Trials@uspto.gov
`Tel: 571-272-7822
`
`Paper 22
`Entered: April 10, 2015
`
`
`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 B2
`
`
`
`
`
`
`
`
`
`Before JENNIFER S. BISK, RAMA G. ELLURU,
`JEREMY M. PLENZLER, and MATTHEW R. CLEMENTS,
`Administrative Patent Judges.
`
`CLEMENTS, Administrative Patent Judge.
`
`DECISION
`Instituting Covered Business Method Patent Review
`and Denying Motion for Joinder
`37 C.F.R. § 42.208
`37 C.F.R. § 42.222(b)
`
`
`
`
`Tel: 571-272-7822
`
`Paper 22
`Entered: April 10, 2015
`
`
`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 B2
`
`
`
`
`
`
`
`
`
`Before JENNIFER S. BISK, RAMA G. ELLURU,
`JEREMY M. PLENZLER, and MATTHEW R. CLEMENTS,
`Administrative Patent Judges.
`
`CLEMENTS, Administrative Patent Judge.
`
`DECISION
`Instituting Covered Business Method Patent Review
`and Denying Motion for Joinder
`37 C.F.R. § 42.208
`37 C.F.R. § 42.222(b)
`
`
`
`
`
`CBM2015-00017
`Patent 8,061,598 B2
`
`INTRODUCTION
`
`A. Background
`Apple Inc. (“Petitioner”), filed a Corrected Petition requesting
`covered business method patent review of claims 1, 2, 7, 15, and 31 (the
`“challenged claims”) of U.S. Patent No. 8,061,598 (Ex. 1201, “the ’598
`patent”) pursuant to § 18 of the Leahy-Smith America Invents Act (“AIA”).1
`Paper 9 (“Pet.”). Petitioner also filed a Motion for Joinder. Paper 3
`(“Mot.”). Patent Owner, Smartflash LLC (“Patent Owner”), filed a
`Preliminary Response (Paper 18, “Prelim. Resp.”) and an Opposition to the
`Motion for Joinder (Paper 10, “Opp.”). Petitioner filed a Reply in support of
`its Motion for Joinder. Paper 17 (“Reply”). We have jurisdiction under 35
`U.S.C. § 324(a), which provides that a covered business method patent
`review may not be instituted “unless . . . it is more likely than not that at
`least 1 of the claims challenged in the petition is unpatentable.”
`Upon consideration of the Petition and Preliminary Response, we
`determine that Petitioner has demonstrated that it is more likely than not that
`at least one of the challenged claims are unpatentable. Accordingly, we
`institute a covered business method review of claims 1, 2, 15, and 31 of the
`’598 patent. Petitioner’s Motion for Joinder is denied.
`
`B. Asserted Grounds
`Petitioner argues that the challenged claims are unpatentable based on
`the following grounds:
`
`
`1 Pub. L. No. 112-29, 125 Stat. 284, 296–07 (2011).
`
`2
`
`
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`CBM2015-00017
`Patent 8,061,598 B2
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`Basis Claims Challenged
`References
`§ 101
`1, 2, 7, 15, and 31
`Not applicable
`1, 2, 15, and 314
`Stefik2 and Ahmad3
`§ 103
`1, 2, 15, and 316
`Stefik, Ahmad, and Kopp5
`§ 103
`Petitioner also provides a declaration from Anthony J. Wechselberger.
`Ex. 1219.
`
`C. Related Matters
`The parties indicate that the ’598 patent is the subject of the following
`district court cases: Smartflash LLC v. Apple Inc., Case No. 6:13-cv-447
`(E.D. Tex. 2014); Smartflash LLC v. Samsung Electronics Co., Case No.
`6:13-cv-448 (E.D. Tex. 2014). Pet. 20–21; Paper 8, 2–3. Patent Owner also
`indicates that the ’598 patent is the subject of a third district court case:
`Smartflash LLC v. Google, Inc., Case No. 6:14-cv-435 (E.D. Tex. 2014).
`Paper 8, 3.
`Petitioner previously filed two Petitions for covered business method
`patent review of the ’598 patent: CBM2014-00108 and CBM2014-00109.
`Those petitions were instituted under 35 U.S.C. § 103 with respect to claim
`26, and consolidated into a single proceeding. Apple Inc. v. Smartflash LLC,
`
`
`2 U.S. Patent No. 5,530,235 (Ex. 1212) (“Stefik ’235”), and U.S. Patent No.
`5,629,980 (Ex. 1213) (“Stefik ’980”) (collectively, “Stefik”).
`3 U.S. Patent No. 5,925,127 (Ex. 1203) (“Ahmad”)
`4 Although the Petition alleges that all of the challenged claims would have
`been obvious under this ground (Pet. 42), only claims 1, 2, 15, and 31 are
`analyzed (Pet. 45–74).
`5 U.S. Patent No. 5,940,805 (Ex. 1204) (“Kopp”)
`6 Although the Petition alleges that all of the challenged claims would have
`been obvious under this ground (Pet. 42), only claims 1, 2, 15, and 31 are
`analyzed (Pet. 45–74).
`
`3
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`CBM2015-00017
`Patent 8,061,598 B2
`
`Case CBM2014-00108 (PTAB Sept. 30, 2014) (Paper 8). Petitioner also
`previously filed ten Petitions for covered business method patent review
`challenging claims of patents owned by Patent Owner and disclosing similar
`subject matter: CBM2014-00102, CBM2014-00103, CBM2014-00104,
`CBM2014-00105, CBM2014-00106, CBM2014-00107, CBM2014-00110,
`CBM2014-00111, CBM2014-00112, and CBM2014-00113. Pet. 21.
`Concurrent with the filing of this Petition, Petitioner filed three other
`Petitions for covered business patent review challenging claims of patents
`owned by Patent Owner and disclosing similar subject matter: CBM2015-
`00015, CBM2015-00016, and CBM2015-00018.
`
`D. The ’598 Patent
`The ’598 patent relates to “a portable data carrier for storing and
`paying for data and to computer systems for providing access to data to be
`stored” and the “corresponding methods and computer programs.”
`Ex. 1201, 1:21–25. Owners of proprietary data, especially audio recordings,
`have an urgent need to address the prevalence of “data pirates” who make
`proprietary data available over the internet without authorization. Id. at
`1:29–55. The ’598 patent describes providing portable data storage together
`with a means for conditioning access to that data upon validated payment.
`Id. at 1:59–2:11. This combination allows data owners to make their data
`available over the internet without fear of data pirates. Id. at 2:11–15.
`As described, the portable data storage device is connected to a
`terminal for internet access. Id. at 1:59–67. The terminal reads payment
`information, validates that information, and downloads data into the portable
`storage device from a data supplier. Id. The data on the portable storage
`device can be retrieved and output from a mobile device. Id. at 2:1–5. The
`
`4
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`CBM2015-00017
`Patent 8,061,598 B2
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`’598 patent makes clear that the actual implementation of these components
`is not critical and may be implemented in many ways. See, e.g., id. at
`25:49–52 (“The skilled person will understand that many variants to the
`system are possible and the invention is not limited to the described
`embodiments.”).
`
`E. Illustrative Claim
`Petitioner challenges claims 1, 2, 7, 15, and 31 of the ’598 patent.
`Claims 1 and 31 are independent. Claims 2, 7, and 15 depend from claim 1.
`Claim 1 is illustrative of the challenged subject matter and recites the
`following:
`1.
`A portable data carrier comprising:
`an interface for reading and writing data from and to the portable data
`carrier;
`content data memory, coupled to the interface, for storing one or more
`content data items on the carrier;
`use rule memory to store one or more use rules for said one or more
`content data items;
`a program store storing code implementable by a processor;
`and a processor coupled to the content data memory, the use rule
`memory, the interface and to the program store for implementing
`code in the program store,
`wherein the code comprises code for storing at least one content data
`item in the content data memory and at least one use rule in the use
`rule memory.
`Ex. 1201, 25:54–67.
`
`ANALYSIS
`
`A. Consolidation
`The statutory provision governing consolidation of inter partes review
`proceedings is 35 U.S.C. § 325(c), which reads as follows:
`
`5
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`CBM2015-00017
`Patent 8,061,598 B2
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`(c) JOINDER. — If more than 1 petition for a post-grant review
`under this chapter is properly filed against the same patent and
`the Director determines that more than 1 of these petitions
`warrants the institution of a post-grant review under section
`324, the Director may consolidate such reviews into a single
`post-grant review.
`Petitioner moves to consolidate this proceeding with CBM2014-
`00108.7 Mot. 1. In CBM2014-00108, we instituted trial on claim 26 of the
`’598 patent under 35 U.S.C. § 103. Apple Inc. v. Smartflash LLC,
`CBM2014-00108, Paper 8, 24 (PTAB Sept. 30, 2014). We declined to
`institute trial on claims 1, 2, 7, 13, 15, and 31 based on the prior art cited in
`that petition. Id. A Patent Owner Response was filed on February 27, 2015.
`CBM2014-00108, Paper 23.
`Petitioner argues that consolidating this proceeding with CBM2014-
`00108 will secure the just, speedy, and inexpensive resolution of these
`proceedings. Mot. 4. Petitioner argues that this Petition involves the same
`patent, same parties, same counsel, same expert, and one of the same prior
`art references as CBM2014-00108. Id. at 5–6. Petitioner argues that the
`“significant overlap in subject matter and prior art” lead to significant
`efficiencies in briefing, discovery (i.e., depositions), and argument. Id. at 7.
`Petitioner also argues that “[j]oinder . . . need not have any appreciable
`effect on the trial schedule of [CBM2014-00108]” because the due dates in
`this proceeding could be compressed without unfairly prejudicing either
`party. Id. at 8. Finally, Petitioner requests, in the event consolidation is
`
`
`7 Petitioner refers to Section 325(c) and seeks “joinder.” Although that
`provision is titled “Joinder,” it grants the Director authority only to
`“consolidate.” Thus, we treat Petitioner’s request as a request to consolidate
`pursuant to Section 325(c).
`
`6
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`CBM2015-00017
`Patent 8,061,598 B2
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`denied, that we coordinate the schedule in this proceeding with CBM2014-
`00108 such that, at minimum, oral arguments in the two proceedings occur
`together. Id. at 9.
`Patent Owner argues that Petitioner has filed a total of twenty-one
`petitions—“three, four[,] or five per patent”—over an eight month period
`and, therefore, not even consolidation will secure the just, speedy, and
`inexpensive resolution of these proceedings. Opp. 3–4. According to Patent
`Owner, the Petitioner’s motion to consolidate is untimely because the
`changes made in the Corrected Petition were extensive enough to warrant
`according a new filing date of November 21, 2014 (the date of the Corrected
`Petition), which is more than one month after September 30, 2014, the date
`on which CBM2014-00108 was instituted. Opp. 5–7. Patent Owner also
`points out that consolidation will not streamline discovery because Petitioner
`has filed five additional petitions for covered business method patent review
`that will not be entitled to consolidation with the earlier-filed proceedings
`and, therefore, at least those five Petitions, assuming they are instituted, will
`not be on the same schedule. Id. at 8–9. Patent Owner argues that
`Petitioner’s request for coordinated schedules should be denied for the same
`reasons. Id. at 8.
`Petitioner replies that it timely filed the instant Petition and Motion
`for Joinder. Reply 3–4. Petitioner also argues that the later-filed petitions
`for covered business method patent review identified by Patent Owner are
`not relevant to whether to consolidate this proceeding with an earlier
`proceeding involving the ’598 patent because those later-filed petitions
`relate to two different patents for which no trial has been instituted yet. Id.
`at 4–5.
`
`7
`
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`CBM2015-00017
`Patent 8,061,598 B2
`
`We have considered Petitioner’s arguments in support of
`consolidation and Patent Owner’s arguments in opposition. In CBM2014-
`00108, we instituted under 35 U.S.C. § 103 whereas, in this proceeding, we
`institute only under 35 U.S.C. § 101. We determine that the proceedings
`involve non-overlapping grounds, and thus, we are not persuaded that
`consolidation is warranted or justified on the facts presented. As discussed
`above, consolidation of two or more proceedings for covered business
`method patent review is discretionary. See 35 U.S.C. § 325(c). We decline
`to exercise that discretion to consolidate these proceedings. Likewise, we do
`not exercise our discretion to coordinate the schedule in this case with that of
`CBM2014-00108 given that we instituted trial in CBM2014-00108 on
`September 30, 2014, more than six months ago. See 37 C.F.R. § 42.222(a).
`
`B. Claim Construction
`In a covered business method patent review, claim terms are given
`their broadest reasonable interpretation in light of the specification in which
`they appear and the understanding of others skilled in the relevant art. See
`37 C.F.R. § 42.200(b); see also In re Cuozzo Speed Techs., LLC,
`778 F.3d 1271, 1281 (Fed. Cir. 2015) (“We conclude that Congress
`implicitly adopted the broadest reasonable interpretation standard in
`enacting the AIA.”). Applying that standard, we interpret the claim terms of
`the ’598 patent according to their ordinary and customary meaning in the
`context of the patent’s written description. See In re Translogic Tech., Inc.,
`504 F.3d 1249, 1257 (Fed. Cir. 2007). For purposes of this decision, we
`construe the claim term “use rule.”
`The term “use rule” is recited in independent claim 1. Petitioner
`proposes that “use rule” be construed to mean “a rule specifying a condition
`
`8
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`CBM2015-00017
`Patent 8,061,598 B2
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`under which access to content is permitted.” Pet. 23 (citing Apple Inc. v.
`Smartflash LLC, Case CBM2014-00108/109 (PTAB Sept. 30, 2014) (Paper
`8, 7) (construing “use rule”)). The ’598 patent describes “use rules” as “for
`controlling access to the stored content” (Ex. 1201, Abstract) and as
`“indicating permissible use of data stored on the carrier” (id. at 9:14–16).
`The ’598 patent also describes “evaluating the use status data using the use
`rules to determine whether access to the stored data is permitted.” Id. at
`6:38–40; see also id. at 21:48–53 (“[E]ach content data item has an
`associated use rule to specify under what conditions a user of the smart Flash
`card is allowed access to the content data item.”). Accordingly, for purposes
`of this decision, we construe “use rule” as “a rule specifying a condition
`under which access to content is permitted.”
`
`C. Covered Business Method Patent
`Section 18 of the AIA provides for the creation of a transitional
`program for reviewing covered business method patents. A “covered
`business method patent” is a patent that “claims a method or corresponding
`apparatus for performing data processing or other operations used in the
`practice, administration, or management of a financial product or service,
`except that the term does not include patents for technological inventions.”
`AIA § 18(d)(1); see 37 C.F.R. § 42.301(a). A patent need have only one
`claim directed to a covered business method to be eligible for review. See
`Transitional Program for Covered Business Method Patents—Definitions of
`Covered Business Method Patent and Technological Invention; Final Rule,
`77 Fed. Reg. 48,734, 48,736 (Aug. 14, 2012) (“CBM Rules”) (Comment 8).
`
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`1. Financial Product or Service
`Petitioner asserts that claim 7 “clearly concerns a computer system . . .
`for performing data processing and other operations used in the practice,
`administration, or management of a financial activity and service” because it
`“describes storing and providing payment data to a payment validation
`system.” Pet. 13. Based on this record, we agree with Petitioner that the
`subject matter recited by claim 7 is directed to activities that are financial in
`nature, namely data access conditioned on payment validation. Claim 7
`recites “payment data memory to store payment data and code to provide the
`payment data to a payment validation system.” We are persuaded that
`payment validation is a financial activity, and conditioning data access based
`on payment validation amounts to a financial service. This is consistent with
`the Specification of the ’598 patent, which confirms claim 7’s connection to
`financial activities by stating that the invention “relates to a portable data
`carrier for storing and paying for data.” Ex. 1201, 1:21–23. The
`Specification also states repeatedly that the disclosed invention involves
`managing access to data based on payment validation. See, e.g., Ex. 1201,
`1:59–67, 6:60–64, 20:50–54.
`Patent Owner disagrees that Claim 7 satisfies the financial-in-nature
`requirement of AIA § 18(d)(1), arguing that section should be interpreted
`narrowly to cover only technology used specifically in the financial or
`banking industry. Prelim. Resp. 5–10. Patent Owner cites to various
`portions of the legislative history as support for its proposed interpretation.
`Id.
`
`Although we agree with Patent Owner that the statutory language
`controls whether a patent is eligible for a covered business method patent
`
`10
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`CBM2015-00017
`Patent 8,061,598 B2
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`review, we do not agree that the phrase “financial product or service” is as
`limited as Patent Owner proposes. The AIA does not include as a
`prerequisite for covered business method patent review, a “nexus” to a
`“financial business,” but rather a “method or corresponding apparatus for
`performing data processing or other operations used in the practice,
`administration, or management of a financial product or service.” AIA
`§ 18(d)(1). Further, contrary to Patent Owner’s view of the legislative
`history, the legislative history indicates that the phrase “financial product or
`service” is not limited to the products or services of the “financial services
`industry,” and is to be interpreted broadly. CBM Rules, 77 Fed. Reg. at
`48,735–36. For example, the “legislative history explains that the definition
`of covered business method patent was drafted to encompass patents
`‘claiming activities that are financial in nature, incidental to a financial
`activity or complementary to a financial activity.’” Id. (citing 157 Cong.
`Rec. S5432 (daily ed. Sept. 8, 2011) (statement of Sen. Schumer)).
`In addition, Patent Owner asserts that claim 7 is not directed to an
`apparatus or method that is financial in nature because claim 7 “omits the
`specifics of how payment is made.” Prelim. Resp. 9. We are not persuaded
`by this argument because § 18(d)(1) of the AIA does not include such a
`requirement, nor does Patent Owner point to any other authority that makes
`such a requirement. Id. We determine that because payment is required by
`claim 7, as Patent Owner acknowledges, the financial in nature requirement
`of § 18(d)(1) is satisfied.
`For the reasons stated above, and based on the particular facts of this
`proceeding, we conclude that the ’598 patent includes at least one claim that
`meets the financial in nature requirement of § 18(d)(1) of the AIA.
`
`11
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`2. Exclusion for Technological Inventions
`Petitioner asserts that claim 7 does not fall within § 18(d)(1)’s
`exclusion for “technological inventions.” Pet. 15–20. In particular,
`Petitioner argues that claim 7 does not recite a technological feature that is
`novel and unobvious or solve a technical problem using a technical solution.
`Id. Patent Owner disagrees and argues that claim 7, as a whole, recites at
`least one technological feature that is novel and unobvious over the prior art.
`Prelim. Resp. 10–11.
`We are persuaded that claim 7 as a whole does not recite a
`technological feature that is novel and unobvious over the prior art. For
`example, claim 1, on which claim 7 depends, recites only limitations such as
`“interface,” “content data memory,” “use rule memory,” “program store,”
`“processor,” “code for storing,” and “code to provide” data, which are not
`novel and unobvious. Claim 7 also recites a “payment validation system.”
`The Specification, however, discloses that the required payment validation
`system may be one that is already in use or otherwise commercially
`available. For example, “[t]he payment validation system may be part of the
`data supplier’s computer systems or it may be a separate e-payment system.”
`Ex. 1201, 8:63–65; see also id. at 13:35–47.
`In addition, the ’598 patent makes clear that the asserted novelty of
`the invention is not in any specific improvement of software or hardware,
`but in the method of controlling access to data. For example, the ’598 patent
`states that “there is an urgent need to find a way to address the problem of
`data piracy” (id. at 1:52–55), while acknowledging that the “physical
`embodiment of the system is not critical and a skilled person will understand
`that the terminals, data processing systems and the like can all take a variety
`
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`of forms” (id. at 12:29–32). Thus, we determine that claim 7 is merely the
`recitation of a combination of known technologies, which indicates that it is
`not a patent for a technological invention. See Office Patent Trial Practice
`Guide, 77 Fed. Reg. 48,756, 48,764 (Aug. 14, 2012).
`Patent Owner also argues that claim 7 falls within § 18(d)(1)’s
`exclusion for “technological inventions” because it is directed towards
`solving the technological problem of “storing at least one content data item
`in the content data memory and at least one use rule in the use rule memory”
`with the technological solution of “code for storing at least one content data
`item in the content data memory and at least one use rule in the use rule
`memory.” Prelim. Resp. 10–11. We are not persuaded by this argument
`because, as Petitioner argues, the problem being solved by claim 7 is a
`business problem—data piracy. Pet. 18–19. For example, the Specification
`states that “[b]inding the data access and payment together allows the
`legitimate owners of the data to make the data available themselves over the
`Internet without fear of loss of revenue, thus undermining the position of
`data pirates.” Ex. 1201, 2:11–15. Thus, based on the particular facts of this
`proceeding, we conclude that claim 7 does not recite a technological
`invention and is eligible for a covered business method patent review.
`
`3. Conclusion
`In view of the foregoing, we conclude that the ’598 patent is a covered
`business method patent under AIA § 18(d)(1) and is eligible for review
`using the transitional covered business method patent program.
`
`D. 35 U.S.C. § 101
`Petitioner challenges claims 1, 2, 7, 15, and 31 as directed to patent-
`ineligible subject matter under 35 U.S.C. § 101. Pet. 26–38. Analyzing the
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`challenged claims using the two-step process applied recently in Alice Corp.
`Pty, Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014), Petitioner asserts that all
`the challenged claims are directed to an abstract idea without additional
`elements that transform the claims into a patent-eligible application of that
`idea. Id. Specifically, Petitioner argues that the challenged claims are
`directed to the abstract idea of “payment for something, and/or of controlling
`access to something.” Pet. 28.
`We agree with Petitioner that the challenged claims of the ’598 patent
`are more likely than not directed to patent-ineligible subject matter. Under
`35 U.S.C. § 101, we must first identify whether an invention fits within one
`of the four statutorily provided categories of patent-eligibility: “processes,
`machines, manufactures, and compositions of matter.” Ultramercial, Inc. v.
`Hulu, LLC, 772 F.3d 709, 713–714 (Fed. Cir. 2014). Here, each of the
`challenged claims recites a “machine,” i.e., a “portable data carrier,” under
`§ 101. Section 101, however, “contains an important implicit exception [to
`subject matter eligibility]: Laws of nature, natural phenomena, and abstract
`ideas are not patentable.” Alice, 134 S. Ct. at 2354 (citing Assoc. for
`Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2116 (2013)
`(internal quotation marks and brackets omitted)).
`We are persuaded that the challenged claims are more likely than not
`drawn to a patent-ineligible abstract idea. In Alice, the Supreme Court
`reiterated the framework set forth previously in Mayo Collaborative Servs.
`v. Prometheus Labs., 132 S. Ct. 1289, 1293 (2012) “for distinguishing
`patents that claim laws of nature, natural phenomena, and abstract ideas
`from those that claim patent-eligible applications of those concepts.” Alice,
`134 S. Ct. at 2355. The first step in the analysis is to “determine whether the
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`claims at issue are directed to one of those patent-ineligible concepts.” Id.
`If so, the second step in the analysis is to consider the elements of the claims
`“individually and ‘as an ordered combination’” to determine whether there
`are additional elements that “‘transform the nature of the claim’ into a
`patent-eligible application.” Id. (quoting Mayo, 132 S. Ct. at 1291, 1297).
`In other words, the second step is to “search for an ‘inventive concept’—i.e.,
`an element or combination of elements that is ‘sufficient to ensure that the
`patent in practice amounts to significantly more than a patent upon the
`[ineligible concept] itself.’” Id. (brackets in original) (quoting Mayo, 132 S.
`Ct. at 1294).
`As discussed above, the ’598 patent discusses addressing recording
`industry concerns of data pirates offering unauthorized access to widely
`available compressed audio recordings. Ex. 1201, 1:20–55. The ’598 patent
`proposes to solve this problem by restricting access to data on a portable
`data carrier based upon payment validation. Ex. 1201, 1:59–2:4. The ’598
`patent makes clear that the heart of the claimed subject matter is restricting
`access to stored data based on supplier-defined access rules and validation of
`payment. Id.; id. at 1:59–2:15. We are, thus, persuaded, on this record, that
`the claimed “portable data carrier,” is directed to an abstract idea. See Alice,
`134 S. Ct. at 2356 (holding that the concept of intermediated settlement at
`issue in Alice was an abstract idea); Accenture Global Servs., GmbH v.
`Guidewire Software, Inc., 728 F.3d 1336, 1344 (Fed. Cir. 2013) (holding the
`abstract idea at the heart of a system claim to be “generating tasks [based on]
`rules . . . to be completed upon the occurrence of an event”).
`Turning to the second step of the analysis, we look for additional
`elements that can “transform the nature of the claim” into a patent-eligible
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`application of an abstract idea. Mayo, 132 S. Ct. at 1297. On this record,
`we are not persuaded that the challenged claims of the ’598 patent add an
`inventive concept sufficient to ensure that the patent in practice amounts to
`significantly more than a patent on the abstract idea itself. Alice, 134 S. Ct.
`at 2355; see also Accenture Global Servs., 728 F.3d at 1345 (holding claims
`directed to the abstract idea of “generating tasks [based on] rules . . . to be
`completed upon the occurrence of an event” to be unpatentable even when
`applied in a computer environment and within the insurance industry).
`As discussed above, the Specification treats as well-known all
`potentially technical additions to the claims, including “interface,” “content
`data memory,” “use rule memory,” “program store,” “processor,” “code for
`storing,” and “code to provide” data. The linkage of existing hardware
`devices to existing payment validation processes and supplier-defined access
`rules appear to be “‘well-understood, routine, conventional activit[ies]’
`previously known to the industry.” Alice, 134 S. Ct. at 2359; Mayo, 132 S.
`Ct. at 1294.
`Having considered the information provided in the Petition and the
`Preliminary Response, we are persuaded that Petitioner has demonstrated
`that it is more likely than not that the challenged claims are unpatentable
`under 35 U.S.C. § 101. However, because we already instituted a covered
`business method patent review of claim 7 under 35 U.S.C. § 101 in
`CBM2014-00193 (Samsung Elecs. Am. Inc. v. Smartflash LLC, CBM2014-
`00193, Paper 7, 19 (PTAB April 2, 2015)), and because whether claim 7 is
`directed to patent-eligible subject matter is an issue of law, we exercise our
`discretion under 35 U.S.C. § 325(d) to decline to institute a covered business
`method patent review of claim 7 under this ground in this case.
`
`16
`
`
`
`CBM2015-00017
`Patent 8,061,598 B2
`
`Patent Owner argues that Petitioner’s assertion of this ground is
`untimely because “[t]here is no reason [Petitioner] could not have raised its
`§ 101 challenge in its initial filings.” Prelim. Resp. 12. According to Patent
`Owner,
`[A]llowing 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.
`Id. at 13. Patent Owner, however, cites no statutory or regulatory authority
`precluding Petitioner from asserting this ground. Moreover, Patent Owner
`acknowledges that the Supreme Court’s June 19, 2014, decision in Alice was
`decided after Petitioner’s original petitions were filed on April 1, 2014.
`Thus, on this record, we are not persuaded that Petitioner’s assertion of a
`new ground based on 35 U.S.C. § 101 is untimely.
`Conclusion
`On this record, Petitioner has established that it is more likely than not
`that claims 1, 2, 15, and 31 are unpatentable under 35 U.S.C. § 101.
`
`E. Obviousness based Stefik ’235, Stefik ’980, and Ahmad
`Petitioner argues that claims 1, 2, 15, and 31 are unpatentable under
`35 U.S.C. § 103(a) as obvious over Stefik ’235, Stefik ’980, and Ahmad.
`Pet. 38–74. Petitioner also argues that claims 1, 2, 15, and 31 are
`unpatentable under 35 U.S.C. § 103(a) as obvious over Stefik ’235, Stefik
`’980, Ahmad, and Kopp. Id.
`A patent claim is unpatentable, under 35 U.S.C. § 103(a), if the
`differences between the claimed subject matter and the prior art are such that
`the subject matter, as a whole, would have been obvious at the time the
`
`17
`
`
`
`CBM2015-00017
`Patent 8,061,598 B2
`
`invention was made to a person having ordinary skill in the art to which said
`subject matter pertains. KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 406
`(2007). The question of obviousness is resolved on the basis of underlying
`factual determinations, including: (1) the scope and content of the prior art,
`(2) any differences between the claimed subject matter and the prior art, (3)
`the level of skill in the art, and (4) where in evidence, so-called secondary
`considerations. Graham v. John Deere Co., 383 U.S. 1, 17–18 (1966).
`After carefully considering the Petition and Preliminary Response, we
`determine that Petitioner has not shown that it is more likely than not that it
`would prevail in showing that claims 1, 2, 15, and 31 are unpatentable as
`obvious over any of the combinations listed above. An obviousness inquiry
`is based on factual inquiries including the difference between the claimed
`invention and the prior art. Graham, 383 U.S. at 17–18. For each of the
`challenged claims, Petitioner has not identified sufficiently the differences
`between the claimed invention and each reference, or how the teachings of
`the two references are to be combined, if at all. Pet. 45–74.
`With respect to independent claim 1, for example, Petitioner cites
`Stefik for every element. Id. at 45–58. With respect to the recited “use
`rules,” Petitioner identifies “enumerated types of associated right
`restrictions” in a parenthetical, but appears to rely on Stefik’s Grammar
`Elements 1501 and 1502, which define digital work rights. Id. at 51–52.
`Petitioner argues that “[t]hese rules . . . include some of the same content
`rules disclosed in the ’598 patent,” such as a predetermined number of plays
`or time-limited access. Id. at 51. Petitioner then suggests, however, that
`Stefik’s digital work rights are not “use rules” by arguing the following:
`At a minimum, a POSA would have found it obvious to
`implement the limitations and conditions in the contents of
`
`18
`
`
`
`CBM2015-00017
`Patent 8,061,598 B2
`
`Stefik’s rights as access rules. A POSA would at a minimum
`have been motivated and found it obvious to encode a
`conditional statement with the encoded contents of the right that
`dictates that the conditions must be checked and met before the
`digital work could be accessed. A POSA would have
`understood
`that
`such
`conditional
`statement
`could
`advantageously ensure the conditions are checked even if the
`digital work is transferred and stored on a device other than a
`repository that does not process the rights of a digital work in
`the same manner as a repository in a repository transaction
`protocol when access is requested.
`Id. at 52–53, n.24. As a result, it is not clear whether Petitioner is alleging
`that Stefik’s digital work rights are “use rules,
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