UNITED STATES PATENT AND TRADEMARK OFFICE
`______________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`______________________
`
`APPLE INC.,
`Petitioner
`
`v.
`
`SMARTFLASH LLC,
`Patent Owner
`______________________
`
`Case CBM2015-00017
`Patent 8,061,598 B2
`______________________
`
`Before the Honorable JENNIFER S. BISK, RAMA G. ELLURU, JEREMY M.
`PLENZLER, and MATTHEW R. CLEMENTS, Administrative Patent Judges.
`
`
`PETITIONER APPLE INC.’S OPPOSITION TO
`PATENT OWNER’S MOTION TO EXCLUDE UNDER 37 C.F.R. § 42.64(c)
`
`
`
`
`
`
`
`
`
`______________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`______________________
`
`APPLE INC.,
`Petitioner
`
`v.
`
`SMARTFLASH LLC,
`Patent Owner
`______________________
`
`Case CBM2015-00017
`Patent 8,061,598 B2
`______________________
`
`Before the Honorable JENNIFER S. BISK, RAMA G. ELLURU, JEREMY M.
`PLENZLER, and MATTHEW R. CLEMENTS, Administrative Patent Judges.
`
`
`PETITIONER APPLE INC.’S OPPOSITION TO
`PATENT OWNER’S MOTION TO EXCLUDE UNDER 37 C.F.R. § 42.64(c)
`
`
`
`
`
`
`
`
`
`
`Case CBM2015-00017
`Patent 8,061,598 B2
`
`TABLE OF CONTENTS
`
`
`I.
`II.
`
`The Board Should Not Exclude Exhibit 1202 ................................................. 2
`The Board Should Not Exclude Exs. 1203-04, 1206-08, 1211-18,
`Or 1225-27 ....................................................................................................... 2
`III. The Board Should Not Exclude Exhibit 1219 ................................................. 4
`
`
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`Case CBM2015-00017
`Patent 8,061,598 B2
`
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`In response to Patent Owner’s (“PO”) Motion to Exclude (“Mot.”, Pap. 38),
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`Petitioner respectfully submits that the Board, sitting as a non-jury tribunal with
`
`administrative expertise, is well-positioned to determine and assign appropriate
`
`weight to the evidence presented here, without resorting to formal exclusion that
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`might later be held reversible error. See, e.g., S.E.C. v. Guenthner, 395 F. Supp. 2d
`
`835, 842 n.3 (D. Neb. 2005); Builders Steel Co. v. Comm’r of Internal Revenue,
`
`179 F.2d 377, 379 (8th Cir. 1950) (vacating Tax Court decision for exclusion of
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`competent, material evidence); Donnelly Garment Co. v. Nat’l Labor Relations
`
`Bd., 123 F.2d 215, 224 (8th Cir. 1941) (NLRB’s refusal to receive testimonial evi-
`
`dence was denial of due process). See also, e.g., Samuel H. Moss, Inc. v. F.T.C.,
`
`148 F.2d 378, 380 (2d Cir. 1945), cert. denied, 326 U.S. 734 (1945) (“Even in
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`criminal trials to a jury it is better, nine times out of ten, to admit, than to exclude, .
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`. . and in such proceedings as these the only conceivable interest that can suffer by
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`admitting any evidence is the time lost, which is seldom as much as that inevitably
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`lost by idle bickering about irrelevancy or incompetence.”). But even under strict
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`application of the Rules of Evidence, cf. 77 Fed. Reg. 48,612, 48,616 (Aug. 14,
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`2012) (“42.5(a) and (b) permit administrative patent judges wide latitude in admin-
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`istering the proceedings to balance the ideal of precise rules against the need for
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`flexibility to achieve reasonably fast, inexpensive, and fair proceedings”), Petition-
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`er’s evidence here is entirely proper while PO’s objections are baseless.
`1
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`Case CBM2015-00017
`Patent 8,061,598 B2
`The Board Should Not Exclude Exhibit 1202
`I.
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`Petitioner did not rely on Ex. 1202 for “evidence of the content” of the ’598
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`patent (cf. Mot. 1), but rather to show PO’s own characterization of the subject
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`matter of the ’598 patent supports Petitioner’s contention, and the Board’s conclu-
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`sion, that the ’598 patent relates to a financial activity or transaction and is thus
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`subject to the Board’s review as a covered business method patent. See Pap. 9 at
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`12-13. PO’s characterization of the ’598 patent in another proceeding is not found
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`in the patent itself; thus, Ex. 1202 is not cumulative of the ’598 patent, and FRE
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`1004 is inapplicable. Indeed, as PO admits, the Board declined to exclude the
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`same exhibit in another proceeding on the same patent because the Board found
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`“[Patent Owner’s] characterization of the ’598 patent in prior proceedings are rele-
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`vant to the credibility of its characterization of the ’598 patent in this proceeding.”
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`Mot. 3 (citing CBM2014-00108, Pap. 50 at 19); see also CBM2014-00102, Pap. 52
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`at 36; CBM2014-00106, Pap. 52 at 25; CBM2014-00112, Pap. 48 at 24. Contrary
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`to PO’s claim that its characterization of the ’598 patent is not at issue here (Mot.
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`2-3), PO disputed the financial nature of the ’598 patent here, see Pap. 18 at 5-10,
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`and its highly relevant admission to the contrary should not be excluded.
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`II.
`
`The Board Should Not Exclude Exs. 1203-04, 1206-08, 1211-18, Or
`1225-27
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`Contrary to PO’s assertions, Exs. 1206-08, 1211, 1214-18, and 1225-27
`
`
`
`2
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`
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`Case CBM2015-00017
`Patent 8,061,598 B2
`(“Prior Art Exhibits”) are certainly relevant to the Board’s § 101 analysis.1 More
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`specifically, such evidence is relevant to Mayo’s two-step inquiry for patent eligi-
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`bility to determine, for example, whether the claims contain an “inventive concept”
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`or merely recite “well-understood, routine, conventional activit[ies] previously
`
`known to the industry.” Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347,
`
`2357, 2359 (2014) (internal quotations omitted); see e.g., YYZ, LLC v. Hewlett-
`
`Packard Co., No. 13-136-SLR, 2015 WL 5886176, at *8 (D. Del. Oct. 8, 2015)
`
`(“Although the § 101 inquiry is focused on the claim language, extrinsic evidence
`
`[, such as prior art,] may be helpful in terms of understanding the state of the art . .
`
`. , and whether the problem to which the patent was directed is solved using com-
`
`puter technology in unconventional ways.”); cf. Versata Dev. Grp., Inc. v. SAP
`
`Am., Inc., 793 F.3d 1306, 1334, 1336 (Fed. Cir. 2015) (affirming Board’s reliance
`
`on petitioner’s expert in determining claimed steps were well-known, routine, and
`
`conventional and Board’s finding that “claims at issue do not recite any improve-
`
`ment in computer technology”).2 Both the Petition and the Wechselberger Declara-
`
`tion describe Prior Art Exhibits as evidence of that knowledge. See, e.g., Pap. 9 at
`
`6-10 (Overview of Field of the Claimed Invention); Ex. 1219 ¶¶ 34-55 (State of the
`
`1 Ex. 1205 was not relied on here. While exclusion of Ex. 1205 is unnecessary, Pe-
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`titioner would not oppose it.
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`2 All emphasis herein is added unless otherwise indicated.
`
`
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`3
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`Case CBM2015-00017
`Patent 8,061,598 B2
`Art).
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`Moreover, the Petition and Wechselberger Declaration specifically rely on
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`Prior Art Exhibits to show either that (1) the basic concept of controlling access
`
`based on payment—to which the challenged claims are directed—was well-known
`
`in the prior art, or (2) the elements disclosed by the challenged claims were well-
`
`known, routine, and conventional. See, e.g., Pap. 9 at 34-36 (analogizing chal-
`
`lenged claims to those held ineligible in Alice); Ex. 1219 ¶¶ 76-77 (citing “State of
`
`the Art” discussion and Exs. 1216, 1225), 81-85 (citing Exs. 1206-07, 1211-13,
`
`1215). The Prior Art Exhibits are unquestionably relevant to the § 101 analysis;
`
`there is no basis to exclude them.
`
`PO’s assertion that Exs. 1203-04 and 1212-13 are irrelevant is similarly mer-
`
`itless. As with the other Prior Art Exhibits, these exhibits are relevant to the
`
`Board’s § 101 analysis because they provide further evidence of the state of the art.
`
`While the Board did not institute review based on grounds calling out Exs. 1203-
`
`04 and 1212-13, they nonetheless establish the state of the art and provide context
`
`for the § 101 inquiry, and the Wechselberger Declaration specifically relies on
`
`them for this purpose. See Ex. 1219 ¶¶ 48-49, 53 (“State of the Art” discussion),
`
`76 (citing “State of the Art” discussion in § 101 analysis), 85 (citing Exs. 1212-13).
`
`III. The Board Should Not Exclude Exhibit 1219
`
`Despite the Board’s rejection on multiple occasions of PO’s argument that
`
`
`
`4
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`
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`Case CBM2015-00017
`Patent 8,061,598 B2
`the Wechselberger Declaration should be disregarded for not reciting the eviden-
`
`tiary standard, PO reargues it again here. Mot. 9-11; CBM2014-00108, Pap. 8 at
`
`16 n.5; CBM2014-00108, Pap. 50 at 21-22; see also CBM2014-00102, Pap. 8 at 4
`
`n.8; CBM2014-00106, Pap. 8 at 4 n.11; CBM2014-00112, Pap. 7 at 4 n.9;
`
`CBM2014-00102, Pap. 52 at 39; CBM2014-00106, Pap. 52 at 27-28; CBM2014-
`
`00112, Pap. 48 at 26. But, as the Board properly found, experts, like Mr. Wech-
`
`selberger, are “not required to recite the ‘preponderance of the evidence’ standard
`
`expressly in order for the expert testimony to be accorded weight, much less ad-
`
`missibility.” CBM2014-00108, Pap. 50 at 21-22; see also CBM2014-00102, Pap.
`
`52 at 39; CBM2014-00106, Pap. 52 at 27; CBM2014-00112, Pap. 48 at 26. “Ra-
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`ther, it is within [the Board’s] discretion to assign the appropriate weight to be ac-
`
`corded to evidence based on whether the expert testimony discloses the underlying
`
`facts or data on which the opinion is based.” See IPR2013-00172, Pap. 50 at 42.
`
`Further, the Wechselberger Declaration sufficiently “disclose[s] the underlying
`
`facts or data on which the opinion is based,” as required by 37 C.F.R. § 42.65(a),
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`and cites specific evidence supporting each of the opinions.
`
`PO also seeks to exclude the portions of the Wechselberger Declaration that
`
`identify the level of skill of a POSITA, disclose Mr. Wechselberger’s assumed
`
`claim constructions, cite prior art to describe the state of the art and provide con-
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`text for his § 101 opinions, and “any other portion . . . that is directed to patentabil-
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`
`
`5
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`Case CBM2015-00017
`Patent 8,061,598 B2
`ity under 35 U.S.C. §103.” Mot. 11-12 (identifying paragraphs 30-68). First, as
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`detailed in § II, supra, the Wechselberger Declaration’s description of the art at the
`
`relevant time is clearly relevant to the § 101 inquiry. For the same reasons the Prior
`
`Art Exhibits and Exs. 1203-04 and 1212-13 are relevant, expert analyses of those
`
`exhibits are relevant under FRE 401 and should not be excluded. Further, the level
`
`of skill of a POSITA is relevant in determining whether claim elements would be
`
`considered well-known, routine, and conventional; and claim construction is rele-
`
`vant because “the determination of patent eligibility requires a full understanding
`
`of the basic character of the claimed subject matter.” See, e.g., Bancorp Servs.,
`
`LLC v. Sun Life Assurance Co. of Can., 687 F.3d 1266, 1273-74 (Fed. Cir. 2012).
`
`PO provides no argument or support to the contrary.
`
`PO further seeks to exclude the portions of the Wechselberger Declaration
`
`that provide Mr. Wechselberger’s opinions on the patent eligibility of the chal-
`
`lenged claims, arguing that § 101 is a “strictly legal issue . . . for which Mr. Wech-
`
`selberger is not an expert.” Mot. 12 (identifying paragraphs 69-98). But PO’s ar-
`
`gument ignores that “[p]atent eligibility under § 101 presents an issue of law . . . .
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`[that] may contain underlying factual issues.” Accenture Global Servs., GmbH v.
`
`Guidewire Software, Inc., 728 F.3d 1336, 1340-41 (Fed. Cir. 2013); see also Ar-
`
`rhythmia Research Tech., Inc. v. Corazonix Corp., 958 F.2d 1053, 1055-56 (Fed.
`
`Cir. 1992) (“[D]etermination of [statutory subject matter] may require findings of
`
`
`
`6
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`Case CBM2015-00017
`Patent 8,061,598 B2
`underlying facts specific to the particular subject matter and its mode of claim-
`
`ing.”); cf. Versata, 793 F.3d at 1334 (affirming Board’s reliance on petitioner’s
`
`expert over patent owner’s expert in determining claimed steps were well-known,
`
`routine, and conventional). And, there is no dispute that Mr. Wechselberger is
`
`competent to opine on the factual issues. Cf. Mot. 12. Moreover, there is no basis
`
`for PO’s objections to Mr. Wechselberger’s expert testimony under FRE 602, as
`
`the rule plainly states it “does not apply to a witness’s expert testimony under Rule
`
`703.” Thus, PO’s FRE 602 objection to paragraphs 69-98 of the Wechselberger
`
`Declaration should be rejected for this additional, independent reason.
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`
`
`October 15, 2015
`
`
`
`
`
`
`
`
`Respectfully submitted,
`By /J. Steven Baughman/
`J. Steven Baughman, Lead Counsel
`
`
`
`7
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`
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`Case CBM2015-00017
`Patent 8,061,598 B2
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`
`
`CERTIFICATE OF SERVICE
`
`The undersigned hereby certifies that a copy of the foregoing PETITIONER
`
`APPLE INC.’S OPPOSITION TO PATENT OWNER’S MOTION TO EX-
`
`CLUDE was served on October 15, 2015, to the following Counsel for Patent
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`Owner via e-mail, pursuant to the parties’ agreement concerning service:
`
`Michael R. Casey
`J. Scott Davidson
`DAVIDSON BERQUIST JACKSON & GOWDEY LLP
`8300 Greensboro Drive, Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7700
`Facsimile: (571) 765-7200
`mcasey@dbjg.com
`jsd@dbjg.com
`docket@dbjg.com
`
`Attorneys for Patent Owner Smartflash LLC
`
`/s/ Sharon Lee
`Sharon Lee
`
`
`
`ROPES & GRAY LLP
`
`8
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