UNITED STATES PATENT AND TRADEMARK OFFICE
`
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`APPLE INC.,
`
`Petitioner
`
`v.
`
`SMARTFLASH LLC
`
`Patent Owner
`
`____________
`
`Case CBM2015-00017
`
`Patent 8,061,598
`
`____________
`
`PATENT OWNER’S PRELIMINARY RESPONSE
`
`
`
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`APPLE INC.,
`
`Petitioner
`
`v.
`
`SMARTFLASH LLC
`
`Patent Owner
`
`____________
`
`Case CBM2015-00017
`
`Patent 8,061,598
`
`____________
`
`PATENT OWNER’S PRELIMINARY RESPONSE
`
`
`
`TABLE OF CONTENTS
`
`
`
`
`
`INTRODUCTION ........................................................................................... 1
`
` OVERVIEW OF U.S. PATENT NO. 8,061,598 ............................................ 3
`
`PATENT OWNER’S LIST OF EXHIBITS ............................................................. ii
`
`I.
`
`II.
`
`III. THE CHALLENGED CLAIMS ARE NOT DIRECTED TO FINANCIAL
`PRODUCTS OR SERVICES .......................................................................... 5
`
`
`IV. THE CHALLENGED CLAIMS OF THE ‘598 PATENT ARE
`TECHNOLOGICAL INVENTIONS EXEMPT FROM CBM REVIEW .... 10
`
`
`V.
`
` APPLE’S UNTIMELY § 101 CHALLENGE WILL NOT SECURE THE
`JUST, SPEEDY, AND INEXPENSIVE RESOLUTION OF THE
`BOARD’S PROCEEDINGS ......................................................................... 12
`
`
`VI. APPLE’S § 103 OBVIOUSNESS CHALLENGES RAISE
`SUBSTANTIALLY THE SAME PRIOR ART AND ARGUMENTS
`PREVIOUSLY PRESENTED ....................................................................... 14
`
`
`VII. STEFIK ‘235 and STEFIK ‘980 ARE NOT A SINGLE REFERENCE ...... 18
`
`VIII. “STEFIK” WOULD NOT HAVE BEEN COMBINED WITH AHMAD ... 20
`
`IX. CONCLUSION .............................................................................................. 22
`
`
`
`
`
`- i -
`
`
`
`PATENT OWNER’S LIST OF EXHIBITS
`
`Exhibit Number
`
`Exhibit Description
`
`2001
`
`2002
`
`2003
`
`2004
`
`2005
`
`Reserved
`
`Reserved
`
`Redline Showing “Corrected Petition” Compared to Original
`Petition in CBM2015-00017
`
`Congressional Record - House, June 23, 2011, H4480-4505
`
`Congressional Record - Senate, Sep. 8, 2011, S5402-5443
`
`
`
`
`
`
`
`- ii -
`
`
`
`Pursuant to 37 C.F.R. § 42.107, Smartflash LLC (“Patent Owner”) files this
`
`preliminary response to the corrected petition, setting forth reasons why no new
`
`covered business method review of U.S. Patent 8,061,598 should be instituted as
`
`requested by Apple, Inc. (“Apple” or “Petitioner”). Arguments presented herein
`
`are presented without prejudice to presenting additional arguments in a later
`
`response should the Board institute a CBM review.
`
`I.
`
`INTRODUCTION
`
`Petitioner Apple seeks covered business method review of claims 1, 2, 7, 15,
`
`and 31 of U.S. Patent No. 8,061,598 (“the ‘598 Patent”). Paper 9 at 1 (“Petition”).
`
`Apple filed two earlier petitions, CBM2014-00108 and CBM2014-00109 on April
`
`1, 2014, seeking covered business method review of these same ‘598 Patent
`
`claims, in addition to claims 13 and 26. Apple Inc. v. Smartflash LLC, Cases
`
`CBM2014-00108 and
`
`-00109, Paper 8 at 3-4
`
`(PTAB September 30,
`
`2014)(Decision,
`
`Institution
`
`of Covered Business Method
`
`Patent
`
`Review)(“00108/00109 Institution Decision”)(showing Apple’s prior ‘598 Patent
`
`claim challenges based on § 103 obviousness grounds and instituting covered
`
`business method patent review of claim 26 only). The Board granted review of
`
`claim 26 on § 103 obviousness grounds, but denied review of the remaining
`
`challenged claims. Id. at 4.
`
`
`
`- 1 -
`
`
`
`In the Corrected Petition, Apple raises for the first time a 35 U.S.C. § 101
`
`unpatentable subject matter challenge to claims 1, 2, 7, 15, and 31. Corrected
`
`Petition at 1, 22. Apple also re-raises § 103 obviousness challenges to claims 1, 2,
`
`15, and 31, relying on four pieces of prior art: two of which (Stefik ‘235 and Stefik
`
`‘980) are the same prior art raised in CBM2014-00108; and two of which (Ahmad
`
`and Kopp) are “additional prior art” Apple “now identifies” “in light of the Board’s
`
`Decision.” Corrected Petition at 2. However, Apple does not allege that such
`
`additional references were not known or available to it when it filed its earlier
`
`petitions.
`
`As the Board already correctly noted about the Corrected Petition and other
`
`petitions filed in 2014 on the same patent family, “[t]he 2015 set of petitions assert
`
`substantially overlapping arguments and prior art as asserted in the 2014 set of
`
`petitions, as well as challenges pursuant to 35 U.S.C. § 101, which raise purely
`
`legal issues.” CBM2015-00017, Paper 6 at 2. The Board should deny review of
`
`claims 1, 2, 7, 15, and 31 on Apple’s § 101 unpatentable subject matter grounds set
`
`forth in the Corrected Petition because Apple’s purely legal challenge is untimely
`
`and thus does not “secure the just, speedy, and inexpensive resolution” of the
`
`Board’s proceedings reviewing the ‘598 Patent claims. 37 C.F.R. § 42.1(b). The
`
`Board should also deny review of claims 1, 2, 15, and 31 on Apple’s § 103
`
`obviousness grounds because the Corrected Petition “raises substantially the same
`
`
`
`- 2 -
`
`
`
`prior art or arguments previously presented” and rejected by the Board in
`
`CBM2014-00108 and -00109. See, Unilever, Inc. v. The Proctor & Gamble
`
`Company, Case IPR2014-00506, Paper 17 at 6 (PTAB July 7, 2014)(Decision,
`
`Denying Institution of Inter Partes Review)( quoting 35 U.S.C. § 325(d)). In fact,
`
`in the face of serial petitions by other Petitioners, the PTAB has already held that
`
`the PTAB’s “resources are better spent addressing matters other than [a
`
`Petitioner’s] second attempt to raise a plurality of duplicative grounds against the
`
`same patent claims.” Conopco, Inc. dba Unilever v. The Proctor & Gamble
`
`Company, Case
`
`IPR2014-00628, Paper 21 at 21
`
`(PTAB October 20,
`
`2014)(Decision, Declining Institution of Inter Partes Review).
`
`II. OVERVIEW OF U.S. PATENT NO. 8,061,598
`
`Although the claims define the actual scope of coverage of the patent, as
`
`described in the first paragraph of the BACKGROUND OF THE INVENTION,
`
`the patent-at-issue, U.S. Patent No. 8,061,598 (hereinafter “the ‘598 patent”)
`
`generally describes “data storage and access systems ... [and] is particularly useful
`
`for managing stored audio and video data, but may also be applied to storage and
`
`access of text and software, including games, as well as other types of data.” Col.
`
`1, lines 20-28.
`
`Preferred embodiments described in the last full paragraph of col. 15
`
`illustrate this further: “FIG. 7 ... shows a variety of content access terminals for
`
`
`
`- 3 -
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`
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`accessing data supply computer system 120 over internet 142. The terminals are
`
`provided with an interface to a portable data carrier or ‘smart Flash card’ (SFC) as
`
`generally described with reference to FIG. 2 and as described in more detail below.
`
`In most embodiments of the terminal the SFC interface allows the smart Flash card
`
`data carrier to be inserted into and removed from the terminal, but in some
`
`embodiments the data carrier may be integral with the terminal.” Exemplary
`
`terminals include, but are not limited to, set-top boxes 154, CD/DVD Players 170
`
`and mobile communications devices 152. Col. 16, lines 4-17.
`
`Referring to preferred embodiments, the ‘598 patent discloses that a data
`
`supply system may provide users with a seamless purchase and content delivery
`
`experience. Col. 23, line 63 - col. 24, line 1. Users are able to purchase content
`
`from a variety of different content providers even if they do not know where the
`
`content providers are located or how the content is delivered. See id. The
`
`exemplary system is operated by a “content data supply ‘system owner,’” who may
`
`act as an intermediary between a user seeking to purchase content and content
`
`providers, such as record labels, movie studios, and software providers. See col.
`
`13, lines 60-67. When a user accesses the system, he or she is able to select
`
`content to purchase or rent from a variety of different content providers. See the
`
`paragraph crossing cols. 4 and 5. If the user finds a content item to buy, his or her
`
`device will transmit stored “payment data” to a “payment validation system” to
`
`
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`- 4 -
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`
`
`validate the payment data. See col. 8, lines 3-6. The payment validation system
`
`returns proof that the payment data has been validated, in the form of “payment
`
`validation data,” and the user is able to retrieve the purchased content from the
`
`content provider. See col. 8, lines 6-9.
`
`III. THE CHALLENGED CLAIMS ARE NOT DIRECTED TO FINANCIAL
`PRODUCTS OR SERVICES
`
`Petitioner has cited claim 7 as being the basis for requesting that a covered
`
`business method review be instituted. Petition at 11. Since claim 7 does not, in
`
`fact, meet the requirements for instituting a review, the Petition should be denied.
`
`As set forth in 37 CFR 42.301(a), to be eligible for CBM review, claim 7
`
`must be found to be claiming “a method or corresponding apparatus for performing
`
`data processing or other operations used in the practice, administration, or
`
`management of a financial product or service.” In the publication of the Final
`
`Rules for “Transitional Program for Covered Business Method Patents -
`
`Definitions of Covered Business Method Patent and Technological Invention,” the
`
`PTO stated:
`
`The definition set forth in § 42.301(a) for covered business
`method patent adopts the definition for covered business method
`patent provided in section 18(d)(1) of the AIA. In administering the
`program, the Office will consider the legislative intent and history
`behind the public law definition and the transitional program itself.
`For example, the legislative history explains that the definition of
`- 5 -
`
`
`
`
`
`covered business method patent was drafted to encompass patents
`“claiming activities that are financial in nature, incidental to a
`financial activity or complementary to a financial activity.” 157
`CONG. REC. S5432 (daily ed. Sept. 8, 2011) (statement of Sen.
`Schumer). This remark tends to support the notion that “financial
`product or service” should be interpreted broadly.
`
`
`Regardless of this explanation, it is improper for this tribunal to rely on the
`
`legislative history of the AIA to determine the specific issue before it, i.e., whether
`
`trial should be instituted on the present petition. The Supreme Court has “stated
`
`time and again that courts must presume that a legislature says in a statute what it
`
`means and means in a statute what it says. When the words of a statute are
`
`unambiguous, then, this first canon of construction is also the last: judicial inquiry
`
`is complete.” Connecticut Nat’l Bank v. Germain, 503 U.S. 249, 253–54 (1992).
`
`“[W]hen the language of the statute is plain, legislative history is irrelevant.”
`
`Zedner v. United States, 547 U.S. 489, 510–11 (2006) (Scalia, J., concurring-in-
`
`part). This long standing rule is based on the constitutional limitation that
`
`legislators cannot achieve through floor statements what “they were unable to
`
`achieve through the statutory text.” Exxon Mobil Corp. v. Allapattah Servs., Inc.,
`
`545 U.S. 546, 568 (2005). Because Section 18 is unambiguously limited to
`
`“financial product[s] and service[s],” there is no reason to look to the statements of
`
`
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`- 6 -
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`
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`a single Senator to re-tool text that was approved by both houses of Congress and
`
`signed by the President.
`
`Moreover, the PTO’s synopsis of the legislative history is an improper
`
`oversimplification and does not address that “financial product or service” was
`
`intended to be interpreted narrowly. In fact, when the House of Representatives
`
`debated Congressman Schock’s Amendment to remove Section 18 in its entirety
`
`from the America Invents Act, several members of Congress discussed their
`
`understanding of that narrower interpretation. For example, Mr. Schock himself
`
`discussed at the beginning of his remarks that “Section 18 carves out a niche of
`
`business method patents covering technology used specifically in the financial
`
`industry and would create a special class of patents in the financial services field
`
`subject to their own distinctive post-grant administrative review.” (Exhibit 2001,
`
`Congressional Record - House, June 23, 2011, H4496.) (Emphasis added.)
`
`Similarly, Congressman Shuster expressly discussed his understanding of
`
`the narrow interpretation of the legislation. He stated:
`
`Mr. Chair, I would like to place in the record my understanding
`that the definition of ‘‘covered business method patent,’’ Section
`18(d)(1) of H.R. 1249, the America Invents Act, is intended to be
`narrowly construed to target only those business method patents that
`are unique to the financial services industry in the sense that they are
`patents which only a financial services provider would use to
`furnish a financial product or service. The example that I have been
`- 7 -
`
`
`
`
`
`given is a patent relating to electronic check scanning, which is the
`type of invention that only the financial services industry would
`utilize as a means of providing improved or more efficient banking
`services. In contrast, Section 18 would not encompass a patent that
`can be used in other industries, but which a financial services
`provider might also use. Lastly, it is also my understanding from
`discussions with the Committee that Section 18 is targeted only
`towards patents for non-technological inventions.
`
`
`
`Id. at H4497. (Emphasis added.) It was based on that understanding that
`
`Congressman Shuster then voted to keep Section 18 in the bill. (See Id. at H4503.)
`
`
`
`Likewise, Congresswoman Waters discussed that Section 18 was directed to
`
`cost savings measures in the banking industry when she stated “too-big-to-fail
`
`banks ... are now coming to Congress in hopes that [Congress] will help them steal
`
`a specific type of innovation and legislatively take other financial services-related
`
`business method patents referenced in H.R. 1249, section 18. ... Financial
`
`services-related business method patents have saved financial services companies
`
`billions of dollars.” Id. at H4496. See also Exhibit 2002, 157 Cong. Rec. S5428
`
`(Rep. Pryor) (“It is of crucial importance to me that we clarify the intent of the
`
`[AIA § 18] process and implement it as narrowly as possible.”)
`
`In contrast to the banking or other financial products or services patents,
`
`claim 1 recites:
`
`
`
`- 8 -
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`
`
`1. A portable data carrier comprising:
`
`an interface for reading and writing data from and to the
`
`portable data carrier;
`
`content data memory, coupled to the interface, for storing one
`
`or more content data items on the carrier;
`
`use rule memory to store one or more use rules for said one or
`
`more content data items;
`
`a program store storing code implementable by a processor; and
`
`a processor coupled to the content data memory, the use rule
`
`memory, the interface and to the program store for implementing code
`
`in the program store, wherein the code comprises code for storing at
`
`least one content data item in the content data memory and at least
`
`one use rule in the use rule memory.
`
`Claim 7 depends from claim 1 and recites “7. A portable data carrier as claimed in
`
`claim 1, further comprising payment data memory to store payment data and code
`
`to provide the payment data to a payment validation system.” Rather than recite
`
`the “practice, administration, or management of a financial product or service,”
`
`claim 7 actually omits the specifics of how payment is made and focuses on
`
`technical aspects of data on a data carrier, e.g., code for storing content data item
`
`and use rule. Claim 7, therefore, does not recite a “financial product or service”
`
`
`
`- 9 -
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`
`
`when that phrase is properly construed, both under its plain meaning and in light of
`
`the legislative history showing Congress’ intent of the narrow meaning of that
`
`phrase.
`
`IV. THE CHALLENGED CLAIMS OF THE ‘598 PATENT ARE
`TECHNOLOGICAL INVENTIONS EXEMPT FROM CBM REVIEW
`
`As set forth in 37 CFR 42.301(a), even if claim 7 were considered to be
`
`claiming “a method or corresponding apparatus for performing data processing or
`
`other operations used in the practice, administration, or management of a financial
`
`product or service,” Petitioner must show that claim 7 does not meet the exception
`
`of being directed to a technological invention. Section 42.301(b) sets forth that a
`
`claim is directed to a technological invention (and therefore not the basis for
`
`instituting a CBM review) if “the claimed subject matter as a whole recites a
`
`technological feature that is novel and unobvious over the prior art; and solves a
`
`technical problem using a technical solution.”
`
`Claim 7, as a whole, recites at least one technological feature that is novel
`
`and unobvious over the prior art and solves a technical problem using a technical
`
`solution. At least one technological problem solved by the portable data carrier of
`
`claim 7 is storing at least one content data item in the content data memory and at
`
`least one use rule in the use rule memory. Moreover, it does so using a technical
`
`
`
`- 10 -
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`
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`solution, by using “code for storing at least one content data item in the content
`
`data memory and at least one use rule in the use rule memory.”
`
`Section III.A. of the Petition also does not allege, much less prove, that
`
`“code for storing at least one content data item in the content data memory and at
`
`least one use rule in the use rule memory” was known at the time of the invention
`
`of the patent-at-issue. Thus, as previously held in Epsilon Data Management, LLC
`
`et al. v. RPOST Comm. Ltd., CBM2014-00017, paper 21, page 8, any analysis in
`
`any other portion of the Petition (other than the portion relating to whether CBM
`
`review is proper) need not be considered in determining that the Petitioner has not
`
`met its burden of proving that the claim at issue is a covered business method
`
`patent. Id. (“In addition, although Patent Owner addresses the analysis in the
`
`Declaration of [Petitioner’s Declarant] (id. at 19), which Petitioner submitted with
`
`the Petition, this analysis was not included in the relevant portion of the Petition
`
`(Pet. 2-6), and need not be considered in determining that the ... Patent[-at-issue] is
`
`a covered business method patent.”) Thus, Petitioner has not proven that the
`
`challenged claims of the ‘598 patent are not directed to technological inventions
`
`exempt from CBM review.
`
`
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`- 11 -
`
`
`
`V. APPLE’S UNTIMELY § 101 CHALLENGE WILL NOT SECURE THE
`JUST, SPEEDY, AND INEXPENSIVE RESOLUTION OF THE
`BOARD’S PROCEEDINGS
`
`The Corrected Petition is Apple’s third-filed covered business method
`
`challenge against claims 1, 2, 7, 15, and 31 of the ‘598 Patent. Apple filed its first
`
`two petitions on April 1, 2014 (CBM2014-00108, Paper 2 and CBM2014-00109,
`
`Paper 2), nearly 7 months before filing its initial petition in this matter on October
`
`30, 2014 (CBM2015-00017, Paper 2). There is no reason Apple could not have
`
`raised its § 101 challenge in its initial filings.
`
`“[T]he Board is charged with securing the just, speedy, and inexpensive
`
`resolution of every proceeding.” EMC Corporation, et al. v. Personal Web
`
`Technologies, LLC, Case IPR2013-00082, Paper 33 at 4 (PTAB June 5,
`
`2013)(Decision, Denying Request for Rehearing)(citing 37 C.F.R. § 42.1(b)).
`
`“Rules for inter partes review proceedings were promulgated to take into account
`
`the ‘regulation on the economy, the integrity of the patent system, the efficient
`
`administration of the Office, and the ability of the Office to timely complete
`
`proceedings.’” Id. at 2 (citing 35 U.S.C. § 316(b)).
`
`Apple’s § 101 unpatentable subject matter grounds are raised for the first
`
`time in the Corrected Petition. As the Board has acknowledged, “challenges
`
`pursuant to 35 U.S.C. § 101 … raise purely legal issues.” CBM2015-00015, Paper
`
`6 at 2. Apple provides no valid reason why it did not raise this purely legal issue
`
`
`
`- 12 -
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`
`
`as grounds for invalidity in its two prior petitions filed long before the instant
`
`Corrected Petition. While it is true that Alice Corp. Pty, Ltd. v. CLS Bank Int’l,
`
`134 S. Ct. 2347 (2014) was “decided after Petitioner’s original petitions
`
`challenging the ‘598 Patent were filed” (Corrected Petition at 5), there was no
`
`impediment to Apple asserting § 101 back in April when it filed CBM2014-00108
`
`and -00109. As Apple acknowledges, “[i]n Alice, … the Supreme Court applied
`
`[Mayo Collaborative Servs. v. Prometheus Labs, 132 S. Ct. 1289, 1293 (2012)]’s
`
`two-part framework to ‘distinguish[] patents that claim laws of nature, natural
`
`phenomena, and abstract ideas from those that claim patent-eligible applications of
`
`these concepts.’” Corrected Petition at 27. Apple proffers no reason why it could
`
`not have raised this purely legal issue and applied Mayo’s two-part framework in
`
`its April petitions, as it does now in the Corrected Petition. Corrected Petition at
`
`27-38.
`
`Here, allowing Apple to raise a new ground of invalidity that it could have
`
`and should have raised in its April 1, 2014 petitions encourages Apple’s piecemeal
`
`invalidity challenges to Patent Owner’s patent claims and runs afoul of the Board’s
`
`charge to “secure the just, speedy, and inexpensive resolution” of Apple’s covered
`
`business method challenges to the ‘598 Patent. In fact, Patent Owner has been
`
`subjected to a continuing barrage of Petitions such that, together with the ten
`
`petitions filed by another group of Petitioners, the six patents in the patent family
`
`
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`- 13 -
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`
`
`under review have now been subject to 31 different CBM petitions. Thus, of the
`
`277 CBM petitions filed through the end of 2014, 31/277 or more than 11% of all
`
`CBMs ever filed have targeted only six patents belonging to the same assignee.
`
`As in Conopco, Smartflash’s “concern that it will ‘have to continually defend
`
`against repetitive challenges’ to the same patent claims is not without merit, given
`
`the multiplicity of grounds applied in each petition.” Conopco at 12. Patent
`
`Owner therefore respectfully requests that the Board deny review of claims 1, 2, 7,
`
`15, and 31 on Apple’s newly asserted § 101 unpatentable subject matter grounds.
`
`VI. APPLE’S § 103 OBVIOUSNESS CHALLENGES RAISE
`SUBSTANTIALLY THE SAME PRIOR ART AND ARGUMENTS
`PREVIOUSLY PRESENTED
`
`“As set forth in 35 U.S.C. § 325(d), the Director, and by extension the
`
`Board, has broad discretion to deny a petition that raises substantially the same
`
`prior art or arguments previously presented to the Office.” Unilever at 6. Here,
`
`the Corrected Petition raises substantially the same prior art and arguments
`
`previously presented in the CBM2014-00108 and -00109 petitions. The Board
`
`should exercise its broad discretion and deny the Corrected Petition.
`
`The Corrected Petition challenges claims 1, 2, 15, and 31 of the ‘598 Patent
`
`on § 103 obviousness grounds, claims that previously were denied review on § 103
`
`obviousness grounds in the CBM2014-00108 and -00109 proceedings. Compare
`
`Corrected Petition at 22 with 00108/00109 Institution Decision at 3-4)(showing
`
`
`
`- 14 -
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`
`
`Apple’s prior ‘598 Patent claims 1, 2, 15, and 31 challenges based on § 103
`
`obviousness grounds and denying institution of a covered business method patent
`
`review of claims 1, 2, 15, and 31).
`
`Apple’s current request for covered business method review of the ‘598
`
`Patent on § 103 obviousness grounds argues that “[c]laims 1, 2, 15, and 31 are
`
`obvious in light of Stefik and Ahmad”; and that “[c]laims 1, 2, 15, and 31 are
`
`obvious in light of Stefik, Ahmad, and Kopp. Apple admits that Ahmad and Kopp
`
`are “additional prior art” that it “now identifies” “[i]n light of the Board’s
`
`Decision” denying review of claims 1, 2, 15, and 31 as unpatentable under 35
`
`U.S.C. § 103. Corrected Petition at 2. Apple’s Corrected Petition is nothing more
`
`than an attempt to use the Board’s 00108/00109 Institution Decision declining to
`
`review claims 1, 2, 15, and 31 as a road map to resurrect challenges that were
`
`rejected in the CBM2014-00108 and -00109 proceeding.
`
`Apple cannot dispute that the Stefik ‘235 and Stefik ‘980 references
`
`constitute the same prior art previously presented against claims 1, 2, 15, and 31 of
`
`the ‘598 Patent as § 103 invalidating prior art in CBM2014-00108 and -00109 and
`
`rejected by the Board. 00108/00109 Institution Decision at 3-4 (summarizing
`
`references and claims challenged under § 103).
`
`Simply put, Apple put its best case on the invalidity of claims 1, 2, 15, and
`
`31 before the Board in CBM2014-00108 and -00109 and should not now be
`
`
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`- 15 -
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`
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`allowed to try again just because the Board declined to institute a review of those
`
`claims. Allowing Apple to file serial CBM petitions using the Board’s prior
`
`decision as guidance to fix flaws in its prior petitions encourages piecemeal
`
`litigation and promotes inefficiency. Forcing Patent Owner to respond and defend
`
`against the duplicative challenges is a financial burden. Serial filing of duplicative
`
`challenges is also a drain on the Board’s resources. The “interests of fairness,
`
`economy, and efficiency support declining review—a result that discourages the
`
`filing of a first petition that holds back prior art for use in successive attacks,
`
`should the first petition be denied.” Conopco at 11. In fact, in Apple’s case, it is
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`actually successive attacks, should the first and second petitions be denied.
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`As to the newly-cited prior art, Apple has not provided any argument or
`
`evidence that the Ahmad and Kopp references (Exhibits 1203 and 1204) were not
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`known or available to it in April 2014 when it filed the CBM2014-00108 and -
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`00109 petitions. If Apple wanted to rely on Ahmad and Kopp as § 103
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`invalidating prior art against claims 1, 2, 15, and 31 it could have, and should have,
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`done so in April in CBM2014-00108 and -00109.
`
`Moreover, the Ahmad and Kopp references are not alleged to teach anything
`
`that the references Apple cited in the CBM2014-00108 and -00109 petitions were
`
`not alleged to teach. In CBM2014-00108, Apple asserted that claims 1, 2, 15, and
`
`31 were obvious based on the Stefik ‘235 and Stefik ‘980 references. 00108/00109
`
`
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`- 16 -
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`
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`Institution Decision at 3. Here, Apple asserts that claims 1, 2, 15, and 31 are
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`obvious based on Stefik ‘235 and Stefik ‘980 in combination with Ahmad, and
`
`then in combination with Ahmad plus Kopp. Corrected Petition at 22. As
`
`compared to CBM2014-00108, Apple simply adds Ahmad, and then adds Ahmad
`
`plus Kopp. The Board declined to initiate review of claims 1, 2, 15, and 31 based
`
`on Apple’s combination of Stefik ‘235 and Stefik ‘980. 00108/00109 Institution
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`Decision at 3-4, 15-17. The Board’s decision was based on insufficiencies in the
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`application of Stefik ‘235 and Stefik ‘980, the same prior art references submitted
`
`here, to the claim elements of claims 1 and 31 (claims 2 and 15 are dependent
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`claims that depend from claim 1). “With respect to claims 1 and 31 … we are not
`
`persuaded that Apple has shown that Stefik ‘980 and Stefik ‘235 teach ‘use rules’
`
`or ‘use status data’ for the reasons discussed above.” Id. at 17 (referring to reasons
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`set forth at pp. 12 – 13). Yet Apple continues to assert Stefik ‘235 and Stefik ‘980
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`for teaching “use rules.” Corrected Petition at 17 (citing Stefik references,
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`Exhibits 1213 and 1215, for proposition that “[u]se rules, too, were already
`
`known…), 51 (“Stefik discloses use rule memory … that stores use rules…”).
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`Moreover, Ahmad and Kopp are not alleged to teach anything that the Stefik ‘235
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`and Stefik ‘980 references were not alleged to teach in the prior petition. As noted
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`above, in the prior petition Stefik ‘235 and Stefik ‘980 were purported to teach
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`“use rules” and “use status data,” which is what Ahmad and Kopp now are
`
`
`
`- 17 -
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`
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`purported to teach. Corrected Petition at 2 (“Petitioner now identifies additional
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`prior art – Ahmad and Kopp – with explicit disclosures of ‘use rules’ … and data
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`that meets particular examples of ‘use status data’”). Thus, the Corrected Petition
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`raises substantially the same prior art and arguments previously presented to the
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`Board in CBM2014-00108.
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`Given that the Corrected Petition raises substantially the same prior art and
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`arguments previously presented by Apple to attempt to invalidate claims 1, 2, 15,
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`and 31 of the ‘598 Patent in the CBM2014-00108 petition and given that the
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`arguments based on that prior art were rejected by the Board, the Board should
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`exercise its broad discretion here and deny the Corrected Petition. To do otherwise
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`promotes piecemeal litigation, inefficient duplicative serial filings, and drains the
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`resources of Patent Owner and the Board.
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`VII. STEFIK ‘235 and STEFIK ‘980 ARE NOT A SINGLE REFERENCE
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`The Petition alleges at page 38 that Stefik ’235 incorporates Stefik ’980 by
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`reference. However, Petitioner has not proven that the alleged incorporation by
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`reference in the ‘235 patent is sufficient to support a finding that the ‘235 and ‘980
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`patents should be considered a single reference. The ‘235 patent states, at col. 2,
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`lines 48-53, that “The currently preferred embodiment of a DocuCard is an
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`instance of a repository, as defined in co-pending application entitled ‘System for
`
`Controlling the Distribution and Use of Digital Works,’ serial number not yet
`
`
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`- 18 -
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`
`
`assigned, which is assigned to the assignee of the present invention and which is
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`herein incorporated by reference.” However, such a reference does not meet the
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`MPEP’s standard for incorporation by reference. MPEP 608.01(p) (Sixth Ed., Jan.
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`1995) set forth the procedure for incorporation by reference at the time the ‘235
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`patent was filed. As specified in the MPEP on page 600-55, left column, lines 11-
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`13, “In addition to other requirements for an application, the referencing
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`application should include an identification of the referenced patent, application, or
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`publication.” The Petitioner has not established that a reference to “co-pending
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`application entitled ‘System for Controlling the Distribution and Use of Digital
`
`Works,’ serial number not yet assigned, which is assigned to the assignee of the
`
`present invention,” actually identifies the referenced application. For example, the
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`application is not referenced by application serial number, filing date, inventors or
`
`attorney docket number.
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`As set forth in In re Fouche, 169 USPQ 429 (CCPA 1971), when the issue
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`arises as to whether an incorporation by reference is proper, the test is “whether the
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`original referring language was adequate to effect an incorporation by reference” --
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`a test which is resolved by determining whether the application allegedly
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`incorporated by reference is distinguished “from all others.” Id. at 431. Petitioner,
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`which bears the burden of proof on the issue, has not proven that the application is
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`distinguished from all others (e.g., by a declaration from Stefik describing that the
`
`
`
`- 19 -
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`
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`‘980 patent is the only such application). Thus, the alleged incorporation by
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`reference is not proper, and the ‘235 and ‘980 patents should not be considered a
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`single reference. As the Petition treats Stefik ’235 and Stefik ’980 as a single
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`reference when they are not, the Petition fails to present a motivation to combine
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`Ahmad with Stefik ’235 and Stefik ’980 and fails to present a motivation to
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`combine Ahmad and Kopp with Stefik ’235 and Stefik ’980. As a result, the
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`Petition fails to make out a prima facie case of obviousness for the claims
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`challenged under either Ground 2 or Ground 3 of the Petition.
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`
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`VIII. “STEFIK” WOULD NOT HAVE BEEN COMBINED WITH AHMAD
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`
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`Petitioner alleges in Grounds 2 and 3 that one of ordinary skill in the art
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`would have combined Ahmad with “Stefik,” either alone or in combination with
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`Kopp. Petition at 42. Not only is “Stefik” not a single reference (as described
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`above), but the Petition also has failed to articulate a legally tenable reason for
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`combining Ahmad with “Stefik.” Instead, the Petition impermissibly picks and
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`chooses elements from Ahmad using the claimed invention as a roadmap while
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`ignoring the teachings of Ahmad.
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`As described in the abstract, Ahmad teaches “The Software Monitor module
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`monitors use of the rented software program module while it is in use by the user.”
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`However, such an active monitoring during use of the software changes the
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`
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`- 20 -
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`
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`principle of operation of Stefik which does not utilize monitoring of any actively
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`running software but which instead treats “digital works” as passive “documents,”
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`e.g., to be copied, pri
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