a generic computer cannot
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`transform a patent-ineligible abstract idea into a patent-eligible invention.” 134 S.
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`Ct. at 2358. Because the Challenged Claim does nothing more than recite routine,
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`conventional computer functions in implementing an abstract idea, it is patent inel-
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`igible under Alice. See, e.g., id.; Pet’n27-32.2
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`B.
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`The DDR Claims Are Not Analogous to the Challenged Claim
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`PO’s entire argument regarding step 2 of the Mayo analysis is premised on
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`2 Petitioner also notes that PO’s so-called “Overview” of the ’221 (Resp5-8) is not
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`tied in any way to the Challenged Claim limitations. PO discusses, for example, a
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`user “select[ing] content to purchase or rent from a variety of different content
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`providers,” “‘use rules pertaining to allowed use of stored data items,’” “‘use status
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`data . . . [to] indicat[e] past use of the stored data,’” and “purchas[ing] additional
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`content.” Resp5-8 (citing Ex. 1201 4:64-5:8, 5:29-33, 9:33-35). Yet none of these
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`concepts is recited in the Challenged Claim. Similarly, PO quotes the district
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`court’s statement that the “asserted claims . . . recite specific ways of using distinct
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`memories, data types, and use rules” (Resp15 (quoting Ex. 2049 19)), but again,
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`the Challenged Claim does not recite distinct memories or use rules.
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`its flawed assumption that the Challenged Claim is patent eligible because PO sug-
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`gests it resembles the claims in DDR that were found eligible. To begin with, DDR
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`does not overturn the two-step inquiry required by Mayo. If the Challenged Claim
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`is directed to an abstract idea (it is), and if there is no “inventive concept” in the
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`claim “sufficient to ensure that the patent in practice amounts to significantly more
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`than a patent upon the [ineligible concept] itself” (there is none), then the claim is
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`patent ineligible. As noted above, PO does not dispute that the claim is directed to
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`an abstract idea under step 1, and has provided no evidence of any “inventive con-
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`cept” under step 2. That analysis is dispositive: the Challenged Claim is not patent
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`eligible. Superficial comparisons to the claims in DDR cannot substitute for the
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`Mayo two-step inquiry. In any case, the DDR claims are not analogous, and in fact
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`the Challenged Claim is much more similar to claims found patent ineligible.
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`In DDR, the asserted patent addressed the problem of retaining website visi-
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`tors when clicking on an advertisement within the host’s website. See 773 F.3d at
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`1257. Under the conventional Internet function, clicking an advertisement hyper-
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`link would transport a website visitor away from the host’s website to, e.g., a third-
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`party advertiser’s website. Id. The patented claims provided a solution where the
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`visitor is no longer transported to the third-party website, but, instead, has an out-
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`source provider automatically generate a hybrid web page that combines the visual
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`“look and feel” elements from the host website and product information from the
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`third-party website. Id. This allows for the host website to retain the visitors but
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`still enable the visitors to purchase the product from the third-party merchant. Id. at
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`1257-58. The court distinguished this Internet-centric problem by stating that this
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`practice “introduces a problem that does not arise in the ‘brick and mortar’ con-
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`text” as “[t]here is . . . no possibility that by walking up to [a kiosk in a warehouse
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`store], the customer will be suddenly and completely transported outside the ware-
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`house store and relocated to a separate physical venue associated with the third-
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`party.” Id. at 1258. Specifically, the court found that the result of the claimed
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`method “overrides the routine and conventional sequence of events ordinarily trig-
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`gered by” routine and conventional computer action and is not directed to the gen-
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`eral abstract idea of “‘use of the Internet’ to perform an abstract business practice
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`(with insignificant added activity).” Id. In contrast, the Challenged Claim does not
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`address an internet-specific problem, nor does it “override[] the routine and con-
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`ventional sequence of events ordinarily triggered by” conventional processes.
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`1.
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`The Challenged Claim Does Not Address an Internet-
`Specific Problem
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`PO incorrectly argues that the Challenged Claim is like the DDR claims be-
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`cause it allegedly addresses a “technological problem,” is rooted in computer tech-
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`nology and is directed to a challenge particular to the Internet or computer net-
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`works. Resp10-12. However, “data piracy”—the business problem PO argues that
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`its Challenged Claim addresses—is neither a technological problem, rooted in
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`computer technology nor a “problem specifically arising in the realm of computer
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`networks.” See, e.g., Ex. 2068 15:17-16:5, 25:3-16, 76:10-77:6; Ex. 1221 ¶¶ 87-88;
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`Dec14.
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`Indeed, it is undisputed that the problem of data piracy exists outside the
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`context of the Internet/computer networks in the context of, e.g., content copy pro-
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`tection with digital watermarking. See Ex. 1201 5:9-12 (“where the data carrier
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`stores . . . music, the purchase outright option may be equivalent to the purchase of
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`a compact disc (CD), preferably with some form of content copy protection such as
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`digital watermarking”). Similarly, to prevent piracy of video data (copying and
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`misuse), video on demand was used in the pay TV industry, to prevent piracy of
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`software data, time-limited promotional trials were used for software (including in
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`the prior art Poggio), and to prevent piracy of DVDs, region codes and encryptions
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`were used to control the use of DVDs well before the priority date of the ’221 Pa-
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`tent. See Ex. 1221 ¶ 88; see also, e.g., Ex. 1216 1:13-23 (discussing purchasing
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`“try and buy” software in a store).
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`Further, unlike the DDR claims, which addressed “a problem that does not
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`arise in the ‘brick and mortar’ context,” PO’s Challenged Claim really addresses a
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`problem of ensuring payment for access—an age-old business problem that many
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`have solved outside the context of the Internet, such as through apartment rentals,
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`movie rentals, movie tickets, subscription plans, and pay-per-view programming.
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`
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`See, e.g., Ex. 1221 ¶¶ 30, 87-88; see also, e.g., Ex. 1207 Abstract, 4:27-35 (de-
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`scribing a pay-per-use cable system); Ex. 2068 42:11-43:15. Thus, the fact that da-
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`ta piracy (and requiring payment in exchange for access to goods) may also exist
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`on the Internet does not render it a “‘challenge particular to the Internet’” (Resp11
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`(quoting DDR, 773 F.3d at 1257)). See, e.g., Ultramercial, 772 F.3d at 716 (“Nar-
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`rowing the abstract idea of using advertising as a currency to the Internet is an ‘at-
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`tempt[] to limit the use’ of the abstract idea ‘to a particular technological environ-
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`ment,’ which is insufficient to save a claim.” (quoting Alice, 134 S. Ct. at 2358)).
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`Thus, the Challenged Claim is not analogous to the DDR claims, where “the
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`claimed solution [was] necessarily rooted in computer technology in order to over-
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`come a problem specifically arising in the realm of computer networks.” DDR, 773
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`F.3d at 1257. And, even if the only practical application of the Challenged Claim is
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`for use with a computer, that fact would not render the claim patent eligible. See,
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`e.g., Benson, 409 U.S. at 71-74 (holding claims 8 and 13 of application at issue in-
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`eligible even though claimed idea “ha[d] no substantial practical application except
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`in connection with a digital computer”). Regardless, because the claim here “do[es]
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`not address problems unique to the Internet . . . DDR has no applicability.” IV, 792
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`F.3d at 1371.
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`Instead, the business problem and purported solution addressed by the Chal-
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`lenged Claim are more like those for claims held patent ineligible, despite their ap-
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`
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`plication to the Internet. E.g., Ultramercial, 772 F.3d at 715-16 (using advertising
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`as currency on the Internet); buySAFE, 765 F.3d at 1355 (creating transaction per-
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`formance guaranty on the Internet); IV, 792 F.3d at 1367-71 (tracking financial
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`transactions on the Internet; tailoring advertisements on the Internet); see also
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`Pet’n30-31 (comparing ’221 Patent claim to Alice patent claim).
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`2.
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`The Challenged Claim Does Not “Override” Routine and
`Conventional Computer Action
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`Contrary to Smartflash’s assertion (Resp10-11), and unlike the DDR claims,
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`the Challenged Claim does not “override” routine and conventional computer ac-
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`tion, and therefore remains ineligible. See DDR, 773 F.3d at 1258; id. at 1256
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`(“[A]fter Alice, there can remain no doubt: recitation of generic computer limita-
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`tions does not make an otherwise ineligible claim patent-eligible.”). The Chal-
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`lenged Claim simply recites computer-based limitations acting in a routine and
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`conventional manner. For example, the Claim recites a known data carrier that may
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`be a generic device such as a “standard smart card,” Ex. 1201 11:28-29, and recites
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`a known “payment validation system,” which “may be part of the data supplier’s
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`computer systems or it may be a separate e-payment system,” id. 8:63-65. See also
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`Pet’n27-30; Ex. 1201 4:4-5, 16:46-50, 18:7-11 (describing components as “con-
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`ventional”). Furthermore, the claimed “code to” limitations perform generic com-
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`puter functions, such as reading, forwarding, receiving, responding to, retrieving,
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`
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`
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`and writing data. See, e.g., Ex. 2068 14:17-15:1, 77:7-18, 78:6-11, 87:19-88:11,
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`99:7-23, 100:6-101:8 (explaining routine and conventional nature of computer-
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`based limitations); Pet’n27-30; see also Ex. 2068 96:6-18, 96:25-98:24; Ex. 1221
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`¶¶ 91-101. Therefore, the Challenged Claim does not override routine and conven-
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`tional computer actions—it claims such actions, and it is patent ineligible.
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`Rather than the claims in DDR, the Challenged Claim is analogous to nu-
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`merous claims held unpatentable. For example, in IV, patent-ineligible claims were
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`directed to the abstract idea of budgeting on the Internet, employing “generic com-
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`puter elements,” including “a database, a user profile, . . . and a communication
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`medium,” and reciting steps of “storing” the user profile (i.e., data) in the database
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`and “causing communication” between the database and a “receiving device.” 792
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`F.3d at 1366-69 (analyzing claims 5-11 of U.S. Patent No. 8,083,137 (Ex. 1236)).
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`Additional ineligible claims in IV were directed to the abstract idea of tailoring ad-
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`vertisements on the Internet based on location and time of day, and included
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`“[s]teps that d[id] nothing more than spell out what it means to ‘apply it on a com-
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`puter,’” such as employing an “interactive interface” that was simply “a generic
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`web server with attendant software, tasked with providing web pages to and com-
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`municating with the user’s computer.” Id. at 1369-71 (analyzing claims 1-5, 16-17,
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`and 19-22 of U.S. Patent No. 7,603,382 (Ex. 1237)). The claims in IV were distin-
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`guishable from the DDR claims that “recited a specific series of steps that resulted
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`in a departure from the routine and conventional sequence of events after the click
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`of a hyperlink advertisement.” Id. at 1371. As in IV, the Challenged Claim recites
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`generic computer elements performing routine and conventional computer activity.
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`Similarly, in OIP, the ineligible claims were “directed to the concept of of-
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`fer-based price optimization,” and “merely recite[d] ‘well-understood, routine con-
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`ventional activit[ies],’ either by requiring conventional computer activities or rou-
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`tine data-gathering steps”—including “sending . . . messages over a network to de-
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`vices,’ the devices being ‘programmed to communicate,’” and “storing test results
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`in a ‘machine-readable medium.’” 788 F.3d at 1360-63 (analyzing claims of U.S.
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`Patent No. 7,970,713 (Ex. 1238)) (quoting Alice, 134 S. Ct. at 2359). There, the
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`Federal Circuit indicated that the application of DDR is limited to claims that “re-
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`cite a specific manipulation of a general-purpose computer such that the claims do
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`not rely on a ‘computer network operating in its normal, expected manner.’” Id. at
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`1363 (citing DDR, 773 F.3d at 1258-59). Here, the Challenged Claim, like the OIP
`
`claims, recites only computer-based limitations that are routine, conventional, and
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`operating in a normal, expected manner—and, like the OIP claims, is patent ineli-
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`gible. See also, e.g., Alice, 134 S. Ct. at 2360; Content Extraction, 776