UNITED STATES PATENT AND TRADEMARK OFFICE
`
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`APPLE INC.,
`
`Petitioner,
`
`v.
`
`SMARTFLASH LLC,
`
`Patent Owner.
`
`____________
`
`Case CBM2015-00029
`
`Patent 7,334,720 B2
`
`____________
`
`PATENT OWNER’S PRELIMINARY RESPONSE
`
`

`
`TABLE OF CONTENTS
`
`TABLE OF CONTENTS
`
`
`
`PATENT OWNER’S LIST OF EXHIBITS ............................................................. ii
`
`PATENT OWNER’S LIST OF EXHIBITS ........................................................... .. ii
`
`I.
`
`I.
`
`
`
`INTRODUCTION ........................................................................................... 1
`
`INTRODUCTION ......................................................................................... ..1
`
`II.
`II.
`
` OVERVIEW OF U.S. PATENT NO. 7,334,720 B2 ....................................... 3
`OVERVIEW OF U.S. PATENT NO. 7,334,720 B2 ..................................... ..3
`
`III.
`
`THE CHALLENGED CLAIMS ARE NOT DIRECTED TO A
`
`III. THE CHALLENGED CLAIMS ARE NOT DIRECTED TO A
`FINANCIAL PRODUCT OR SERVICE ........................................................ 5
`
`FINANCIAL PRODUCT OR SERVICE ...................................................... ..5
`
`IV.
`
`THE CHALLENGED CLAIMS OF THE ‘72O PATENT ARE
`
`IV. THE CHALLENGED CLAIMS OF THE ‘720 PATENT ARE
`TECHNOLOGICAL INVENTIONS EXEMPT FROM CBM REVIEW .... 10
`
`TECHNOLOGICAL INVENTIONS EXEMPT FROM CBM REVIEW....1O
`
`V.
`
`V. MR. WECHSELBERGER’S DECLARATION SHOULD BE AF FORDED
`
` MR. WECHSELBERGER’S DECLARATION SHOULD BE AFFORDED
`LITTLE OR NO WEIGHT ............................................................................ 12
`
`LITTLE OR NO WEIGHT .......................................................................... .. 12
`
`VI. APPLE’S UNTIMELY § 101 CHALLENGE WILL NOT SECURE THE
`VI. APPLE’S UNTIMELY § 101 CHALLENGE WILL NOT SECURE THE
`JUST, SPEEDY, AND INEXPENSIVE RESOLUTION OF THE ISSUES
`IUST, SPEEDY, AND INEXPENSIVE RESOLUTION OF THE ISSUES
`SURROUNDING THE ‘720 PATENT ......................................................... 14
`SURROUNDING THE ‘720 PATENT ....................................................... ..14
`
`VII. CLAIM CONSTRUCTION .......................................................................... 17
`
`VII. CLAIM CONSTRUCTION ........................................................................ .. 17
`
`VIII. APPLE’S § 103 OBVIOUSNESS CHALLENGES RAISE
`VIII. APPLE’S § 103 OBVIOUSNESS CHALLENGES RAISE
`SUBSTANTIALLY THE SAME PRIOR ART AND ARGUMENTS
`SUBSTANTIALLY THE SAI\/[E PRIOR ART AND ARGU1\/[ENTS
`PREVIOUSLY PRESENTED ....................................................................... 18
`
`PREVIOUSLY PRESENTED ..................................................................... .. 18
`
`IX. STEFIK ‘235 and STEFIK ‘980 ARE NOT A SINGLE REFERENCE ...... 26
`
`STEFIK ‘235 and STEFIK ‘98O ARE NOT A SINGLE REFERENCE .... ..26
`
`IX.
`
`X.
`
`X.
`
` CONCLUSION .............................................................................................. 28
`
`CONCLUSION ............................................................................................ . .28
`
`- i -
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`

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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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`- ii -
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`

`
`Pursuant to 37 C.F.R. § 42.107, Smartflash LLC (“Patent Owner”) files this
`
`preliminary response to the corrected petition, setting forth reasons why no new
`
`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 3
`
`and 13-15 of U.S. Patent No. 7,334,720 B2 (“the ‘720 Patent”). Paper 5 at 1
`
`(“Corrected Petition”). Apple challenges claims 3 and 13-15 on 35 U.S.C. § 103
`
`obviousness grounds. Paper 5 at 1, 19. On March 31, 2014, Apple filed two
`
`earlier petitions, in CBM2014-00104 and -00105, also seeking CBM review of
`
`claims 3 and 13-15 of the ‘720 Patent, among others, on § 103 obviousness
`
`grounds. The PTAB denied review of claims 3 and 13-15 on § 103 obviousness
`
`grounds in both instances. Apple Inc. v. Smartflash LLC, Case CBM2014-00104
`
`Paper 9 at 4, 20 (PTAB September 30, 2014) and Case CBM2014-00105, Paper 9
`
`at 3, 20-21 (PTAB September 30, 2014).
`
`Here, Apple re-raises its obviousness challenge to claims 3 and 13-15,
`
`relying on five pieces of prior art: three of which (Stefik ‘235, Stefik ‘980, and
`
`Poggio) are the same prior art raised in both CBM2014-00104 and -00105; and two
`
`
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`- 1 -
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`of which (Kopp and Smith) are “additional prior art” Apple “now identifies” “in
`
`light of the Board’s Decision.” Corrected Petition at 1-2. Apple does not allege
`
`that Kopp (a U.S. Patent issued in 1999) and Smith (a PCT application filed in
`
`1995) were not known or not available to it when it filed its earlier petitions.
`
`The Board should again deny review of claims 3 and 13-15 on Apple’s
`
`§ 103 obviousness challenge because the Corrected Petition “raises substantially
`
`the same prior art or arguments previously presented” and rejected by the Board in
`
`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 raises for the first time a 35 U.S.C. § 101
`
`statutory subject matter challenge to claims 3 and 13-15 of the ‘720 Patent.
`
`Corrected Petition at 1, 14. As the Board already noted with respect to other
`
`petitions filed against the same patent family, “challenges pursuant to 35 U.S.C.
`
`
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`- 2 -
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`§ 101 ... raise purely legal issues.” CBM2015-00015, Paper 6 at 2. The Board
`
`should deny review of claims 3 and 13-15 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
`
`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
`
`data supply computer system 120 over internet 142. The terminals are provided
`
`with an interface to a portable data carrier or ‘smart Flash card’ (SFC) as generally
`
`described with reference to FIG. 2 and as described in more detail below. In most
`
`embodiments of the terminal the SFC interface allows the smart Flash card data
`
`carrier to be inserted into and removed from the terminal, but in some
`
`
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`- 3 -
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`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
`
`able to retrieve the purchased content from the content provider. See col. 8, lines
`
`7-9.
`
`
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`- 4 -
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`III. THE CHALLENGED CLAIMS ARE NOT DIRECTED TO A
`FINANCIAL PRODUCT OR SERVICE
`
`Petitioner cites claim 14 as being the “exemplary” basis for requesting that a
`
`covered business method review be instituted. Corrected Petition at 7. While
`
`Petitioner cites claim 14 as being “exemplary,” and states on page 3 that “the other
`
`challenged claims are nothing but variations on this same simple and well-known
`
`theme,” the Petition does not set forth any analysis to show why, if claim 14 is not
`
`a basis for review, any of the other challenged claims (i.e., claims 3, 13 and 15)
`
`would instead meet the statutory requirements for instituting a review.
`
`Furthermore, because claim 14 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 14
`
`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
`- 5 -
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`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
`“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
`
`legislative history of the AIA to determine the specific issue before it, i.e., whether
`
`trial should be instituted on the present petition. The Supreme Court has “stated
`
`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
`
`legislators cannot achieve through floor statements what “they were unable to
`
`achieve through the statutory text.” Exxon Mobil Corp. v. Allapattah Servs., Inc.,
`
`545 U.S. 546, 568 (2005). Because Section 18 is unambiguously limited to
`
`
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`“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
`
`signed by the President.
`
`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
`
`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,
`
`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
`
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`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
`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
`
`a specific type of innovation and legislatively take other financial services-related
`
`business method patents referenced in H.R. 1249, section 18. ... Financial
`
`services-related business method patents have saved financial services companies
`
`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
`
`[AIA § 18] process and implement it as narrowly as possible.”)
`
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`- 8 -
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`In contrast to the banking or other financial products or services patents,
`
`claim 14 recites:
`
`14. A method of providing data from a data supplier to a data
`
`carrier, the method comprising:
`
`reading payment data from the data carrier;
`
`forwarding the payment data to a payment validation system;
`
`retrieving data from the data supplier;
`
`writing the retrieved data into the data carrier;
`
`receiving at least one access rule from the data supplier; and
`
`writing the at least one access rule into the data carrier,
`
`the at least one access rule specifying at least one condition for
`
`accessing the retrieved data written into the data carrier,
`
`the at least one condition being dependent upon the amount of
`
`payment associated with the payment data forwarded to the payment
`
`validation system.
`
`Thus, the main thrust of claim 14 is providing data and at least one access
`
`rule retrieved from a data supplier to a data carrier, as one would do, for example,
`
`when loading software, music or a video onto a data carrier for later use and/or
`
`playback according to the stored access rule. Further, rather than recite the
`
`“practice, administration, or management of a financial product or service,” claim
`
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`- 9 -
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`14 actually omits the specifics of how payment is made and focuses on technical
`
`steps that take place with respect to the data and the at least one access rule on the
`
`data carrier. Claim 14, 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 14 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 14 does not meet the
`
`exception of being directed to a technological invention. Section 42.301(b) sets
`
`forth that a 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 technological feature that is novel and unobvious over the prior art; and
`
`solves a technical problem using a technical solution.”
`
`Claim 14, 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
`
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`- 10 -
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`14 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
`
`Background of the Invention in col. 1, “One problem associated with the
`
`increasingly wide use of the internet is the growing prevalence of so-called data
`
`pirates. Such pirates obtain data either by unauthorized or legitimate means and
`
`then make this data available essentially world-wide over the internet without
`
`authorization. Data can be a very valuable commodity, but once it has been
`
`published on the internet it is difficult to police access to and use of it by internet
`
`users who may not even realize that it is pirated.”
`
`Moreover, claim 14 utilizes technical solutions to address the technical
`
`problem of data piracy. The solutions include at least (1) a data carrier from which
`
`payment data is read and to which retrieved data from a data supplier is written and
`
`(2) at least one access rule, also stored on the data carrier, specifying at least one
`
`condition for accessing the retrieved data written into the data carrier. As
`
`described in the Abstract, a portable data carrier may include “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 3 “Claim 14 involves
`
`no ‘technology’ at all other than ‘a payment validation system’ and ‘a data
`
`carrier.’” Petition at 3. (Emphasis added.) Thus, the technical solutions of claim
`
`14 exempt the ‘720 patent from CBM review.
`
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`- 11 -
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`Section III.A. of the Corrected Petition also does not allege, much less
`
`prove, that reading payment data from the data carrier, writing the retrieved data
`
`from the data supplier into the data carrier, and writing the at least one access rule
`
`into the 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 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 determining that the ... Patent[-at-issue] is a covered
`
`business method patent.”) Thus, Petitioner has not proven that the claims of the
`
`‘720 patent are 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 1319, DECLARATION OF ANTHONY J.
`
`WECHSELBERGER IN SUPPORT OF APPLE INC.’S PETITION FOR
`
`COVERED BUSINESS METHOD PATENT REVIEW OF UNITED STATES
`
`
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`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
`
`failing to state the evidentiary weight standard that he applied, Mr. Wechselberger
`
`has not shown that he has used the correct criteria in coming to his conclusions.
`
`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.
`
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`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
`
`CBM2014-00104 and -00105 directed to the patent-at-issue. Despite Patent Owner
`
`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
`
`did not include any reference to the standard of evidence in his declaration
`
`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,
`
`the PTAB should find that his declaration is entitled to little or no weight.
`
`
`
`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 claims 3 and 13-15 of the ‘720 Patent. Apple filed its first two
`
`petitions on March 31, 2014 (CBM2014-00105, Paper 1 and CBM2014-00105,
`
`Paper 1), well over 7 months before filing its initial petition in this matter on
`
`November 24, 2014 (CBM2015-00029, Paper 1).
`
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`“[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
`
`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,
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`Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014) was “decided after Petitioner’s
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`original challenges to the ‘720 were filed” (Corrected Petition at 4), there was no
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`impediment to Apple asserting § 101 back in March 2014 when it filed the
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`petitions in CBM2014-00104 and -00105 (“the March Petitions”). As Apple
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`acknowledges, “[i]n Alice, the Supreme Court applied [Mayo Collaborative Servs.
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`v. Prometheus Labs, 132 S. Ct. 1289, 1293 (2012)]’s two-part framework to
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`‘distinguish[] patents that claim laws of nature, natural phenomena, and abstract
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`ideas from those that claim patent-eligible applications of these concepts.’”
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`Corrected Petition at 19-20. Apple proffers no reason why it could not have raised
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`this purely legal issue and applied Mayo’s two-part framework in its March
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`Petitions, as it does now in the Corrected Petition. Corrected Petition at 20-23.
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`Here, allowing Apple to raise a new ground of invalidity that it could have
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`and should have raised in its March 31, 2014 petitions encourages Apple’s
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`piecemeal invalidity challenges to Patent Owner’s patent claims and runs afoul of
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`the PTAB’s charge to “secure the just, speedy, and inexpensive resolution” of
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`Apple’s covered business method challenges to the ‘720 Patent. In fact, Patent
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`Owner has been subjected to a continuing barrage of Petitions such that, together
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`with the ten petitions filed by another group of Petitioners, the six patents in the
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`patent family under review were the subject of 31 different CBM petitions by the
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`end of 2014. Thus, of the 277 CBM petitions filed through the end of 2014,
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`31/277 or more than 11% of all CBMs ever filed had targeted only six patents
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`belonging to the same assignee. As in Conopco, Smartflash’s “concern that it will
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`‘have to continually defend against repetitive challenges’ to the same patent claims
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`is not without merit, given the multiplicity of grounds applied in each petition.”
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`Conopco at 12. Patent Owner therefore respectfully requests that the Board deny
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`review of claims 3 and 13-15 on Apple’s newly asserted § 101 nonstatutory subject
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`matter grounds.
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`VII. CLAIM CONSTRUCTION
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`Claims 3 and 13-15 each recite “payment data.” Petitioner has alleged that
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`“payment data” should be construed to mean “data representing payment made for
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`requested content data” and is distinct from “access control data.” Petition at 17.
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`However, “payment data” in the context of the ‘720 patent should be interpreted to
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`mean “data that can be used to make payment for content.” This is consistent with
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`Exhibit 1323, Claim Construction Memorandum Opinion from Smartflash LLC v.
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`Apple Inc., No. 6:13cv447, page 11.
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`The ‘720 patent, col. 21, lines 15-18, states “payment data for making a
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`payment … is received from the smart Flash card by the content access terminal
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`and forwarded to an e-payment system.” That is, the payment data is used for
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`making a payment. Furthermore, as can be seen in Figure 12c of the ‘720 patent,
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`step S54 reads “PAYMENT FOR SCHEME OWNER RECEIVED FROM CARD
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`BY CONTENT ACCESS TERMINAL AND FORWARDED TO e-PAYMENT
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`SYSTEM.” Step S55 then reads “PAYMENT RECORD DATA RECEIVED
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`FROM e-PAYMENT SYSTEM BY CONTENT ACCESS TERMINAL AND
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`FORWARDED TO CARD.” Both of those steps precede step S56 which recites
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`“PAYMENT RECORD DATA, PURCHASE REQUEST AND CARD
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`REGISTRATION DATA TRANSMITTED TO SCHEME OWNER.” Thus,
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`“payment data” is not “data representing payment made for requested content
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`data,” as payment has not yet been made when the payment data of step S54 is
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`sent. Therefore, Petitioner’s requested claim construction for “payment data”
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`should not be adopted, and “payment data” should be interpreted to mean “data
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`that can be used to make payment for content.” If Petitioner’s claim construction
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`is not adopted, the Petition fails to set forth a separate analysis of why the claims
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`would be obvious in light of the alternate claim interpretation. Thus, the Petition
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`should be denied on that basis as well.
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`VIII. APPLE’S § 103 OBVIOUSNESS CHALLENGES RAISE
`SUBSTANTIALLY THE SAME PRIOR ART AND ARGUMENTS
`PREVIOUSLY PRESENTED
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`“As set forth in 35 U.S.C. § 325(d), the Director, and by extension the
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`Board, has broad discretion to deny a petition that raises substantially the same
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`prior art or arguments previously presented to the Office.” Unilever at 6. Here,
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`the Corrected Petition raises substantially the same prior art and arguments
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`previously presented in the CBM2014-00104 and -00105 petitions. The Board
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`should exercise its broad discretion and deny the Corrected Petition.
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`The instant Corrected Petition challenges claims 3 and 13-15 of the ‘720
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`Patent on § 103 obviousness grounds, the same claims that were previously denied
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`review on § 103 obviousness grounds in the CBM2014-00104 and -00105
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`proceedings. Compare Corrected Petition at 14-15 with CBM2014-00104, Paper
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`9, Decision Denying Institution of Covered Business Method Patent Review at 2-4
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`(showing Apple’s prior ‘720 Patent claim 3 and 13-15 challenges based on § 103
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`obviousness grounds and denying institution of a covered business method patent
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`review of claims 3 and 13-15) and CBM2014-00105, Paper 9, Decision Denying
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`Institution of Covered Business Method Patent Review at 2-3 (showing Apple’s
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`prior ‘720 Patent claim 3 and 13-15 challenges based on § 103 obviousness
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`grounds and denying institution of a covered business method patent review of
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`claims 3 and 13-15).
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`Apple’s current request for covered business method review of the ‘720
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`Patent on § 103 obviousness grounds argues that “claims 3 and 13-15 are obvious
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`in light of Stefik in view of Poggio and Kopp” and that “claims 3 and 13-15 are
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`obvious in light of Stefik in view of Poggio, Kopp, and Smith.” Corrected Petition
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`at 14-15. Apple admits that Kopp and Smith are “additional prior art” that it “now
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`identifies” “[i]n light of the Board’s Decision” denying review of claims 3 and 13-
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`15 as unpatentable under 35 U.S.C. § 103. Corrected Petition at 1-2. Apple’s
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`Corrected Petition is therefore nothing more than an attempt to use the Board’s
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`prior decisions in CBM2014-00104 and -00105 declining to review claims 3 and
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`13-15 on § 103 obviousness grounds as a road map to resurrect challenges that
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`were rejected in the CBM2014-00104 and -00105 proceedings.
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`Apple cannot dispute that Stefik ‘235, Stefik ‘980 and Poggio constitute the
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`same prior art previously presented against claims 3 and 13-15 of the ‘720 Patent
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`as § 103 invalidating prior art in CBM2014-00104 and -00105 and rejected by the
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`Board. CBM2014-00104, Paper