Case CBM2015-00018
`Patent 7,942,317 B2
`
`
`
`
`
`
`
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`______________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`______________________
`
`APPLE INC.,
`Petitioner
`
`v.
`
`SMARTFLASH LLC,
`Patent Owner
`______________________
`
`Case CBM2015-00018
`Patent 7,942,317 B2
`______________________
`
`Before JENNIFER S. BISK, RAMA G. ELLURU, JEREMY M. PLENZLER, and
`MATTHEW R. CLEMENTS, Administrative Patent Judges.
`
`PETITIONER’S REPLY TO PATENT OWNER’S RESPONSE
`
`
`
`

`
`Case CBM2015-00018
`Patent 7,942,317 B2
`
`
`
`
`
`
`
`TABLE OF CONTENTS
`
`I. 
`INTRODUCTION ........................................................................................... 1 
`PETITIONER’S RESPONSE TO PO’S STATEMENT OF FACTS ............. 3 
`II. 
`III.  THE CHALLENGED CLAIM IS NOT § 101 PATENT ELIGIBLE ............ 3 
`A. 
`PO Fails to Identify Any Inventive Concept ......................................... 5 
`The DDR Claims Are Not Analogous to the Challenged Claim .......... 8 
`B. 
`1. 
`The Challenged Claim Does Not Address an Internet-
`Specific Problem ....................................................................... 10 
`The Challenged Claim Does Not “Override” Routine and
`Conventional Computer Action ................................................ 12 
`The Challenged Claim and the DDR Claims are Not
`Comparable ............................................................................... 15 
`PO’s Preemption Arguments Are Misplaced ...................................... 16 
`C. 
`IV.  PO’S OTHER ARGUMENTS ARE IRRELEVANT TO THE
`MERITS ......................................................................................................... 20 
`A.  Mr. Wechselberger Was Not Required to Recite the
`“Preponderance of the Evidence” Standard ....................................... 20 
`PO’s Construction of “Payment Data” Ignores the Explicit
`Teachings of the ’317 Patent ............................................................... 21 
`PO’s “Estoppel” Arguments Are Unfounded ..................................... 23 
`1. 
`The ’317 Patent’s Prosecution Before the PTO Does Not
`Estop the Board from Considering § 101 Here ........................ 23 
`Non-Final § 101 Determinations in District Court
`Litigation Have No Impact on This Proceeding ....................... 24 
`
`2. 
`
`3. 
`
`2. 
`
`B. 
`
`C. 
`
`
`
`i
`
`
`
`
`
`

`
`Case CBM2015-00018
`Patent 7,942,317 B2
`
`
`
`
`
`
`TABLE OF AUTHORITIES
`
`
`
`
`CASES
`Accenture Global Servs., GmbH v. Guidewire Software, Inc.,
`728 F.3d 1336 (Fed. Cir. 2013) ................................................................ 6, 16, 25
`
`Page(s)
`
`Alice Corp. Pty. Ltd. v. CLS Bank Int’l,
`134 S. Ct. 2347 (2014) .................................................................................passim
`
`Ariosa Diagnostics, Inc. v. Sequenom, Inc.,
`788 F.3d 1371 (Fed. Cir. 2015) ...................................................................passim
`
`Arrhythmia Research Tech., Inc. v. Corazonix Corp.,
`958 F.2d 1053 (Fed. Cir. 1992) .......................................................................... 25
`
`Bancorp Servs., L.L.C. v. Sun Life Assurance Co. of Can.,
`687 F.3d 1266 (Fed. Cir. 2012) ................................................................ 5, 16, 19
`
`buySAFE, Inc. v. Google, Inc.,
`765 F.3d 1350 (Fed. Cir. 2014) ................................................................ 6, 12, 15
`
`Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat’l Ass’n,
`776 F.3d 1343 (Fed. Cir. 2014) .............................................................. 2, 5, 6, 15
`
`DDR Holdings, LLC v. Hotels.com, L.P.,
`773 F.3d 1245 (Fed. Cir. 2014) ...................................................................passim
`
`Enzo Biochem, Inc. v. Gen-Probe, Inc.,
`424 F.3d 1276 (Fed. Cir. 2005) .......................................................................... 21
`
`Ethicon, Inc. v. Quigg,
`849 F.2d 1422 (Fed. Cir. 1988) .................................................................... 24, 25
`
`Fresenius USA, Inc. v. Baxter Int’l, Inc.,
`721 F.3d 1330 (Fed. Cir. 2013) .......................................................................... 24
`
`Gottschalk v. Benson,
`409 U.S. 63 (1972) .......................................................................................... 1, 11
`
`
`
`ii
`
`

`
`Case CBM2015-00018
`Patent 7,942,317 B2
`
`Intellectual Ventures I LLC v. Capital One Bank (USA)
`(“IV”), 792 F.3d 1363 (Fed. Cir. 2015) .................................................... 2, 12, 14
`
`
`
`
`
`
`Mayo Collaborative Servs. v. Prometheus Labs., Inc.,
`132 S. Ct. 1289 (2012) .................................................................................passim
`
`OIP Techs., Inc. v. Amazon.com, Inc.,
`788 F.3d 1359 (Fed. Cir. 2015) ...................................................................passim
`
`Suffolk Techs., LLC v. AOL Inc.,
`752 F.3d 1358 (Fed. Cir. 2014) .......................................................................... 21
`
`Telebuyer, LLC v. Amazon.com, Inc.,
`No. 2:13-cv-1677, 2015 WL 4493045 (W.D. Wash. July 23, 2015) ................... 6
`
`Ultramercial, Inc. v. Hulu, LLC,
`772 F.3d 709 (Fed. Cir. 2014) .....................................................................passim
`
`Versata Dev. Grp., Inc. v. SAP Am., Inc.,
`793 F.3d 1306 (Fed. Cir. 2015) .................................................................... 21, 23
`
`PTAB RULINGS
`
`CBM2012-00007, Papers 15 & 58........................................................................... 25
`
`CBM2013-00013, Paper 61 ....................................................................................... 6
`
`CBM2014-00079, Paper 28 ................................................................................. 3, 18
`
`CBM2014-00112, Paper 7 ....................................................................................... 20
`
`CBM2015-00059, Paper 13 ................................................................................. 3, 18
`
`IPR2013-00078, Paper 15 ........................................................................................ 21
`
`IPR2013-00172, Paper 50 .................................................................................... 3, 20
`
`STATUTES & REGULATIONS
`
`35 U.S.C. § 101 .................................................................................................passim
`
`35 U.S.C. § 324(a) ................................................................................................... 23
`
`37 C.F.R. § 42.65 ..................................................................................................... 20
`iii
`
`
`
`

`
`Case CBM2015-00018
`Patent 7,942,317 B2
`
`
`
`
`
`
`
`
`LIST OF EXHIBITS
`
`
`Description
`
`Exhibit
`1201
`
`1202
`
`1203
`
`1204
`
`1205
`
`1206
`
`1207
`
`1208
`
`1209
`
`1210
`
`1211
`
`1212
`
`1213
`
`1214
`
`1215
`
`1216
`
`1217
`
`1218
`
`
`
`U.S. Patent No. 7,942,317
`
`Plaintiff’s First Amended Complaint
`
`U.S. Patent No. 5,940,805
`
`U.S. Patent No. 4,999,806
`
`U.S. Patent No. 5,675,734
`
`U.S. Patent No. 4,337,483
`
`File History for U.S. Patent No. 7,942,317
`
`Declaration of Megan F. Raymond In Support of Apple Inc.’s Peti-
`tion for Covered Business Method Patent Review
`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 (translation)
`
`Eberhard von Faber, Robert Hammelrath, and Franz-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
`Declaration of Michael P. Duffey In Support of Apple Inc.’s Peti-
`tion for Covered Business Method Patent Review
`
`iv
`
`

`
`Case CBM2015-00018
`Patent 7,942,317 B2
`
`
`
`
`
`Exhibit
`1219
`
`U.S. Patent No. 4,878,245
`
`Description
`
`
`
`1220
`
`1221
`
`1222
`
`1223
`
`1224
`
`1225
`
`1226
`
`1227
`
`
`
`
`
`Claim Construction Memorandum Opinion from Smartflash LLC v.
`Apple Inc., No. 6:13cv447 (Dkt. 229)
`U.S. Patent No. 5,925,127
`
`Excerpts from the Deposition Transcript of Jonathan Katz, Ph.D.
`Vol. 1, April 8, 2015, taken in connection with CBM2014-
`00102, -00106, -00108, and 00112
`Smartflash LLC, et al. v. Apple Inc., et al., No. 6:13-cv-447, Dkt.
`585, Order (E.D. Tex. July 8, 2015)
`U.S. Patent No. 8,083,137
`
`U.S. Patent No. 7,603,382
`
`U.S. Patent No. 7,970,713
`
`Declaration of Michael P. Duffey In Support of Apple Inc.’s Reply
`to Patent Owner’s Response
`
`
`
`
`v
`
`

`
`Case CBM2015-00018
`Patent 7,942,317 B2
`
`
`
`
`
`
`
`GLOSSARY OF ABBREVIATIONS
`
`
`Description
`Shorthand
`’317 Patent or ’317 United States Patent No. 7,942,317
`§ 101
`35 U.S.C. § 101
`BRI
`Broadest Reasonable Interpretation
`Petition or Pet’n
`Case CBM2015-00018 Petition, Paper 1
`Decision or Dec
`Case CBM2015-00018 Institution Decision, Paper 15
`PO
`Patent Owner
`POSITA
`Person of ordinary skill in the art
`Response or Resp
`Case CBM2015-00018 Patent Owner Response, Paper 25
`
`
`
`
`vi
`
`

`
`Case CBM2015-00018
`Patent 7,942,317 B2
`
`I.
`
`INTRODUCTION
`
`
`
`
`
`
`PO does not dispute that the Challenged Claim, Claim 18 of the ’317, is di-
`
`rected to an abstract idea under step 1 of the test for patent eligibility provided in
`
`Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1296-97
`
`(2012) and Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2355 (2014).
`
`Instead, PO argues only that the Challenged Claim has an “inventive concept” suf-
`
`ficient to satisfy § 101 under step 2 of Mayo. But PO fails to demonstrate that any
`
`such inventive concept exists. Indeed, its Response does not identify even one in-
`
`ventive concept, let alone one “‘sufficient to ensure that the patent in practice
`
`amounts to significantly more than a patent upon the [ineligible concept] itself.’”
`
`Alice, 134 S. Ct. at 2355 (quoting Mayo, 132 S. Ct. at 1294).
`
`Instead, in an effort to circumvent the Mayo two-step analysis, PO relies ex-
`
`clusively on conclusory attorney argument that the invention involves a computer-
`
`related problem and solution, and erroneously analogizes the Challenged Claim to
`
`the claims in DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 1255-59
`
`(Fed. Cir. 2014). But the claims in DDR are entirely distinguishable, and in a failed
`
`effort to suggest superficial similarities, PO ignores important case law—ranging
`
`in vintage from recent years to decades ago—finding claims similar to the Chal-
`
`lenged Claim to be patent ineligible. See, e.g., Alice, 134 S. Ct. 2347; Gottschalk v.
`
`Benson, 409 U.S. 63 (1972); Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709 (Fed.
`
`
`
`1
`
`

`
`Case CBM2015-00018
`Patent 7,942,317 B2
`
`Cir. 2014); Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat’l
`
`
`
`
`
`
`Ass’n, 776 F.3d 1343 (Fed. Cir. 2014); OIP Techs., Inc. v. Amazon.com, Inc., 788
`
`F.3d 1359 (Fed. Cir. 2015); Intellectual Ventures I LLC v. Capital One Bank (USA)
`
`(“IV”), 792 F.3d 1363 (Fed. Cir. 2015). And, in any case, DDR does not allow PO
`
`to circumvent the two-step Mayo inquiry.
`
`PO also misapplies the preemption concern underlying the § 101 analysis.
`
`PO incorrectly argues that, separate from the two-step inquiry required by Mayo,
`
`the Challenged Claim is patent eligible because it does “not result in inappropriate
`
`preemption.” Resp11-14. This very same argument—contradicted by Mayo in lan-
`
`guage PO fails to mention—has been considered and rejected in recent Federal
`
`Circuit decisions, which PO entirely ignores. See, e.g., Ariosa Diagnostics, Inc. v.
`
`Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015); OIP, 788 F.3d at 1362-63.
`
`Indeed, preemption is not an alternative or addition to the Mayo test, but rather is
`
`the motivation that led to that test: it is the “concern that drives” the exclusion of
`
`ineligible subject matter from § 101, Alice, 134 S. Ct. at 2354, and the Mayo two-
`
`part test acts as a “more easily administered proxy” for making judgments about
`
`how much future innovation is preempted. Mayo, 132 S. Ct. at 1303. Indeed, as the
`
`Board has correctly recognized, “questions on preemption are inherent in and re-
`
`solved by the 101 analysis,” and “[w]here a patent’s claims are deemed only to dis-
`
`close patent ineligible subject matter under the Mayo framework . . . preemption
`
`
`
`2
`
`

`
`Case CBM2015-00018
`Patent 7,942,317 B2
`
`concerns are fully addressed and made moot.” Ariosa, 788 F.3d at 1379 (emphases
`
`
`
`
`
`
`added); CBM2015-00059, Pap.13 at 5 (discussing Ariosa); CBM2014-00079,
`
`Pap.28 at 19. Thus, non-infringement and non-infringing alternatives are irrelevant
`
`to the § 101 analysis, as ineligible subject matter is not rendered patentable by the
`
`existence of non-infringing alternatives. See, e.g., Ariosa, 788 F.3d at 1379
`
`(“[A]bsence of complete preemption does not demonstrate patent eligibility.”);
`
`OIP, 788 F.3d at 1362-63.
`
`Finally, PO’s remaining arguments about claim construction, the weight to
`
`accord Petitioner’s unrebutted expert opinions, and alleged estoppel, are legally in-
`
`correct and irrelevant. None can alter the ineligibility of the Challenged Claim.
`
`II.
`
`PETITIONER’S RESPONSE TO PO’S STATEMENT OF FACTS
`
`As to PO’s alleged facts (1) and (2), Petitioner admits that the phrases “pre-
`
`ponderance of the evidence” and “more likely than not” do not appear in Mr.
`
`Wechselberger’s declaration. The evidentiary standard need not be recited in ex-
`
`pert declarations. See, e.g., IPR2013-00172, Pap.50 at 42. Petitioner otherwise de-
`
`nies these allegations. Petitioner further states the following material fact: PO did
`
`not submit any expert opinion in this proceeding, either in support of its Response
`
`or to rebut Petitioner’s expert’s opinions.
`
`III. THE CHALLENGED CLAIM IS NOT § 101 PATENT ELIGIBLE
`
`PO does not dispute that the Challenged Claim is directed to an abstract idea
`
`
`
`3
`
`

`
`Case CBM2015-00018
`Patent 7,942,317 B2
`
`under part 1 of the Mayo analysis. Cf. Resp9-10.1 Thus, the only remaining ques-
`
`
`
`
`
`
`tion is whether, under part 2 of the Mayo analysis, the Challenged Claim includes
`
`“additional features” amounting to an “inventive concept” that is “significantly
`
`more” than the claimed abstract idea. Alice, 134 S. Ct. at 2355, 2357.
`
`“[I]mplement[ing] the abstract idea with ‘routine, conventional activit[ies],’ . . . is
`
`insufficient to transform the patent-ineligible abstract idea into patent-eligible sub-
`
`ject matter.” Ultramercial, 772 F.3d at 716 (quoting Mayo, 132 S. Ct. at 1298). In-
`
`
`1 See also Dec15-17 (“We are persuaded that the challenged claim is more likely
`
`than not drawn to a patent-ineligible abstract idea. . . . The ’317 patent makes clear
`
`that the heart of the claimed subject matter is restricting access to stored data based
`
`on validated payment information.”); Ex. 2049 17-18 (“The asserted claims recite
`
`abstract ideas. . . . [They] recite methods and systems for controlling access to con-
`
`tent data, such as various types of multimedia files, and receiving and validating
`
`payment data. . . . Therefore, the general purpose of the claims—conditioning and
`
`controlling access to data based on payment—is abstract and a fundamental build-
`
`ing block of the economy in the digital age.”); Ex. 2050 1-2; Ex. 2068 65:16-
`
`66:20, 67:1-68:20, 69:8-70:5; see also 11:16-12:7, 99:7-23; cf. Pap.16 at 3 (“The
`
`patent owner is cautioned that any arguments for patentability not raised in the re-
`
`sponse will be deemed waived.”).
`
`
`
`4
`
`

`
`Case CBM2015-00018
`Patent 7,942,317 B2
`
`deed, “[t]here is no ‘inventive concept’ in [the] use of a generic . . . computer to
`
`
`
`
`
`
`perform well-understood, routine, and conventional activities commonly used in
`
`industry.” Content Extraction, 776 F.3d at 1348 (citing Alice, 134 S. Ct. at 2359);
`
`see also Bancorp Servs., L.L.C. v. Sun Life Assurance Co. of Can., 687 F.3d 1266,
`
`1278-79 (Fed. Cir. 2012). As discussed below, the Challenged Claim recites only
`
`well-known, routine, and conventional computer activities, which is insufficient to
`
`show an inventive concept.
`
`A.
`
`PO Fails to Identify Any Inventive Concept
`
`Smartflash fails to identify any “inventive concept” in the Challenged Claim.
`
`The most PO states is that the claim “provid[es] for legitimate acquisition of con-
`
`tent data by transmitting requested data to the requester after receiving payment
`
`data from the requester, and in connection with reading payment distribution in-
`
`formation from a data store.” Resp10. But simply “reading” data from a “data
`
`store,” and “transmitting,” “receiving,” or “outputting” data, are all well-
`
`understood, routine, conventional computer activities, not inventive concepts. See,
`
`e.g., Ex. 1217 ¶¶ 71-78. Indeed, computer operations more complex than those at
`
`issue here—including “creat[ing] electronic records,” “track[ing] multiple transac-
`
`tions,” “issu[ing] simultaneous instructions,” and “selectively forwarding [] credit
`
`application data”—have been found sufficiently “mundane” that they cannot bring
`
`a patent claim within the scope of § 101. Alice, 134 S. Ct. at 2350, 2359-60 (no in-
`
`
`
`5
`
`

`
`Case CBM2015-00018
`Patent 7,942,317 B2
`
`ventive concept in reciting generic computer components such as “creating” and
`
`
`
`
`
`
`“obtaining” data, noting “[n]early every computer . . . [is] capable of performing []
`
`basic calculation, storage, and transmission functions”); DealerTrack, 674 F.3d at
`
`1331-34. See also Content Extraction, 776 F.3d at 1345 (rep. cl. 1), 1347-49 (no
`
`inventive concept in routine and conventional activities, including collecting, rec-
`
`ognizing, and storing data); Ultramercial, 772 F.3d at 712 (rep. cl. 1), 714-16 (no
`
`inventive concept in claims that “simply instruct the practitioner to implement the
`
`abstract idea with routine, conventional activity,” including “selecting an ad,” “re-
`
`stricting public access,” “facilitating display,” “allowing the consumer access,”
`
`“updating the activity log,” and “receiving payment”); buySAFE, Inc. v. Google,
`
`Inc., 765 F.3d 1350, 1351-52, 1355 (Fed. Cir. 2014) (no inventive concept in recit-
`
`ing generic computer functionality (rep. cls. 1, 14), explaining that “a computer
`
`[that] receives and sends [] information over a network . . . is not even arguably in-
`
`ventive”); Accenture Global Servs., GmbH v. Guidewire Software, Inc., 728 F.3d
`
`1336, 1338, 1344-46 (Fed. Cir. 2013) (claims (rep. cl. 1) reciting only “generalized
`
`software components” for “generating tasks [based on] rules . . . to be completed
`
`upon the occurrence of an event” unpatentable); CBM2013-00013, Pap.61 at 8, 16
`
`(claims (rep. cl. 1) reciting “an abstract method, i.e., performing a real-time Web
`
`transaction,” including “transferring funds (i.e., debiting or crediting) in response
`
`to user signals from an input device” unpatentable); Telebuyer, LLC v. Ama-
`
`
`
`6
`
`

`
`Case CBM2015-00018
`Patent 7,942,317 B2
`
`zon.com, Inc., No. 2:13-cv-1677, 2015 WL 4493045, at *1-5, *10-12 (W.D. Wash.
`
`
`
`
`
`
`July 23, 2015) (no inventive concept in claims directed to “traffic control system
`
`[that] uses various types of stored data”).
`
`The Challenged Claim recites nothing more than generic computer elements
`
`that were well-known, routine, and conventional to a POSITA at the time of filing.
`
`See, e.g., Ex. 1217 ¶¶ 71-78; Ex. 2068 67:1-68:3, 69:8-70:5, 77:7-18; Ex. 1201
`
`3:66-67, 16:46-50, 18:7-11; see also Ex. 2068 14:17-15:1, 78:6-11, 87:19-88:11,
`
`96:6-18, 96:25-98:24, 99:7-23, 100:6-101:8. PO has submitted no evidence to the
`
`contrary and Alice makes clear that, as here, “the mere recitation of a generic com-
`
`puter cannot transform a patent-ineligible abstract idea into a patent-eligible inven-
`
`tion.” 134 S. Ct. at 2358. Because the Challenged Claim does nothing more than
`
`recite routine, conventional computer functions in implementing an abstract idea, it
`
`is patent ineligible under Alice. See, e.g., id.; Pet’n28-29.2
`
`
`2 Petitioner also notes that PO’s so-called “Overview” of the ’317 (Resp5-7) is not
`
`tied in any way to the Challenged Claim limitations. PO discusses, for example, a
`
`user “select[ing] content to purchase or rent from a variety of different content
`
`providers,” “‘use rules pertaining to allowed use of stored data items,’” “‘use status
`
`data . . . [to] indicat[e] past use of the stored data,’” and ”writ[ing] partial use sta-
`
`tus data.” Resp5-7 (citing Ex. 1201 4:62-5:3, 9:29-32). Yet none of these concepts
`
`
`
`7
`
`

`
`Case CBM2015-00018
`Patent 7,942,317 B2
`
`
`
`
`
`
`
`B.
`
`The DDR Claims Are Not Analogous to the Challenged Claim
`
`PO’s entire argument regarding step 2 of the Mayo analysis is premised on
`
`its flawed assumption that the Challenged Claim is patent eligible because PO sug-
`
`gests it resembles the claims in DDR that were found eligible. To begin with, DDR
`
`does not overturn the two-step inquiry required by Mayo. If the Challenged Claim
`
`is directed to an abstract idea (it is), and if there is no “inventive concept” in the
`
`claim “sufficient to ensure that the patent in practice amounts to significantly more
`
`than a patent upon the [ineligible concept] itself” (there is none), then the claim is
`
`patent ineligible. As noted above, PO does not dispute that the claim is directed to
`
`an abstract idea under step 1, and has provided no evidence of any “inventive con-
`
`cept” under step 2. That analysis is dispositive: the Challenged Claim is not patent
`
`eligible. Superficial comparisons to the claims in DDR cannot substitute for the
`
`Mayo two-step inquiry. In any case, the DDR claims are not analogous, and in fact
`
`the Challenged Claim is much more similar to claims found patent ineligible.
`
`In DDR, the asserted patent addressed the problem of retaining website visi-
`
`
`is recited in the Challenged Claim. Similarly, PO quotes the district court’s state-
`
`ment that the “asserted claims . . . recite specific ways of using distinct memories,
`
`data types, and use rules” (Resp11 (quoting Ex. 2049 19)), but again, the Chal-
`
`lenged Claim does not recite distinct memories or use rules.
`
`
`
`8
`
`

`
`Case CBM2015-00018
`Patent 7,942,317 B2
`
`tors when clicking on an advertisement within the host’s website. See 773 F.3d at
`
`
`
`
`
`
`1257. Under the conventional Internet function, clicking an advertisement hyper-
`
`link would transport a website visitor away from the host’s website to, e.g., a third-
`
`party advertiser’s website. Id. The patented claims provided a solution where the
`
`visitor is no longer transported to the third-party website, but, instead, has an out-
`
`source provider automatically generate a hybrid web page that combines the visual
`
`“look and feel” elements from the host website and product information from the
`
`third-party website. Id. This allows for the host website to retain the visitors but
`
`still enable the visitors to purchase the product from the third-party merchant. Id. at
`
`1257-58. The court distinguished this Internet-centric problem by stating that this
`
`practice “introduces a problem that does not arise in the ‘brick and mortar’ con-
`
`text” as “[t]here is . . . no possibility that by walking up to [a kiosk in a warehouse
`
`store], the customer will be suddenly and completely transported outside the ware-
`
`house store and relocated to a separate physical venue associated with the third-
`
`party.” Id. at 1258. Specifically, the court found that the result of the claimed
`
`method “overrides the routine and conventional sequence of events ordinarily trig-
`
`gered by” routine and conventional computer action and is not directed to the gen-
`
`eral abstract idea of “‘use of the Internet’ to perform an abstract business practice
`
`(with insignificant added activity).” Id. In contrast, the Challenged Claim does not
`
`address an internet-specific problem, nor does it “override[] the routine and con-
`
`
`
`9
`
`

`
`Case CBM2015-00018
`Patent 7,942,317 B2
`
`ventional sequence of events ordinarily triggered by” conventional processes.
`
`
`
`
`
`
`1.
`
`The Challenged Claim Does Not Address an Internet-
`Specific Problem
`
`PO incorrectly argues that the Challenged Claim is like the DDR claims be-
`
`cause it allegedly addresses a “technological problem,” is rooted in computer tech-
`
`nology and is directed to a challenge particular to the Internet or computer net-
`
`works. Resp10-11. However, “data piracy”—the business problem PO argues its
`
`Challenged Claim addresses—is neither a technological problem, rooted in com-
`
`puter technology nor a “problem specifically arising in the realm of computer net-
`
`works.” E.g., Ex. 1217 ¶ 67; Dec9; see Ex. 2068 15:17-16:5, 25:3-16, 76:10-77:18.
`
`Indeed, it is undisputed that the problem of data piracy exists outside the
`
`context of the Internet/computer networks in the context of, e.g., content copy pro-
`
`tection with digital watermarking. See Ex. 1201 5:4-7 (“where the data carrier
`
`stores . . . music, the purchase outright option may be equivalent to the purchase of
`
`a compact disc (CD), preferably with some form of content copy protection such as
`
`digital watermarking”). Similarly, to prevent piracy of video data (copying and
`
`misuse), pay TV was used to control access to video content, to prevent piracy of
`
`software data, time-limited promotional trials were used for software, and to pre-
`
`vent piracy of DVDs, region codes and encryptions were used to control the use of
`
`the DVDs well before the priority date of the ’317 Patent. Ex. 1217 ¶ 67; see also,
`
`
`
`10
`
`

`
`Case CBM2015-00018
`Patent 7,942,317 B2
`
`e.g., Ex. 1219 4:27-35 (discussing pay television); Ex. 1213 1:13-23 (discussing
`
`
`
`
`
`
`“try and buy” in software).
`
`Further, unlike the DDR claims, which addressed “a problem that does not
`
`arise in the ‘brick and mortar’ context,” PO’s Challenged Claim really addresses a
`
`problem of ensuring payment for access—an age-old business problem that many
`
`have solved outside the context of the Internet, such as through apartment rentals,
`
`movie rentals, movie tickets, subscription plans, and pay-per-view programming.
`
`See, e.g., Ex. 1217 ¶¶ 34, 67; see also, e.g., Ex. 1219 Abstract, 4:27-35 (describing
`
`a pay-per-use cable system). Thus, the fact that data piracy (and requiring payment
`
`in exchange for access to goods) may also exist on the Internet does not render it a
`
`“‘challenge particular to the Internet’” (Resp10 (quoting DDR, 773 F.3d at 1257)).
`
`See, e.g., Ultramercial, 772 F.3d at 716 (“Narrowing the abstract idea of using ad-
`
`vertising as a currency to the Internet is an ‘attempt[] to limit the use’ of the ab-
`
`stract idea ‘to a particular technological environment,’ which is insufficient to save
`
`a claim.” (quoting Alice, 134 S. Ct. at 2358)). Thus, the Challenged Claim is not
`
`analogous to the DDR claims, where “the claimed solution [was] necessarily root-
`
`ed in computer technology in order to overcome a problem specifically arising in
`
`the realm of computer networks.” DDR, 773 F.3d at 1257. Even if the only practi-
`
`cal application of the Challenged Claim is for use with a computer, that fact would
`
`not render the claim patent eligible. See, e.g., Benson, 409 U.S. at 71-74 (holding
`
`
`
`11
`
`

`
`Case CBM2015-00018
`Patent 7,942,317 B2
`
`claims 8 and 13 of application at issue ineligible even though claimed idea “ha[d]
`
`
`
`
`
`
`no substantial practical application except in connection with a digital computer”).
`
`But here, contrary to PO’s assertion (Resp10), the Challenged Claim could be
`
`“performed using pen and paper” by, for example, a vendor selling a poem desired
`
`by the buyer. A seller could receive a written request for a copy of a poem (data
`
`item) from the buyer (requester); obtain a credit card number (receive payment da-
`
`ta) in written form from the buyer for the poem; hand (transmit) a copy of the po-
`
`em to the purchaser; look-up (read) in a ledger (data store) information about roy-
`
`alties due to the poet; and notify (output to) the bank (payment system) to provide
`
`the credit card number (payment data). See also Pet25-26. Because the claim here
`
`“do[es] not address problems unique to the Internet . . . DDR has no applicability.”
`
`IV, 792 F.3d at 1371.
`
`Instead, the business problem and purported solution addressed by the Chal-
`
`lenged Claim are more like those for claims held patent ineligible, despite their ap-
`
`plication to the Internet. E.g., Ultramercial, 772 F.3d at 715-16 (using advertising
`
`as currency on the Internet); buySAFE, 765 F.3d at 1355 (creating transaction per-
`
`formance guaranty on the Internet); IV, 792 F.3d at 1367-71 (tracking financial
`
`transactions on the Internet; tailoring advertisements on the Internet).
`
`2.
`
`The Challenged Claim Does Not “Override” Routine and
`Conventional Computer Action
`
`
`
`12
`
`

`
`Case CBM2015-00018
`Patent 7,942,317 B2
`
`
`
`
`
`
`
`Contrary to Smartflash’s assertion (Resp9-10), and unlike the DDR claims,
`
`the Challenged Claim does not “override” routine and conventional computer ac-
`
`tion, and therefore remains ineligible. See DDR, 773 F.3d at 1258; id. at 1256
`
`(“[A]fter Alice, there can remain no doubt: recitation of generic computer limita-
`
`tions does not make an otherwise ineligible claim patent-eligible.”). The Chal-
`
`lenged Claim simply recites computer-based limitations acting in a routine and
`
`conventional manner. For example, the Claim merely recites a known data store
`
`that may be a generic device such as a “standard smart card,” Ex. 1201 11:28-30,
`
`14:25-29, and recites a known “payment system,” which may be “a signature-
`
`transporting . . . [or] a third party e-payment system.” Ex. 1201 7:11-16, 13:36-38
`
`(“an e-payment system according to, for example, MONDEX, Proton, and/or Visa
`
`cash compliant standards”); see also Pet’n28-29; Ex. 1201 3:66-67, 16:46-50,
`
`18:7-11 (describing components as “conventional”); Dec11-12. Furthermore, the
`
`claimed method steps perform generic computer functions, such as reading, receiv-
`
`ing, transmitting, and outputting data. See, e.g., Ex. 2068 77:7-18; see also 14:17-
`
`15:1, 78:6-11, 87:19-88:11, 96:6-18, 96:25-98:24, 99:7-23, 100:6-101:8 (explain-
`
`ing conventional nature of computer-based limitations); Pet’n28-29; Ex. 1217 ¶¶
`
`71-78. Thus, the Challenged Claim does not override routine and conventional
`
`computer actions—it claims such actions, and is patent ineligible.
`
`Rather than the claims in DDR, the Challenged Claim is analogous to nu-
`
`
`
`13
`
`

`
`Case CBM2015-00018
`Patent 7,942,317 B2
`
`merous claims held unpatentable. For example, in IV, patent-ineligible claims were
`
`
`
`
`
`
`directed to the abstract idea of budgeting on the Internet, employing “generic com-
`
`puter elements,” including “a database, a user profile, . . . and a communication
`
`medium,” and reciting steps of “storing” the user profile (i.e., data) in the database
`
`and “causing communication” between the database and a “receiving device.” 792
`
`F.3d at 1366-69 (analyzing claims 5-11 of U.S. Patent No. 8,083,137 (Ex. 1224)).
`
`Additional ineligible claims in IV were directed to the abstract idea of tailoring ad-
`
`vertisements on the Internet based on location and time of day, and included
`
`“[s]teps that d[id] nothing more than spell out what it means to ‘apply it on a com-
`
`puter,’” such as employing an “interactive interface” that was simply “a generic
`
`web server with attendant software, tasked with providing web pages to and com-
`
`municating with the user’s computer.” Id. at 1369-71 (analyzing claims 1-5, 16-17,
`
`and 19-22 of U.S. Patent No. 7,603,382 (Ex. 1225)). The claims in IV were distin-
`
`guishable from the DDR claims that “recited a specific series of steps that resulted
`
`in a departure from the routine and conventional sequence of events after the click
`
`of a hyperlink advertisement.” Id. at 1371. As in IV, the Challenged Claim recites
`
`generic computer elements performing routine and conventional computer activity.
`
`Similarly, in OIP, the ineligible claims were “directed to the concept of of-
`
`fer-based price optimization,” and “merely recite[d] ‘well-understood, routine con-
`
`ventional activit[ies],’ either by requiring conventional computer activities or rou-
`
`
`
`14
`
`

`
`Case CBM2015-00018
`Patent 7,942,317 B2
`
`tine data-gathering steps”—including “sending . . . messages over a network to de-
`
`
`
`
`
`
`vices,’ the devices being ‘p