`
`_________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_________
`
`APPLE INC.,
`Petitioner,
`
`v.
`
`SMARTFLASH LLC,
`Patent Owner.
`
`_________
`
`Case CBM2015-00016
`
`Patent 8,033,458 B2
`
`_________
`
`
`
`PATENT OWNER’S REQUEST FOR REHEARING
`
`
`
`
`
`
`
`
`
`TABLE OF CONTENTS
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`
`
`
`
`INTRODUCTION ........................................................................................... 1
`
`STATEMENT OF PRECISE RELIEF REQUESTED ................................... 2
`
`I.
`
`II.
`
`III. BACKGROUND ............................................................................................. 2
`
`IV. ARGUMENT ................................................................................................... 4
`A.
`Like the Claims in DDR Holdings, the Challenged Claims Are Patent
`Eligible Because They Teach a Specific Solution to a Novel Problem
`Presented By Digital Commerce ........................................................... 5
`The Challenged Claims Do Not Resemble Those in Alice ................. 10
`1.
`The Challenged Claims Are Directed To A Specific Device,
`Not An Abstract Idea ................................................................ 10
`The Challenged Claims Contain Numerous “Additional
`Features” That Demonstrate That They Do Not Cover An
`Abstract Idea ............................................................................. 12
`CONCLUSION .............................................................................................. 15
`
`B.
`
`2.
`
`V.
`
`i
`
`
`
`
`
`
`
`
`I.
`
`INTRODUCTION
`
`The Board’s final written decision in this covered business method patent
`
`review misapprehends the Federal Circuit’s and Supreme Court’s guidance on
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`patent eligible subject matter under 35 U.S.C. § 101. The challenged claims cover
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`a specific physical device operating within a novel content delivery system that
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`facilitates distribution of digital content over the Internet while helping to reduce
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`piracy—a pressing problem at the time of invention. The claims contain
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`meaningful limitations that are both inventive and technological, which, when
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`taken in ordered combination, amount to more than the idea of “controlling access
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`to content” and do not pre-empt the field. Furthermore, the claims improve the
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`functioning of computers used to download, store, and access data thereby
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`effecting a technological improvement in the relevant field.
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`The Board wrongly determined that these claims on a physical device
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`actually covered an abstract idea and ignored the claims’ specific combination of
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`hardware and software to hold that the claims contain no inventive concept. Under
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`the Board’s analysis, any device used in an economic transaction that contains
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`conventional components would be patent ineligible. This error is exactly what the
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`Supreme Court cautioned against in Alice. See Alice Corp. Pty. Ltd. v. CLS Bank
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`Int’l, 134 S. Ct. 2347, 2354 (2014) (warning against “construing this exclusionary
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`principle [to] swallow all of patent law”). Patent Owner respectfully requests
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`rehearing to correct these errors. See 37 C.F.R. § 42.71(d).
`
`
`
`1
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`
`
`
`II.
`
`
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`STATEMENT OF PRECISE RELIEF REQUESTED
`
`Patent Owner requests that the Board reverse its original decision (Paper 56,
`
`March 29, 2016) and hold that challenged claims 6, 8, and 10 are patent eligible.1
`
`III. BACKGROUND
`
`1.
`
`The opportunities and challenges associated with distribution of
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`digital content over the Internet “introduces a problem that does not arise” with
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`content distributed on physical media. DDR Holdings, LLC v. Hotels.com, L.P.,
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`773 F.3d 1245, 125 (Fed. Cir. 2014). By the late 1990s, as a result of improved
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`data compression and increasing bandwidth for Internet access, content providers,
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`for the first time, had the ability to offer data for purchase over the Internet; at the
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`same time, unprotected data files could be easily pirated and made available
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`“essentially world-wide.” Ex. 1201, 1:32-33. The conventional operation of the
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`Internet does not solve the problem of data piracy: on the contrary, the Internet
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`facilitates the distribution of data without restriction or protection. Id. 1:49-55.
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`Content providers had faced the issue of piracy before—a CD can be copied
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`onto a cassette tape or onto another CD and the pirated copy sold—but the problem
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`of widespread distribution of pirated content over the Internet was unprecedented.
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`There had never before been a way to make free, identical, and flawless copies of
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`1 Claim 11 was invalidated on indefiniteness grounds; Patent Owner reserves the
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`right to appeal that determination but does not seek rehearing with respect to it.
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`
`
`2
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`
`
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`physical media available to millions of people instantaneously at virtually no
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`incremental cost. See generally Metro-Goldwyn-Mayer Studios, Inc. v. Grokster,
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`Ltd., 545 U.S. 913, 929-30 (2005). The advent of the Internet thus gave rise to an
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`urgent need to address the problem of data piracy.
`
`
`
`The inventor devised a data storage and access system for downloading and
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`paying for data, described in the specification and claimed in this patent and others,
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`comprising specific elements designed to overcome the problems inherent in
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`making digital content available over the Internet. Ex. 1201, at 1 (Abstract). The
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`relevant claims of the ’458 patent are directed to one aspect of that system:
`
`namely, a “data access device”—for example, a mobile multi-media player—for
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`“retrieving stored data from a data carrier.” Id. at 27:8-9. Related patents cover
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`other aspects of the system and interactions explained in the specification.
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`Claim 6 requires the “data access device” to include a “processor” coupled
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`to a “program store” storing code to “retrieve use status data” and “use rules data”
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`from the data carrier. The device includes code “to evaluate the use status data
`
`using the use rules data to determine whether access is permitted.” “[W]hen access
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`is permitted,” the device includes code to access the content data stored on the data
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`carrier. Ex. 1201, 27:8–23. Claim 8 adds “user access control,” in which the “user
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`access data,” too, is stored on the data carrier. Claim 10 adds code to retrieve and
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`output “supplementary data”—such as advertising– to the user.
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`
`
`3
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`
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`
`
`
`2.
`
`The Board found the challenged claims to be patent ineligible. First,
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`the Board found (at 8) that the claims “are drawn to a patent-ineligible abstract
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`idea” of “performing the fundamental economic practice of controlling access to
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`content.” The Board found “that the additional elements . . . are either field of use
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`limitations and/or generic features of a computer.” Id. at 10. And the Board
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`distinguished DDR Holdings because “[d]ata piracy exists in contexts other than
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`the Internet,” “the solution provided by the challenged claims is not rooted in
`
`specific computer technology” and the “result does not override[] the routine and
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`conventional use of the recited devices and functions.” Id. at 16.
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`IV. ARGUMENT
`
`The Board should reverse its decision and find the claims directed to
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`statutory subject matter because the Board failed to give effect to the actual
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`language of the claims and their specific limitations. The actual claim language,
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`read in light of the specification, reflects a specific and concrete solution to a novel
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`problem associated with distribution of digital content over the Internet. Such a
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`technological advance is patent eligible.2
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`2 The Board disregarded the actual text of the claims, using nearly identical
`
`language in all the final written decisions concerning patents related to the ’458
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`patent, even though challenged claims in each patent were distinct and varied
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`dramatically in their coverage. See CBM2015-00017 and CBM2014-00194.
`
`
`
`4
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`
`
`
`
`A.
`
`Like the Claims in DDR Holdings, the Challenged Claims Are
`Patent Eligible Because They Teach a Specific Solution to a Novel
`Problem Presented By Digital Commerce
`
`1.
`
`The claims of the ’458 patent are patent eligible because they
`
`embody one concrete aspect of a particular solution to the Internet-specific
`
`problem of digital piracy. This is not a patent that simply claims “use of the
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`Internet” or a computer to perform an established business method. Cf.
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`Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 716 (Fed. Cir. 2014). This is no
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`digital telephone book. Cf. Final Written Decision, Paper 56 at 13. On the
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`contrary, the challenged claim limitations reflect specific technical choices: a
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`“data carrier” that is a distinct element from the “data access device”; “use status
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`data” and “use rules data” that are distinct from stored content data; and storage of
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`those various elements on the same data carrier.
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`That particular configuration of elements provides distinct advantages over
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`alternatives. For example, by storing “use rules data” as a distinct element on the
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`data carrier—rather than (for example) requiring that any use rules be included as
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`part of the content file—the invention allows for different levels of usage of the
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`same digital content. This permits, for example, both rental and sale of particular
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`content data; it also allows for provision of enhanced access without downloading
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`the content data anew. Ex. 1201, 22:49-51. By storing the use status data on the
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`data carrier rather than (for example) on the access device, the invention ensures
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`that a portable data carrier can be used with various access devices without losing
`
`
`
`5
`
`
`
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`the ability to control access to the stored data. Indeed, the basic insight reflected in
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`the claims—that a single portable data carrier can store content data, use rule data,
`
`and use status data for use with a data access device—is itself inventive.
`
`Because the claims teach specific technical solutions to a problem associated
`
`with distribution of digital content through specific organization of distinct data
`
`types, implemented on specific devices, there is no risk that the patents monopolize
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`“fundamental economic concepts,” as the Board held (at 7). Consequently, there is
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`no concern that recognizing the patent-eligibility of these claims will “impede
`
`innovation” or “improperly t[ie] up . . . building blocks of human ingenuity,” Alice,
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`134 S. Ct. at 2354. On the contrary, each challenged claim teaches a “specific
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`way” to control access to stored digital content; the claims do not attempt to
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`“preempt every application of the idea.” DDR Holdings, 773 F.3d at 1259.
`
`2.
`
`The Board rejected Patent Owner’s reliance on DDR Holdings
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`(at 16), holding that the challenged claims were not “rooted in computer
`
`technology in order to overcome a problem specifically arising in the realm of
`
`computer networks.” 3 That is incorrect: the claim discusses specific computer
`
`
`3 Pursuant to 37 C.F.R. § 42.71(d), the issue of whether the challenged claims were
`
`similar to those in DDR Holdings was previously addressed. See PO Resp. 11-12,
`
`18-19; Ex. 2049, 19.
`
`
`
`6
`
`
`
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`functions and interactions, including with data carriers, to perform a defined series
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`of operations.
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`Indeed, the Board’s own summary of the ’458 patent (at 4) states:
`
`The ’458 patent describes providing portable data storage together
`with a means for conditioning access to that data upon validated
`payment. This combination allows data owners to make their data
`available over the internet without fear of data pirates.
`
`The specification further explains that the purpose of the invention is to “make . . .
`
`data available . . . over the internet without fear of loss of revenue.” Ex. 1201,
`
`2:13-15. The specification notes that “the growing prevalence of so-called data
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`pirates” is a problem that arises by virtue of “increasingly wide use of the internet.”
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`Id. 1:29-30. Because the Internet facilitates “essentially world-wide” distribution
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`of flawless, identical copies of content data, the data piracy problems it creates are
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`qualitatively different from the problem of copying of physical media (videotapes,
`
`CDs, software, books), which necessarily takes time, imparts imperfections, and
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`imposes incremental costs. See Grokster, Ltd., 545 U.S. at 929-30. Rather than
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`generically claiming use of the Internet to perform an abstract business practice,
`
`the claims solve problems faced by digital content providers in the Internet Era and
`
`improve the functioning of the computer itself. 4
`
`
`4 The claims of the ’458 patent do not directly involve Internet transactions; rather,
`
`they are directed to a data access device interacting with a data carrier. The claims
`
`
`
`
`
`7
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`
`
`
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`The Board also held (at 15-16) that the challenged claims contained
`
`limitations—unlike the claims in DDR Holdings—that were “specified at a high
`
`level of generality.” But the challenged claims and the specification discuss
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`specific data stored in specific places, not mere generalities. There is “use status
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`data” and “use rules data” stored on the carrier. See Ex. 1201 27:17-19. In
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`dependent claim 8, there is “user access data” transmitted to the carrier and “user
`
`access permission data” received from the carrier. See id. 28:5-8. These phrases
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`are uniquely used in the ’458 patent and do not have the broad acceptance that the
`
`words in the DDR Holding patent did. See DDR Holdings, 773 F.3d at 1249
`
`(reciting “links,” “source page,” and “web page”). These limitations are not
`
`“specified at a high level of generality.”
`
`The Board itself concluded (at 21) that claim 11 is indefinite because this
`
`dependent claim recites “said use rules,” while the independent claim only recites
`
`“use rules data.” The Board held that these limitations had precise meanings and
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`could not be used interchangeably or generically. The fact that the patentee uses
`
`its own lexicography does not mean that the claim limitations are not precisely
`
`described. Here, the device must transfer, receive, and act on different specific
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`data. The claim does not “merely recite the performance of some business practice
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`nevertheless are directed towards an Internet-specific problem—storing and
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`controlling access to content data sold separately from a storage medium.
`
`
`
`8
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`
`
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`known from the pre-Internet world along with the requirement to perform it on the
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`Internet.” DDR Holdings, LLC, 773 F.3d at 1257. By ignoring these limitations,
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`the Board erred in holding that there were not “additional features” present in the
`
`challenged claims that made them patent-eligible.
`
`
`
` Finally, the Board held (at 11) that the claims could be performed by “a
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`general-purpose computer.” But, again, this ignores the limitations of the claims,
`
`which, as explained above, require specific configurations of distinct data types
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`and defined interactions among system components to facilitate secure access to
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`data stored on a data carrier. As the specification makes clear, when digital data is
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`sent over the Internet operating in its normal, expected manner and stored by a
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`recipient, the content data are insecure; the content owner has no means to exert
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`further control over access. The claims provide a specific mechanism to ensure
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`that content, once downloaded and stored, can be accessed only when the
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`associated use rules and use status data confirm that access is authorized. Just as
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`the claims in DDR Holdings “specify how interactions with the Internet are
`
`manipulated to yield a desired result,” 773 F.3d at 1258, so too the claims here
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`specify how manipulation of specific data facilitates convenient and secure
`
`provision of digital content, a result that neither the conventional Internet nor
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`unimproved computers can produce. The patent “improve[s] the functioning” and
`
`the functionality of digital media players, which, as the specification makes clear,
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`
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`9
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`
`
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`likewise improves the functioning of data communications networks used for
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`digital content distribution. Alice, 134 S. Ct. at 2359.
`
`B.
`
`The Challenged Claims Do Not Resemble Those in Alice
`
`The claims do not fit the mold of the patent-ineligible claims of Alice. They
`
`do not recite an “abstract idea” and, in any event, teach a specific “combination of
`
`elements” that amounts to “significantly more” than any ineligible concept.
`
`1.
`
`The Challenged Claims Are Directed To A Specific Device,
`Not An Abstract Idea
`
`The Board’s determination that the claims were directed to an abstract idea
`
`is incorrect because the claims are directed to a concrete machine with specific
`
`hardware and software components and not merely to the abstract idea of
`
`controlling access to content. As the Board acknowledged (at 6) “each of the
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`challenged claims recites a ‘machine,’ i.e., a ‘data access device” with defined
`
`components. See Ex. 1201, 27:8–23. It contains a user interface, a data carrier
`
`interface, memory, and a processor. The machine runs specific software to retrieve
`
`information governing whether a user may access data on the data carrier. The
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`patent specification emphasizes that the patent is on a machine. See, e.g., id. 1:21-
`
`
`
`10
`
`
`
`
`25; see also 35 U.S.C. § 101 (allowing for patents on “processes, machines,
`
`manufactures, and compositions of matter”).5
`
`In finding this claimed machine was directed to an abstract idea, the Board
`
`apparently focused on the problem that the patented machine was designed to solve
`
`and treated the problem itself as the abstract idea to which the claims were
`
`directed. Specifically, the Board held (at 8) that “the challenged claims are
`
`directed to performing the fundamental economic practice of controlling access to
`
`content.”6 But while it is true that the claimed machine provides a specific
`
`mechanism that can be used to control access to content, thus combatting problems
`
`of data piracy, see Ex. 1201, 1:20-55, that does not provide a fair description of the
`
`claims, which, as explained, provide a specific solution to an aspect of the problem.
`
`There is a fundamental difference between claiming a specific device or
`
`method that can be used to accomplish an economic practice and claiming the
`
`practice itself. See Brookhill-Wilk 1, LLC v. Intuitive Surgical, Inc., 326 F.3d
`
`1215, 1223 (Fed. Cir. 2003) (“Advantages described in the body of the
`
`5 Pursuant to 37 C.F.R. § 42.71(d), the issue of whether the claims are abstract
`
`ideas was previously addressed. See PO Resp. 10-27; see also Tr. 46:21-47:11.
`
`6 The Board identified the abstract idea without explaining its methodology, which
`
`itself merits rehearing. Cf. Avago Techs. Gen. IP (Singapore) Pte Ltd. v. Asustek
`
`Computer, Inc., No. 15-cv-04525-EMC, at 10-11 (N.D. Cal. Apr. 25, 2016).
`
`
`
`11
`
`
`
`
`specification, if not included in the claims, are not per se limitations to the claimed
`
`invention.”). As an example, a cash register is a physical device used to perform a
`
`fundamental economic practice, namely, collecting, storing, and tracking payment.
`
`A claim on a specific novel device—with specific circuit boards, keys, and cash
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`drawers—may be patentable even though a claim on collecting and storing
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`payment itself would not be. The Board’s decision equates a claim on a machine
`
`that may be used to perform an economic task with a claim on the economic task
`
`itself, which risks turning all devices used in commerce into abstract ideas. This is
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`the problem that the Supreme Court warned against in Alice. “At some level, all
`
`inventions ... embody, use, reflect, rest upon, or apply laws of nature, natural
`
`phenomena, or abstract ideas. Thus, an invention is not rendered ineligible for
`
`patent simply because it involves an abstract concept.” Alice, 134 S. Ct. at 2354.
`
`2.
`
`The Challenged Claims Contain Numerous “Additional
`Features” That Demonstrate That They Do Not Cover An
`Abstract Idea
`
`In any event, the Board was incorrect to find that the challenged claims did
`
`not contain “additional features” to ensure that they were more than a drafting
`
`effort designed to monopolize the abstract idea. 7 On the contrary, because the
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`7 Pursuant to 37 C.F.R. § 42.71(d), the issue of whether the challenged claims
`
`contain “additional features” beyond an abstract idea was previously addressed.
`
`See PO Resp. 11-12, 18-19; Ex. 2049, 19.
`
`
`
`12
`
`
`
`
`challenged claims are not limited to generic computer implementation, they
`
`contain an inventive concept sufficient to establish patent eligibility.
`
`Just as the claims do not purport to cover an abstract idea, the challenged
`
`claims do not “simply stat[e] an abstract idea while adding the words ‘apply it’ or
`
`‘apply it with a computer.’” Versata Development Group, Inc. v. SAP America,
`
`Inc., 793 F.3d 1306, 1332 (Fed. Cir. 2015). It is, of course, true that the claimed
`
`machine has several components, including computer code. Some of that code
`
`allows the machine to retrieve “use status data” and “use rules” from a carrier
`
`through the machine’s data carrier interface. And, after evaluating these specific
`
`pieces of data, the machine can access other “stored data.” But these limitations
`
`specify a way in which the machine provides access to stored data to the user. It
`
`does not claim the general idea of controlling access to content. The Board came
`
`to a different conclusion by failing to consider the various claim limitations as an
`
`ordered combination reflecting distinct technological choices and advantages.
`
`The Board held (at 10-11) that each specific limitation was a “generic
`
`computer component” such as a program store or a processor and, with respect to
`
`the claimed software limitations, that the claims lack “any inventive concept …
`
`related to the way these data types are constructed or used.” But that basic
`
`methodology is flawed, because it is not proper to look at individual limitations
`
`and determine if each specified component of the machine is conventional in
`
`isolation. “[I]nventions in most, if not all, instances rely upon building blocks long
`
`
`
`13
`
`
`
`
`since uncovered, and claimed discoveries almost of necessity will be combinations
`
`of what, in some sense, is already known.” KSR Int’l Co. v. Teleflex Inc., 550 U.S.
`
`398, 418-19 (2007). The fact that a machine uses individual well-known pieces
`
`does not mean that the particular combination of elements lacks an inventive
`
`concept. A novel cash register will likely be made of well-known circuitry or
`
`plastics, but that does not mean that the combination is not technological. See
`
`Alice, 134 S. Ct. at 2359 (a claim may be patentable if it “effect an improvement in
`
`any other technology or technical field”).
`
`As explained above, the ’458 patent claims a data access device used with a
`
`data carrier storing content data, use rule data, and use status data; that
`
`combination enables (for example) a portable “Smartflash” card to securely store
`
`downloaded content—a technological invention. See Ex. 1201, 24:16-18. Nothing
`
`in the Board’s opinion supports its conclusion that such an approach to data storage
`
`and access was merely conventional—which, in any event, should be a question of
`
`substantive validity, not patent eligibility.
`
`The Board acknowledged (at 13) that a combination of elements may
`
`provide an inventive concept under the Alice analysis. But in doing so, the Board
`
`not only improperly focused on a single aspect of the invention, it also drew the
`
`wrong conclusion. The Board acknowledged that the claims teach storing “two
`
`specific types of information—content and the conditions for providing access to
`
`the content – . . . in the same place or on the same storage device.” The Board then
`
`
`
`14
`
`
`
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`simply pronounced itself “not persuaded” that this particular configuration of data
`
`is “an inventive concept” —no reason given.
`
`The Board then asserted that this idea was known in the prior art, citing a
`
`1997 European patent application (Ex. 1216). But a single prior art reference
`
`hardly suggests that a particular concept, if deployed as part of a novel
`
`configuration, is conventional; just as significant, the reference does not disclose
`
`the type of data storage and manipulation that the ’458 patent claims. On the
`
`contrary, Ex. 1216 teaches embedding a “time bomb” within purchased content
`
`data. See Ex. 1216 10:26 (“rental products are formatted to include a time bomb”)
`
`(emphasis added). That renders the product useless after the rental period and
`
`makes it impossible to provide greater access without modifying the content itself.
`
`By contrast, the ’458 patent, by teaching storage and retrieval of content data, on
`
`the one hand, and use rules data and use status data, on the other, as distinct
`
`elements, solves this very problem. Thus a comparison to that prior art actually
`
`confirms the patent eligibility of the claims.
`
`
`
`V. CONCLUSION
`
`The Board should reverse its original decision and hold challenged
`
`claims 6, 8, and 10 patent-eligible.
`
`
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`
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`15
`
`
`
` /
`
` Michael R. Casey /
`
`
`Michael R. Casey
`Registration No. 40,294
`Davidson Berquist Jackson & Gowdey, LLP
`8300 Greensboro Drive
`Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7705
`Fax: (571) 765-7200
`Email: mcasey@dbjg.com
`Attorney for Patent Owner
`
`
`
`16
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`
`
`Dated: April 28, 2016
`
`
`
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`
`
`CERTIFICATE OF SERVICE
`
`The undersigned hereby certifies that this PATENT OWNER’S REQUEST
`FOR REHEARING in CBM2015-00016 was served today by emailing a copy to
`counsel for the Petitioner as follows:
`
`
`J. Steven Baughman (steven.baughman@ropesgray.com)
`Megan Raymond (megan.raymond@ropesgray.com)
`James R. Batchelder (james.batchelder@ropesgray.com)
`ApplePTABService-SmartFlash@ropesgray.com
`
`
`
`
`
`
`
`
`
`
`Dated: April 28, 2016
`
` /
`
` Michael R. Casey /
`
`
`Michael R. Casey
`Registration No. 40,294
`Davidson Berquist Jackson & Gowdey, LLP
`8300 Greensboro Drive
`Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7705
`Fax: (571) 765-7200
`Email: mcasey@dbjg.com
`Attorney for Patent Owner
`
`
`
`17