`
`_________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_________
`
`APPLE INC.,
`Petitioner,
`
`v.
`
`SMARTFLASH LLC,
`Patent Owner.
`
`_________
`
`Case CBM2015-00017
`
`Patent 8,061,598 B2
`
`_________
`
`PATENT OWNER’S REQUEST FOR REHEARING
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`TABLE OF CONTENTS
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`I.
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`INTRODUCTION .............................................................................................. 1
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`II. STATEMENT OF PRECISE RELIEF REQUESTED ...................................... 2
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`III. BACKGROUND ................................................................................................ 2
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`IV. ARGUMENT ..................................................................................................... 4
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`A.
`
`Like the Claims in DDR Holdings, the Challenged Claims Are Patent
`Eligible Because They Teach a Specific Solution to a Novel Problem
`Presented By Digital Commerce ............................................................ 5
`
`B.
`
`The Challenged Claims Do Not Resemble Those in Alice .................. 10
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`1.
`
`2.
`
`The Challenged Claims Are Directed To A Specific Device,
`Not An Abstract Idea ............................................................ 10
`
`The Challenged Claims Contain Numerous “Additional
`Features” That Demonstrate That They Do Not Cover An
`Abstract Idea ......................................................................... 12
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`V. CONCLUSION ................................................................................................ 15
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`
`
`i
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`I.
`
`INTRODUCTION
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`The Board’s final written decision in this covered business method patent
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`review misapprehends the Federal Circuit’s and Supreme Court’s guidance on
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`patent eligible subject matter under 35 U.S.C. § 101. The challenged claims cover
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`a specific physical device operating within a novel content delivery system that
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`facilitates distribution of digital content over the Internet while helping to reduce
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`piracy—a pressing problem at the time of invention. The claims contain
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`meaningful limitations that are both inventive and technological, which, when
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`taken in ordered combination, amount to more than the idea of “controlling access
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`to content” and do not pre-empt the field. Furthermore, the claims improve the
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`functioning of computers used to download, store, and access data thereby
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`effecting a technological improvement in the relevant field.
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`The Board wrongly determined that these claims on a physical device
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`actually covered an abstract idea and ignored the claims’ specific combination of
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`hardware and software to hold that the claims contain no inventive concept. Under
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`the Board’s analysis, any device used in an economic transaction that contains
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`conventional components would be patent ineligible. This error is exactly what the
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`Supreme Court cautioned against in Alice. See Alice Corp. Pty. Ltd. v. CLS Bank
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`Int’l, 134 S. Ct. 2347, 2354 (2014) (warning against “construing this exclusionary
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`
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`1
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`
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`principle [to] swallow all of patent law”). Patent Owner respectfully requests
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`rehearing to correct these errors. See 37 C.F.R. § 42.71(d).
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`II.
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`STATEMENT OF PRECISE RELIEF REQUESTED
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`Patent Owner requests that the Board reverse its original decision (Paper 46,
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`March 30, 2016) and hold that challenged claims 1, 2, and 15 are patent eligible.1
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`III. BACKGROUND
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`1.
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`The opportunities and challenges associated with distribution of
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`digital content over the Internet “introduces a problem that does not arise” with
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`content distributed on physical media. DDR Holdings, LLC v. Hotels.com, L.P.,
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`773 F.3d 1245, 125 (Fed. Cir. 2014). By the late 1990s, as a result of improved
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`data compression and increasing bandwidth for Internet access, content providers,
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`for the first time, had the ability to offer data for purchase over the Internet; at the
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`same time, unprotected data files could be easily pirated and made available
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`“essentially world-wide.” Ex. 1201, 1:32-33. The conventional operation of the
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`Internet does not solve the problem of data piracy: on the contrary, the Internet
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`facilitates the distribution of data without restriction or protection. Id. 1:49-55.
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`Content providers had faced the issue of piracy before—a CD can be copied
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`onto a cassette tape or onto another CD and the pirated copy sold—but the problem
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`1 Patent Owner does not seek rehearing with respect to claim 31 but reserves the
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`right to appeal the Board’s determination with regard to that claim.
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`
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`2
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`
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`of widespread distribution of pirated content over the Internet was unprecedented.
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`There had never before been a way to make free, identical, and flawless copies of
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`physical media available to millions of people instantaneously at virtually no
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`incremental cost. See generally Metro-Goldwyn-Mayer Studios, Inc. v. Grokster,
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`Ltd., 545 U.S. 913, 929-30 (2005). The advent of the Internet thus gave rise to an
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`urgent need to address the problem of data piracy.
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`
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`The inventor devised a data storage and access system for downloading and
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`paying for data, described in the specification and claimed in this patent and others,
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`comprising specific elements designed to overcome the problems inherent in
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`making digital content available over the Internet. Ex. 1201, at 1 (Abstract). The
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`relevant claims of the ’598 patent are directed to one aspect of that system:
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`namely, a “portable data carrier.” Id. at 25:54. Related patents cover other aspects
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`of the system and interactions explained in the specification.
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`Claim 1 requires the “portable data carrier” to include an “interface for
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`reading and writing data from and to the portable data carrier”; “content data
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`memory”; “use rule memory”; a “program store”; and a “processor . . . for
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`implementing code in the program store,” “wherein the code comprises code for
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`storing at least one content data item in the content data memory and at least one
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`use rule in the use rule memory.” Ex. 1201, 25:54-67. Claim 2 adds the element
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`of “code to provide access to . . . content data . . . in accordance with the . . . use
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`
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`3
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`
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`rule.” And Claim 15 adds a “content access PIN memory” to store a “PIN number
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`for controlling access to the content data memory.”
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`
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`2.
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`The Board found the challenged claims to be patent ineligible. First,
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`the Board found (at 7-8) “that the challenged claims are drawn to a patent-
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`ineligible abstract idea,” that is, “performing the fundamental economic practice of
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`conditioning and controlling access to content.” The Board also found “that the
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`additional elements . . . are either field of use limitations and/or generic features of
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`a computer.” Id. at 10. And the Board distinguished DDR Holdings because
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`“[d]ata piracy exists in contexts other than the Internet,” “the solution provided by
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`the challenged claims is not rooted in specific computer technology” and the
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`“result” does not “override[] the routine and conventional use of the recited
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`devices and functions.” Id. at 14-15.
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`IV. ARGUMENT
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`The Board should reverse its decision in this case and find the claims
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`directed to statutory subject matter because, in evaluating whether challenged
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`claims 1, 2, and 15 comply with the requirements of § 101, the Board failed to give
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`effect to the actual language of the claims and their specific limitations.2 The
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`2 The Board disregarded the actual text of the claims, using nearly identical
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`language in all the final written decisions of the covered business methods that
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`4
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`
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`actual claim language, read in light of the specification, reflects a specific and
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`concrete solution to a novel problem associated with distribution of digital content
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`over the Internet. Such a technological advance is patent eligible.
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`A. Like the Claims in DDR Holdings, the Challenged Claims Are
`Patent Eligible Because They Teach a Specific Solution to a Novel
`Problem Presented By Digital Commerce
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`1.
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`The claims of the ’598 patent are patent eligible because they
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`embody one concrete aspect of a particular solution to the Internet-specific
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`problem of digital piracy. This is not a patent that simply claims “use of the
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`Internet” or a computer to perform an established business method. Cf.
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`Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 716 (Fed. Cir. 2014). This is no
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`digital telephone book. Cf. Paper 46, at 17. On the contrary, the challenged claim
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`limitations reflect specific technical choices: a “portable data carrier” that includes
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`“content data memory” and “use rule memory” and a “processor” capable of
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`storing content data and use rules.
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`That particular configuration of elements provides distinct advantages over
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`alternatives. For example, by storing “use rules” in a “use rule memory” on the
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`data carrier—rather than (for example) including any use rules as part of the
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`content file—the invention allows for different levels of usage of the same digital
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`concern the patents related to the ’598 patent, even though the challenged claims
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`varied dramatically in their coverage. See CBM2015-00016 and CBM2014-00194.
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`5
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`
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`content. This permits, for example, both rental and sale rather than just sale of
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`particular content data; it also allows for provision of enhanced access without
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`downloading the content data anew. Ex. 1201, 22:49-51. By including a processor
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`on the portable data carrier, the claimed invention enhances the functionality of the
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`data carrier, providing more than just storage. Indeed, the basic insight reflected in
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`the claims—that a portable data carrier can include functionality to read and write
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`content data, and use rules in distinct memories—is itself inventive.
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`Because the claims teach specific technical solutions to a problem associated
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`with distribution of digital content through specific organization of distinct data
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`types, implemented on a specific device, there is no risk that the patents
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`monopolize a “fundamental economic practice,” as the Board held (at 7-8).
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`Consequently, there is no concern that recognizing the patent-eligibility of these
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`claims will “impede innovation” or “improperly t[ie] up . . . building blocks of
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`human ingenuity,” Alice, 134 S. Ct. at 2354. On the contrary, each claim teaches a
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`“specific way” to control access to stored digital content; the claims do not attempt
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`to “preempt every application of the idea.” DDR Holdings, 773 F.3d at 1259.
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`2.
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`The Board rejected Patent Owner’s reliance on DDR Holdings
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`(at 15), holding that the challenged claims were not “rooted in computer
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`technology in order to overcome a problem specifically arising in the realm of
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`6
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`
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`computer networks.”3 That is incorrect: the claim discusses specific computer
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`functions and interactions to perform a defined series of operations. Indeed, the
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`Board’s own summary of the ’598 patent (at 3) states:
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`The ’598 patent describes providing portable data storage together
`with a means for conditioning access to that data upon validated
`payment. . . . This combination allows data owners to make their data
`available over the internet without fear of data pirates.
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`The specification further explains that the purpose of the invention is to
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`“make . . . data available . . . over the internet without fear of loss of revenue.” Ex.
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`1201, 2:13-15. The specification notes that “the growing prevalence of so-called
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`data pirates” is a problem that arises by virtue of “increasingly wide use of the
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`internet.” Id. 1:29-30. Because the Internet facilitates “essentially world-wide”
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`distribution of flawless, identical copies of content data, the data piracy problems it
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`creates are qualitatively different from the problem of copying of physical media
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`(videotapes, CDs, software, books), which necessarily takes time, imparts
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`imperfections, and imposes incremental costs. See Grokster, Ltd., 545 U.S. at 929-
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`30. Rather than generically claiming use of the Internet to perform an abstract
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`3 Pursuant to 37 C.F.R. § 42.71(d), the issue of whether the challenged claims were
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`similar to those in DDR Holdings was previously addressed. See PO Resp. 1, 10-
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`12.
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`
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`7
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`
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`business practice, the claims solve problems faced by digital content providers in
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`the Internet Era and improve the functioning of the computer itself.4
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`The Board also held (at 15) that the challenged claims contained
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`limitations—unlike the claims in DDR Holdings—that were “specified at a high
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`level of generality.” But the challenged claims and the specification discuss
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`specific data stored in specific places, not mere generalities. There is “content
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`data” and “use rules” stored on the carrier. See Ex. 1201 25:58-59. These phrases
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`are uniquely used in the ’598 patent and do not have the broad acceptance that the
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`words in the DDR Holding patent did. See DDR Holdings, 773 F.3d at 1249
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`(reciting “links,” “source page,” and “web page”). These limitations are not
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`“specified at a high level of generality.”
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`The fact that the patentee uses its own lexicography does not mean that the
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`claim limitations are not precisely described. Here, the device must be able to
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`read, write, and store specific data, namely, content data items and associated use
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`rules. The claim does not “merely recite the performance of some business
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`4 The claims of the ’598 patent do not directly involve Internet transactions; rather,
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`they are directed to a portable data carrier for reading and writing content data and
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`use rules. The claims nevertheless are directed towards an Internet-specific
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`problem – that is, storing and controlling access to content data sold separately
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`from a storage medium.
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`
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`8
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`
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`practice known from the pre-Internet world along with the requirement to perform
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`it on the Internet.” DDR Holdings, LLC, 773 F.3d at 1257. By ignoring these
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`limitations, the Board erred in holding that there were not “additional features”
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`present in the challenged claims that made them patent-eligible.
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`
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` Finally, the Board held (at 12) that the claims could be performed by “a
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`general-purpose computer.” But, again, this ignores the limitations of the claims,
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`which, as explained above, require specific configurations of distinct memories
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`and data types and defined interactions to facilitate secure access to content data
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`items stored on a data carrier. As the specification makes clear, when digital data
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`is sent over the Internet operating in its normal, expected manner and stored by a
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`recipient, the content data are insecure; the content owner has no means to exert
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`further control over access. The claims provide a specific mechanism to ensure
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`that content, once downloaded and stored, can be accessed only when access is
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`authorized in accordance with associated use rules. Just as the claims in DDR
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`Holdings “specify how interactions with the Internet are manipulated to yield a
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`desired result,” 773 F.3d at 1258, so too the claims here specify how manipulation
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`of specific data facilitates convenient and secure provision of digital content, a
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`result that neither the conventional Internet nor unimproved computers can
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`produce. The patent “improve[s] the functioning” and the functionality of portable
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`data carriers, which, as the specification makes clear, likewise improves the
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`9
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`
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`functioning of data communications networks used for digital content distribution.
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`Alice, 134 S. Ct. at 2359.
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`B.
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`The Challenged Claims Do Not Resemble Those in Alice
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`The claims do not fit the mold of the patent-ineligible claims of Alice. They
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`do not recite an “abstract idea” and, in any event, teach a specific “combination of
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`elements” that amounts to “significantly more” than any ineligible concept.
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`1.
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`The Challenged Claims Are Directed To A Specific Device,
`Not An Abstract Idea
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`The Board’s determination that the claims were directed to an abstract idea
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`is incorrect because the claims are directed to a concrete machine with specific
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`hardware and software components and not merely to the abstract idea of
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`conditioning and controlling access to content.5 As the Board acknowledged (at 6)
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`“the challenged claims recite a ‘machine,’ i.e., a ‘portable data carrier” with
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`defined components. See Ex. 1201, 25:54-67. It contains an interface, distinct
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`memories, and a processor. The machine runs specific software to store content
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`data items and associated use rules governing whether a user may access data on
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`the data carrier. The patent specification emphasizes that the patent is on a
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`5 Pursuant to 37 C.F.R. § 42.71(d), the issue of whether the claims are abstract
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`ideas was previously addressed. See PO Resp. 10-22; see also Tr. 46:21-47:11.
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`
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`10
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`
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`machine. See, e.g., id. 1:21-25; see also 35 U.S.C. § 101 (allowing for patents on
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`“processes, machines, manufactures, and compositions of matter”).6
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`In finding this claimed machine was directed to an abstract idea, the Board
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`apparently focused on the problem that the patented machine was designed to solve
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`and treated the problem itself as the abstract idea to which the claims were
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`directed. Specifically, the Board held (at 7-8) that “the challenged claims are
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`directed to performing the fundamental economic practice of conditioning and
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`controlling access to content.” But while it is true that the claimed machine
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`provides a specific mechanism that can be used to condition and control access to
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`content, thus combatting problems of data piracy, see Ex. 1201, 1:20-55, that does
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`not provide a fair description of the claims, which, as explained, provide a specific
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`solution to an aspect of the problem.
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`There is a fundamental difference between claiming a specific device or
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`method that can be used to accomplish an economic practice and claiming the
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`practice itself. See Brookhill-Wilk 1, LLC v. Intuitive Surgical, Inc., 326 F.3d
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`1215, 1223 (Fed. Cir. 2003) (“Advantages described in the body of the
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`specification, if not included in the claims, are not per se limitations to the claimed
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`6 The Board identified the abstract idea without explaining its methodology, which
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`itself merits rehearing. Cf. Avago Techs. Gen. IP (Singapore) Pte Ltd. v. Asustek
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`Computer, Inc., No. 15-cv-04525-EMC, at 10-11 (N.D. Cal. Apr. 25, 2016).
`
`
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`11
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`
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`invention.”). As an example, a cash register is a physical device used to perform a
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`fundamental economic practice, namely, collecting, storing, and tracking payment.
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`A claim on a specific novel device—with specific circuit boards, keys, and cash
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`drawers—may be patentable even though a claim on collecting and storing
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`payment itself would not be. The Board’s decision equates a claim on a machine
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`that may be used to perform an economic task with a claim on the economic task
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`itself, which risks turning all devices used in commerce into abstract ideas. This is
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`the problem that the Supreme Court warned against in Alice. “At some level, all
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`inventions ... embody, use, reflect, rest upon, or apply laws of nature, natural
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`phenomena, or abstract ideas. Thus, an invention is not rendered ineligible for
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`patent simply because it involves an abstract concept.” Alice, 134 S. Ct. at 2354.
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`2.
`
`The Challenged Claims Contain Numerous “Additional
`Features” That Demonstrate That They Do Not Cover An
`Abstract Idea
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`In any event, the Board was incorrect to find that the challenged claims did
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`not contain “additional features” to ensure that they were more than a drafting
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`effort designed to monopolize the abstract idea.7 On the contrary, because the
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`7 Pursuant to 37 C.F.R. § 42.71(d), the issue of whether the challenged claims
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`contain “additional features” beyond an abstract idea was previously addressed.
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`See PO Resp. 11-12.
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`
`
`12
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`
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`challenged claims are not limited to generic computer implementation, they
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`contain an inventive concept sufficient to establish patent eligibility.
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`Just as the claims do not purport to cover an abstract idea, the challenged
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`claims do not “simply stat[e] an abstract idea while adding the words ‘apply it’ or
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`‘apply it with a computer.’” Versata Development Group, Inc. v. SAP America,
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`Inc., 793 F.3d 1306, 1332 (Fed. Cir. 2015). It is, of course, true that the claimed
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`machine has several components, including computer code. Some of that code
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`allows the machine to store “content data items” and associated “use rules.” And,
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`after evaluating these specific pieces of data, the machine can provide access to the
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`content data items. But these limitations specify a way in which the machine
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`controls access to stored data. It does not claim the general idea of controlling
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`access to content. The Board came to a different conclusion by failing to consider
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`the various claim limitations as an ordered combination reflecting distinct
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`technological choices and advantages.
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`The Board held (at 10-11) that each specific limitation was a “generic
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`computer component” such as a program store or a processor and, with respect to
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`the claimed software limitations, that the claims lack “any inventive concept …
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`related to the way these data types are constructed or used.” But that basic
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`methodology is flawed, because it is not proper to look at individual limitations
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`and determine if each specified component of the machine is conventional in
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`
`
`13
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`
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`isolation. “[I]nventions in most, if not all, instances rely upon building blocks long
`
`since uncovered, and claimed discoveries almost of necessity will be combinations
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`of what, in some sense, is already known.” KSR Int’l Co. v. Teleflex Inc., 550 U.S.
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`398, 418-19 (2007). The fact that a machine uses individual well-known pieces
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`does not mean that the particular combination of elements lacks an inventive
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`concept. A novel cash register will likely be made of well-known circuitry or
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`plastics, but that does not mean that the combination is not technological. See
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`Alice, 134 S. Ct. at 2359 (a claim may be patentable if it “effect an improvement in
`
`any other technology or technical field”).
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`As explained above, the ’598 patent claims a portable data carrier storing
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`content data items and associated use rules; that combination enables (for example)
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`a portable “Smartflash” card to securely store downloaded content—a
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`technological invention. See Ex. 1201, 24:16-18. Nothing in the Board’s opinion
`
`supports its conclusion that such an approach to data storage and access was
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`merely conventional—which, in any event, should be a question of substantive
`
`validity, not patent eligibility.
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`The Board acknowledged (at 12) that a combination of elements may
`
`provide an inventive concept under the Alice analysis. But in doing so, the Board
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`not only improperly focused on a single aspect of the invention, it also drew the
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`wrong conclusion. The Board (at 17-18) acknowledged that the claims teach
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`
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`14
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`
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`storing “two specific types of information—content and the payment data – . . . in
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`the same place or on the same storage device.” The Board then simply pronounced
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`itself “not persuaded” that this particular configuration of data is “an inventive
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`concept” —no reason given.
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`The Board then asserted that this idea was known in the prior art, citing U.S.
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`Patent No. 5,629,980 (Ex. 1213) and a1997 European patent application (Ex.
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`1216). But this hardly suggests that a particular concept, if deployed as part of a
`
`novel configuration, is conventional; just as significant, the references do not
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`disclose the type of data storage and manipulation that the ’598 patent claims. On
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`the contrary, both teach having the content owner include or attach usage rights as
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`part of the content item. See Ex. 1216 10:26 (“rental products are formatted to
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`include a time bomb”) (emphasis added); Ex. 1213, Abstract (“the owner . . .
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`attaches usage rights to that work”). That makes it impossible to provide greater
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`access without downloading the content again. By contrast, the ’598 patent, by
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`teaching separate storage of content data items, on the one hand, and associated use
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`rules on the other, solves this very problem. Thus a comparison to that prior art
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`actually confirms the patent eligibility of the claims.
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`V. CONCLUSION
`The Board should reverse its original decision and hold challenged
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`claims 1, 2, and 15 patent-eligible.
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`15
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`
` /
`
` Michael R. Casey /
`
`
`Michael R. Casey
`Registration No. 40,294
`Davidson Berquist Jackson & Gowdey, LLP
`8300 Greensboro Dr., Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7700
`Fax : (571) 765-7200
`Email: mcasey@dbjg.com
`
`
`
`
`
`16
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`Dated: April 29, 2016
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`CERTIFICATE OF SERVICE
`
`The undersigned hereby certifies that this PATENT OWNER’S REQUEST
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`FOR REHEARING was served, by agreement of the parties, by email on April 29,
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`2016, to the following addresses:
`
`
`
`J. Steven Baughman (steven.baughman@ropesgray.com)
`James R. Batchelder (james.batchelder@ropesgray.com)
`Megan Raymond (megan.raymond@ropesgray.com
`ApplePTABService-SmartFlash@ropesgray.com
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`
`
`Dated: April 29, 2016
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`
`
`
`
` /
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` Michael R. Casey /
`
`
`Michael R. Casey
`Registration No. 40,294
`Davidson Berquist Jackson & Gowdey, LLP
`8300 Greensboro Drive
`Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7705
`Fax: (571) 765-7200
`Email: mcasey@dbjg.com
`Attorney for Patent Owner
`
`
`
`17