`______________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`______________________
`
`GOOGLE INC. and APPLE INC.,
`Petitioner
`
`v.
`
`SMARTFLASH LLC,
`Patent Owner
`______________________
`
`Case CBM2015-000281
`Patent 7,334,720 B2
`______________________
`
`Before the Honorable JENNIFER S. BISK, RAMA G. ELLURU, GREGG I.
`ANDERSON, and MATTHEW R. CLEMENTS, Administrative Patent Judges.
`
`
`PETITIONER APPLE INC.’S OPPOSITION TO
`PATENT OWNER’S MOTION TO EXCLUDE UNDER 37 C.F.R. § 42.64(c)
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`
`
`
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`1 CBM2015-00125 has been consolidated with this proceeding.
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`
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`TABLE OF CONTENTS
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`Case CBM2015-00028
`Patent 7,334,720 B2
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`I. THE BOARD SHOULD NOT EXCLUDE EXHIBIT 1202 ............................. 2
`II. THE BOARD SHOULD NOT EXCLUDE EXHIBITS 1224, 1229-30,
`1233, OR 1235 ................................................................................................... 3
`III. THE BOARD SHOULD NOT EXCLUDE EXHIBITS 1203-04, 1206-08,
`1211-18, OR 1225-28 ......................................................................................... 4
`IV. THE BOARD SHOULD NOT EXCLUDE EXHIBIT 1219 ............................. 6
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`Case CBM2015-00028
`Patent 7,334,720 B2
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`In response to Patent Owner’s (“PO”) Motion to Exclude (“Mot.”, Pap. 31),
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`Petitioner respectfully submits that the Board, sitting as a non-jury tribunal with
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`administrative expertise, is well-positioned to determine and assign appropriate
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`weight to the evidence presented here, without resorting to formal exclusion that
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`might later be held reversible error. See, e.g., S.E.C. v. Guenthner, 395 F. Supp. 2d
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`835, 842 n.3 (D. Neb. 2005); Builders Steel Co. v. Comm’r of Internal Revenue,
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`179 F.2d 377, 379 (8th Cir. 1950) (vacating Tax Court decision for exclusion of
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`competent, material evidence); Donnelly Garment Co. v. Nat’l Labor Relations
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`Bd., 123 F.2d 215, 224 (8th Cir. 1941) (NLRB’s refusal to receive testimonial evi-
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`dence was denial of due process). See also, e.g., Samuel H. Moss, Inc. v. F.T.C.,
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`148 F.2d 378, 380 (2d Cir. 1945), cert. denied, 326 U.S. 734 (1945) (“Even in
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`criminal trials to a jury it is better, nine times out of ten, to admit, than to exclude, .
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`. . and in such proceedings as these the only conceivable interest that can suffer by
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`admitting any evidence is the time lost, which is seldom as much as that inevitably
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`lost by idle bickering about irrelevancy or incompetence.”). But even under strict
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`application of the Rules of Evidence, cf. 77 Fed. Reg. 48,612, 48,616 (Aug. 14,
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`2012) (“42.5(a) and (b) permit administrative patent judges wide latitude in admin-
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`istering the proceedings to balance the ideal of precise rules against the need for
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`flexibility to achieve reasonably fast, inexpensive, and fair proceedings”), Petition-
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`er’s evidence here is entirely proper while PO’s objections—many of which have
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`Patent 7,334,720 B2
`already been rejected by the Board in prior proceedings on related patents—are
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`baseless.
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`I.
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`The Board Should Not Exclude Exhibit 1202
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`Petitioner did not rely on Ex. 1202 for “evidence of the content” of the ’720
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`patent (cf. Mot. 2), but rather to show that PO’s own characterization of the sub-
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`ject matter of the ’720 patent supports Petitioner’s contention—and the Board’s
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`conclusion—that the ’720 patent relates to a financial activity or transaction and is
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`thus subject to the Board’s review as a covered business method patent. See Pap. 5
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`at 11. PO’s characterization of the ’720 patent in another proceeding is not found
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`in the patent itself; thus, Ex. 1202 is not cumulative of the ’720 patent, and FRE
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`1004 is inapplicable. Indeed, as PO admits, the Board declined to exclude the
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`same exhibit in other proceedings on related patents because the Board found “[Pa-
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`tent Owner’s] characterization of the [related] patent in prior proceedings are rele-
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`vant to the credibility of its characterization of the [] patent in this proceeding.”
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`Mot. 3 (citing CBM2014-00102, Pap. 52 at 36); see also CBM2014-00106, Pap. 52
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`at 25; CBM2014-00108, Pap. 50 at 19; CBM2014-00112, Pap. 48 at 24. Contrary
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`to PO’s claim that its characterization of the ’720 patent is not at issue (Mot. 3),
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`PO disputed the financial nature of the ’720 patent here, see Pap. 8 at 5-10, and its
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`highly relevant admission to the contrary should not be excluded.
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`2
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`Case CBM2015-00028
`Patent 7,334,720 B2
`The Board Should Not Exclude Exhibits 1224, 1229-30, 1233, Or 1235
`II.
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`PO’s assertion that Exs. 1224, 1229-30, 1233, and 1235 are not cited in the
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`Wechselberger Declaration (Mot. 3) is simply wrong: all were cited as “Materials
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`Reviewed and Relied Upon,” see Ex. 1219, App. C, and properly filed with the Pe-
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`tition. See 37 C.F.R. § 42.6(c). (Indeed, Petitioner respectfully submits PO would
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`now be objecting if Petitioner had failed to provide these cited exhibits.) PO also
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`incorrectly argues that “mere review” of an exhibit by an expert in reaching his
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`opinions does not render an exhibit relevant or admissible because FRE 703 allows
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`experts to rely on facts or data that may not be admissible. Mot. 4. The fact that
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`FRE 703 allows experts to rely on material that may not be admissible does not
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`render all material relied on by experts irrelevant or inadmissible. Indeed, as PO
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`admits, in another proceeding on a related patent, the Board denied PO’s request to
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`exclude similar exhibits, finding that “[b]ecause Mr. Wechselberger attests that he
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`reviewed these exhibits in reaching the opinions he expressed in this case, Patent
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`Owner has not shown that they are irrelevant under FRE 401 and 402.” Mot. 4
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`(citing CBM2014-00102, Pap. 52 at 37); see also CBM2014-00106, Pap. 52 at 25;
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`CBM2014-00108, Pap. 50 at 19-20; CBM2014-00112, Pap. 48 at 24. To the ex-
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`tent PO’s objection is based on imaginings that Petitioner will advance at oral hear-
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`ing arguments about these documents not presented in previous papers, this is
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`baseless–Petitioner intends to comply fully with the Board’s rules (e.g., Trial Prac-
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`3
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`Case CBM2015-00028
`Patent 7,334,720 B2
`tice Guide, 77 Fed. Reg. 48,756, 48,768 (Aug. 14, 2012)).
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`III. The Board Should Not Exclude Exhibits 1203-04, 1206-08, 1211-18, Or
`1225-28
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`Contrary to PO’s assertions, Exs. 1206-08, 1211, 1214-18, and 1225-27
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`(“Prior Art Exhibits”) are certainly relevant to the Board’s § 101 analysis.2 More
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`specifically, such evidence is relevant to Mayo’s two-step inquiry for patent eligi-
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`bility to determine, for example, whether the claims contain an “inventive con-
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`cept.” Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2357, 2359 (2014)
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`(internal quotations omitted); see, e.g., YYZ, LLC v. Hewlett-Packard Co., No. 13-
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`136-SLR, 2015 WL 5886176, at *8 (D. Del. Oct. 8, 2015) (“Although the § 101
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`inquiry is focused on the claim language, extrinsic evidence [, such as prior art,]
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`may be helpful in terms of understanding the state of the art . . . , and whether the
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`problem to which the patent was directed is solved using computer technology in
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`unconventional ways.”); cf. Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d
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`1306, 1334, 1336 (Fed. Cir. 2015) (affirming Board’s reliance on petitioner’s ex-
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`pert in determining claimed steps were well-known, routine, and conventional and
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`Board’s finding that “claims at issue do not recite any improvement in computer
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`2 Exs. 1205 and 1236 were not relied on here. While exclusion of Exs. 1205 and
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`1236 is unnecessary, Petitioner would not oppose it.
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`4
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`Case CBM2015-00028
`Patent 7,334,720 B2
`technology”).3 Both the Petition and the Wechselberger Declaration describe Pri-
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`or Art Exhibits as evidence of that knowledge. See, e.g., Pap. 5 at 6-9 (Overview
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`of Field of the Claimed Invention); Ex. 1219 ¶¶ 30-52 (State of the Art).
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`Moreover, the Petition and Wechselberger Declaration specifically rely on
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`the Prior Art Exhibits to show either that (1) the basic concept of controlling access
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`based on payment and/or rules—to which the challenged claims are directed—was
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`well-known in the prior art, or (2) the elements disclosed by the challenged claims
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`were well-known, routine, and conventional. See, e.g., Pap. 5 at 34-35 (analogiz-
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`ing challenged claims to those held ineligible in Alice (Ex. 1226)); Ex. 1219 ¶¶ 84-
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`85 (citing “State of the Art” discussion and Exs. 1215 and 1225), ¶¶ 89-95 (citing
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`“State of the Art” discussion and Exs. 1206-07, 1211, 1215). The Prior Art Exhib-
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`its are unquestionably relevant to the § 101 analysis; there is no basis to exclude
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`them.
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`PO’s assertion that Exs. 1203, 1204, 1212-13, and 1228 are irrelevant is sim-
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`ilarly meritless. As with the other Prior Art Exhibits, these exhibits are relevant to
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`the Board’s § 101 analysis because they provide evidence of the state of the art.
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`See YYZ, 2015 WL 5886176, at *8. While the Board did not institute review based
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`on grounds calling out Exs. 1203, 1204, 1212-13, and 1228, they nonetheless es-
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`tablish the state of the art and provide context for the § 101 inquiry—and the
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`3 All emphasis herein is added unless otherwise indicated.
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`5
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`Patent 7,334,720 B2
`Wechselberger Declaration specifically relies on them for this purpose. See Ex.
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`1219 ¶¶ 44-45, 47, 50 (“State of the Art” discussion), ¶ 89 (citing “State of the
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`Art” discussion in § 101 analysis), ¶ 93 (citing Exs. 1212-13), ¶ 95. Moreover, the
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`named inventor has plainly admitted, in related proceedings that both parties have
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`cited to the Board (Pap. 5 at 18; Pap. 6 at 3), that he did not invent claimed con-
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`cepts or elements, such as use rules in connection with the online sale of content or
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`charging different prices for online rentals and online purchases. See, e.g., Smart-
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`flash LLC, et al. v. Apple Inc., No. 6:13-cv-447, Dkt. 511 (CBM2015-00127, Ex.
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`1045) at 118:6-119:14, 120:14-121:8, 122:19-125:25, 126:11-129:18. Nonethe-
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`less, it appears that PO intends to argue in this proceeding that these admitted prior
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`art elements could somehow provide an inventive concept sufficient to satisfy the
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`second step of the Mayo analysis (see, e.g., Patent Owner Response, Pap. 23 at 21
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`(arguing claim 2 contains “use rules . . . dependent on payment data stored on the
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`data carrier”)—making such evidence unquestionably relevant here. There is thus
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`no merit in PO’s assertion that “nothing in the Alleged Prior Art Exhibits makes a
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`fact of consequence in determining this action more or less probable than it would
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`be without the Alleged Prior Art Exhibits.” Mot. 7.
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`IV. The Board Should Not Exclude Exhibit 1219
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`Despite the Board’s rejection on multiple occasions of PO’s argument that
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`the Wechselberger Declaration should be disregarded for not reciting the eviden-
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`6
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`Patent 7,334,720 B2
`tiary standard, PO repeats it again here. Mot. 8-11; see also CBM2014-00102,
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`Pap. 8 at 4 n.8; CBM2014-00106, Pap. 8 at 4 n.11; CBM2014-00108, Pap. 8 at 16
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`n.5; CBM2014-00112, Pap. 7 at 4 n.9; CBM2014-00102, Pap. 52 at 39;
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`CBM2014-00106, Pap. 52 at 27-28; CBM2014-00108, Pap. 50 at 21-22;
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`CBM2014-00112, Pap. 48 at 26. But, as the Board properly found in prior pro-
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`ceedings on related patents, experts like Mr. Wechselberger are “not required to
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`recite the ‘preponderance of the evidence’ standard expressly in order for the ex-
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`pert testimony to be accorded weight, much less admissibility.” CBM2014-00102,
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`Pap. 52 at 39; see also CBM2014-00106, Pap. 52 at 27; CBM2014-00108, Pap. 50
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`at 21-22; CBM2014-00112, Pap. 48 at 26. “Rather, it is within [the Board’s] dis-
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`cretion to assign the appropriate weight to be accorded to evidence based on
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`whether the expert testimony discloses the underlying facts or data on which the
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`opinion is based.” See IPR2013-00172, Pap. 50 at 42. The Wechselberger Decla-
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`ration sufficiently “disclose[s] the underlying facts or data on which the opinion is
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`based,” as required by 37 C.F.R. § 42.65(a), and cites specific evidence supporting
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`each of the opinions. PO’s meritless request that the Board simply ignore this evi-
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`dence should be rejected.
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`PO also seeks to exclude the portions of the Wechselberger Declaration that
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`identify the level of skill of a POSITA, disclose Mr. Wechselberger’s assumed
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`claim constructions, cite prior art to describe the state of the art and provide con-
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`7
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`Patent 7,334,720 B2
`text for his § 101 opinions, as well as “any other portion . . . that is directed to pa-
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`tentability under 35 U.S.C. §§ 102/103.” Mot. 11-12 (identifying paragraphs 26-
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`76). First, as detailed in § III, supra, the Wechselberger Declaration’s description
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`of the art at the relevant time is clearly relevant to the § 101 inquiry. For the same
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`reasons the Prior Art Exhibits and Exs. 1203, 1204, 1212-13, and 1228 are rele-
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`vant, expert analyses of those exhibits are relevant under FRE 401 and should not
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`be excluded. Further, the level of skill of a POSITA is relevant in determining
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`whether claim elements would be considered well-known, routine, and conven-
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`tional; and claim construction is relevant because “the determination of patent eli-
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`gibility requires a full understanding of the basic character of the claimed subject
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`matter.” See, e.g., Bancorp Servs., LLC v. Sun Life Assurance Co. of Can., 687
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`F.3d 1266, 1273-74 (Fed. Cir. 2012). PO provides no argument or support to the
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`contrary; Mr. Wechselberger’s conclusions regarding what would be considered
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`well-known, routine, and conventional (see, e.g., Ex. 1219 ¶ 82) are entitled to
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`weight.
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`PO further seeks to exclude the portions of the Wechselberger Declaration
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`that provide Mr. Wechselberger’s opinions on the patent eligibility of the chal-
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`lenged claims, arguing that § 101 is a “strictly legal issue . . . for which Mr. Wech-
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`selberger is not an expert.” Mot. 11-12 (identifying paragraphs 77-104). But PO’s
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`argument ignores that “[p]atent eligibility under § 101 presents an issue of law . . .
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`8
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`. [that] may contain underlying factual issues.” Accenture Global Servs., GmbH v.
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`Guidewire Software, Inc., 728 F.3d 1336, 1340-41 (Fed. Cir. 2013); see also Ar-
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`rhythmia Research Tech., Inc. v. Corazonix Corp., 958 F.2d 1053, 1055-56 (Fed.
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`Cir. 1992) (“[D]etermination of [statutory subject matter] may require findings of
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`underlying facts specific to the particular subject matter and its mode of claim-
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`ing.”); YYZ, 2015 WL 5886176, at *8; cf. Versata, 793 F.3d at 1334 (affirming
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`Board’s reliance on petitioner’s expert over patent owner’s expert in determining
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`claimed steps were well-known, routine, and conventional). And there is no dis-
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`pute that Mr. Wechselberger is competent to opine on the factual issues. Cf. Mot.
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`11-12. Moreover, there is no basis for PO’s objections to Mr. Wechselberger’s ex-
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`pert testimony under FRE 602, as the rule plainly states it “does not apply to a wit-
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`ness’s expert testimony under Rule 703.” Thus, PO’s FRE 602 objection to para-
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`graphs 77-104 of the Wechselberger Declaration should be rejected for this addi-
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`tional, independent reason.
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`For the foregoing reasons, PO’s most recent attempts to exclude relevant,
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`admissible evidence should again be rejected.
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`December 3, 2015
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`Respectfully submitted,
`By /J. Steven Baughman/
`J. Steven Baughman, Lead Counsel
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`9
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`Patent 7,334,720 B2
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that a copy of the foregoing PETITIONER
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`APPLE INC.’S OPPOSITION TO PATENT OWNER’S MOTION TO EX-
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`CLUDE was served on December 3, 2015, to the following counsel via e-mail,
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`pursuant to the parties’ agreement concerning service:
`
`Michael R. Casey
`J. Scott Davidson
`DAVIDSON BERQUIST JACKSON & GOWDEY LLP
`8300 Greensboro Drive, Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7700
`Facsimile: (571) 765-7200
`mcasey@dbjg.com
`jsd@dbjg.com
`docket@dbjg.com
`
`Attorneys for Patent Owner Smartflash LLC
`
`Raymond Nimrod
`Andrew Holmes
`QUINN EMANUEL URQUHART & SULLIVAN, LLP
`raynimrod@quinnemanuel.com
`QE-SF-PTAB-Service@quinnemanuel.com
`
`Attorneys for Petitioner Google Inc.
`
`/s/ Sharon Lee
`Sharon Lee
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`
`
`ROPES & GRAY LLP
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`10