Case CBM2015-00017
`Patent 8,061,598 B2
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`______________________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`______________________
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`APPLE INC.,
`Petitioner
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`v.
`
`SMARTFLASH LLC,
`Patent Owner
`______________________
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`Case CBM2015-00017
`Patent 8,061,598 B2
`______________________
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`Before JENNIFER S. BISK, RAMA G. ELLURU, JEREMY M. PLENZLER, and
`MATTHEW R. CLEMENTS, Administrative Patent Judges.
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`PETITIONER’S REPLY TO PATENT OWNER’S RESPONSE
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`Case CBM2015-00017
`Patent 8,061,598 B2
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`TABLE OF CONTENTS
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`INTRODUCTION ........................................................................................... 1
`I.
`PETITIONER’S RESPONSE TO PO’S STATEMENT OF FACTS ............. 3
`II.
`III. THE CHALLENGED CLAIMS ARE NOT § 101 PATENT ELIGIBLE ..... 3
`A.
`PO Fails to Identify Any Inventive Concept ......................................... 5
`The DDR Claims Are Not Analogous to the Challenged Claims ......... 9
`B.
`1.
`The Challenged Claims Do Not Address an Internet-
`Specific Problem ....................................................................... 10
`The Challenged Claims Do Not “Override” Routine and
`Conventional Computer Action ................................................ 13
`The Challenged Claims and the DDR Claims are Not
`Comparable ............................................................................... 16
`PO’s Preemption Arguments Are Misplaced ...................................... 17
`C.
`IV. PO’S OTHER ARGUMENTS ARE IRRELEVANT TO THE MERITS .... 20
`A. Mr. Wechselberger Was Not Required to Recite the “Preponder-
`ance of the Evidence” Standard ......................................................... 20
`PO’s Construction of “Payment Data” Ignores the Explicit
`Teachings of the ’598 Patent ............................................................... 22
`PO’s “Estoppel” Arguments Are Unfounded ..................................... 23
`1.
`The ’598 Patent’s Prosecution Before the PTO Does Not
`Estop the Board from Considering § 101 Here ........................ 23
`Non-Final § 101 Determinations in District Court Litiga-
`tion Have No Impact on This Proceeding ................................. 24
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`2.
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`3.
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`2.
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`B.
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`C.
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`Case CBM2015-00017
`Patent 8,061,598 B2
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`TABLE OF AUTHORITIES
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`CASES
`Accenture Global Servs., GmbH v. Guidewire Software, Inc.,
`728 F.3d 1336 (Fed. Cir. 2013) ................................................................ 7, 16, 25
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`Page(s)
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`Alice Corp. Pty. Ltd. v. CLS Bank Int’l,
`134 S. Ct. 2347 (2014) .................................................................................passim
`
`Ariosa Diagnostics, Inc. v. Sequenom, Inc.,
`788 F.3d 1371 (Fed. Cir. 2015) ...................................................................passim
`
`Arrhythmia Research Tech., Inc. v. Corazonix Corp.,
`958 F.2d 1053 (Fed. Cir. 1992) .......................................................................... 25
`
`Bancorp Servs., L.L.C. v. Sun Life Assurance Co. of Can.,
`687 F.3d 1266 (Fed. Cir. 2012) ................................................................ 5, 16, 19
`
`buySAFE, Inc. v. Google, Inc.,
`765 F.3d 1350 (Fed. Cir. 2014) ................................................................ 7, 13, 16
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`Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat’l Ass’n,
`776 F.3d 1343 (Fed. Cir. 2014) .............................................................. 1, 5, 6, 16
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`DDR Holdings, LLC v. Hotels.com, L.P.,
`773 F.3d 1245 (Fed. Cir. 2014) ...................................................................passim
`
`Digitech Image Techs., LLC v. Elecs. for Imaging, Inc.,
`758 F.3d 1344 (Fed. Cir. 2014) ............................................................................ 7
`
`Enzo Biochem, Inc. v. Gen-Probe, Inc.,
`424 F.3d 1276 (Fed. Cir. 2005) .......................................................................... 22
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`Ethicon, Inc. v. Quigg,
`849 F.2d 1422 (Fed. Cir. 1988) .......................................................................... 25
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`Fresenius USA, Inc. v. Baxter Int’l, Inc.,
`721 F.3d 1330 (Fed. Cir. 2013) .......................................................................... 24
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`Gottschalk v. Benson,
`409 U.S. 63 (1972) .......................................................................................... 1, 12
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`Intellectual Ventures I LLC v. Capital One Bank (USA)
`(“IV”), 792 F.3d 1363 (Fed. Cir. 2015) .............................................. 2, 13, 14, 15
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`Mayo Collaborative Services v. Prometheus Labs, Inc.,
`132 S. Ct. 1289 (2012) .................................................................................passim
`
`OIP Techs., Inc. v. Amazon.com, Inc.,
`788 F.3d 1359 (Fed. Cir. 2015) ...................................................................passim
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`SmartGene, Inc. v. Advanced Biological Labs. SA,
`555 F. App’x 950 (Fed. Cir. 2014) ....................................................................... 7
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`Suffolk Techs., LLC v. AOL Inc.,
`752 F.3d 1358 (Fed. Cir. 2014) .......................................................................... 21
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`Telebuyer, LLC v. Amazon.com, Inc.,
`No. 2:13-cv-1677, 2015 WL 4493045 (W.D. Wash. July 23, 2015) ................... 8
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`Ultramercial, Inc. v. Hulu, LLC,
`772 F.3d 709 (Fed. Cir. 2014) .....................................................................passim
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`Versata Dev. Grp., Inc. v. SAP Am., Inc.,
`793 F.3d 1306 (Fed. Cir. 2015) .................................................................... 21, 23
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`PTAB RULINGS
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`CBM2012-00007, Papers 15 & 58........................................................................... 25
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`CBM2013-00013, Paper 61 ....................................................................................... 7
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`CBM2014-00079, Paper 28 ................................................................................. 3, 18
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`CBM2014-00108, Paper 8 ....................................................................................... 20
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`CBM2015-00059, Paper 13 ................................................................................. 3, 18
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`IPR2013-00078, Paper 15 ........................................................................................ 22
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`IPR2013-00172, Paper 50 .................................................................................... 3, 21
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`STATUTES & REGULATIONS
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`35 U.S.C. § 101 .................................................................................................passim
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`35 U.S.C. § 324(a) ................................................................................................... 24
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`37 C.F.R. § 42.65 ..................................................................................................... 21
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`LIST OF EXHIBITS
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`Description
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`Exhibit
`1201
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`1202
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`1203
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`1204
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`1205
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`1206
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`1207
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`1208
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`1209
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`1210
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`1211
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`1212
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`1213
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`1214
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`1215
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`1216
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`1217
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`1218
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`1219
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`U.S. Patent No. 8,061,598
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`Plaintiffs’ First Amended Complaint
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`U.S. Patent No. 5,925,127
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`U.S. Patent No. 5,940,805
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`Russell Housley and Jan Dolphin, “Metering: A Pre-pay Tech-
`nique,” Storage and Retrieval for Image and Video Databases V,
`Conference Volume 3022, 527 (January 15, 1997)
`U.S. Patent No. 4,999,806
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`U.S. Patent No. 5,675,734
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`U.S. Patent No. 4,878,245
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`U.S. Patent No. 7,334,720
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`U.S. Patent No. 7,942,317
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`U.S. Patent No. 5,103,392
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`U.S. Patent No. 5,530,235
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`U.S. Patent No. 5,629,980
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`U.S. Patent No. 5,915,019
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`European Patent Application, Publication No. EP0809221A2
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`International Publication No. WO 99/43136
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`JP Patent Application Publication No. H11-164058 (translation)
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`Eberhard von Faber, Robert Hammelrath, and Frank-Peter Heider,
`“The Secure Distribution of Digital Contents,” IEEE (1997)
`Declaration of Anthony J. Wechselberger In Support of Apple Inc.’s
`Petition for Covered Business Method Patent Review
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`Case CBM2015-00017
`Patent 8,061,598 B2
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`Exhibit
`1220
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`U.S. Patent No. 8,033,458
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`Description
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`1221
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`1222
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`1223
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`1224
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`1225
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`1226
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`1227
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`1228
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`1229
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`1230
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`1231
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`1232
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`1233
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`Declaration of Michael P. Duffey In Support of Apple Inc.’s Peti-
`tion for Covered Business Method Patent Review
`Declaration of Megan F. Raymond In Support of Apple Inc.’s Peti-
`tion for Covered Business Method Patent Review
`Claim Construction Memorandum Opinion from Smartflash LLC v.
`Apple Inc., No. 6:13cv447 (Dkt. 229)
`File History for U.S. Patent No. 8,061,598
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`U.S. Patent No. 4,337,483
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`U.S. Patent No. 7,725,375
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`International Publication No. WO 95/34857
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`Excerpts from the Deposition Transcript of Jonathan Katz, Ph.D.
`Vol. 1, April 8, 2015, taken in connection with CBM2014-
`00102, -00106, -00108, and 00112
`Smartflash LLC, et al. v. Apple Inc., et al., No. 6:13-cv-447, Dkt.
`585, Order (E.D. Tex. July 8, 2015)
`U.S. Patent No. 8,083,137
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`U.S. Patent No. 7,603,382
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`U.S. Patent No. 7,970,713
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`Declaration of Michael P. Duffey In Support of Petitioner’s Reply
`to Patent Owner’s Response
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`GLOSSARY OF ABBREVIATIONS
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`Description
`Shorthand
`’598 Patent or ’598 United States Patent No. 8,061,598
`§ 101
`35 U.S.C. § 101
`BRI
`Broadest Reasonable Interpretation
`Petition or Pet’n
`Case CBM2015-00017 Corrected Petition, Paper 9
`Decision or Dec
`Case CBM2015-00017 Institution Decision, Paper 22
`PO
`Patent Owner
`POSITA
`Person of ordinary skill in the art
`Response or Resp
`Case CBM 2015-00017 Patent Owner Response, Paper 32
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`Case CBM2015-00017
`Patent 8,061,598 B2
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`I.
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`INTRODUCTION
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` PO does not dispute that Challenged Claims 1, 2, 15, and 31 of the ’598, are
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`directed to an abstract idea under step 1 of the test for patent eligibility provided in
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`Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1296-97
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`(2012) and Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2355 (2014).
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`Instead, PO argues only that the Challenged Claims have an “inventive concept”
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`sufficient to satisfy § 101 under step 2 of Mayo. But PO fails to demonstrate that
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`any such inventive concept exists. Indeed, its Response does not identify even one
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`inventive concept, let alone one “‘sufficient to ensure that the patent in practice
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`amounts to significantly more than a patent upon the [ineligible concept] itself.’”
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`Alice, 134 S. Ct. at 2355 (quoting Mayo, 132 S. Ct. at 1294).
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`Instead, in an effort to circumvent the Mayo two-step analysis, PO relies ex-
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`clusively on conclusory attorney argument that the invention involves a computer-
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`related problem and solution, and erroneously analogizes the Challenged Claims to
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`those in DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 1255-59 (Fed.
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`Cir. 2014). But the DDR claims are entirely distinguishable, and in a failed effort
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`to suggest superficial similarities, PO ignores important case law finding claims
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`similar to the Challenged Claims to be patent ineligible. See, e.g., Alice, 134 S. Ct.
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`2347; Gottschalk v. Benson, 409 U.S. 63 (1972); Ultramercial, Inc. v. Hulu, LLC,
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`772 F.3d 709 (Fed. Cir. 2014); Content Extraction & Transmission LLC v. Wells
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`Fargo Bank, Nat’l Ass’n, 776 F.3d 1343 (Fed. Cir. 2014); OIP Techs., Inc. v. Ama-
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`zon.com, Inc., 788 F.3d 1359 (Fed. Cir. 2015); Intellectual Ventures I LLC v. Capi-
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`tal One Bank (USA) (“IV”), 792 F.3d 1363 (Fed. Cir. 2015). And, in any case,
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`DDR does not allow PO to circumvent the two-step Mayo inquiry.
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`PO also misapplies the preemption concern underlying the § 101 analysis.
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`PO incorrectly argues that, separate from the two-step inquiry required by Mayo,
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`the Challenged Claims are patent eligible because they do “not result in inappro-
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`priate preemption.” Resp13-20. This very same argument—contradicted by Mayo
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`in language PO fails to mention—has been considered and rejected in recent deci-
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`sions, which PO entirely ignores. See, e.g., Ariosa Diagnostics, Inc. v. Sequenom,
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`Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015); OIP, 788 F.3d at 1362-63. Indeed,
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`preemption is not an alternative or addition to the Mayo test, but rather is the moti-
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`vation that led to that test: it is the “concern that drives” the exclusion of ineligible
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`subject matter from § 101, Alice, 134 S. Ct. at 2354, and the Mayo two-part test
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`acts as a “more easily administered proxy” for making judgments about how much
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`future innovation is preempted. Mayo, 132 S. Ct. at 1303. Indeed, as the Board has
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`correctly recognized, “questions on preemption are inherent in and resolved by the
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`101 analysis,” and “[w]here a patent’s claims are deemed only to disclose patent
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`ineligible subject matter under the Mayo framework . . . preemption concerns are
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`fully addressed and made moot.” Ariosa, 788 F.3d at 1379 (emphases added);
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`CBM2015-00059, Pap.13 at 5 (discussing Ariosa); CBM2014-00079, Pap.28 at 19.
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`Thus, non-infringement and non-infringing alternatives are irrelevant to § 101, as
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`ineligible subject matter is not rendered patentable by the existence of non-
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`infringing alternatives. E.g., Ariosa, 788 F.3d at 1379 (“[T]he absence of complete
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`preemption does not demonstrate patent eligibility”); OIP, 788 F.3d at 1362-63.
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`Finally, PO’s remaining arguments about claim construction, the weight to
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`accord Petitioner’s unrebutted expert opinions, and alleged estoppel, are legally in-
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`correct and irrelevant. None can alter the ineligibility of the Challenged Claims.
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`II.
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`PETITIONER’S RESPONSE TO PO’S STATEMENT OF FACTS
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`As to PO’s alleged facts (1) and (2), Petitioner admits that the phrases “pre-
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`ponderance of the evidence” and “more likely than not” do not appear in Mr.
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`Wechselberger’s declaration. The evidentiary standard need not be recited in ex-
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`pert declarations. See, e.g., IPR2013-00172, Pap.50 at 42. Petitioner otherwise de-
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`nies these allegations. Petitioner further states the following material fact: PO did
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`not submit any expert opinion in this proceeding, either in support of its Response
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`or to rebut Petitioner’s expert’s opinions.
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`III. THE CHALLENGED CLAIMS ARE NOT § 101 PATENT ELIGIBLE
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`PO does not dispute that the Challenged Claims are directed to an abstract
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`idea under part 1 of the Mayo analysis. Cf. Resp9-10.1 Thus, the only remaining
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`1 See also Dec14-15 (“We are persuaded that the challenged claims are more like-
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`question is whether, under part 2 of the Mayo analysis, the Challenged Claims in-
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`clude “additional features” amounting to an “inventive concept” that is “signifi-
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`cantly more” than the claimed abstract idea. Alice, 134 S. Ct. at 2355, 2357.
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`“[I]mplement[ing] the abstract idea with ‘routine, conventional activit[ies],’ . . . is
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`insufficient to transform the patent-ineligible abstract idea into patent-eligible sub-
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`ject matter.” Ultramercial, 772 F.3d at 716 (quoting Mayo, 132 S. Ct. at 1298). In-
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`deed, “[t]here is no ‘inventive concept’ in [the] use of a generic . . . computer to
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`perform well-understood, routine, and conventional activities commonly used in
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`ly than not drawn to a patent-ineligible abstract idea. . . . The ’598 Patent makes
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`clear that the heart of the claimed subject matter is restricting access to stored data
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`based on supplier-defined access rules and validation of payment.”); Ex. 2049 17-
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`18 (“The asserted claims recite abstract ideas. . . . [They] recite methods and sys-
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`tems for controlling access to content data, such as various types of multimedia
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`files, and receiving and validating payment data. . . . Therefore, the general pur-
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`pose of the claims—conditioning and controlling access to data based on pay-
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`ment—is abstract and a fundamental building block of the economy in the digital
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`age.”); Ex. 2050 1-2; Ex. 2068 11:16-12:7, 65:16-66:20, 67:1-68:20, 69:8-70:5; cf.
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`Pap.23 at 3 (“The patent owner is cautioned that any arguments for patentability
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`not raised in the response will be deemed waived.”).
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`industry.” Content Extraction, 776 F.3d at 1348 (citing Alice, 134 S. Ct. at 2359);
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`see also Bancorp Servs., L.L.C. v. Sun Life Assurance Co. of Can., 687 F.3d 1266,
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`1278-80 (Fed. Cir. 2012). As discussed below, the Challenged Claims recite only
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`well-known, routine, and conventional computer activities, which is insufficient to
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`show an inventive concept.
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`A.
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`PO Fails to Identify Any Inventive Concept
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`Smartflash fails to identify any “inventive concept” in the Challenged
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`Claims. The most PO states is that the claims “combine[] on the data carrier the
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`digital content data item and at least one use rules [], and ‘code to provide access to
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`the at least one content data item in accordance with the at least one use rule’ [], or
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`‘a content access PIN memory store to store a PIN number for controlling access to
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`the content data memory” [], or ‘evaluating the use status data using the one or
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`more use rules to determine whether access to the content data item is permitted;
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`and enabling access to the content data item responsive to a determination that ac-
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`cess to the content data item is permitted.’” Resp10. But simply storing multiple
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`types of data (i.e., “combin[ing]” digital content and use rules) in a conventional
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`portable data carrier, employing code to evaluate rules, and accessing data, are
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`well-understood, routine, conventional computer activities, not inventive concepts.
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`Indeed, claims held unpatentable in Alice similarly recited limitations for storing
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`multiple types of information and ensuring that valuation rules were met.2 See,
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`e.g., Pet’n32-34; Ex. 1226 cl. 26; Ex. 1219 ¶¶ 83-85; Alice, 134 S. Ct. at 2352
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`nn.1-2 (rep. cl. 33), 2360 (no inventive concept in reciting generic computer com-
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`ponents, noting “[n]early every computer . . . [is] capable of performing [] basic
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`calculation, storage, and transmission functions”); Content Extraction, 776 F.3d at
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`1345 (rep. cl. 1), 1347-49 (no inventive concept in routine and conventional activi-
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`ties, including collecting, recognizing, and storing data); Ultramercial, 772 F.3d at
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`712 (rep. cl. 1), 714-16 (routine, conventional activities, such as “selecting an ad,”
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`2 PO also asserts that these features of the claims somehow provide that “access
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`control to the digital content data item can be continuously enforced prior to access
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`to the digital content data item, allowing subsequent use (e.g., playback) of the dig-
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`ital content to be portable and disconnected, and additional content can be ob-
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`tained.” Resp11. Yet, even were these assertions accurate, these concepts are nei-
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`ther claimed in the Challenged Claims nor does PO even attempt to explain how
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`these concepts show that the computer-based limitations are functioning in any-
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`thing more than a routine and conventional way. See, e.g., Alice, 134 S. Ct. at
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`2359. Indeed, Alice makes clear that the implementation of an abstract idea on a
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`computer is not patent eligible if it does not “improve the functioning of the com-
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`puter itself.” Id. PO has failed to show that the claimed limitations do so.
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`“restricting public access,” “facilitating display,” “allowing the consumer access,”
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`“updating the activity log,” and “receiving payment,” add no inventive concept;
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`“that the system is active . . . and restricts public access also represents only insig-
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`nificant pre-solution activity”) (internal quotations omitted); buySAFE, Inc. v.
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`Google, Inc., 765 F.3d 1350, 1351-52, 1355 (Fed. Cir. 2014) (no inventive concept
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`in reciting generic computer functionality (rep. cls. 1, 14), explaining that “a com-
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`puter [that] receives and sends [] information over a network . . . is not even argua-
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`bly inventive”); Accenture Global Servs., GmbH v. Guidewire Software, Inc., 728
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`F.3d 1336, 1338, 1344-46 (Fed. Cir. 2013) (claims (rep. cl. 1) reciting only “gener-
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`alized software components” for “generating tasks [based on] rules . . . to be com-
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`pleted upon the occurrence of an event” unpatentable); CBM2013-00013, Pap.61
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`at 8, 16 (claims (rep. cl. 1) reciting “an abstract method, i.e., performing a real-time
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`Web transaction . . . to access checking and savings accounts, and transferring
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`funds (i.e., debiting or crediting) in response to user signals from an input device”
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`unpatentable); Digitech Image Techs., LLC v. Elecs. for Imaging, Inc., 758 F.3d
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`1344, 1351 (Fed. Cir. 2014) (finding that a claim directed to generating two data
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`sets and combining them into a device profile is an ineligible abstract process);
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`SmartGene, Inc. v. Advanced Biological Labs., SA, 555 F. App’x 950, 955 (Fed.
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`Cir. 2014) (“The claim does not purport to identify new computer hardware: it as-
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`sumes the availability of physical components for input, memory, look-up, com-
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`parison, and output.”); Telebuyer, LLC v. Amazon.com, Inc., No. 2:13-cv-1677,
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`2015 WL 4493045, at *1-5, *10-12 (W.D. Wash. July 23, 2015) (no inventive con-
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`cept in claims directed to traffic control system that accesses multiple sources of
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`information and “uses various types of stored data”).
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`Because the Challenged Claims do nothing more than recite routine, conven-
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`tional computer functions in implementing an abstract idea, they are patent ineligi-
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`ble under Alice. See, e.g., 134 S. Ct. 2358; Pet’n31-36; Ex. 1219 ¶¶ 83-85; Ex.
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`2068 96:6-18, 96:25-98:24; Ex. 1201 4:4-13, 16:46-50, 18:7-11; see also Ex. 2068
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`14:17-15:1, 69:8-70:5, 77:7-18, 78:6-11, 87:19-88:11, 99:7-23, 100:6-101:8.3 PO
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`has submitted no evidence to the contrary and Alice makes clear that, as here, “the
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`mere recitation of a generic computer cannot transform a patent-ineligible abstract
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`idea into a patent-eligible invention.” 134 S. Ct. at 2358.
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`3 Petitioner also notes that PO’s so-called “Overview” of the ’598 (Resp5-8) is not
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`tied to the Challenged Claim limitations. PO discusses, e.g., a user “select[ing]
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`content to purchase or rent from a variety of different content providers,” “trans-
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`mit[ting] stored ‘payment data’ to a ‘payment validation system’ to validate the
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`payment data,” “retriev[ing] the purchased content from the content provider,” and
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`“writ[ing] partial use status data.” Resp6-8 (citing Ex. 1201 4:64-5:8, 8:3-9). Yet
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`none of these concepts is recited in the Challenged Claims.
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`B.
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`The DDR Claims Are Not Analogous to the Challenged Claims
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`PO’s entire argument regarding step 2 is premised on its flawed assumption
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`that the Challenged Claims are patent eligible because PO suggests they resemble
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`the claims in DDR that were found eligible—but they do not. To begin with, DDR
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`does not overturn the two-step inquiry required by Mayo. If the Challenged Claims
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`are directed to an abstract idea (they are), and if there is no “inventive concept”
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`“sufficient to ensure that the patent in practice amounts to significantly more than a
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`patent upon the [ineligible concept] itself” (there is none), then the claims are pa-
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`tent ineligible. As noted above, PO does not dispute that the claims are directed to
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`an abstract idea under step 1, and has provided no evidence of any “inventive con-
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`cept” under step 2. That analysis is dispositive: the Challenged Claims are not pa-
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`tent eligible. Superficial comparisons to the claims in DDR cannot substitute for
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`the Mayo two-step inquiry. In any case, the DDR claims are not analogous, and in
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`fact the Challenged Claims are much more similar to claims found patent ineligi-
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`ble.
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`In DDR, the asserted patent addressed the problem of retaining website visi-
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`tors when clicking on an advertisement within the host’s website. See 773 F.3d at
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`1257. Under the conventional Internet function, clicking an advertisement hyper-
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`link would transport a website visitor away from the host’s website to, e.g., a third-
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`party advertiser’s website. Id. The patented claims provided a solution where the
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`visitor is no longer transported to the third-party website, but, instead, has an out-
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`source provider automatically generate a hybrid web page that combines the visual
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`“look and feel” elements from the host website and product information from the
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`third-party website. Id. This allows for the host website to retain the visitors but
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`still enable the visitors to purchase the product from the third-party merchant. Id. at
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`1257-58. The court distinguished this Internet-centric problem by stating that this
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`practice “introduces a problem that does not arise in the ‘brick and mortar’ con-
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`text” as “[t]here is . . . no possibility that by walking up to [a kiosk in a warehouse
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`store], the customer will be suddenly and completely transported outside the ware-
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`house store and relocated to a separate physical venue associated with the third-
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`party.” Id. at 1258. Specifically, the court found that the result of the claimed
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`method “overrides the routine and conventional sequence of events ordinarily trig-
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`gered by” routine and conventional computer action and is not directed to the gen-
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`eral abstract idea of “‘use of the Internet’ to perform an abstract business practice
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`(with insignificant added activity).” Id. In contrast, the Challenged Claims do not
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`address an Internet-specific problem, nor do they “override[] the routine and con-
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`ventional sequence of events ordinarily triggered by” conventional processes.
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`1.
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`The Challenged Claims Do Not Address an Internet-
`Specific Problem
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` PO incorrectly argues the Challenged Claims are like those in DDR because
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`they allegedly address a “technological problem,” are rooted in computer technol-
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`ogy and are directed to a challenge particular to the Internet/computer networks.
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`Resp10-12. However, “data piracy”—the business problem PO argues its Chal-
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`lenged Claims address—is neither a technological problem, rooted in computer
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`technology nor a “problem specifically arising in the realm of computer networks.”
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`E.g., Ex. 1219 ¶¶ 76-77; Dec12-13; see Ex. 2068 15:17-16:5, 25:3-16, 76:10-77:6.
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`Indeed, it is undisputed that the problem of data piracy exists outside the
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`context of the Internet/computer networks in the context of, e.g., content copy pro-
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`tection with digital watermarking. See Ex. 1201 5:9-12 (“where the data carrier
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`stores . . . music, the purchase outright option may be equivalent to the purchase of
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`a compact disc (CD), preferably with some form of content copy protection such as
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`digital watermarking”). Similarly, to prevent piracy of video data (copying and
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`misuse), video on demand was used in the pay TV industry, to prevent piracy of
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`software data, time-limited promotional trials were used for software (including in
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`the prior art Poggio), and to prevent piracy of DVDs, region codes and encryptions
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`were used to control the use of DVDs well before the priority date of the ’598 Pa-
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`tent. See Ex. 1219 ¶ 77; see also, e.g., Ex. 1215 1:13-23 (discussing purchasing
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`“try and buy” software in a store).
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`Further, unlike the DDR claims, which addressed “a problem that does not
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`arise in the ‘brick and mortar’ context,” PO’s Challenged Claims really address a
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`problem of controlling access based on payment or rules—an age-old business
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`problem that many have solved outside the context of the Internet, such as through
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`apartment rentals, movie rentals, movie tickets, subscription plans, and pay-per-
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`view programming. See, e.g., Ex. 1219 ¶¶ 37, 75-77; see also, e.g., Ex. 1208 Ab-
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`stract, 4:27-35 (describing a pay-per-use cable system). Thus, the fact that data pi-
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`racy (and providing access to goods based on rules) may also exist on the Internet
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`does not render it a “‘problem specifically arising in the realm of computer net-
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`works.’” (Resp10 (quoting DDR, 773 F.3d at 1257)). See, e.g., Ultramercial, 772
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`F.3d at 716 (“Narrowing the abstract idea of using advertising as a currency to the
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`Internet is an ‘attempt[] to limit the use’ of the abstract idea ‘to a particular techno-
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`logical environment,’ which is insufficient to save a claim.” (citing Alice, 134 S.
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`Ct. at 2358)). Thus, the Challenged Claims are not analogous to the DDR claims,
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`where “the claimed solution [was] necessarily rooted in computer technology in
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`order to overcome a problem specifically arising in the realm of computer net-
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`works.” DDR, 773 F.3d at 1257. And, even if the only practical application of the
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`Challenged Claims is for use with a computer, that fact would not render the claim
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`patent eligible. See, e.g., Benson, 409 U.S. at 71-74 (claims 8 and 13 ineligible de-
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`spite “no substantial practical application except in connection with a digital com-
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`puter”). Regardless, because the claims here “do not address problems unique to
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`the Internet . . . DDR has no applicability.” IV, 792 F.3d at 1371.
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`Instead, the business problem and purported solution addressed by the Chal-
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`lenged Claims are more like those for claims held patent ineligible, despite their
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`application to the Internet. E.g., Ultramercial, 772 F.3d at 715-16 (using advertis-
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`ing as currency on the Internet); buySAFE, 765 F.3d at 1355 (creating transaction
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`performance guaranty on the Internet); IV, 792 F.3d at 1367-71 (tracking financial
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`transactions on the Internet; tailoring advertisements on the Internet).
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`2.
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`The Challenged Claims Do Not “Override” Routine and
`Conventional Computer Action
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` Contrary to Smartflash’s assertion (see Resp10-13), and unlike the DDR
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`claims, the Challenged Claims do not “override” routine and conventional comput-
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`er action, and therefore remain ineligible. See DDR, 773 F.3d at 1258; id. at 1256
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`(“[A]fter Alice, there can remain no doubt: recitation of generic computer limita-
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`tions does not make an otherwise ineligible claim patent-eligible.”). The Chal-
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`lenged Claims simply recite computer-based limitations acting in a routine and
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`conventional manner. For example, the Claims recite a known portable data carrier
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`that may be a generic device such as a “standard smart card,” Ex. 1201 11:27-29,
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`known content data memory, use rule/parameter memory, and PIN memory that
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`may be conventional memories, such as “optic, magnetic or semiconductor
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`memory, . . . [or] Flash memory,” id. 5:35-38; 6:19-21, 17:22-27, 17:56-60; Fig. 9.
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`See also Pet’n31-36; Ex. 1201 4:4-5, 16:46-50, 18:7-11 (describing components as
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`“conventional”). Furthermore, the Challenged Claims perform generic computer
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`functions, such as storing, reading, writing, receiving, evaluating, and enabling ac-
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`cess to data. See, e.g., Ex. 2068 96:6-18, 96:25-98:24; Pet’n31-36; see also Ex.
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`2068 14:17-15:1, 77:7-18, 78:6-11, 87:19-88:11, 99:7-23, 100:6-101:8 (explaining
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`routine and conventional nature of computer-based limitations); Ex. 1219 ¶¶ 83-85.
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`Therefore, the Challenged Claims do not override routine and conventional com-
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`puter actions—they claim such actions, and are patent ineligible.
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`Rather than the claims in DDR, the Challenged Claims are analogous to nu-
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`merous claims held unpatentable. For example, in IV, patent-ineligible claims were
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`directed to the abstract idea of budgeting on the Internet, employing “generic com-
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`puter elements,” including “a database, a user profile, . . . and a communication
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`medium,” and reciting steps of “storing” the user profile (i.e., data) in the database
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`and “causing communication” between the database and a “receiving device.” 792
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`F.3d at 1366-69 (analyzing c