`
`_________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_________
`
`APPLE INC. and GOOGLE INC.,
`Petitioners,
`
`v.
`
`SMARTFLASH LLC,
`Patent Owner.
`
`_________
`
`Case CBM2015-000291
`
`Patent 7,334,720 B2
`
`_________
`
`
`
`PATENT OWNER’S REQUEST FOR REHEARING
`
`
`
`
`1 CBM2015-00125 has been consolidated with this proceeding.
`
`
`
`TABLE OF CONTENTS
`
`
`I.
`STATEMENT OF PRECISE RELIEF REQUESTED ................................... 2
`BACKGROUND ............................................................................................. 2
`II.
`III. ARGUMENT ................................................................................................... 4
`Like the Claims in Enfish and DDR Holdings, the Challenged Claims
`A.
`Are Patent Eligible Because They Are Directed to a Specific Solution
`to a Novel Problem Presented by Digital Commerce ........................... 5
`The Challenged Claims Do Not Resemble Those in Alice ................. 10
`1.
`The Challenged Claims Are Directed to a Specific Device and a
`Specific Method, Not an Abstract Idea ..................................... 10
`The Challenged Claims Contain “Additional Features”
`Demonstrating That They Do Not Cover an Abstract Idea ...... 13
`IV. CONCLUSION .............................................................................................. 15
`
`B.
`
`2.
`
`
`
`i
`
`
`
`
`
`
`
`The Board’s final written decision in this covered business method patent
`
`review misapprehends the Federal Circuit’s and Supreme Court’s guidance on
`
`patent eligible subject matter under 35 U.S.C. § 101 and overlooks the Federal
`
`Circuit’s decision in Enfish, LLC v. Microsoft Corp., No. 2015-2044 (Fed. Cir.
`
`May 12, 2016). The challenged claims are directed to a novel content delivery
`
`system for distributing digital content over the Internet while reducing piracy—a
`
`pressing problem at the time of invention. Like the claims at issue in Enfish, DDR
`
`Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 125 (Fed. Cir. 2014), Apple,
`
`Inc. v. Mirror World Techs., LLC, Case CBM2016-00019 (Paper 12, May 26,
`
`2016), and Google Inc. v. ContentGuard Holdings, Inc., Case CBM2015-00040
`
`(Paper 9, June 24, 2105), the inventions improve the functioning of computers by
`
`teaching improved devices and methods for downloading, storing, and accessing
`
`data. “[T]he focus of the claims is on the specific asserted improvement in
`
`computer capabilities” – not an “‘abstract idea’ for which computers are invoked
`
`merely as a tool.” Enfish, slip op. at 11. Whether considered at step one or step
`
`two of the Alice inquiry, the specific devices and techniques that the claims teach
`
`put them squarely in the realm of patent-eligible subject matter.
`
`The Board failed to address the claim language and the specific limitations
`
`governing the organization and processing of specific data types. By
`
`characterizing the claims as “directed to performing the fundamental economic
`
`
`
`1
`
`
`
`practice of conditioning and controlling access to content based on payment,” the
`
`Board “describe[d] the claims at . . . a high level of abstraction and untethered
`
`from the language of the claims,” thereby “all but ensur[ing] that the exceptions to
`
`§ 101 swallow the rule.” Enfish, slip op. at 9; see also Alice Corp. Pty. Ltd. v. CLS
`
`Bank Int’l, 134 S. Ct. 2347, 2354 (2014) (warning against “construing this
`
`exclusionary principle [to] swallow all of patent law”). Patent Owner respectfully
`
`requests rehearing to correct these errors. See 37 C.F.R. § 42.71(d).
`
`I.
`
`STATEMENT OF PRECISE RELIEF REQUESTED
`
`Patent Owner requests that the Board reverse its original decision (Paper 43,
`
`May 26, 2016) and hold that challenged claims 3 and 15 are patent eligible.
`
`II. BACKGROUND
`
`1.
`
`Distribution of digital content over the Internet “introduces a problem
`
`that does not arise” with content distributed on physical media. DDR Holdings,
`
`LLC v. Hotels.com, L.P., 773 F.3d 1245, 125 (Fed. Cir. 2014). By the late 1990s,
`
`improved data compression and increasing bandwidth for Internet access enabled
`
`content providers, for the first time, to offer content data for purchase over the
`
`Internet; at the same time, unprotected data files could be easily pirated and made
`
`available “essentially world-wide.” Ex. 1301, 1:32-33. Conventional operation of
`
`the Internet does not solve the problem of data piracy: on the contrary, the Internet
`
`facilitates the distribution of data without restriction or protection. Id. 1:49-55.
`
`
`
`2
`
`
`
`Content providers faced piracy before—a CD can be copied onto another
`
`CD—but the problem presented by widespread distribution of pirated content over
`
`the Internet was unprecedented. There had never before been a way to make free,
`
`identical, and flawless copies of physical media available to millions of people
`
`instantaneously at virtually no incremental cost. See generally Metro-Goldwyn-
`
`Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 929-30 (2005). The Internet
`
`thus gave rise to an urgent need to address data piracy challenges particularly
`
`associated with digital content distribution over the Internet.
`
`
`
`The inventor devised a data storage and access system for downloading and
`
`paying for data, described in the specification, comprising specific elements to
`
`overcome problems inherent in making digital content available over the Internet
`
`and in accessing that content. Ex. 1301, at 1 (Abstract). The relevant claims of the
`
`’720 patent are directed to a “data access terminal for retrieving data from a data
`
`supplier and providing the retrieved data to a data carrier” id. 26:41-42, and “a
`
`method of providing data from a data supplier,” id. 28:21. Claim 3 requires the
`
`“data access terminal” to include a “first interface for communicating with the data
`
`supplier”; “a data carrier interface for interfacing with the data carrier”; a “program
`
`store”; and a “processor . . . for implementing the stored code,” “the code
`
`comprising: [(1)] code to read payment data from the data carrier and to forward
`
`the payment data to a payment validation system; [(2)] code to receive payment
`
`
`
`3
`
`
`
`validation data from the payment validation system; [(3)] code responsive to the
`
`payment validation data to retrieve data from the data supplier and to write the
`
`retrieved data into the data carrier; and [(4)] code responsive to the payment
`
`validation data to receive at least one access rule from the data supplier and to
`
`write 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 . . . the at least one
`
`condition being dependent upon the amount of payment . . . .” Ex. 1301, 26:43-
`
`65. Claim 15 describes a related method, specifying that “at least a portion of the
`
`payment validation data” must be transmitted “to the data supplier.” Id. 26:25-26.
`
`
`
`2.
`
`The Board found the challenged claims patent ineligible. It found (at
`
`9) that the challenged claims “are drawn to an abstract idea,” that is, “performing
`
`the fundamental economic practice of conditioning and controlling access to
`
`content based on payment.” It also found (at 12-13) “that the additional elements
`
`. . . are either field of use limitations or generic features of a computer. . . .” The
`
`Board (at 17-18) distinguished DDR Holdings, stating that “[d]ata piracy exists in
`
`contexts other than the Internet,” “the solution provided by the challenged claims is
`
`not rooted in specific computer technology,” and the “result” does not “override[]
`
`the routine and conventional manner in which this technology operates.”
`
`III. ARGUMENT
`
`The Board should reverse its decision in this case and find the claims
`
`
`
`4
`
`
`
`directed to statutory subject matter because, in evaluating whether challenged
`
`claims 3 and 15 comply with § 101, the Board failed to give effect to the actual
`
`language of the claims and their specific limitations.2 The actual claim language,
`
`read in light of the specification, reflects a specific and concrete technical solution
`
`to a novel problem associated with distribution of digital content over the Internet.
`
`Such a technological advance is patent eligible.
`
`A. Like the Claims in Enfish and DDR Holdings, the Challenged
`Claims Are Patent Eligible Because They Are Directed to a
`Specific Solution to a Novel Problem Presented by Digital
`Commerce
`
`1.
`
`The claims of the ’720 patent are patent eligible because they embody
`
`concrete aspects of a particular solution to the Internet-specific problem of digital
`
`piracy – “a specific improvement to the way computers operate.” Enfish, slip op.
`
`at 12. This is not a patent that simply claims “use of the Internet” or a computer to
`
`perform an established business method. Cf. Ultramercial, Inc. v. Hulu, LLC, 772
`
`F.3d 709, 716 (Fed. Cir. 2014). This is no digital telephone book. Cf. Paper 43, at
`
`20. On the contrary, the challenged claim limitations reflect specific technical
`
`
`2 The Board disregarded the text of the claims, using nearly identical language in
`
`all the final written decisions of the covered business method reviews that concern
`
`the patents related to the ’720 patent, even though the challenged claims varied
`
`dramatically in their coverage. See, e.g., CBM2014-00192, CBM2015-00017.
`
`
`
`5
`
`
`
`choices involving the storage, transmission, and organization of specific data types.
`
`For example, by storing payment data on the data carrier – rather than
`
`requiring the user to enter payment data manually into the data access terminal
`
`with each purchase – the invention improves the function of user devices over prior
`
`systems that required separate submission of payment information or post-use
`
`billing. See Ex. 1301, 4:26-28. By transmitting payment validation data to the
`
`data access terminal and having the terminal retrieve the digital content from the
`
`data supplier in response, the patent inventively allows the same data carrier to be
`
`compatible with independent and integrated validation systems. See id. 8:64-9:5.
`
`By writing onto the data carrier “access rules” dependent on the payment amount,
`
`the invention limits a user’s ability to make unauthorized copies and allows for
`
`different levels of access to downloaded digital content. See, e.g., Exhibit 1301
`
`(15:13-17). “[T]he claimed solution amounts to an inventive concept for resolving
`
`this particular Internet-centric problem.” DDR Holdings, 773 F.3d at 1259.
`
`The claims teach specific technical solutions to a problem associated with
`
`distribution of digital content through specific organization of distinct data types,
`
`implemented on a specific device. There is no risk that the patents monopolize
`
`“fundamental economic concepts,” as the Board held (at 9). The claims are not
`
`directed to “any way” of conditioning and controlling access to content but to
`
`specific devices and methods involving a novel organization of designated data
`
`
`
`6
`
`
`
`types. The patent-eligibility of these claims will not “impede innovation” or
`
`“improperly t[ie] up . . . building blocks of human ingenuity.” Alice, 134 S. Ct. at
`
`2354. On the contrary, each claim teaches a “specific way” to control access to
`
`stored digital content; the claims do not attempt to “preempt every application of
`
`the idea.” DDR Holdings, 773 F.3d at 1259.
`
`2.
`
`The Board rejected Patent Owner’s reliance on DDR Holdings (at 14),
`
`holding that the challenged claims were not “rooted in computer technology in
`
`order to overcome a problem specifically arising in the realm of computer
`
`networks.”3 That is incorrect: the claim discusses specific computer functions and
`
`interactions to perform a specific series of operations. Indeed, the Board’s own
`
`summary of the ’720 patent (at 3) states:
`
`The ’720 patent describes providing portable data storage
`together with a means for conditioning access to that data
`upon validated payment. . . . This combination allows
`data owners to make their data available over the internet
`without fear of data pirates.
`
`The specification further explains that the purpose of the invention is to
`
`“make . . . data available . . . over the internet without fear of loss of revenue.” Ex.
`
`
`3 Pursuant to 37 C.F.R. § 42.71(d), whether the challenged claims were similar to
`
`those in DDR Holdings was previously addressed. See PO Resp. 1, 16-22.
`
`
`
`7
`
`
`
`1301, 2:1-2. “[T]he growing prevalence of so-called data pirates” is a problem
`
`that arises by virtue of “increasingly wide use of the internet.” Id. 1:15-17.
`
`Because the Internet facilitates “essentially world-wide” distribution of flawless,
`
`identical copies of digital content data, the data piracy problems it creates are
`
`qualitatively different from the problem of copying of physical media (videotapes,
`
`CDs, software, books), which necessarily takes time, imparts imperfections, and
`
`imposes incremental costs. See Grokster, Ltd., 545 U.S. at 929-30.
`
`Rather than generically claiming use of the Internet to perform an abstract
`
`business practice, the claims solve problems faced by digital content providers in
`
`the Internet Era and teach “an improvement to computer functionality itself.”
`
`Enfish, slip op. at 12; Mirror World, Paper 12, at 15. Another panel of the PTAB
`
`reached the same conclusion in refusing to initiate a CBM review of another patent
`
`involving digital rights management in ContentGuard. That patent claimed a
`
`method and system for transferring rights associated with an item, involving
`
`obtaining a “meta-right” specifying a right that can be created when the meta-right
`
`is exercised and determining, by a repository, whether the consumer is entitled to
`
`the right specified by the meta-right. Although it found that the claims involved no
`
`novel technological feature, the panel nevertheless held that, rather than merely
`
`reciting a “fundamental economic or longstanding commercial practice,” the
`
`claims “are directed to a particular way of creating and enforcing rights
`
`
`
`8
`
`
`
`associated with digital works that is ‘necessarily rooted in computer technology’
`
`and ‘specifically arises in the realm of computer networks.’” Paper 9, at 29
`
`(emphasis added). And the panel also found that “implementation of digital rights
`
`management required by the challenged claims . . . is specific enough that it does
`
`not preempt all other ways of ensuring that an owner of a digital work can enforce
`
`the rights associated therewith.” Id. The same analysis applies here.
`
`The Board also held (at 18) that the challenged claims contained
`
`limitations—unlike the claims in DDR Holdings—that were “specified at a high
`
`level of generality.” But the challenged claims and the specification discuss a
`
`specific organization of data types to carry out transactions according to a
`
`particular scheme, not mere generalities. “Payment data,” “payment validation
`
`data” and “access rules” are described in the ’720 patent and are at least as specific
`
`as the claim terms in DDR Holdings. See 773 F.3d at 1249 (reciting “link,”
`
`“source page,” “commerce object,” and “visually perceptible elements”).
`
`
`
` Finally, the Board held (at 15) that the claims could be performed by “a
`
`general-purpose computer.” But that is generally true of software inventions, and
`
`“[s]oftware can make non-abstract improvements to computer technology just as
`
`hardware improvements can.” Enfish, slip op. at 11. These claims teach a specific
`
`scheme for storing payment data, content data, and access rules on a data carrier
`
`and using those data types to control and condition access to content data
`
`
`
`9
`
`
`
`according to a specific transaction sequence. As the specification explains, when
`
`digital data is sent over the Internet operating in its normal, expected manner and
`
`stored by a recipient, the content owner has no means to exert further control over
`
`access to downloaded content. The claims provide a specific mechanism to ensure
`
`that content, once downloaded, can be accessed only in accordance with associated
`
`access rules. Just as the claims in DDR Holdings “specify how interactions with
`
`the Internet are manipulated to yield a desired result,” 773 F.3d at 1258, the claims
`
`here specify how manipulation of specific data types facilitates convenient and
`
`secure provision of digital content, a result that neither the Internet nor unimproved
`
`computers can produce. See Enfish, slip op. at 15; ContentGuard, Paper 9, at 29.
`
`The patent “improve[s] the functioning” and the functionality of data access
`
`terminals and data carriers, likewise improving data communications networks
`
`used for digital content distribution. Alice, 134 S. Ct. at 2359.
`
`
`
`B.
`
`The Challenged Claims Do Not Resemble Those in Alice
`
`The claims do not fit the mold of the patent-ineligible claims of Alice. They
`
`do not recite an “abstract idea” and, in any event, teach a specific “combination of
`
`elements” that amounts to “significantly more” than any ineligible concept.
`
`1.
`
`The Challenged Claims Are Directed to a Specific Device
`and a Specific Method, Not an Abstract Idea
`
`The Board’s determination that the claims were directed to an abstract idea
`
`is incorrect because the claims are directed to a concrete machine, a data access
`
`
`
`10
`
`
`
`terminal for receiving data from a data supplier, with specific hardware and
`
`software components (Claim 3) and to a method of providing data from a data
`
`supplier to a data carrier in such a device (Claim 15) and not merely to the abstract
`
`idea of controlling access to content.4 As the Board acknowledged (at 7) the
`
`claims at issue “recite[] a ‘machine,’ (“a data access terminal”), and . . . a
`
`“process” (“[a] method”) under § 101.” Both claims involve the use of specific
`
`software to read and transmit payment data; receive payment validation data;
`
`retrieve content data and write it to a data carrier; and receive access rules and
`
`write those rules onto the data carrier.
`
`The Board apparently focused on the problem the inventions were designed
`
`to solve and treated that problem as the abstract idea to which the claims were
`
`directed. Thus, the Board held (at 9) that “the challenged claims are directed to
`
`performing the fundamental economic practice of conditioning and controlling
`
`access to content based on payment.” But while the claims provide a specific
`
`mechanism that can be used to condition and control access to content, thus
`
`combatting problems of data piracy, see Ex. 1301, 1:6-42, that does not fairly
`
`4 Pursuant to 37 C.F.R. § 42.71(d), the issue of whether the claims are directed to
`
`patent eligible subject matter was previously addressed. See PO Resp. 15-27.
`
`Enfish makes clear that arguments concerning whether claims are directed to an
`
`abstract idea are also relevant to step two of the Alice framework. Slip op. 18.
`
`
`
`11
`
`
`
`describe the claims, which, as explained, provide a specific solution to an aspect of
`
`the problem of piracy of digital content distributed over the Internet. See Enfish,
`
`slip op. at 14-15; Mirror World, Paper 12 at 17; ContentGuard, Paper 9 at 29.
`
`There is a fundamental difference between claiming a specific device or
`
`method that can be used to accomplish an economic practice and claiming the
`
`practice itself. As an example, all relational databases address the problem of
`
`“storing, organizing, and retrieving memory in a logical table” or “organizing
`
`information using tabular formats.” See Enfish, slip op. at 14. Nevertheless, a
`
`claim that teaches a specific way to store and organize information may be
`
`patentable even though a claim on storing and organizing data itself would not be.
`
`Compare Enfish, slip op. at 14, with In re: TLI Comm’ns LLC Patent Litig., No.
`
`2015-1372, et al., slip op. at 10 (Fed. Cir. May 17, 2016) (patent directed to
`
`“abstract idea of classifying and storing digital images in an organized manner”).
`
`The Board’s decision equates a claim on a specific way to control and condition
`
`access to content with a claim on the economic task itself, which risks turning all
`
`software into patent-ineligible abstract ideas. This is the problem that Enfish and
`
`Alice warn against. “At some level, all inventions ... embody, use, reflect, rest
`
`upon, or apply laws of nature, natural phenomena, or abstract ideas. Thus, an
`
`invention is not rendered ineligible for patent simply because it involves an
`
`abstract concept.” Alice, 134 S. Ct. at 2354; see Enfish, slip op. at 10.
`
`
`
`12
`
`
`
`2.
`
`The Challenged Claims Contain “Additional Features”
`Demonstrating That They Do Not Cover an Abstract Idea
`
`The Board was incorrect to find that the challenged claims did not contain
`
`“additional features” to ensure that they were more than a drafting effort designed
`
`to monopolize the abstract idea. On the contrary, because the challenged claims
`
`are not limited to generic computer implementation, they contain an inventive
`
`concept sufficient to establish patent eligibility.5
`
`The challenged claims do not “simply stat[e] an abstract idea while adding
`
`the words ‘apply it’ or ‘apply it with a computer.’” Versata Development Group,
`
`Inc. v. SAP America, Inc., 793 F.3d 1306, 1332 (Fed. Cir. 2015). The claims do
`
`depend on software code. But the limitations specify a particular way to control
`
`and condition access to content. The claims are not directed to controlling and
`
`conditioning access to content generically. The Board concluded otherwise by
`
`failing to consider the various claim limitations as an ordered combination
`
`reflecting distinct technological choices and advantages. See also Enfish, slip op.
`
`at 11; Mirror World, Paper 12, at 17 (“the claims are not directed generically to
`
`organizing and storing data but instead to the particular use” of types of data).
`
`
`5 Pursuant to 37 C.F.R. § 42.71(d), the issue of whether the challenged claims
`
`contain “additional features” beyond an abstract idea was previously addressed.
`
`See PO Resp. 21-22; see also id. at 4-9.
`
`
`
`13
`
`
`
`The Board held (at 10-11) that each specific limitation was a “generic
`
`computer component” such as a program store or a processor and, with respect to
`
`the claimed software limitations, that the claims lack “any inventive concept …
`
`related to the way these data types are constructed or used.” But that basic
`
`methodology is flawed, because it is not proper to look at individual limitations
`
`and determine if each specified component of the machine is conventional in
`
`isolation. See Mirror World, Paper 12, at 15 (Petitioner’s analysis “is flawed”
`
`because it “should consider the claims as a whole”). “[I]nventions in most, if not
`
`all, instances rely upon building blocks long since uncovered, and claimed
`
`discoveries almost of necessity will be combinations of what, in some sense, is
`
`already known.” KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 418-19 (2007).
`
`As explained above, the ’720 patent claims a “data access terminal” and
`
`“method” for retrieving and storing content data and access rules according to a
`
`novel and non-obvious organization of payment data, payment validation data,
`
`content data, and access rules. The Board’s conclusion that this approach to data
`
`storage and access was merely conventional is unsupported and incorrect.
`
`The Board acknowledged (at 15) that a combination of elements may
`
`provide an inventive concept. And it acknowledged that the claims teach storing
`
`“two specific types of information—content and the conditions for providing
`
`access to the content – . . . in the same place or on the same storage device.” But
`
`
`
`14
`
`
`
`the Board overlooked the storage of payment data, which enhances user
`
`convenience, and use of payment validation data, which reduces risk of non-
`
`payment. Instead, the Board simply pronounced itself “not persuaded” that this
`
`particular configuration of data is “an inventive concept.”
`
`The Board then asserted that this idea was known in the prior art, citing U.S.
`
`Patent No. 5,629,980 (Ex. 1315). But this hardly suggests that a particular
`
`concept, if deployed as part of a novel configuration, is conventional. Just as
`
`significant, the reference does not disclose the type of data storage and
`
`manipulation that the ’720 patent claims. On the contrary, the cited art teaches
`
`having the content owner include a time bomb – which would destroy or alter the
`
`data – as part of the content item. See Ex. 1315, 10:26 (“rental products are
`
`formatted to include a time bomb”) (emphasis added). That makes it impossible to
`
`provide greater access without downloading the content again. By contrast, the
`
`’720 patent solves this very problem by teaching separate storage of content data,
`
`on the one hand, and associated access rules on the other. Thus, a comparison to
`
`that prior art actually confirms the patent eligibility of the claims.
`
`IV. CONCLUSION
`
`The Board should reverse its original decision and hold challenged
`
`claims 3 and 15 patent-eligible.
`
`15
`
`
`
`
`
`
`
`
`
`Dated: June 27, 2016
`
`
`
`
`
`/ Michael R. Casey /
`
`Michael R. Casey
`Registration No. 40,294
`Davidson Berquist Jackson & Gowdey, LLP
`8300 Greensboro Drive
`Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7705
`Fax: (571) 765-7200
`Email: mcasey@dbjg.com
`Attorney for Patent Owner
`
`
`
`
`16
`
`
`
`
`
`CERTIFICATE OF SERVICE
`
`The undersigned hereby certifies that this PATENT OWNER’S REQUEST
`
`FOR REHEARING in CBM2015-00029 was served today by emailing a copy to
`
`counsel for the Petitioners as follows:
`
`J. Steven Baughman (steven.baughman@ropesgray.com)
`Megan Raymond (megan.raymond@ropesgray.com)
`James R. Batchelder (james.batchelder@ropesgray.com)
`ApplePTABService-SmartFlash@ropesgray.com
`Attorneys for Petitioner Apple Inc.
`
`
`
`Raymond Nimrod (raynimrod@ quinnemanuel.com)
`QE-SF-PTAB-Service@quinnemanuel.com
`Attorneys for Petitioner Google Inc.
`
`
`
`Dated: June 27, 2016
`
`
`
`
`
`
`
` /
`
` Michael R. Casey /
`
`
`Michael R. Casey
`Registration No. 40,294
`Davidson Berquist Jackson & Gowdey, LLP
`8300 Greensboro Drive
`Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7705
`Fax: (571) 765-7200
`Email: mcasey@dbjg.com
`Attorney for Patent Owner
`
`17