Covered Business Method Patent Review
`United States Patent No. 8,061,598
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`Petitioner: Apple Inc.
`
`Attorney Docket No.:
`
` 104677-5008-815
`Customer No. 28120
`
`§
`Inventor: Racz et al.
`United States Patent No.: 8,061,598 §
`Formerly Application No.: 13/012,541 §
`Issue Date: November 22, 2011
`§
`Filing Date: January 24, 2011
`§
`Former Group Art Unit: 2887
`§
`Former Examiner: Thien M. Le
`§
`
`For: Data Storage and Access Systems
`
`MAIL STOP PATENT BOARD
`Patent Trial and Appeal Board
`United States Patent and Trademark Office
`Post Office Box 1450
`Alexandria, Virginia 22313-1450
`
`PETITION FOR COVERED BUSINESS METHOD PATENT REVIEW OF
`UNITED STATES PATENT NO. 8,061,598 PURSUANT TO 35 U.S.C. § 321,
`37 C.F.R. § 42.304
`
`
`
`

`

` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`
`TABLE OF CONTENTS
`
`B.
`
`3.
`
`4.
`
`INTRODUCTION ....................................................................................................... 1
`I.
`II. OVERVIEW OF FIELD OF THE CLAIMED INVENTION ......................... 6
`III. PETITIONER HAS STANDING .......................................................................... 12
`A.
`The ’598 Patent Is a Covered Business Method Patent ............................. 12
`1.
`Exemplary Claim 7 Is Financial In Nature ...................................... 13
`2.
`Claim 7 Does Not Cover A Technological Invention ................... 17
`Related Matters and Mandatory Notice Information; Petitioner Is a Real
`Party In Interest Sued for and Charged With Infringement ..................... 22
`IV. DETAILED EXPLANATION OF REASONS FOR RELIEF REQUESTED,
`SHOWING IT IS MORE LIKELY THAN NOT THAT AT LEAST ONE
`OF THE CHALLENGED CLAIMS IS UNPATENTABLE ............................ 24
`A.
`Claim Construction .......................................................................................... 24
`B.
`The Challenged Claims Are Unpatentable Under § 101 ............................ 29
`1.
`Claims Are Directed To Abstract Ideas ........................................... 30
`2.
`Claims Do Not Disclose An “Inventive Concept” That Is
`“Significantly More” Than an Abstract Idea ................................... 33
`Field Of Use Limitations Cannot Transform Abstract Ideas
`Into Patent Eligible Inventions .......................................................... 33
`Generic Computer Implementation Cannot Transform Ab-
`stract Ideas Into Patent Eligible Inventions..................................... 34
`The Functional Nature Of The Challenged Claims Con-
`firms preemption and Patent Ineligibility ......................................... 39
`6. Machine-or-Transformation Test Also Confirms Patent In-
`eligibility ................................................................................................. 41
`The Challenged Claims Are Unpatentable Under § 103 ............................ 41
`1.
`Overview of Stefik ............................................................................... 41
`2. Motivation to Combine Stefik with Ahmad .................................... 45
`3. Motivation to Combine Stefik with Ahmad and Kopp ................. 47
`4.
`Claims 1, 2, 15, and 31 are Obvious in Light of Stefik in
`View of Ahmad (Ground 2); Claims 1, 2, 15, and 31 are
`Obvious in Light of Stefik in View of Ahmad and Kopp
`(Ground 3) ............................................................................................ 48
`
`5.
`
`C.
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`ii
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`CONCLUSION........................................................................................................... 79
`
`V.
`
`iii
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`

`

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`EXHIBIT LIST
`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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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`U.S. Patent No. 8,061,598
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`Plaintiffs’ First Amended Complaint
`
`U.S. Patent No. 5,925,127
`
`U.S. Patent No. 5,940,805
`
`Russell Housley and Jan Dolphin, “Metering: A Pre-pay
`Technique,” Storage and Retrieval for Image and Video Data-
`bases V, Conference Volume 3022, 527 (January 15, 1997)
`U.S. Patent No. 4,999,806
`
`U.S. Patent No. 5,675,734
`
`U.S. Patent No. 4,878,245
`
`U.S. Patent No. 7,334,720
`
`U.S. Patent No. 7,942,317
`
`U.S. Patent No. 5,103,392
`
`U.S. Patent No. 5,530,235
`
`U.S. Patent No. 5,629,980
`
`U.S. Patent No. 5,915,019
`
`European Patent Application, Publication No. EP0809221A2
`
`International Publication No. WO 99/43136
`
`JP Patent Application Publication No. H11-164058 (transla-
`tion)
`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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`
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`

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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`
`EXHIBIT LIST
`1220
`
`U.S. Patent No. 8,033,458
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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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`Declaration of Michael P. Duffey In Support of Apple Inc.’s
`Petition for Covered Business Method Patent Review
`Declaration of Megan F. Raymond In Support of Apple Inc.’s
`Petition 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
`
`U.S. Patent No. 4,337,483
`
`U.S. Patent No. 7,725,375
`
`International Publication No. WO 95/34857
`
`ii
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`I.
`
`INTRODUCTION
`
`Pursuant to 35 U.S.C. § 321 and 37 C.F.R. § 42.304,1 the undersigned, on be-
`
`half of and acting in a representative capacity for petitioner, Apple Inc. (“Petitioner”
`
`and the real party in interest), petitions for review under the transitional program for
`
`covered business method (“CBM”) patents of claims 1, 2, 7, 15, and 31 of U.S. Patent
`
`No. 8,061,598 (“the ’598 Patent”), issued to Smartflash Technologies Limited and as-
`
`signed to Smartflash LLC (“Patentee”). Petitioner asserts that it is more likely than
`
`not that at least one of the challenged claims is unpatentable, and respectfully requests
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`review of, and judgment against the challenged claims as unpatentable under §101,
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`and claims 1, 2, 15, and 31 as unpatentable under § 103 as obvious.
`
`As discussed in Section III.B, infra, Petitioner previously filed CBM2014-00108
`
`and CBM2014-00109 seeking CBM review of the ’598 Patent on §§102 and 103
`
`grounds. Those petitions were instituted for trial (and consolidated2) with respect to
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`claim 26 on grounds based on § 103, but the Board did not institute trial on claims 1,
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`2, 7, 15, or 31. In its Institution Decision, the Board construed the term “use rule” as
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`1 Petitioner is demonstrating, in pending litigation, that these claims are invalid for
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`numerous additional reasons. All emphasis herein added unless otherwise noted. All
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`section cites herein are to 35 U.S.C. or 37 C.F.R., as the context indicates, and all em-
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`phasis herein is added unless otherwise noted.
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`2 Petitioner concurrently moves for joinder of this petition and CBM2014-00108.
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`“a rule specifying a condition under which access to content is permitted,” and de-
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`termined that Petitioner had not shown it was more likely than not that it would pre-
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`vail in demonstrating that Stefik renders obvious “use rules” under the Board’s con-
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`struction and did not sufficiently explain why usage rights in Stefik fall within exam-
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`ples of “use status data” in the specification of the ’598 Patent (e.g., past usage of
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`stored data, that stored data has not been accessed, number of times stored data has
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`been accessed, duration of access of stored data). In light of the Board’s Decision,
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`Petitioner now identifies additional prior art—Ahmad and Kopp (see Exs. 1203 and
`
`1204)—with explicit disclosures of “use rules” as construed by the Board, and data
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`that meets particular examples of “use status data” provided by the specification of
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`the ’598 Patent. Ahmad, for example, describes a software rental system that moni-
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`tors an elapsed time of use recorded by a timer or a number of uses recorded by a
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`counter and does not permit access to the rented software if a software rental license
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`has been exhausted (see, e.g., Ex. 1203 at 2:62-3:18), while Kopp discloses checking
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`recorded utilization data and denying access to a data record if a licensed extent of
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`utilization has been exhausted (see, e.g., Ex. 1204 at 6:41-47). Petitioner has also identi-
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`fied additional disclosures in Stefik concerning these limitations of claims 2, 15, and
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`31, further confirming a POSITA3 would have found it entirely obvious and routine
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`3 All references to a person of ordinary skill in the art (“POSITA”) refer to the
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`knowledge or understanding of a person of ordinary skill in the art as of October 25,
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`2
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`to implement the system disclosed by Stefik using the express and advantageous
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`teachings of Ahmad and Kopp detailed in Section IV.C.4., infra, and in Ex. 1219 ¶¶48,
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`49, 51, 53, 60-68.
`
`The challenged claims of the ’598 Patent merely recite steps and corresponding
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`systems well-known in the field of data storage and access, including use of a “porta-
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`ble data carrier.” Ex. 1201 at 1:20-24, Abstract, claim 1. Claim 1, for example, recites
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`five rudimentary components of a portable data carrier (e.g., smart card)—(A) an in-
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`terface, (B and C) content data and use rule memory, (D) a program store storing
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`code implementable by a processor, and (E) a processor . . . for implementing code.
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`The recited code is similarly elementary, storing content data and a use rule in memory (F):
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`1. A portable data carrier comprising:
`[A] an interface for reading and writing data from and to the portable
`data carrier;
`[B] content data memory, coupled to the interface, for storing one or
`more content data items on the carrier;
`[C] use rule memory to store one or more use rules for said one or more
`content data items;
`
`
`1999, unless specifically noted. A POSITA would have at least a Bachelor of Science
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`degree in electrical engineering, computer science or a telecommunications related
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`field, and at least three years of industry experience that included client-server
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`data/information distribution and management architectures. See Ex. 1219 ¶31.
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`[D] a program store storing code implementable by a processor;
`[E] and a processor coupled to the content data memory, the use rule
`memory, the interface and to the program store for implementing code
`in the program store,
`[F] wherein the code comprises code for storing at least one content data
`item in the content data memory and at least one use rule in the use rule
`memory.
`Ex. 1201. And dependent claim 7, for instance, adds certain express financial
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`components to claim 1:
`
`7. A portable data carrier as claimed in claim 1, further comprising
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`[G] payment data memory to store payment data and code to
`provide the payment data to a payment validation system.
`
`Ex. 1201. But at the time of the earliest claimed priority date, these simple elements
`
`and their combination would have all been well known. Indeed, the patent itself
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`acknowledges that the idea of providing access to data in exchange for a payment (e.g.,
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`purchase of music on a CD) was well known at the time. E.g., Ex. 1201 5:9-12
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`(“where the data carrier stores, for example, music, the purchase outright option may
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`be equivalent to the purchase of a compact disc (CD), preferably with some form of con-
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`tent copy protection such as digital watermarking”). The idea of purchasing digital
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`data for payment was similarly well known. See, e.g., Ex. 1207. And, as shown herein,
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`the prior art was teeming with disclosures of this basic concept and its straightforward
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`implementation.
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`Further, as its language makes clear, claim 1 involves no “technology” at all other
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`than a “portable data carrier” with an interface, non-volatile memory, and program
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`store/processor—which the patent itself concedes was well known and commonplace at
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`the time. See e.g., Ex. 1201 11:28-29 (“standard smart card”), 3:37, 4:7-13, 6:19-21,
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`11:27-44, 17:6-18:4, Figs. 2, 9. The use rules of claim 1 “may be linked to payments
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`made from the card to provide payment options such as access to buy content data
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`outright; [or] rental access . . .” Id. 5:1-8. Thus, as the intrinsic record reflects, claim 1
`
`recites nothing more than a system for reading and writing data while restricting ac-
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`cess to that data. Indeed, the ’598 Patent states that “[t]he physical embodiment of
`
`the system is not critical and a skilled person will understand that the terminals, data
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`processing systems and the like can all take a variety of forms.” See, e.g., Ex. 1201 Fig
`
`1, 12:29-32. And the variations presented in the other challenged system claims add
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`nothing that was not already well-known. Dependent claim 7, for example,4 simply
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`adds to claim 1 the ability to store and provide payment data. Similarly, the chal-
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`lenged method claim, claim 31, relating to “controlling access to content data,” recites
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`4 Claim 2 merely adds to claim 1 the well-known notion of providing access to data
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`based on a use rule. Claim 15 adds to claim 1 only the storage of a PIN number.
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`Claim 31 is a rudimentary method claim for “controlling aces to content data,” includ-
`
`ing the steps of (a) “receiving a data access request . .”; (b) “reading the use status da-
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`ta”, (c) “evaluating the use status data . . .”; and (4) enabling access to the content . . .”
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`5
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`

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`nothing more than the steps implemented by the portable data carrier that restrict ac-
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`cess to data. See id. Fig. 13.
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`Indeed, as confirmed by the Supreme Court’s recent decision in Alice Corp. Pty,
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`Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014)—decided after Petitioner’s original peti-
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`tions challenging the ’598 Patent were filed—the challenged claims are also directed to
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`patent-ineligible subject matter under § 101. As the Board noted in its previous Insti-
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`tution Decision, “the ’598 patent makes clear that the asserted novelty of the inven-
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`tion is not in any specific improvement of software or hardware, but in the method of
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`controlling access to data,” CBM2014-00108, Paper No. 8, at 10, and the challenged claims
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`are directed to nothing more than the unpatentable abstract idea of paying for and
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`controlling access to data, with at most the addition of well-known, routine and con-
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`ventional features that do not render them patentable—in particular, generic comput-
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`er implementation that cannot confer patentability on these patent-ineligible abstrac-
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`tions. E.g., Alice, 134 S. Ct. at 2359-60. Because each of the challenged claims recites
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`unpatentable subject matter, and because claims 1, 2, 15, and 31 are also obvious, all
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`of the challenged claims should be unpatentable.
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`II. OVERVIEW OF FIELD OF THE CLAIMED INVENTION
`By October 25, 1999, electronic sale, distribution, and content protection for
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`digital products all would have been well-known to a POSITA, and their combination
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`as claimed also would have been well-known or at minimum obvious to a POSITA.
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`United States Patent No. 8,061,598
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`See, e.g., Ex. 1219 Sec. V. On March 12, 1991, for example, U.S. Pat. No. 4,999,806
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`(“Chernow,” filed Sept. 4, 1987) issued, disclosing a system and method for sale and
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`distribution of digital products by phone, and for content protection. See Ex. 1206
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`Abstract (“A central station distributes software by telephone[,] accepts credit card
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`information, transmits an acceptance code and then terminates the call. After verifying
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`the credit card information, the station calls the purchaser back and continues with the transaction
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`only after receiving the acceptance code.”); 1:67-2:9 ( “means for selling and distributing protected
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`software using standard telephone lines,” “permit[ting] the purchaser to rent the protected software for
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`a period of time,” and “to rent the protected software for a specific number of runs”). Chernow
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`thus discloses making different types of access available, such as purchase versus rent-
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`al, and further discloses a Control Transfer Program and Primary Protection Program
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`that ensures the computer receiving a downloaded program does not have another
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`program present that could create unauthorized copies. See Ex. 1206 Abstract; 2:65-
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`3:23. See also Ex. 1219 ¶36.
`
`In April 1992, U.S. Patent No. 5,103,392 (“Mori,” filed Dec. 5, 1990), issued
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`disclosing storing information about customer use of digital products so that a cus-
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`tomer can be charged according to its use. See, e.g., Ex. 1211 1:64-2:17.
`
`The data processing apparatus includes user-specific credit data storage
`means for storing data identifying the user . . . and indicating credit for payment ca-
`pacity, use time length, or the like of the user of the data processing appa-
`ratus. Also included is use decision means for determining permission to use
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`United States Patent No. 8,061,598
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`the program on the data processing apparatus on the basis of program-specific
`data supplied from the program storage means or user-specific credit data
`supplied from the user-specific credit data storage means, the use deci-
`sion means delivering either an affirmative or negative signal corre-
`sponding to results of the decision. Also included is program use history
`storage means connected to the use decision means for storing program
`use history data . . . .
`Mori’s emphasis on assuring permission to access a program and compensation to
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`providers for use of their programs underscores the art’s focus on digital rights man-
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`agement (“DRM”), over eight years before the ’598 Patent’s claimed priority date. See
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`also Ex. 1219 ¶39.
`
`Exhibit 1215 (“Poggio,” pub’d Nov. 26, 1997), gives another example of secure
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`distribution and protection, disclosing a “virtual vending machine” system for the sale
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`of digital products. See, e.g., id. Abstract (“A virtual vending machine manages a comprehen-
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`sive vending service for the distribution of licensed electronic data (i.e., products) over a distributed
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`computer system. . . . [and] distributes licenses for the electronic data for the complete product or for
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`components thereof and for a variety of time frames, including permanent licenses and rental period
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`licenses. [It] provides client computers with the capability to obtain information regarding
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`the available products and the associated license fees and rental periods, to receive the product upon
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`receipt of a corresponding electronic payment, and to reload the product during the term of the li-
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`cense.”). Thus, like Chernow, Poggio too discloses different types of product options,
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`including rentals. See also Ex. 1219 ¶40.
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`8
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`Also in 1997, Exhibit 1218 (“von Faber”) observed that “[e]lectronic commerce sys-
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`tems dealing with the distribution of digital contents like software or multimedia data
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`have to couple the use of the provided digital goods with a prior payment for the goods in a way
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`which cannot be bypassed.” See id. at 7. Von Faber proposes a system where cus-
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`tomers purchase keys required to utilize distributed encrypted content. See, e.g., id.
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`(“The basic idea of one possible solution is to distribute the contents in encrypted form, and to
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`have the customer pay for the key which he needs to transform the encrypted content in an usable form.
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`The security problem can in this way be transformed into a problem of key distribu-
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`tion.”); id. at 8 (“The Content Provider provides digital contents in encrypted form being
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`distributed by the Content Distributor. The Key Management System holds the keys for the
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`contents to be decrypted. The Authorisation System permits the distribution of the appropriate
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`key after settling of the fees payable by the Customer, who will enjoy the decrypted digital con-
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`tents.”); see also Ex. 1218 at Fig. 1. Von Faber also states its system could be used for
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`a variety of known distribution and payment methods, and further addressed the
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`known issue of payment distribution to content providers. See, e.g., Ex. 1218 at 13
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`(“Different methods can be used to distribute the encrypted contents (standard techniques)…
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`This includes broadcasting, point-to-point networking, as well as offering disks. Different electronic
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`payment methods can be integrated… independent from the number of protocol steps
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`needed. This includes credit card based systems as well as electronic purses. This flex-
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`ibility leads to the fact that totally different authorisation methods can be integrated.”); (The system
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`automatically divides the package price (payments) and guarantees that the money is transferred to
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`each Content Provider whose product has been integrated into the package.”). See also Ex.
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`1219 ¶¶41-43.
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`Moreover, U.S. Patent No. 5,915,019 (“Ginter,” filed Jan. 8, 1997), issued June
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`22, 1999, discloses “Systems and Methods for Secure Transaction Management and
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`Electronic Rights Protection.” See, e.g., Ex. 1214 (filed January 8, 1997). Ginter dis-
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`closes “systems and methods for secure transaction management and electronic rights
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`protection,” and describes a “virtual distribution environment” (termed a “VDE”) to
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`“control and/or meter or otherwise monitor use of electronically stored or dissemi-
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`nated information.” See, e.g., Ex. 1214 Abstract. Ginter’s system “help[s] to ensure
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`that information is accessed and used only in authorized ways, and maintain the integrity,
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`availability, and/or confidentiality of the information.” See, e.g., id. Ginter discloses that
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`various entities that comprise the VDE can flexibly take on any of the roles within the
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`VDE, see, e.g., id. 255:22-23 (“All participants of VDE 100 have the innate ability to
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`participate in any role.”); 255:23-43, and thus highlights the known flexibility in such
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`distribution systems, underscoring that a POSITA would have known that combina-
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`tions between and among disclosures of such distribution systems would have been
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`obvious to a POSITA. See also Ex. 1219 ¶¶44-45.
`
`Storage and utilization of content on portable devices, including mobile com-
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`munication devices such as cellular phones, was also well-known before Smartflash’s
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`claimed October 25, 1999 priority date. As one example, Exhibit 1216, (“Rydbeck,”
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`pub’d Aug. 26, 1999), discloses a cellular phone for storing and accessing digital con-
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`tent. See, e.g., Ex. 1216 at 5 (“Because of its integration into the cellular phone, the digital en-
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`tertainment module can share components already present in the cellular phone. Such savings
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`would not be available if a CD player were simply aggregated with the phone . . . the
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`use of solid state RAM or ROM, as opposed to disc storage, eliminates the need for
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`bounce control circuitry. This enables the disclosed invention to provide cellular communications
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`and entertainment during leisure activities.”). See also Ex. 1219 ¶46. And Exhibit 1218
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`(“Sato,” pub’d June 18, 1999) discloses storing media content on mobile user devices
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`and playing the media content from these mobile devices, as well as storing the media
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`content on a removable IC card. See, e.g., Ex. 1217 ¶ 9 (“The portable music selection
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`and viewing device 70 provides a removable storage device 76 [which] is a memory card simi-
`
`lar to, for example. . . an IC card… The user, after downloading the music software
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`to the storage device (medium) 76 of the portable music selection and viewing device
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`70 by operating the push buttons or the like on the main body 71, can enjoy this mu-
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`sic software on a display 72 or a receiver 74 of the portable music selection and view-
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`ing device 70, and can also enjoy higher quality music playback by removing this storage
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`device (medium) and inserting it into another audio unit. [T]he user can store the music software
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`from another audio unit into the storage device 76 and enjoy music by inserting this storage
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`unit 76 into this portable music selection and viewing device 70.”); ¶ 13 (“A music
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`storage medium 250 such as a magnetic card, magnetic tape, a CD, a DVD, or a
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`memory card such as an IC card stores the music software, and this storage medium 250
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`can be removed and used on other audio units.”). See also Ex. 1219 ¶47.
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`As this background and the additional examples detailed below in Section IV.C
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`illustrate, the prior art was rife with awareness and discussion of the same supposed
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`“invention” now memorialized in the challenged claims of the ’598 patent.
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`III. PETITIONER HAS STANDING
`A.
`The ’598 Patent is a “covered business method patent” under § 18(d)(1) of the
`
`The ’598 Patent Is a Covered Business Method Patent
`
`Leahy-Smith America Invents Act, Pub. L. 112-29 (“AIA”) and § 42.301, and Peti-
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`tioner certifies it is available for review under § 42.304(a). See also CBM2014-
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`00108/109, Pap. 8, 7-12) (finding claim 7 of ’598 Patent satisfies requirement). Alt-
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`hough numerous claims of the ’598 Patent qualify, a patent with even one claim cover-
`
`ing a covered business method is considered a CBM patent. See CBM 2012-00001,
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`Doc. 36 at 26; 77 Fed. Reg. 48,709 (Aug. 14, 2012). Petitioner thus addresses here ex-
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`emplary claim 7, which depends from claim 1 (Ex. 1201):
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`1. A portable data carrier comprising:
`[A] an interface for reading and writing data from and to the portable da-
`ta carrier;
`[B] content data memory, coupled to the interface, for storing one or
`more content data items on the carrier;
`[C] use rule memory to store one or more use rules for said one or more
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`content data items;
`[D] a program store storing code implementable by a processor;
`[E] and a processor coupled to the content data memory, the use rule
`memory, the interface and to the program store for implementing code
`in the program store,
`[F] wherein the code comprises code for storing at least one content data
`item in the content data memory and at least one use rule in the use rule
`memory.
`7. A portable data carrier as claimed in claim 1, further comprising
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`[G] payment data memory to store payment data and code to
`provide the payment data to a payment validation system.
`1.
`A “covered business method patent” is “a patent that claims a method or corre-
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`Exemplary Claim 7 Is Financial In Nature
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`sponding apparatus for performing data processing or other operations used in the practice, admin-
`
`istration, or management of a financial product or service, except that the term does not in-
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`clude patents for technological inventions.” AIA § 18(d)(1); 37 C.F.R. § 42.301. “The
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`‘legislative history explains that the definition of covered business method patent was
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`drafted to encompass patents claiming activities that are financial in nature, incidental
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`to a financial activity or complementary to a financial activity.’” 77 Fed. Reg. 48,734,
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`48,735 (Aug. 14, 2012) (citing 157 Cong. Rec. S5432 (daily ed. Sept. 8, 2011) (state-
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`ment of Sen. Schumer)). “[F]inancial product or service” is to be interpreted broadly,
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`id., and the term “financial . . . simply means relating to monetary matters”—it does
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`not require any link to traditional financial industries such as banks. See, e.g.,
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`CBM2012-00001, Paper 36 at 23.
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`The Board has previously found, e.g., that a claim for “transferring money elec-
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`tronically via a telecommunication line to the first party . . . from the second party”
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`met the financial product or service requirement, concluding that “the electronic
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`transfer of money is a financial activity, and allowing such a transfer amounts to
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`providing a financial service.” CBM2013-00020, Paper 14 at 11-12. See also, e.g.,
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`CBM2013-00017, Paper 8 at 5-6 (finding patent sufficiently financial based on refer-
`
`ence in the specification to e-commerce and the fact that “[a] person of ordinary skill
`
`in the art would have understood that [one of the claim limitations] may be associated
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`with financial services”).
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`As discussed above, the ’598 patent includes claims directed to a “portable data
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`carrier” (such as a standard smart card) that stores content, use rules, payment data,
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`and code that provides payment data to a payment validation system. See AIA
`
`§ 18(d)(1); 37 C.F.R. § 42.301(a); Ex. 1201. The ’598 patent alleges that this allows
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`content owners to make content available to users without fearing loss of revenue.
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`Ex. 1201 at 2:11-15; see also id. at claim 31 (“A method of controlling access to content data,
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`the method comprising: receiving a data access request from a user for a content data
`
`item, reading the use status data and one or more use rules from parameter memory
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`that pertain to use of the requested content data item; evaluating the use status data
`
`using the one or more use rules to determine whether access to the content data item
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`is permitted; and enabling access to the content data item responsive to a determina-
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`tion that access to the content data item is permitted”). More generally, the patent is
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`about “[d]ata storage and access systems [that] enable downloading and paying for da-
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`ta . . .” Id. Abstract. “The combination of payment data and stored content data and
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`use rule data helps reduce the risk of unauthorized access to data.” Id. And in seek-
`
`ing to enforce the ’598 patent in litigation, Smartflash itself conceded that the alleged
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`invention relates to a financial activity or transaction, stating that “[t]he patents-in-suit
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`generally cover a portable data carrier for storing data and managing access to the data
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`via payment information and/or use status rules. The patents-in-suit also generally
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`cover a computer network . . . that serves data and manages access to data by, for ex-
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`ample, validating payment information.” Ex. 1202 ¶ 17.
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`Indeed, the specification confirms the “portable data carrier” of the invention
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`is “for storing and paying for data,” Ex. 1201 1:20-22, and the “use rules” of Claim 1
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`“may be linked to payments made from the card to provide payment options such as
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`access to buy content data outright; [or] rental access . . .” Id. 5:1-8. Claim 7 further
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`requires memory to store payment data and code to “provide the payment data to a
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`payment validation system.” Id. cl. 7. Thus Claim 7, which explicitly describes storing
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`and providing payment data to a payment validation system, clearly concerns a com-
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`puter system (corresponding to the methods discussed and claimed elsewhere) for
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`performing data processing and other operations used in the practice, administration,
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` Covered Business Method Patent Review
`United States Patent No. 8,061,598
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`or management of a financial activity and service. Indeed, claim 7 expressly recites
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`software (i.e., code) to perform data processing and other operations in connection
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`with the recited “payment validation system” (e.g., “to store payment data and code to
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`provide the payment data to