UNITED STATES PATENT AND TRADEMARK OFFICE
`
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`APPLE INC.,
`
`Petitioner,
`
`v.
`
`SMARTFLASH LLC,
`
`Patent Owner.
`
`____________
`
`Case CBM2015-00028
`
`Patent 7,334,720 B2
`
`____________
`
`PATENT OWNER’S PRELIMINARY RESPONSE
`
`
`
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`APPLE INC.,
`
`Petitioner,
`
`v.
`
`SMARTFLASH LLC,
`
`Patent Owner.
`
`____________
`
`Case CBM2015-00028
`
`Patent 7,334,720 B2
`
`____________
`
`PATENT OWNER’S PRELIMINARY RESPONSE
`
`
`
`TABLE OF CONTENTS
`
`
`
`PATENT OWNER’S LIST OF EXHIBITS ............................................................. ii
`
`I.
`
`
`
`INTRODUCTION ........................................................................................... 1
`
`II.
`
` OVERVIEW OF U.S. PATENT NO. 7,334,720 B2 ....................................... 3
`
`III. THE CHALLENGED CLAIMS ARE NOT DIRECTED TO A
`FINANCIAL PRODUCT OR SERVICE ........................................................ 5
`
`IV. THE CHALLENGED CLAIMS OF THE ‘720 PATENT ARE
`TECHNOLOGICAL INVENTIONS EXEMPT FROM CBM REVIEW .... 10
`
`V.
`
` MR. WECHSELBERGER’S DECLARATION SHOULD BE AFFORDED
`LITTLE OR NO WEIGHT ............................................................................ 13
`
`VI. APPLE’S UNTIMELY § 101 CHALLENGE WILL NOT SECURE THE
`JUST, SPEEDY, AND INEXPENSIVE RESOLUTION OF THE ISSUES
`SURROUNDING THE ‘720 PATENT ......................................................... 15
`
`VII. APPLE’S § 103 OBVIOUSNESS CHALLENGES RAISE
`SUBSTANTIALLY THE SAME PRIOR ART AND ARGUMENTS
`PREVIOUSLY PRESENTED ....................................................................... 17
`
`VIII. STEFIK ‘235 and STEFIK ‘980 ARE NOT A SINGLE REFERENCE ...... 23
`
`IX. CONCLUSION .............................................................................................. 25
`
`- i -
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`PATENT OWNER’S LIST OF EXHIBITS
`
`Exhibit Number
`
`Exhibit Description
`
`2001
`
`2002
`
`Congressional Record - House, June 23, 2011, H4480-4505
`
`Congressional Record - Senate, Sep. 8, 2011, S5402-5443
`
`2003-2039
`
`Reserved
`
`2040
`
`2041
`
`2042
`
`2043
`
`Declaration of Anthony Wechselberger in CBM2014-00104
`
`Declaration of Anthony Wechselberger in CBM2014-00105
`
`Patent Owner’s Preliminary Response in CBM2014-00104
`
`Patent Owner’s Preliminary Response in CBM2014-00105
`
`
`
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`
`
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`- ii -
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`
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`Pursuant to 37 C.F.R. § 42.107, Smartflash LLC (“Patent Owner”) files this
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`preliminary response to the corrected petition, setting forth reasons why no new
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`covered business method review of U.S. Patent 7,334,720 B2 should be instituted
`
`as requested by Apple, Inc. (“Apple” or “Petitioner”). Arguments presented herein
`
`are presented without prejudice to presenting additional arguments in a later
`
`response should the Board institute a CBM review.
`
`I.
`
`INTRODUCTION
`
`Petitioner Apple seeks covered business method (CBM) review of claims 1
`
`and 2 of U.S. Patent No. 7,334,720 B2 (“the ‘720 Patent”). Paper 5 at 1
`
`(“Corrected Petition”). Apple challenges claim 1 on 35 U.S.C. § 103 obviousness
`
`grounds. Paper 5 at 1, 19. On March 31, 2014, Apple filed two earlier petitions, in
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`CBM2014-00104 and -00105, also seeking CBM review of claim 1 of the ‘720
`
`Patent on § 103 obviousness grounds. The PTAB denied review of claim 1
`
`(among others) on § 103 obviousness grounds in both instances. Apple Inc. v.
`
`Smartflash LLC, Case CBM2014-00104 Paper 9 at 4, 15 (PTAB September 30,
`
`2014) and Case CBM2014-00105, Paper 9 at 3, 15 (PTAB September 30, 2014).
`
`Here, Apple re-raises its obviousness challenge to claim 1, relying on five
`
`pieces of prior art: three of which (Stefik ‘235, Stefik ‘980, and Maari) are the
`
`same prior art raised in both CBM2014-00104 and -00105; and two of which
`
`(Ahmad and Kopp) are “additional prior art” Apple “now identifies” “in light of
`
`
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`- 1 -
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`the Board’s Decision.” Corrected Petition at 2. The Petition alleges that Ahmad (
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`a U.S. Patent issues in 1999) “was not known to Petitioner at the time of the
`
`original petitions.” Id. However, such an assertion is not supported by any
`
`declaration from Petitioner. Moreover, Petitioner does not allege that Ahmad was
`
`not available, nor does it allege that Kopp (a U.S. Patent issued in 1999) was not
`
`known or not available to it when it filed its earlier petitions.
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`The Board should again deny review of claim 1 on Apple’s § 103
`
`obviousness grounds because the Corrected Petition “raises substantially the same
`
`prior art or arguments previously presented” and rejected by the Board in
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`CBM2014-00104 and -00105. See, Unilever, Inc. v. The Proctor & Gamble
`
`Company, Case IPR2014-00506, Paper 17 at 6 (PTAB July 7, 2014)(Decision,
`
`Denying Institution of Inter Partes Review)(quoting 35 U.S.C. § 325(d)). In fact,
`
`in the face of serial petitions by other Petitioners, the Board has already held that
`
`the Board’s “resources are better spent addressing matters other than [a
`
`Petitioner’s] second attempt to raise a plurality of duplicative grounds against the
`
`same patent claims.” Conopco, Inc. dba Unilever v. The Proctor & Gamble
`
`Company, Case
`
`IPR2014-00628, Paper 21 at 21
`
`(PTAB October 20,
`
`2014)(Decision, Declining Institution of Inter Partes Review).
`
`In the instant petition, Apple also raises for the first time a 35 U.S.C. § 101
`
`statutory subject matter challenge to claims 1 and 2 of the ‘720 Patent. Corrected
`
`
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`- 2 -
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`
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`Petition at 1, 19. As the Board already noted with respect to other petitions filed
`
`against the same patent family, “challenges pursuant to 35 U.S.C. § 101 ... raise
`
`purely legal issues.” CBM2015-00015, Paper 6 at 2.
`
`The Board should deny review of claims 1 and 2 on Apple’s § 101
`
`unpatentable subject matter grounds set forth in the Corrected Petition because
`
`Apple’s purely legal challenge is untimely and thus does not “secure the just,
`
`speedy, and inexpensive resolution” of the Board’s proceedings reviewing the ‘720
`
`Patent claims. 37 C.F.R. § 42.1(b).
`
`II. OVERVIEW OF U.S. PATENT NO. 7,334,720 B2
`
`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, U.S. Patent No. 7,334,720 B2, generally describes “data storage
`
`and access systems ... [and] is particularly useful for managing stored audio and
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`video data, but may also be applied to storage and access of text and software,
`
`including games, as well as other types of data.” Col. 1, lines 6-14.
`
`Preferred embodiments described in the first paragraph of col. 16 illustrate
`
`this further: “FIG. 7 ... shows a variety of content access terminals for accessing
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`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
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`- 3 -
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`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
`
`terminals include, but are not limited to, set-top boxes 154, CD/DVD Players 170
`
`and mobile communications devices 152. Col. 16, lines 13-33.
`
`Referring to preferred embodiments, the ‘720 patent discloses that a data
`
`supply system may provide users with a seamless purchase and content delivery
`
`experience. Col. 24, lines 25-30. 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 col. 14, lines 5-
`
`13. 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 col. 4, line 59 - col. 5, line
`
`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
`
`col. 8, lines 4-7. The payment validation system returns proof that the payment
`
`data has been validated, in the form of “payment validation data,” and the user is
`
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`- 4 -
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`able to retrieve the purchased content from the content provider. See col. 8, lines
`
`7-9.
`
`III. THE CHALLENGED CLAIMS ARE NOT DIRECTED TO A
`FINANCIAL PRODUCT OR SERVICE
`
`Petitioner has cited claim 2 as being the “exemplary” basis for requesting
`
`that a covered business method review be instituted. Corrected Petition at 10.
`
`Because claim 2 does not, in fact, meet the requirements for instituting a review,
`
`the Petition should be denied.
`
`As set forth in 37 CFR 42.301(a), to be eligible for CBM review, claim 2
`
`must be found to be claiming “a method or corresponding apparatus for performing
`
`data processing or other operations used in the practice, administration, or
`
`management of a financial product or service.” In the publication of the Final
`
`Rules for “Transitional Program for Covered Business Method Patents -
`
`Definitions of Covered Business Method Patent and Technological Invention,” the
`
`PTO stated:
`
`The definition set forth in § 42.301(a) for covered business
`method patent adopts the definition for covered business method
`patent provided in section 18(d)(1) of the AIA. In administering the
`program, the Office will consider the legislative intent and history
`behind the public law definition and the transitional program itself.
`For example, the legislative history explains that the definition of
`covered business method patent was drafted to encompass patents
`
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`- 5 -
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`“claiming activities that are financial in nature, incidental to a
`financial activity or complementary to a financial activity.” 157
`CONG. REC. S5432 (daily ed. Sept. 8, 2011) (statement of Sen.
`Schumer). This remark tends to support the notion that “financial
`product or service” should be interpreted broadly.
`
`Regardless of this explanation, it is improper for this tribunal to rely on the
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`legislative history of the AIA to determine the specific issue before it, i.e., whether
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`trial should be instituted on the present petition. The Supreme Court has “stated
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`time and again that courts must presume that a legislature says in a statute what it
`
`means and means in a statute what it says. When the words of a statute are
`
`unambiguous, then, this first canon of construction is also the last: judicial inquiry
`
`is complete.” Connecticut Nat’l Bank v. Germain, 503 U.S. 249, 253–54 (1992).
`
`“[W]hen the language of the statute is plain, legislative history is irrelevant.”
`
`Zedner v. United States, 547 U.S. 489, 510–11 (2006) (Scalia, J., concurring-in-
`
`part). This long standing rule is based on the constitutional limitation that
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`legislators cannot achieve through floor statements what “they were unable to
`
`achieve through the statutory text.” Exxon Mobil Corp. v. Allapattah Servs., Inc.,
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`545 U.S. 546, 568 (2005). Because Section 18 is unambiguously limited to
`
`“financial product[s] and service[s],” there is no reason to look to the statements of
`
`a single Senator to re-tool text that was approved by both houses of Congress and
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`signed by the President.
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`- 6 -
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`Moreover, the PTO’s synopsis of the legislative history is an improper
`
`oversimplification and does not address that “financial product or service” was
`
`intended to be interpreted narrowly. In fact, when the House of Representatives
`
`debated Congressman Schock’s Amendment to remove Section 18 in its entirety
`
`from the America Invents Act, several members of Congress discussed their
`
`understanding of that narrower interpretation. For example, Mr. Schock himself
`
`discussed at the beginning of his remarks that “Section 18 carves out a niche of
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`business method patents covering technology used specifically in the financial
`
`industry and would create a special class of patents in the financial services field
`
`subject to their own distinctive post-grant administrative review.” (Exhibit 2001,
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`Congressional Record - House, June 23, 2011, H4496.) (Emphasis added.)
`
`Similarly, Congressman Shuster expressly discussed his understanding of
`
`the narrow interpretation of the legislation. He stated:
`
`Mr. Chair, I would like to place in the record my understanding
`that the definition of ‘‘covered business method patent,’’ Section
`18(d)(1) of H.R. 1249, the America Invents Act, is intended to be
`narrowly construed to target only those business method patents that
`are unique to the financial services industry in the sense that they are
`patents which only a financial services provider would use to
`furnish a financial product or service. The example that I have been
`given is a patent relating to electronic check scanning, which is the
`type of invention that only the financial services industry would
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`- 7 -
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`utilize as a means of providing improved or more efficient banking
`services. In contrast, Section 18 would not encompass a patent that
`can be used in other industries, but which a financial services
`provider might also use. Lastly, it is also my understanding from
`discussions with the Committee that Section 18 is targeted only
`towards patents for non-technological inventions.
`
`Id. at H4497. (Emphasis added.) It was based on that understanding that
`
`Congressman Shuster then voted to keep Section 18 in the bill. (See Id. at H4503.)
`
`Likewise, Congresswoman Waters discussed that Section 18 was directed to
`
`cost savings measures in the banking industry when she stated “too-big-to-fail
`
`banks ... are now coming to Congress in hopes that [Congress] will help them steal
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`a specific type of innovation and legislatively take other financial services-related
`
`business method patents referenced in H.R. 1249, section 18. ... Financial
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`services-related business method patents have saved financial services companies
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`billions of dollars.” Id. at H4496. See also Exhibit 2002, 157 Cong. Rec. S5428
`
`(Rep. Pryor) (“It is of crucial importance to me that we clarify the intent of the
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`[AIA § 18] process and implement it as narrowly as possible.”)
`
`In contrast to the banking or other financial products or services patents,
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`claim 2, which depends from claim 1, recites:
`
`1. A method of controlling access to content data on a data
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`carrier, the data carrier comprising non-volatile data memory storing
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`- 8 -
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`content memory and non-volatile parameter memory storing use status
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`data and use rules, the method comprising:
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`receiving a data access request from a user for at least one
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`content item of the content data stored in the non-volatile data
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`memory;
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`reading the use status data and use rules from the parameter
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`memory that pertain to use of the at least one requested content item;
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`evaluating the use status data using the use rules to determine
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`whether access to the at least one requested content item stored in the
`
`content memory is permitted; and
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`displaying to the user whether access is permitted for each of
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`the at least one requested content item stored in the non-volatile data
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`memory.
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`2. A method as claimed in claim 1 wherein said parameter
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`memory further stores payment data and further comprising selecting
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`one of said use rules dependent upon said payment data.
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`Thus, the main thrust of claim 2, and claim 1 from which it depends, is
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`controlling access to data based on reading and evaluating use status data and use
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`rules from parameter memory, including use rules dependent on payment data to
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`allow access to content data on a data carrier, as one would do, for example, when
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`- 9 -
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`loading software, music or a video onto a data carrier for later use and/or playback
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`according to the stored access rule. Claim 2 additionally recites that payment data
`
`can be stored in parameter memory and that a use rule can be dependent on that
`
`payment data. The mere storage of payment data does not bring claim 2 into the
`
`ambit of being a financial product or service. Further, rather than recite the
`
`“practice, administration, or management of a financial product or service,” claim
`
`2, and claim 1 from which it depends, actually omits the specifics of how payment
`
`is made and focuses on technical aspects of receiving a data access request, reading
`
`and evaluating use status data and use rules from parameter memory, and
`
`displaying to the user whether access is permitted. Claim 2, therefore, does not
`
`recite a “financial product or service” when that phrase is properly construed, both
`
`under its plain meaning and in light of the legislative history showing Congress’
`
`intent of the narrow meaning of that phrase.
`
`IV. THE CHALLENGED CLAIMS OF THE ‘720 PATENT ARE
`TECHNOLOGICAL INVENTIONS EXEMPT FROM CBM REVIEW
`
`As set forth in 37 CFR 42.301(a), even if claim 2 were considered to be
`
`claiming “a method or corresponding apparatus for performing data processing or
`
`other operations used in the practice, administration, or management of a financial
`
`product or service,” Petitioner must show that claim 2 does not meet the exception
`
`of being directed to a technological invention. Section 42.301(b) sets forth that a
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`- 10 -
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`claim is directed to a technological invention (and therefore not the basis for
`
`instituting a CBM review) if “the claimed subject matter as a whole recites a
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`technological feature that is novel and unobvious over the prior art; and solves a
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`technical problem using a technical solution.”
`
`Claim 2, as a whole, recites at least one technological feature that is novel
`
`and unobvious over the prior art and solves a technical problem using a technical
`
`solution. Among others, a technological problem solved by the method of claim 2
`
`is controlling access, according to access rules, to data (retrieved from a data
`
`supplier) stored on the data carrier. As described in the second paragraph of the
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`Background of the Invention in col. 1, “One problem associated with the
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`increasingly wide use of the internet is the growing prevalence of so-called data
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`pirates. Such pirates obtain data either by unauthorized or legitimate means and
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`then make this data available essentially world-wide over the internet without
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`authorization. Data can be a very valuable commodity, but once it has been
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`published on the internet it is difficult to police access to and use of it by internet
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`users who may not even realize that it is pirated.”
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`Moreover, claim 2 utilizes technical solutions to address the technical
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`problem of data piracy. The technical solutions include at least (1) reading use
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`status data and use rules from parameter memory that pertain to use of a requested
`
`content item (2) evaluating the use status data using the use rules to determine
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`- 11 -
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`whether access to the requested content item stored in the content memory is
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`permitted. As described in the Abstract, a portable data carrier may include
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`“content use rules for controlling access to the stored content.” Id. Petitioner, in
`
`fact, admits the technological nature of the data carrier when it states on page 5
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`“Claim 2 involves no ‘technology’ at all other than ‘a data carrier’ (with
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`memories)…” Corrected Petition at 5. (Emphasis added.) Thus, the technical
`
`solutions of claim 2 exempt the ‘720 patent from CBM review.
`
`Section III.A. of the Corrected Petition also does not allege, much less
`
`prove, that controlling access to content data on a data carrier based on reading and
`
`evaluating use status data and use rules from parameter memory, including use
`
`rules dependent on payment data to allow access to content data on a data carrier
`
`were known at the time of the invention of the patent-at-issue. Thus, as previously
`
`held in Epsilon Data Management, LLC et al. v. RPOST Comm. Ltd., CBM2014-
`
`00017, paper 21, page 8, any analysis in any other portion of the Petition (other
`
`than the portion relating to whether CBM review is proper) need not be considered
`
`in determining that the Petitioner has not met its burden of proving that the claim at
`
`issue is a covered business method patent. Id. (“In addition, although Patent
`
`Owner addresses the analysis in the Declaration of [Petitioner’s Declarant] (id. at
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`19), which Petitioner submitted with the Petition, this analysis was not included in
`
`the relevant portion of the Petition (Pet. 2-6), and need not be considered in
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`- 12 -
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`determining that the ... Patent[-at-issue] is a covered business method patent.”)
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`Thus, Petitioner has not proven that the challenged claims of the ‘720 patent are
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`not directed to technological inventions exempt from CBM review.
`
`V. MR. WECHSELBERGER’S DECLARATION SHOULD BE
`AFFORDED LITTLE OR NO WEIGHT
`
`Filed with the Petition is Exhibit 1219, DECLARATION OF ANTHONY J.
`
`WECHSELBERGER IN SUPPORT OF APPLE INC.’S PETITION FOR
`
`COVERED BUSINESS METHOD PATENT REVIEW OF UNITED STATES
`
`PATENT NO. 7,334,720 PURSUANT TO 35 U.S.C. § 321, 37 C.F.R. § 42.304
`
`(hereinafter “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. In CBMs, as
`
`in IPRs, “the petitioner shall have the burden of proving a proposition of
`
`unpatentability by a preponderance of the evidence.” 35 U.S.C. § 316(e). By
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`failing to state the evidentiary weight standard that he applied, Mr. Wechselberger
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`has not shown that he has used the correct criteria in coming to his conclusions.
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`That is, given that he has not disclosed what standard he used, the PTAB can only
`
`assume that he impermissibly used none. For example, when Mr. Wechselberger
`
`opines that he believes a statement to be true (e.g., there is a motivation to modify
`
`a reference), is that belief based on less than a preponderance of the evidence, or
`
`more? Is it only based on substantial evidence? Without his having disclosed
`
`what level of evidence he used, the PTAB cannot rely on his opinions.
`
`Further, having filed similar Declarations in earlier Petitions against the
`
`same patent, Petitioner was aware of the defect in Mr. Wechselberger’s
`
`Declaration. Exhibits 2040 and 2041 are Mr. Wechselberger’s Declarations from
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`CBM2014-00104 and -00105 directed to the patent-at-issue. Despite Patent Owner
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`having objected to those Declarations in the earlier proceedings (see Exhibits 2042
`
`and 2043, dated July 11, 2014, pages 16 and 20, respectively), Mr. Wechselberger
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`did not include any reference to the standard of evidence in his declaration
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`executed November 21, 2014 -- more than five months after Patent Owner noted
`
`the defects. The logical conclusion is that Mr. Wechselberger was unable to testify
`
`that his opinions were properly based on a preponderance of the evidence. Thus,
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`the PTAB should find that his declaration is entitled to little or no weight.
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`VI. APPLE’S UNTIMELY § 101 CHALLENGE WILL NOT SECURE
`THE JUST, SPEEDY, AND INEXPENSIVE RESOLUTION OF THE
`ISSUES SURROUNDING THE ‘720 PATENT
`
`The Corrected Petition is Apple’s third-filed covered business method
`
`challenge against independent claim 1 of the ‘720 Patent (albeit the first challenge
`
`to dependent claim 2). Apple filed its first two petitions on March 31, 2014
`
`(CBM2014-00104, Paper 1 and CBM2014-00105, Paper 1), well over 7 months
`
`before filing its initial petition in this matter on November 24, 2014 (CBM2015-
`
`00028, Paper 2).
`
`“[T]he Board is charged with securing the just, speedy, and inexpensive
`
`resolution of every proceeding.” EMC Corporation, et al. v. Personal Web
`
`Technologies, LLC, Case IPR2013-00082, Paper 33 at 4 (PTAB June 5,
`
`2013)(Decision, Denying Request for Rehearing)(citing 37 C.F.R. § 42.1(b)).
`
`“Rules for inter partes review proceedings were promulgated to take into account
`
`the ‘regulation on the economy, the integrity of the patent system, the efficient
`
`administration of the Office, and the ability of the Office to timely complete
`
`proceedings.’” Id. at 2 (citing 35 U.S.C. § 316(b)).
`
`Apple’s § 101 unpatentable subject matter grounds were raised for the first
`
`time in the November 24, 2014 initial petition in this matter. As the Board has
`
`acknowledged, “challenges pursuant to 35 U.S.C. § 101 … raise purely legal
`
`issues.” CBM2015-00015, Paper 6 at 2. Apple provides no valid reason why it
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`- 15 -
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`did not raise this purely legal issue as grounds for invalidity in its two prior
`
`petitions filed long before this CBM petition. While it is true that Alice Corp. Pty,
`
`Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014) was “decided after Petitioner’s
`
`original challenges to the ‘720 were filed” (Corrected Petition at 5), there was no
`
`impediment to Apple asserting § 101 back in March 2014 when it filed the
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`petitions in CBM2014-00104 and -0010500105 (“the March Petitions”). As Apple
`
`acknowledges, “[i]n Alice, the Supreme Court applied [Mayo Collaborative Servs.
`
`v. Prometheus Labs, 132 S. Ct. 1289, 1293 (2012)]’s two-part framework to
`
`‘distinguish[] patents that claim laws of nature, natural phenomena, and abstract
`
`ideas from those that claim patent-eligible applications of these concepts.’”
`
`Corrected Petition at 25-26. Apple proffers no reason why it could not have raised
`
`this purely legal issue and applied Mayo’s two-part framework in its March
`
`petitions, as it does now in the Corrected Petition. Corrected Petition at 25-30.
`
`Here, allowing Apple to raise a new ground of invalidity that it could have
`
`and should have raised in its March 31, 2014 petitions encourages Apple’s
`
`piecemeal invalidity challenges to Patent Owner’s patent claims and runs afoul of
`
`the PTAB’s charge to “secure the just, speedy, and inexpensive resolution” of
`
`Apple’s covered business method challenges to the ‘720 Patent. In fact, Patent
`
`Owner has been subjected to a continuing barrage of Petitions such that, together
`
`with the ten petitions filed by another group of Petitioners, the six patents in the
`
`
`
`- 16 -
`
`
`
`patent family under review were the subject of 31 different CBM petitions by the
`
`end of 2014. Thus, of the 277 CBM petitions filed through the end of 2014,
`
`31/277 or more than 11% of all CBMs ever filed had targeted only six patents
`
`belonging to the same assignee. As in Conopco, Smartflash’s “concern that it will
`
`‘have to continually defend against repetitive challenges’ to the same patent claims
`
`is not without merit, given the multiplicity of grounds applied in each petition.”
`
`Conopco at 12. Patent Owner therefore respectfully requests that the Board deny
`
`review of claims 1 and 2 on Apple’s newly asserted § 101 nonstatutory subject
`
`matter grounds.
`
`VII. APPLE’S § 103 OBVIOUSNESS CHALLENGES RAISE
`SUBSTANTIALLY THE SAME PRIOR ART AND ARGUMENTS
`PREVIOUSLY PRESENTED
`
`“As set forth in 35 U.S.C. § 325(d), the Director, and by extension the
`
`Board, has broad discretion to deny a petition that raises substantially the same
`
`prior art or arguments previously presented to the Office.” Unilever at 6. Here,
`
`the Corrected Petition raises substantially the same prior art and arguments
`
`previously presented in the CBM2014-00104 and -00105 petitions. The Board
`
`should exercise its broad discretion and deny the Corrected Petition.
`
`The instant Corrected Petition challenges claim 1 of the ‘720 Patent on § 103
`
`obviousness grounds, a claim that was previously denied review on § 103
`
`obviousness grounds in the CBM2014-00104 and -00105 proceedings. Compare
`
`
`
`- 17 -
`
`
`
`Corrected Petition at 19 with CBM2014-00104, Paper 9, Decision Denying
`
`Institution of Covered Business Method Patent Review at 2-4 (showing Apple’s
`
`prior ‘720 Patent claim 1 challenges based on § 103 obviousness grounds and
`
`denying institution of a covered business method patent review of claim 1) and
`
`CBM2014-00105, Paper 9, Decision Denying Institution of Covered Business
`
`Method Patent Review at 2-3 (showing Apple’s prior ‘720 Patent claim 1
`
`challenges based on § 103 obviousness grounds and denying institution of a
`
`covered business method patent review of claim 1).
`
`Apple’s current request for covered business method review of the ‘720
`
`Patent on § 103 obviousness grounds argues that “claim 1 is obvious in light of
`
`Stefik in view of Ahmad,” that “claim 1 is obvious in light of Stefik in view of
`
`Ahmad and Kopp,” that “claim 1 is obvious in light of Stefik in view of Ahmad
`
`and Maari,” and that “claim 1 is obvious in light of Stefik in view of Ahmad,
`
`Kopp, and Maari.” Corrected Petition at 19. Apple admits that Ahmad and Kopp
`
`are “additional prior art” that it “now identifies” “[i]n light of the Board’s
`
`Decision” denying review of claim 1 as unpatentable under 35 U.S.C. § 103.
`
`Corrected Petition at 2. Apple’s Corrected Petition therefore is nothing more than
`
`an attempt to use the Board’s prior decisions in CBM2014-00104 and -00105
`
`declining to review claim 1 on § 103 obviousness grounds as a road map to
`
`
`
`- 18 -
`
`
`
`resurrect challenges that were rejected in the CBM2014-00104 and -00105
`
`proceedings.
`
`Apple cannot dispute that Stefik ‘235, Stefik ‘980 and Maari constitute the
`
`same prior art previously presented against claim 1 of the ‘720 Patent as § 103
`
`invalidating prior art in CBM2014-00104 and -00105 and rejected by the Board.
`
`CBM2014-00104, Paper 9, 2-3 (chart summarizing Apple’s prior ‘720 Patent claim
`
`1 challenges based on § 103 obviousness grounds); CBM2014-00105, Paper 9, at
`
`2-3 (chart summarizing Apple’s prior ‘720 Patent claim 1 challenges based on §
`
`103 obviousness grounds).
`
`Simply put, Apple put its best case on claim 1 invalidity before the Board in
`
`CBM2014-00104 and -00105 and should not now be allowed to try again just
`
`because the Board declined to institute a review of that claim. Allowing Apple to
`
`file serial CBM petitions using the Board’s prior decision as guidance to fix flaws
`
`in its prior petitions encourages piecemeal litigation and promotes inefficiency.
`
`Forcing Patent Owner to respond and defend against the duplicative challenges is a
`
`financial burden. Serial filing of duplicative challenges is also a drain on the
`
`Board’s resources. The “interests of fairness, economy, and efficiency support
`
`declining review—a result that discourages the filing of a first petition that holds
`
`back prior art for use in successive attacks, should the first petition be denied.”
`
`Conopco at 11. In fact, in Apple’s case, it is actually successive attacks, given that
`
`
`
`- 19 -
`
`
`
`the Board denied institution of covered business method patent review after the
`
`first and second petitions.
`
`As to the newly-cited prior art, other than a conclusory statement about
`
`Ahmad, Apple has not provided any argument or evidence that the Ahmad
`
`reference (Exhibit 1203, a U.S. Patent issues in 1999) and Kopp reference (Exhibit
`
`1204, a U.S. Patent issued in 1999) were not known or available to it in March
`
`2014 when it filed the CBM2014-00104 and -00105 petitions. If Apple wanted to
`
`rely on Ahmad and Kopp as § 103 invalidating prior art against claim 1 it could
`
`have, and should have, done so in March 2014 in CBM2014-00104 and -00105.
`
`Moreover, the Ahmad and Kopp references are not alleged to teach anything
`
`that the numerous references Apple cited in the CBM2014-00104 and -00105
`
`petitions were not alleged to teach. In CBM2014-00104, Apple asserted that claim
`
`1 was obvious based on (among others): Stefik ‘235, Stefik ‘980 and Sato; and
`
`Stefik ‘235, Stefik ‘980, Maari, and Sato. CBM2014-00104, Paper 9, 2-3 (chart
`
`summarizing Apple’s prior ‘720 Patent claim 1 challenges based on § 103
`
`obviousness grounds). Here, Apple asserts that claim 1 is obvious based on the
`
`combined Stefik ‘235, Stefik ‘980, and Ahmad; and Stefik ‘235, Stefik ‘980,
`
`Ahmad, and Kopp; and Stefik ‘235, Stefik ‘980, Ahmad, and Maari; and Stefik
`
`‘235, Stefik ‘980, Ahmad, Kopp, and Maari. Thus, as compared to CBM2014-
`
`
`
`- 20 -
`
`
`
`00104, Apple simply swaps out Sato for Ahmad and then swaps out Sato for
`
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