`______________________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`______________________
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`APPLE INC.,
`Petitioner
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`v.
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`SMARTFLASH LLC,
`Patent Owner
`______________________
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`Case CBM2015-00016
`Patent 8,033,458 B2
`______________________
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`Before the Honorable JENNIFER S. BISK, RAMA G. ELLURU, JEREMY M.
`PLENZLER, and MATTHEW R. CLEMENTS, Administrative Patent Judges.
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`PETITIONER APPLE INC.’S OPPOSITION TO
`PATENT OWNER’S MOTION TO EXCLUDE UNDER 37 C.F.R. § 42.64(c)
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`Case CBM2015-00016
`Patent 8,033,458 B2
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`TABLE OF CONTENTS
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`I.
`II.
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`The Board Should Not Exclude Exhibit 1202 ................................................. 2
`The Board Should Not Exclude Exs. 1203, 1205-07, 1209, 1211-19,
`Or 1226-27 ....................................................................................................... 2
`III. The Board Should Not Exclude Exhibit 1220 ................................................. 4
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`Case CBM2015-00016
`Patent 8,033,458 B2
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`In response to Patent Owner’s (“PO”) Motion to Exclude (“Mot.”, Pap. 39),
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`Petitioner respectfully submits that the Board, sitting as a non-jury tribunal with
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`administrative expertise, is well-positioned to determine and assign appropriate
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`weight to the evidence presented here, without resorting to formal exclusion that
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`might later be held reversible error. See, e.g., S.E.C. v. Guenthner, 395 F. Supp. 2d
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`835, 842 n.3 (D. Neb. 2005); Builders Steel Co. v. Comm’r of Internal Revenue,
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`179 F.2d 377, 379 (8th Cir. 1950) (vacating Tax Court decision for exclusion of
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`competent, material evidence); Donnelly Garment Co. v. Nat’l Labor Relations
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`Bd., 123 F.2d 215, 224 (8th Cir. 1941) (NLRB’s refusal to receive testimonial evi-
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`dence was denial of due process). See also, e.g., Samuel H. Moss, Inc. v. F.T.C.,
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`148 F.2d 378, 380 (2d Cir. 1945), cert. denied, 326 U.S. 734 (1945) (“Even in
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`criminal trials to a jury it is better, nine times out of ten, to admit, than to exclude, .
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`. . and in such proceedings as these the only conceivable interest that can suffer by
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`admitting any evidence is the time lost, which is seldom as much as that inevitably
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`lost by idle bickering about irrelevancy or incompetence.”). But even under strict
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`application of the Rules of Evidence, cf. 77 Fed. Reg. 48,612, 48,616 (Aug. 14,
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`2012) (“42.5(a) and (b) permit administrative patent judges wide latitude in admin-
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`istering the proceedings to balance the ideal of precise rules against the need for
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`flexibility to achieve reasonably fast, inexpensive, and fair proceedings”), Petition-
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`er’s evidence here is entirely proper while PO’s objections are baseless.
`1
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`Case CBM2015-00016
`Patent 8,033,458 B2
`The Board Should Not Exclude Exhibit 1202
`I.
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`Petitioner did not rely on Ex. 1202 for “evidence of the content” of the ’458
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`patent (cf. Mot. 1), but rather to show PO’s own characterization of the subject
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`matter of the ’458 patent supports Petitioner’s contention, and the Board’s conclu-
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`sion, that the ’458 patent relates to a financial activity or transaction and is thus
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`subject to the Board’s review as a covered business method patent. See Pap. 9 at
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`12. PO’s characterization of the ’458 patent in another proceeding is not found in
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`the patent itself; thus, Ex. 1202 is not cumulative of the ’458 patent, and FRE 1004
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`is inapplicable. Indeed, as PO admits, the Board declined to exclude the same ex-
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`hibit in another proceeding on the same patent because the Board found “[Patent
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`Owner’s] characterization of the ’458 patent in prior proceedings are relevant to
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`the credibility of its characterization of the ’458 patent in this proceeding.” Mot.
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`2-3 (citing CBM2014-00106, Pap. 52 at 25); see also CBM2014-00102, Pap. 52 at
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`36; CBM2014-00108, Pap. 50 at 19; CBM2014-00112, Pap. 48 at 24. Contrary to
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`PO’s claim that its characterization of the ’458 patent is not at issue here (Mot. 3),
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`PO disputed the financial nature of the ’458 patent here, see Pap. 19 at 5-10, and its
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`highly relevant admission to the contrary should not be excluded.
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`II.
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`The Board Should Not Exclude Exs. 1203, 1205-07, 1209, 1211-19, Or
`1226-27
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`Contrary to PO’s assertions, Exs. 1206-07, 1209, 1211-12, 1216-17, 1219,
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`and 1226-27 (“Prior Art Exhibits”) are certainly relevant to the Board’s § 101
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`2
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`Patent 8,033,458 B2
`analysis.1 More specifically, such evidence is relevant to Mayo’s two-step inquiry
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`for patent eligibility to determine, for example, whether the claims contain an “in-
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`ventive concept” or merely recite “well-understood, routine, conventional activ-
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`it[ies] previously known to the industry.” Alice Corp. Pty. Ltd. v. CLS Bank Int’l,
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`134 S. Ct. 2347, 2357, 2359 (2014) (internal quotations omitted); see e.g., YYZ,
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`LLC v. Hewlett-Packard Co., No. 13-136-SLR, 2015 WL 5886176, at *8 (D. Del.
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`Oct. 8, 2015) (“Although the § 101 inquiry is focused on the claim language, ex-
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`trinsic evidence [, such as prior art,] may be helpful in terms of understanding the
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`state of the art . . . , and whether the problem to which the patent was directed is
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`solved using computer technology in unconventional ways.”); cf. Versata Dev.
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`Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306, 1334, 1336 (Fed. Cir. 2015) (affirming
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`Board’s reliance on petitioner’s expert in determining claimed steps were well-
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`known, routine, and conventional and Board’s finding that “claims at issue do not
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`recite any improvement in computer technology”).2 Both the Petition and the
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`Wechselberger Declaration describe Prior Art Exhibits as evidence of that
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`knowledge. See, e.g., Pap. 9 at 6-10 (Overview of Field of the Claimed Invention);
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`Ex. 1220 ¶¶ 28-49 (State of the Art).
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`1 Ex. 1208 was not relied on here. While exclusion of Ex. 1208 is unnecessary, Pe-
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`titioner would not oppose it.
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`2 All emphasis herein is added unless otherwise indicated.
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`3
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`Moreover, the Petition and Wechselberger Declaration specifically rely on
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`Prior Art Exhibits to show either that (1) the basic concept of controlling access
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`based on payment—to which the challenged claims are directed—was well-known
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`in the prior art, or (2) the elements disclosed by the challenged claims were well-
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`known, routine, and conventional. See, e.g., Pap. 9 at 32-34 (analogizing chal-
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`lenged claims to those held ineligible in Alice); Ex. 1220 ¶¶ 83-84 (citing “State of
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`the Art” discussion and Ex. 1211), 88-92 (citing Exs. 1206-07, 1212, 1216). The
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`Prior Art Exhibits are unquestionably relevant to the § 101 analysis; there is no ba-
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`sis to exclude them.
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`PO’s assertion that Exs. 1203, 1205, 1213-15, and 1218 are irrelevant is sim-
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`ilarly meritless. As with the other Prior Art Exhibits, these exhibits are relevant to
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`the Board’s § 101 analysis because they provide further evidence of the state of the
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`art. While the Board did not institute review based on grounds calling out Exs.
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`1203, 1205, 1213-15, and 1218, they nonetheless establish the state of the art and
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`provide context for the § 101 inquiry, and the Wechselberger Declaration specifi-
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`cally relies on them for this purpose. See Ex. 1220 ¶¶ 38-39, 41-43, 47 (“State of
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`the Art” discussion), 83 (citing “State of the Art” discussion in § 101 analysis), 92
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`(citing Exs. 1213-14).
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`III. The Board Should Not Exclude Exhibit 1220
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`Despite the Board’s rejection on multiple occasions of PO’s argument that
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`4
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`the Wechselberger Declaration should be disregarded for not reciting the eviden-
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`tiary standard, PO reargues it again here. Mot. 8-11; CBM2014-00106, Pap. 8 at 4
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`n.11; CBM2014-00106, Pap. 52 at 27-28; see also CBM2014-00102, Pap. 8 at 4
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`n.8; CBM2014-00108, Pap. 8 at 16 n.5; CBM2014-00112, Pap. 7 at 4 n.9;
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`CBM2014-00102, Pap. 52 at 39; CBM2014-00108, Pap. 50 at 21-22; CBM2014-
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`00112, Pap. 48 at 26. But, as the Board properly found, experts, like Mr. Wech-
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`selberger, are “not required to recite the ‘preponderance of the evidence’ standard
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`expressly in order for the expert testimony to be accorded weight, much less ad-
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`missibility.” CBM2014-00106, Pap. 52 at 27; see also CBM2014-00102, Pap. 52
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`at 39; CBM2014-00108, Pap. 50 at 21-22; CBM2014-00112, Pap. 48 at 26. “Ra-
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`ther, it is within [the Board’s] discretion to assign the appropriate weight to be ac-
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`corded to evidence based on whether the expert testimony discloses the underlying
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`facts or data on which the opinion is based.” See IPR2013-00172, Pap. 50 at 42.
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`Further, the Wechselberger Declaration sufficiently “disclose[s] the underlying
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`facts or data on which the opinion is based,” as required by 37 C.F.R. § 42.65(a),
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`and cites specific evidence supporting each of the opinions.
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`PO also seeks to exclude the portions of the Wechselberger Declaration that
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`identify the level of skill of a POSITA, disclose Mr. Wechselberger’s assumed
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`claim constructions, cite prior art to describe the state of the art and provide con-
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`text for his § 101 opinions, and “any other portion . . . that is directed to patentabil-
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`5
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`ity under 35 U.S.C. §103.” Mot. 11-12 (identifying paragraphs 24-26, 28-71).
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`First, as detailed in § II, supra, the Wechselberger Declaration’s description of the
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`art at the relevant time is clearly relevant to the § 101 inquiry. For the same reasons
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`the Prior Art Exhibits and Exs. 1203, 1205, 1213-15, and 1218 are relevant, expert
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`analyses of those exhibits are relevant under FRE 401 and should not be excluded.
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`Further, the level of skill of a POSITA is relevant in determining whether claim el-
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`ements would be considered well-known, routine, and conventional; and claim
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`construction is relevant because “the determination of patent eligibility requires a
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`full understanding of the basic character of the claimed subject matter.” See, e.g.,
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`Bancorp Servs., LLC v. Sun Life Assurance Co. of Can., 687 F.3d 1266, 1273-74
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`(Fed. Cir. 2012). PO provides no argument or support to the contrary.
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`PO also seeks to exclude portions of the Wechselberger Declaration that
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`provide Mr. Wechselberger’s opinions on indefiniteness under 35 U.S.C. § 112,
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`arguing that “the Wechselberger Declaration does not prove that Mr. Wechsel-
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`berger is an expert whose testimony is relevant to the issue.” Mot. 12 (identifying
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`paragraphs 72-75). To the contrary, Mr. Wechselberger’s CV and Declaration
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`prove that Mr. Wechselberger qualifies as an expert in the field of the alleged in-
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`vention. See Ex. 1220 ¶¶ 1-12, App’x A. As the Board previously found in anoth-
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`er proceeding on the ’458 patent, “Mr. Wechselberger has a Bachelor and Master
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`in Electrical Engineering, and has decades of experience in relevant technologies.”
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`6
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`Patent 8,033,458 B2
`CBM2014-00106, Pap. 52 at 27; see also CBM2014-00102, Pap. 52 at 39;
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`CBM2014-00108, Pap. 50 at 21; CBM2014-00112, Pap. 48 at 26. Indeed, at trial
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`in the litigation, PO had no objection to Petitioner’s offer of Mr. Wechselberger as
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`an expert in the field of the alleged invention. Ex. 1234 at 62:12-18. As PO then
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`acknowledged, Mr. Wechselberger is a qualified expert and his opinions should not
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`be excluded.
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`PO further seeks to exclude the portions of the Wechselberger Declaration
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`that provide Mr. Wechselberger’s opinions on the patent eligibility of the chal-
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`lenged claims, arguing that § 101 is a “strictly legal issue . . . for which Mr. Wech-
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`selberger is not an expert.” Mot. 12 (identifying paragraphs 76-105). But PO’s ar-
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`gument ignores that “[p]atent eligibility under § 101 presents an issue of law . . . .
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`[that] may contain underlying factual issues.” Accenture Global Servs., GmbH v.
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`Guidewire Software, Inc., 728 F.3d 1336, 1340-41 (Fed. Cir. 2013); see also Ar-
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`rhythmia Research Tech., Inc. v. Corazonix Corp., 958 F.2d 1053, 1055-56 (Fed.
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`Cir. 1992) (“[D]etermination of [statutory subject matter] may require findings of
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`underlying facts specific to the particular subject matter and its mode of claim-
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`ing.”); cf. Versata, 793 F.3d at 1334 (affirming Board’s reliance on petitioner’s
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`expert over patent owner’s expert in determining claimed steps were well-known,
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`routine, and conventional). And, there is no dispute that Mr. Wechselberger is
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`competent to opine on the factual issues. Cf. Mot. 12. Moreover, there is no basis
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`7
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`for PO’s objections to Mr. Wechselberger’s expert testimony under FRE 602, as
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`the rule plainly states it “does not apply to a witness’s expert testimony under Rule
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`703.” Thus, PO’s FRE 602 objection to paragraphs 76-105 of the Wechselberger
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`Declaration should be rejected for this additional, independent reason.
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`October 15, 2015
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`Respectfully submitted,
`By /J. Steven Baughman/
`J. Steven Baughman, Lead Counsel
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`8
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that a copy of the foregoing PETITIONER
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`APPLE INC.’S OPPOSITION TO PATENT OWNER’S MOTION TO EX-
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`CLUDE was served on October 15, 2015, to the following Counsel for Patent
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`Owner via e-mail, pursuant to the parties’ agreement concerning service:
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`Michael R. Casey
`J. Scott Davidson
`DAVIDSON BERQUIST JACKSON & GOWDEY LLP
`8300 Greensboro Drive, Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7700
`Facsimile: (571) 765-7200
`mcasey@dbjg.com
`jsd@dbjg.com
`docket@dbjg.com
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`Attorneys for Patent Owner Smartflash LLC
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`/s/ Sharon Lee
`Sharon Lee
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`ROPES & GRAY LLP
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`9