UNITED STATES PATENT AND TRADEMARK OFFICE
`
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`APPLE INC.,
`
`Petitioner,
`
`v.
`
`SMARTFLASH LLC,
`
`Patent Owner.
`
`____________
`
`Case CBM2015-00032
`
`Patent 8,336,772
`
`____________
`
`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. 8,336,772 ............................................ 3
`OVERVIEW OF U.S. PATENT NO. 8,336,772 .......................................... ..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 ‘772 PATENT ARE
`
`IV. THE CHALLENGED CLAIMS OF THE ‘772 PATENT ARE
`TECHNOLOGICAL INVENTIONS EXEMPT FROM CBM REVIEW .... 11
`
`TECHNOLOGICAL INVENTIONS EXEMPT FROM CBM REVIEW....11
`
`V.
`
`V. MR. WECHSELBERGER’S DECLARATION SHOULD BE AFFORDED
`
` MR. WECHSELBERGER’S DECLARATION SHOULD BE AFFORDED
`LITTLE OR NO WEIGHT ............................................................................ 13
`
`LITTLE OR NO WEIGHT .......................................................................... ..13
`
`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
`JUST, SPEEDY, AND INEXPENSIVE RESOLUTION OF THE ISSUES
`SURROUNDING THE ‘772 PATENT ......................................................... 15
`SURROUNDING THE ‘772 PATENT ....................................................... ..15
`
`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 SAME PRIOR ART AND ARGUMENTS
`PREVIOUSLY PRESENTED ....................................................................... 19
`
`PREVIOUSLY PRESENTED ..................................................................... ..19
`
`IX. STEFIK ‘235 and STEFIK ‘980 ARE NOT A SINGLE REFERENCE ...... 26
`
`STEFIK ‘235 and STEFIK ‘980 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
`
`2003-2043
`
`Reserved
`
`2044
`
`2045
`
`2046
`
`2047
`
`Declaration of Anthony Wechselberger in CBM2014-00110
`
`Declaration of Anthony Wechselberger in CBM2014-00111
`
`Patent Owner’s Preliminary Response in CBM2014-00110
`
`Patent Owner’s Preliminary Response in CBM2014-00111
`
`
`
`
`
`
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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
`
`preliminary response to the corrected petition, setting forth reasons why no new
`
`covered business method review of U.S. Patent 8,336,772 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 14,
`
`19, and 22 of U.S. Patent No. 8,336,772 (“the ‘772 Patent”). Paper 5 at 1
`
`(“Corrected Petition”). Apple challenges claims 14, 19, and 22 on 35 U.S.C. §101
`
`statutory subject matter grounds and § 103 obviousness grounds. Corrected
`
`Petition at 1, 16.
`
`On April 3, 2014, Apple filed two earlier petitions, in CBM2014-00110 and
`
`-00111, also seeking CBM review of claims 14, 19, and 22 of the ‘772 Patent on
`
`§ 103 obviousness grounds. The PTAB denied review of claims 14, 19, and 22
`
`(among others) on § 103 obviousness grounds in both instances. Apple Inc. v.
`
`Smartflash LLC, Case CBM2014-00110 Paper 7, Decision Denying Institution of
`
`Covered Business Method Patent Review at 3, 19 (PTAB September 30, 2014) and
`
`Case CBM2014-00111, Paper 7, Decision Denying Institution of Covered Business
`
`Method Patent Review at 3, 21 (PTAB September 30, 2014).
`
`
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`- 1 -
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`Here, Apple re-raises its obviousness challenge to claims 14, 19, and 22,
`
`relying on five pieces of prior art: four of which (Stefik ‘235, Stefik ‘980, Poggio,
`
`and Sato) are the same prior art raised in both CBM2014-00110 and -00111; and
`
`one of which (Subler) is “additional prior art” Apple “now identifies” “in light of
`
`the Board’s Decision.” Corrected Petition at 2. Apple does not allege that Subler,
`
`a U.S. Patent issued in 1997, was not known or not available to it when it filed its
`
`earlier petitions.
`
`The Board should again deny review of claims 14, 19, and 22 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
`
`CBM2014-00110 and -00111. 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).
`
`
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`- 2 -
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`

`
`In the instant petition, Apple also raises for the first time a 35 U.S.C. § 101
`
`statutory subject matter challenge to claims 14, 19, and 22 of the ‘772 Patent.
`
`Corrected Petition at 1, 16. 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 14, 19, and 22 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 ‘772
`
`Patent claims. 37 C.F.R. § 42.1(b).
`
`II. OVERVIEW OF U.S. PATENT NO. 8,336,772
`
`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. 8,336,772 (hereinafter “the ‘772 patent”)
`
`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 23-31.
`
`Preferred embodiments described in the paragraph crossing cols. 15 and 16
`
`illustrate this further: “FIG. 7 ... shows a variety of content access terminals for
`
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`- 3 -
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`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
`
`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 6-26.
`
`Referring to preferred embodiments, the ‘772 patent discloses that a data
`
`supply system may provide users with a seamless purchase and content delivery
`
`experience. Col. 24, lines 5-10. 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 1-8.
`
`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. 5, lines 1-12. 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 7-11.
`
`
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`- 4 -
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`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 11-14.
`
`III. THE CHALLENGED CLAIMS ARE NOT DIRECTED TO A
`FINANCIAL PRODUCT OR SERVICE
`
`Petitioner has cited claim 19 as being the “exemplary” basis for requesting
`
`that a covered business method review be instituted. Corrected Petition at 7. The
`
`Corrected Petition does not set forth any analysis to show why, if claim 19 is not a
`
`basis for review, any of the other challenged claims (i.e., claims 14 and 22) would
`
`instead meet the statutory requirements for instituting a review. Furthermore, since
`
`claim 19 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 19
`
`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
`- 5 -
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`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
`“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.,
`
`
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`- 6 -
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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
`
`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
`
`
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`- 7 -
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`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
`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 19 recites:
`
`19. A data access terminal for retrieving a content data item
`from a data supplier and providing the retrieved data item to a data
`carrier, the data access terminal comprising:
`a first interface for communicating with the data supplier;
`a user interface;
`a data carrier interface;
`a program store storing code implementable by a processor; and
`a processor coupled to the user interface, to the data carrier
`interface and to the program store for implementing the stored code,
`the code comprising:
`code to request identifier data identifying one or more content
`data items available for retrieving;
`code to receive said identifier data identifying said one or more
`content data items available for retrieving;
`code to request content information pertaining to at least one of
`said one or more content data items identified by said identified data;
`code to receive said content information;
`code to present said content information to a user via said user
`interface pertaining to said identified one or more content data items
`available for retrieving;
`code to receive a user selection selecting at least one of said one
`or more of said content data items available for retrieving;
`code responsive to said user selection of said selected at least
`one content data item to transmit payment data relating to payment for
`
`
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`- 9 -
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`

`
`said selected at least one content item for validation by a payment
`validation system;
`code to receive payment validation data defining if said
`payment validation system has validated payment for said selected at
`least one content data item; and
`code responsive to the payment validation data to retrieve said
`selected at least one content data item from a data supplier and to
`write said retrieved at least one content data item into said data
`carrier.
`
`Thus, claim 19 is directed to a data access terminal to control access to one
`
`or more content data items from a data supplier and providing the retrieved data
`
`item 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. In fact, rather than
`
`recite the “practice, administration, or management of a financial product or
`
`service,” claim 19 actually omits the specifics of how payment is made and focuses
`
`on the technical issue of the structure of the data access terminal.
`
`At most, the data access terminal is capable of storing and transmitting a
`
`particular type of data termed “payment data.” According to Petitioner, this
`
`payment data is “data representing payment made for requested content data.”
`
`Corrected Petition at 18. Under Petitioner’s analysis, any patent claim covering a
`
`device that can store information related to a payment, e.g. a currency counting
`
`machine that tracks bills associated with a payment, would be a claim directed
`
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`- 10 -
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`towards a “financial product or service.” Even Senator Schumer would find this
`
`assertion to be excessive. See 157 Cong. Rec. S5428 (question by Senator Durbin:
`
`“[T]here are companies that possess class 705 patents which have used the patents
`
`to manufacture and commercialize novel machinery to count, sort, and authenticate
`
`currency and paper instruments. Are these the types of patents that are the target
`
`of Section 18? Mr. SCHUMER. No.”) Claim 19, 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 ‘772 PATENT ARE
`TECHNOLOGICAL INVENTIONS EXEMPT FROM CBM REVIEW
`
`As set forth in 37 CFR 42.301(a), even if claim 19 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 19 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.”
`
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`- 11 -
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`Claim 19, 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. At least one technological problem solved by the apparatus of claim 19
`
`is, responsive to payment validation data, retrieving a selected content data item
`
`from a data supplier and writing it into said data carrier, e.g., as part of a
`
`convenient, legitimate acquisition of data from a data supplier. Moreover, it does
`
`so using a technical solution -- a data access terminal that, responsive to payment
`
`validation data, retrieves a selected content data item from a data supplier and
`
`writes it into said data carrier, e.g., as part of a convenient, legitimate acquisition of
`
`data from a data supplier. In fact, Petitioner admits the technological nature of the
`
`data access terminal when it states on page 3 “Claim 19 clearly involves no
`
`‘technology’ at all other than ‘a data access terminal.’” Corrected Petition at 3.
`
`(Emphasis added.)
`
`Section III.A. of the Petition also does not provide a detailed analysis of how
`
`the various claim elements are allegedly disclosed in the cited sections of the
`
`referenced exhibits. 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 Corrected 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
`
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`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 ‘772 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
`
`PATENT NO. 8,336,772 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
`
`
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`- 13 -
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`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.
`
`Further, having filed similar Declarations in earlier Petitions against the
`
`same patent, Petitioner was aware of the defect in Mr. Wechselberger’s
`
`Declaration. Exhibits 2044 and 2045 are Mr. Wechselberger’s Declarations from
`
`CBM2014-00110 and -00111 directed to the patent-at-issue. Despite Patent Owner
`
`having objected to those Declarations in the earlier proceedings (see Exhibits 2046
`
`and 2047, dated July 11, 2014, pages 16 and 18, 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
`
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`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 ‘772 PATENT
`
`The Corrected Petition is Apple’s third-filed covered business method
`
`challenge against claims 14, 19, and 22 of the ‘772 Patent. Apple filed its first two
`
`petitions on April 3, 2014 (CBM2014-00110, Paper 2 and CBM2014-00111, Paper
`
`2), well over 7 months before filing its initial petition in this matter on November
`
`25, 2014 (CBM2015-00032, 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)).
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`Apple’s § 101 unpatentable subject matter grounds were raised for the first
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`time in the November 25, 2014 initial petition in this matter. As the Board has
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`acknowledged, “challenges pursuant to 35 U.S.C. § 101 … raise purely legal
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`issues.” CBM2015-00015, Paper 6 at 2. Apple provides no valid reason why it
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`did not raise this purely legal issue as grounds for invalidity in its two prior
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`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 ‘772 were filed” (Corrected Petition at 4), there was no
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`impediment to Apple asserting § 101 back in April 2014 when it filed the petitions
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`in CBM2014-00110 and -00111. As Apple acknowledges, “[i]n Alice, the
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`Supreme Court applied [Mayo Collaborative Servs. v. Prometheus Labs, 132 S. Ct.
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`1289, 1293 (2012)]’s two-part framework to ‘distinguish[] patents that claim laws
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`of nature, natural phenomena, and abstract ideas from those that claim patent-
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`eligible applications of these concepts.’” Corrected Petition at 21. Apple proffers
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`no reason why it could not have raised this purely legal issue and applied Mayo’s
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`two-part framework in its April petitions, as it does now in the Corrected Petition.
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`Corrected Petition at 21-25.
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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 April 3, 2014 petitions encourages Apple’s piecemeal
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`invalidity challenges to Patent Owner’s patent claims and runs afoul of the PTAB’s
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`charge to “secure the just, speedy, and inexpensive resolution” of Apple’s covered
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`business method challenges to the ‘772 Patent. In fact, Patent Owner has been
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`subjected to a continuing barrage of Petitions such that, together with the ten
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`petitions filed by another group of Petitioners, the six patents in the patent family
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`under review were the subject of 31 different CBM petitions by the end of 2014.
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`Thus, of the 277 CBM petitions filed through the end of 2014, 31/277 or more
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`than 11% of all CBMs ever filed had targeted only six patents belonging to the
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`same assignee. As in Conopco, Smartflash’s “concern that it will ‘have to
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`continually defend against repetitive challenges’ to the same patent claims is not
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`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 14, 19, and 22 on Apple’s newly asserted § 101 nonstatutory
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`subject matter grounds.
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`VII. CLAIM CONSTRUCTION
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`Claims 14, 19 and 22 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 21.
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`However, “payment data” in the context of the ‘722 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 ‘722 patent, col. 21, lines 1-4, 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 ‘722 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 CBM2014-00110 and -00111 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 14, 19, and 22 of the ‘772
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`Patent on § 103 obviousness grounds, claims that were previously denied review
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`on § 103 obviousness grounds in the CBM2014-00110 and -00111 proceedings.
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`Compare Corrected Petition at 16 with CBM2014-00110, Paper 7 at 2-3 (showing
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`Apple’s prior ‘772 Patent claims 14, 19, and 22 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 14, 19, and 22) and CBM2014-00111, Paper 7 at 2-3 (showing
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`Apple’s prior ‘772 Patent claims 14, 19, and 22 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 14, 19, and 22).
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`Apple’s current request for covered business method review of the ‘772
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`Patent on § 103 obviousness grounds argues that “claims 14, 19, and 22 are …
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`obvious in light of [Stefik ‘235 and Stefik ‘980] in view of Poggio and Subler” and
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`“obvious in light of [Stefik ‘235