`
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`APPLE INC.,
`
`Petitioner,
`
`v.
`
`SMARTFLASH LLC,
`
`Patent Owner.
`
`____________
`
`Case CBM2015-00018
`
`Patent 7,942,317 B2
`
`____________
`
`PATENT OWNER’S RESPONSE
`
`
`
`TABLE OF CONTENTS
`
`V.
`
`
`INTRODUCTION ........................................................................................... 1
`I.
`STATEMENT OF MATERIAL FACTS ........................................................ 3
`II.
`III. THE WECHSELBERGER DECLARATION SHOULD BE GIVEN
`LITTLE OR NO WEIGHT .............................................................................. 3
`A. No Evidentiary Standard Is Disclosed in the Wechselberger
`Declaration ............................................................................................ 3
`IV. OVERVIEW OF U.S. PATENT NO. 7,942,317 ............................................ 5
`A. Overview of the Technology of the Patent ........................................... 5
`B.
`Claim Construction ............................................................................... 8
`CLAIM 18 OF THE ‘317 PATENT ARE DIRECTED TO STATUTORY
`SUBJECT MATTER ....................................................................................... 9
`A.
`The Two-Part Test for Statutory Subject Matter .................................. 9
`B.
`Claim 18 of the ‘317 Patent is Statutory Under the Second Step of
`Mayo and Alice ...................................................................................... 9
`Claim 18 of the ‘317 Patent Do Not Result in Inappropriate
`Preemption ........................................................................................... 11
`Preemption under DDR Holdings ............................................. 11
`1.
`Preemption under Mayo and Alice ........................................... 14
`2.
`3.
`Non-Infringing Alternatives Show a Lack of Preemption ........ 16
`VI. PETITIONER HAS ALREADY LOST A CHALLENGE TO THE CLAIMS
`ON THE SAME STATUTORY GROUNDS IN ITS LITIGATION WITH
`PATENT OWNER ........................................................................................ 16
`VII. THE USPTO IS ESTOPPED FROM REVISITING THE ISSUE OF
`WHETHER THE CLAIMS ARE DIRECTED TO STATUTORY SUBJECT
`MATTER ....................................................................................................... 18
`VIII. CONCLUSION .............................................................................................. 18
`
`
`C.
`
`
`
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`
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`- i -
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`PATENT OWNER’S LIST OF EXHIBITS
`
`Exhibit Number
`
`Exhibit Description
`
`2001-2003
`
`Reserved
`
`2004
`
`2005
`
`Congressional Record - House, June 23, 2011, H4480-4505
`
`Congressional Record - Senate, Sep. 8, 2011, S5402-5443
`
`2006-2048
`
`Reserved
`
`2049
`
`2050
`
`Report and Recommendation (on Defendants’ Motions for
`Summary Judgment of Invalidity Pursuant to 35 U.S.C. §
`101), from Smartflash LLC, et al. v. Apple Inc., et al., Case
`No. 6:13-CV-447 (E.D. Tex.) and Smartflash LLC, et al. v.
`Samsung Electronics Co. Ltd, et al., Case No. 6:13-CV-448
`(E.D. Tex.), dated Jan. 21, 2015
`
`Order adopting Report and Recommendation (on
`Defendants’ Motions for Summary Judgment of Invalidity
`Pursuant to 35 U.S.C. § 101), from Smartflash LLC, et al. v.
`Apple Inc., et al., Case No. 6:13-CV-447 (E.D. Tex.) and
`Smartflash LLC, et al. v. Samsung Electronics Co. Ltd, et al.,
`Case No. 6:13-CV-448 (E.D. Tex.), dated Feb. 13, 2015
`
`2051-2057
`
`Reserved
`
`2058
`
`
`
`Memorandum Opinion and Order (on Defendants’ Motions
`for Stay Pending the Outcome of CBMs) from Smartflash
`LLC, et al. v. Apple Inc., et al., Case No. 6:13-CV-447 (E.D.
`
`- ii -
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`
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`Tex.), Smartflash LLC, et al. v. Samsung Electronics Co. Ltd,
`et al., Case No. 6:13-CV-448 (E.D. Tex.), Smartflash LLC, et
`al. v. Google, Inc., et al., Case No. 6:14-CV-435 (E.D. Tex.),
`and Smartflash LLC, et al. v. Amazon, Inc., et al., Case No.
`6:14-CV-992 (E.D. Tex.) dated May 29, 2015
`
`2059-2067
`
`Reserved
`
`2068
`
`Deposition Transcript of Anthony J. Wechselberger dated
`May 28, 2015
`
`2069-2071
`
`Reserved
`
`2072
`
`2073
`
`2074
`
`
`
`Declaration of Emily E. Toohey in Support of Patent
`Owner’s Response
`
`Reserved
`
`Civil Docket Report from Smartflash LLC, et al. v. Apple
`Inc., et al., Case No. 6:13-CV-447 (E.D. Tex.)
`
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`I.
`
`INTRODUCTION
`
`Covered business method review was instituted for U.S. Patent 7,942,317
`
`(“the ‘317 Patent”) claim 18 as being directed to patent-ineligible subject matter
`
`under 35 U.S.C. § 101. Decision - Institution of Covered Business Method Patent
`
`Review 37 C.F.R. § 42.208, Paper 15 at 13 (PTAB April 10, 2015).
`
`Claim 18 of the ‘317 Patent is directed to statutory subject matter because it
`
`claims a solution “necessarily rooted in computer technology in order to overcome
`
`a problem specifically arising in the realm of computer networks.” DDR Holdings,
`
`LLC v. Hotels.com, L.P., 773 F.3d 1245, 1257 (Fed. Cir. 2014). In particular,
`
`claim 18 of the ‘317 Patent addresses the problem of data content piracy on the
`
`Internet by providing for legitimate acquisition of content data by transmitting
`
`requested data to the requester after receiving payment data from the requester, and
`
`in connection with reading payment distribution information from a data store. Ex.
`
`1201, ‘317 Patent at 28:24-33.
`
`As demonstrated below, claim 18 of the ‘317 Patent does not result in
`
`inappropriate preemption of the “idea of paying for data” (Petition, Paper 1 at 4) or
`
`the “idea of paying for and controlling access to content” (Ex. 1217, Declaration of
`
`Anthony J. Wechselberger (hereinafter “the Wechselberger Declaration”) at ¶ 66).
`
`Nor is there any evidence that a disproportionate amount of future innovation is
`
`foreclosed by claim 18 of the ‘317 Patent.
`
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`- 1 -
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`Additionally, in February 2015, Petitioner already lost in Federal Court the
`
`exact same purely legal issue the Board is considering here – whether claim 18 of
`
`the ‘317 Patent is directed to statutory subject matter under 35 U.S.C. § 101. See
`
`Exhibit 2049, Report and Recommendation (on Defendants’ Motions for Summary
`
`Judgment of Invalidity Pursuant to 35 U.S.C. § 101) (hereinafter “Report and
`
`Recommendation”), from Smartflash LLC, et al. v. Apple Inc., et al., Case No.
`
`6:13-CV-447 (E.D. Tex.) and Smartflash LLC, et al. v. Samsung Electronics Co.
`
`Ltd, et al., Case No. 6:13-CV-448 (E.D. Tex.), dated Jan. 21, 2015, and Exhibit
`
`2050, Order adopting Report and Recommendation (on Defendants’ Motions for
`
`Summary Judgment of Invalidity Pursuant to 35 U.S.C. § 101), from Smartflash
`
`LLC, et al. v. Apple Inc., et al., Case No. 6:13-CV-447 (E.D. Tex.) and Smartflash
`
`LLC, et al. v. Samsung Electronics Co. Ltd, et al., Case No. 6:13-CV-448 (E.D.
`
`Tex.), dated Feb. 13, 2015.
`
`Patent Owner submits that the USPTO has already adjudicated the threshold
`
`question of whether claim 18 of the ‘317 Patent comports with 35 U.S.C. § 101,
`
`which is a question of law, during the prosecution of the ‘317 Patent. The USPTO
`
`is estopped from re-litigating this purely legal issue already considered and
`
`adjudicated by the USPTO.
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`In support of this Patent Owner’s Response, reference will be made to
`
`concurrently filed Exhibit 2068, the Deposition Transcript of Anthony J.
`
`Wechselberger, dated May 28, 2015.
`
`II.
`
`STATEMENT OF MATERIAL FACTS
`
`1.
`
`The Wechselberger Declaration does not state that Mr.
`
`Wechselberger’s opinions presented therein were based on a “preponderance of the
`
`evidence” standard.
`
`2.
`
`The Wechselberger Declaration does not state that Mr.
`
`Wechselberger’s opinions presented therein were based on a “more likely than not”
`
`evidentiary weight standard.
`
`III. THE WECHSELBERGER DECLARATION SHOULD BE GIVEN
`
`LITTLE OR NO WEIGHT
`A. No Evidentiary Standard Is Disclosed in the Wechselberger
`Declaration
`
`The Wechselberger Declaration does not disclose the underlying facts on
`
`which the opinions are based and is, therefore, entitled to little or no weight. 37
`
`CFR § 42.65 (“Expert testimony that does not disclose the underlying facts or data
`
`on which the opinion is based is entitled to little or no weight.”). More
`
`specifically, the Wechselberger Declaration does not state the evidentiary weight
`
`standard (e.g., substantial evidence versus preponderance of the evidence) that Mr.
`
`Wechselberger used in arriving at his conclusions. Given that there is no evidence
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`that Mr. Wechselberger even knows how much weight need be relied upon to show
`
`that a claim is non-statutory, the PTAB can only afford little or no weight to the
`
`testimony therein. To do otherwise would be to accept his opinions without
`
`knowing “the underlying facts ... on which the opinion is based” (i.e., how much
`
`evidence he thinks shows any of his opinions discussed therein).
`
`Similarly, the Board cannot assess under FRE 702 whether Mr.
`
`Wechselberger’s opinion testimony is “the product of reliable principles and
`
`methods” or if Mr. Wechselberger “reliably applied the principles and methods to
`
`the facts of the case” given that Mr. Wechselberger did not disclose the standard
`
`against which he measured the evidence in arriving at his opinions.
`
`For example, when Mr. Wechselberger reviewed various “examples of these
`
`well-known, routine activities and components in the prior art” (Wechselberger
`
`Declaration at ¶¶ 73-78) and opined that “the challenged claim is directed to
`
`nothing more than implementing the basic concept of providing access to content
`
`based on payment data, using generic features present on general purpose
`
`computers (and indeed, not necessarily requiring implementation on a general
`
`purpose or any computer). Therefore, the challenged claim is not patentable” (id.
`
`at ¶ 79), is that opinion based on less than a preponderance of the evidence, or
`
`more? Without Mr. Wechselberger having disclosed what evidentiary standard he
`
`used in forming his opinions, and given that there is no evidence that he even knew
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`what evidentiary standard he was supposed to be using, the PTAB cannot rely on
`
`his statements. Thus, the PTAB should find that the Wechselberger Declaration is
`
`entitled to little or no weight.
`
`IV. OVERVIEW OF U.S. PATENT NO. 7,942,317
`A. Overview of the Technology of the Patent
`Although the claims define the actual scope of coverage of the patent, as
`
`described in the first paragraph of the BACKGROUND OF THE INVENTION,
`
`the patent-at-issue, the ‘317 Patent, generally describes “data storage and access
`
`systems ... [and] is particularly useful for managing stored audio and video data,
`
`but may also be applied to storage and access of text and software, including
`
`games, as well as other types of data.” Ex. 1201, ‘317 Patent at 1:18-26.
`
`Preferred embodiments described in the ‘317 Patent at 15:53-62 illustrate
`
`this further: “FIG. 7 ... shows a variety of content access terminals for accessing
`
`data supply computer system 120 over internet 142. The terminals are provided
`
`with an interface to a portable data carrier or ‘smart Flash card’ (SFC) as generally
`
`described with reference to FIG. 2 and as described in more detail below. In most
`
`embodiments of the terminal the SFC interface allows the smart Flash card data
`
`carrier to be inserted into and removed from the terminal, but in some
`
`embodiments the data carrier may be integral with the terminal.” Exemplary
`
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`- 5 -
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`terminals include, but are not limited to, set-top boxes 154, CD/DVD Players 170
`
`and mobile communications devices 152. Id. at 15:65-16:17.
`
`Referring to preferred embodiments, the ‘317 Patent discloses that a data
`
`supply system may provide users with a seamless purchase and content delivery
`
`experience. Id. at 23: 63-24:1. Users are able to purchase content from a variety
`
`of different content providers even if they do not know where the content providers
`
`are located or how the content is delivered. See id. The exemplary system is
`
`operated by a “content data supply ‘system owner,’” who may act as an
`
`intermediary between a user seeking to purchase content and content providers,
`
`such as record labels, movie studios, and software providers. See id. at 13:60-67.
`
`When a user accesses the system, he or she is able to select content to purchase or
`
`rent from a variety of different content providers. See id. at 4:63-5:3. If the user
`
`finds a content item to buy, his or her device will transmit stored “payment data” to
`
`a “payment validation system” to validate the payment data. See id. at 8:1-3. The
`
`payment validation system returns proof that the payment data has been validated,
`
`in the form of “payment validation data,” and the user is able to retrieve the
`
`purchased content from the content provider. See id. at 8:4-6.
`
`The ’317 Patent discloses that “FIG. 13 ... shows a flow chart for user access
`
`of stored data on a smart Flash card using a data access device such as the MP3
`
`player of FIG. 1.” Id. at 24:16-18. “The data access device uses the use status data
`
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`and use rules to determine what access is permitted to data stored on the data
`
`carrier.” Id. at 9:17-20. “The carrier may ... store content use rules pertaining to
`
`allowed use of stored data items. These use rules may be linked to payments made
`
`from the card to provide payment options such as access to buy content data
`
`outright; rental access to content data for a time period or for a specified number of
`
`access events; and/or rental/purchase, for example where rental use is provided
`
`together with an option to purchase content data at the reduced price after rental
`
`access has expired.” Id. at 4:62-5:3. Further, “use status data [is retrieved] from
`
`the data carrier [to] indicat[e] past use of the stored data.” Id. at 9:29-32.
`
`Thus, as described in the ‘317 Patent at 5:24-28, “[b]y combining digital
`
`rights management with content data storage using a single carrier, the stored
`
`content data becomes mobile and can be accessed anywhere while retaining control
`
`over the stored data for the data content provider or data copyright owner.”
`
`By using a system that combines on the data carrier both the digital content
`
`and the use rules/use status data, access control to the digital content can be
`
`continuously enforced prior to access to the digital content. By comparison, unlike
`
`a system that uses use rules/use status data as claimed, when a DVD was
`
`physically rented for a rental period, there was no mechanism to write partial use
`
`status data to the DVD when only part of the DVD had been accessed (e.g., to
`
`track whether a renter had “finished with” the DVD yet).
`
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`B. Claim Construction
`Petitioner argues that “payment data” should be “construed to mean ‘data
`
`representing payment made for requested content data’ and is distinct from ‘access
`
`control data.’” Petition, Paper 1 at 21. However, “payment data” in the context of
`
`the claims of the ‘317 Patent should be interpreted to mean “data that can be used
`
`to make payment for content” when using a broadest reasonable interpretation.1
`
`The ‘317 Patent at 20:59-62, states “payment data for making a payment …
`
`is received from the smart Flash card by the content access terminal and forwarded
`
`to an e-payment system.” That is, the payment data is used for making a
`
`payment. Furthermore, as can be seen in Figure 12c of the ‘317 Patent, step S54
`
`reads “PAYMENT FOR SCHEME OWNER RECEIVED FROM CARD BY
`
`CONTENT ACCESS TERMINAL AND FORWARDED TO e-PAYMENT
`
`SYSTEM.” Step S55 then reads “PAYMENT RECORD DATA RECEIVED
`
`FROM e-PAYMENT SYSTEM BY CONTENT ACCESS TERMINAL AND
`
`1 Patent Owner’s use of the “broadest reasonable interpretation” (BRI)
`
`standard herein is not an admission that the BRI standard is the proper standard for
`
`CBM proceedings such as this one. However, for the purposes of this proceeding
`
`based on the issues in the instituted proceeding, Patent Owner has presented its
`
`arguments utilizing the BRI standard for “payment data.” Patent Owner reserves
`
`its right to argue for a different standard at a later date or in a different proceeding.
`
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`- 8 -
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`FORWARDED TO CARD.” Both of those steps precede step S56 which recites
`
`“PAYMENT RECORD DATA, PURCHASE REQUEST AND CARD
`
`REGISTRATION DATA TRANSMITTED TO SCHEME OWNER.” Thus, as
`
`payment has not yet been made when the payment data of step S54 is sent,
`
`“payment data” should be interpreted to mean “data that can be used to make
`
`payment for content.”
`
`V. CLAIM 18 OF THE ‘317 PATENT IS DIRECTED TO STATUTORY
`SUBJECT MATTER
`A. The Two-Part Test for Statutory Subject Matter
`The Supreme Court articulated a two-part test for patentability in Mayo
`
`Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012),
`
`which has been followed by Alice Corp. Pty. v. CLS Bank Int'l, 134 S. Ct. 2347
`
`(2014). The first step in the analysis is to determine whether the claims at issue are
`
`directed to patent-ineligible concepts. If the claims at issue are directed to a
`
`patent-ineligible concept, the second step of the analysis is to determine whether
`
`the limitations of the claims, individually and as ordered combinations, contain an
`
`inventive concept that transforms the nature of the claims into patent-eligible
`
`subject matter. Mayo, 132 S. Ct. at 1294.
`
`B. Claim 18 of the ‘317 Patent is Statutory Under the Second Step of
`Mayo and Alice
`Post Mayo and Alice, the Federal Circuit has provided guidance on how to
`
`distinguish statutory claims, like those of the ‘317 Patent, from non-statutory
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`
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`claims. In DDR Holdings, the Federal Circuit analyzed claims, like the ‘317 Patent
`
`claim at issue here, that have technological solutions to technological problems
`
`created by the nature of digital content and the Internet. In DDR Holdings, the
`
`Federal Circuit found the claims to be statutory because “the claimed solution is
`
`necessarily rooted in computer technology in order to overcome a problem
`
`specifically arising in the realm of computer networks.” DDR Holdings, 773 F.3d
`
`at 1257.
`
`Such is the case here too. Claim 18 of the ‘317 Patent is not directed to
`
`mental processes or processes performed using pen and paper, rather the claim is
`
`directed to a particular method to combat data content piracy on the Internet by
`
`providing for legitimate acquisition of content data by transmitting requested data
`
`to the requester after receiving payment data from the requester, and in connection
`
`with reading payment distribution information from a data store. Ex. 1201, ‘317
`
`Patent at 28:24-33.
`
`Thus, claim 18 is rooted in computer technology in order to overcome a
`
`problem specifically arising in the realm of computer networks – that of digital
`
`data piracy, and, like in DDR Holdings, “address … a challenge particular to the
`
`Internet.” Id. at 1257. The Report and Recommendation also acknowledged this
`
`distinction, finding:
`
`As in DDR Holdings, the patents here do not simply
`apply a known business practice from the pre-Internet
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`world to computers or the Internet. “The claimed solution
`is necessarily rooted in computer technology in order to
`overcome a problem specifically arising in the realm of
`computer networks.” ... Digital Rights Management is a
`technology that was developed after widespread use of
`the Internet. Entry into the Internet Era presented new
`and unique problems for digital content providers in
`combatting unauthorized use and reproduction of
`protected media content.
`
`Report and Recommendation at 19, lines 7-12 (quoting DDR Holdings, 773 F.3d at
`
`1257) (internal citation omitted).
`
`Thus, like in DDR Holdings, when “the limitations of the … claims are
`
`taken as [a] combination, the claims recite[] an invention that is not merely the
`
`routine or conventional use of the Internet.” DDR Holdings, 773 F.3d at 1259.
`
`Such a finding was further echoed by the Report and Recommendation when it
`
`held that the “asserted claims … recite specific ways of using distinct memories,
`
`data types, and use rules that amount to significantly more than the underlying
`
`abstract idea. Although in some claims the language is functional and somewhat
`
`generic, the claims contain significant limitations on the scope of the inventions.”
`
`Report and Recommendation at 19, lines 1-4.
`
`C. Claim 18 of the ‘317 Patent Does Not Result in Inappropriate
`Preemption
`1.
`Claim 18 of the ‘317 Patent does not result in inappropriate preemption of
`
`Preemption under DDR Holdings
`
`the “idea of paying for data” (Petition, Paper 1 at 4) or the “idea of paying for and
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`controlling access to content” (Ex. 1217, Wechselberger Declaration at ¶ 66) under
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`DDR Holdings, Mayo and Alice. The Petition alleges that “Here, the broad
`
`functional nature of the challenged claim firmly triggers preemption concerns.”
`
`Paper 1 at 30. However, using the analysis of the Federal Circuit in DDR
`
`Holdings, claims are statutory when “the claims ... do not attempt to preempt every
`
`application of the idea [relating to the field of the invention]. Rather, they recite a
`
`specific way … that incorporates elements from multiple sources in order to solve
`
`a problem faced by [servers] on the Internet.” DDR Holdings, 773 F.3d at 1259.
`
`Such a standard is consistent with other Supreme Court precedent as well. As cited
`
`in Mayo, in “Bilski, the Court pointed out that to allow ‘petitioners to patent risk
`
`hedging would [inappropriately] preempt use of this approach in all fields.” Mayo,
`
`132 S. Ct. at 1301 (citing Bilski v. Kappos, 561 U.S. 612 (2010)).
`
`Mr. Wechselberger’s deposition testimony supports that claim 18 of the ‘317
`
`Patent does not result in inappropriate preemption because it does not preempt
`
`every application of the idea of paying for and controlling access to content.
`
`Specifically, Mr. Wechselberger admitted that “[it is] possible to build a computer
`
`system that enables paying for and controlling access to content that does not read
`
`payment distribution information from a data store” as required by claim 18 of the
`
`‘317 Patent. Ex. 2068, Wechselberger Deposition at 59:15-19 (emphasis added).
`
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`- 12 -
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`The Report and Recommendation also found that the claims of the ‘317
`
`Patent do not result in inappropriate preemption:
`
`[T]he claims do not risk preempting all future inventions
`related to exchanging access to data for payment on the
`Internet. Instead, when taken as ordered combinations,
`the claims recite specific ways of combining system
`components and method steps beyond the routine use of
`the Internet. The claims address specific ways of
`managing access to digital content data based on
`payment validation through storage and retrieval of use
`status data and use rules in distinct memory types and
`evaluating the use data according to the use rules.
`
`Report and Recommendation at 20.
`
`Moreover, the Petition’s assertion that “the broad functional nature of the
`
`challenged claim firmly triggers preemption concerns” (Paper 1 at 30) is
`
`contradicted by Petitioner’s litigation assertions (1) that it does not infringe the
`
`challenged claim (see, e.g., Ex. 2074, Civil Docket Report from Smartflash LLC, et
`
`al. v. Apple Inc., et al., Case No. 6:13-CV-447 (E.D. Tex.), at 45, Dkt. # 271,
`
`Apple's Motion for Partial Summary Judgment of Non−Infringement) and (2) that
`
`there are non-infringing alternatives to the claim. As described in the Report and
`
`Recommendation, “both Smartflash and Defendants identified numerous non-
`
`infringing alternatives, such as those employed by Netflix and Spotify.” Report and
`
`Recommendation at 15 (emphasis added). Indeed, Mr. Wechselberger admitted
`
`that he himself provided opinions on non-infringing alternatives for certain
`
`Smartflash claims. Ex. 2068, Wechselberger Deposition at 22:2-8.
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`Thus, the Petition’s argument that the challenged claims would result in
`
`preemption is without merit.
`
`Preemption under Mayo and Alice
`
`2.
`The Supreme Court’s analyses in Mayo and Alice further confirm that the
`
`challenged claims do not result in preemption. In Mayo, the Supreme Court
`
`clarified that “the underlying functional concern ... is a relative one: how much
`
`future innovation is foreclosed relative to the contribution of the inventor.” Mayo,
`
`132 S. Ct. at 1303. To analyze that issue, the Court looks to the “risk [of]
`
`disproportionately tying up the use of the underlying natural laws, inhibiting their
`
`use in the making of further discoveries.” Id. at 1294. However, in support of the
`
`Petitioner’s case here, Mr. Wechselberger did not even analyze whether there is
`
`any future innovation that is foreclosed by any of the Smartflash patents. Mr.
`
`Wechselberger testified:
`
`Q. In preparing your declaration for the
`
`221 patent, did you analyze what future innovations
`
`would be foreclosed by claim one of the 221 patent?
`
`MS. FUKUDA: Objection to form.
`
`A. I did not. I don't know how one could
`
`reasonably do that.
`
`Q. In preparing your declaration for any of
`
`
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`the four patents at issue, did you analyze what
`
`future innovations would be foreclosed by any of the
`
`claims of those four patents?
`
`MS. FUKUDA: Objection to form.
`
`A. Same answer. Future innovations --
`
`innovations is a hugely broad arena, and, again,
`
`I -- I would not know how a single person could
`
`reasonably do that.
`
`Exhibit 2068, Wechselberger Deposition at 22:9-23 (emphasis added).
`
`When dealing with preemption issues in Alice, the Supreme Court held:
`
`Accordingly, in applying the § 101 exception, we must
`distinguish between patents that claim the “‘building
`blocks’” of human ingenuity and those that integrate the
`building blocks into something more, ...thereby
`“transforming” them into a patent-eligible invention.
`The former “would risk disproportionately tying up the
`use of the underlying” ideas, and are therefore ineligible
`for patent protection. The latter pose no comparable risk
`of pre-emption, and therefore remain eligible for the
`monopoly granted under our patent laws.
`
`Alice, 134 S. Ct. at 2354 (citing Mayo)(internal citations omitted). As discussed in
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`greater detail below, there are non-infringing alternatives to claim 18 of the ‘317
`
`Patent. Thus, the Petition has failed to carry its burden of proof that a
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`disproportionate amount of future innovation is foreclosed. Said differently,
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`without an analysis of the number of “innovations” that are foreclosed and the
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`relative contribution of the inventor, the Petition fails to prove disproportionality or
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`that the relative preemption results in a finding of non-statutory subject matter.
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`Non-Infringing Alternatives Show a Lack of Preemption
`
`3.
`While the Petition alleges that the claims would result in inappropriate
`
`preemption, the reality is that even Petitioner’s own expert agrees that there are
`
`alternatives that would nonetheless still meet the Petitioner’s alleged field of
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`“paying for data” (Petition, Paper 1 at 4) and/or “paying for and controlling access
`
`to content” (Ex. 1217, Wechselberger Declaration at ¶ 66).
`
`Mr. Wechselberger admitted to the existence of non-infringing alternatives
`
`to claim 18 of the ‘317 Patent at issue here. For example he admitted that “[it is]
`
`possible to build a computer system that enables paying for and controlling access
`
`to content that does not read payment distribution information from a data store” as
`
`required by claim 18 of the ‘317 Patent. Ex. 2068, Wechselberger Deposition at
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`59:15-19 (emphasis added).
`
`Thus, given that certain embodiments are not precluded, the Petition has not
`
`shown that there is a disproportionate amount of preemption.
`
`VI. PETITIONER HAS ALREADY LOST A CHALLENGE TO THE
`CLAIMS ON THE SAME STATUTORY GROUNDS IN ITS
`LITIGATION WITH PATENT OWNER
`
`Petitioner has already lost a Motion for Summary Judgment of Invalidity
`
`Pursuant to 35 U.S.C. § 101 in its litigation with Patent Owner. See Exhibits 2049
`
`
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`- 16 -
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`and 2050. The Report and Recommendation expressly found that “The asserted
`
`claims are unlike the claims in Alice, Ultramercial II, and Content Extraction that
`
`claimed little more than abstract concepts. … [T]he claimed methods and systems
`
`are patent-eligible under §101.” Exhibit 2049 at 20-21. The Report and
`
`Recommendation was then adopted by the Court. See Exhibit 2050. Given that
`
`Petitioner has already lost its purely legal challenge to the patentability of the
`
`claims under 35 U.S.C. § 101, there is no reason to re-litigate the issue before the
`
`PTAB as the effort, time, and cost of such re-litigation will not “secure the just,
`
`speedy, and inexpensive resolution of [this] proceeding” as required by 37 C.F.R.
`
`42.1.
`
`As the District Court noted in denying Petitioner Apple’s motion to stay the
`
`litigation in light of the CBM’s Apple filed:
`
`At this late litigation stage, if the Court were to give
`credence to Apple’s arguments, this would serve to
`encourage parties to misuse CBM review in a manner
`completely opposite of what Congress intended, by
`making it into a cost-increasing, post-trial second chance
`at additional litigation, rather than a cost-effective
`alternative to litigation.
`
`Exhibit 2058 at 16.
`
`
`
`- 17 -
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`
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`VII. THE USPTO IS ESTOPPED FROM REVISITING THE ISSUE OF
`WHETHER THE CLAIMS ARE DIRECTED TO STATUTORY
`SUBJECT MATTER
`
`The question of whether claim 18 is directed to statutory subject matter has
`
`already been adjudicated by the USPTO, and the USPTO is estopped from
`
`allowing the issue to be raised in the present proceeding. Inherent in every
`
`examination is a review of whether the pending claims comport with 35 U.S.C. §
`
`101, which is a question of law. As in historical reexamination proceedings, the
`
`PTO’s analysis should be directed to substantial new questions of patentability
`
`arising from previously unapplied prior art, not the re-litigation of issues (e.g.,
`
`compliance of the claims with 35 U.S.C. § 101) already considered and adjudicated
`
`by the PTO.
`
`VIII. CONCLUSION
`The Petition does not prove that claim 18 of the ‘317 Patent is directed to
`
`patent ineligible subject matter, and claim 18 should be found valid.
`
` /
`
` Michael R. Casey /
`
`
`Michael R. Casey
`Registration No. 40,294
`Davidson Berquist Jackson & Gowdey, LLP
`8300 Greensboro Dr., Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7700
`Fax : (571) 765-7200
`Email: mcasey@dbjg.com
`Attorney for Patent Owner
`- 18 -
`
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`Dated: June 24, 2015
`
`
`
`
`
`
`
`
`
`CERTIFICATE OF SERVICE
`
`
`The undersigned hereby certifies that this PATENT OWNER’S RESPONSE
`
`(including Patent Owner’s List of Exhibits) and Exhibits 2049, 2050, 2058, 2068,
`
`2072, and 2074 in CBM2015-00018 were served, by agreement of the parties, June
`
`24, 2015 by emailing copies to counsel for the Petitioner as follows:
`
`J. Steven Baughman (steven.baughman@ropesgray.com)
`Ching-Lee Fukuda (ching-lee.fukuda@ropesgray.com)
`Megan Raymond (megan.raymond@ropesgray.com
`ApplePTABService-SmartFlash@ropesgray.com
`
`
` /
`
` Michael R. Casey /
`
`
`Michael R. Casey
`Registration No. 40,294
`Davidson Berquist Jackson & Gowdey, LLP
`8300 Greensboro Dr., Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7700
`Fax : (571) 765-7200
`Email: mcasey@dbjg.com
`Attorney for Patent Owner
`
`
`
`Dated: June 24, 2015
`
`
`
`
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