UNITED STATES PATENT AND TRADEMARK OFFICE
`______________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`______________________
`
`APPLE INC., SAMSUNG ELECTRONICS CO., LTD., and SAMSUNG ELEC-
`TRONICS AMERICA, INC.
`Petitioner
`
`v.
`
`SMARTFLASH LLC,
`Patent Owner
`______________________
`
`Case CBM2015-000331
`Patent 8,336,772 B2
`______________________
`
`Before the Honorable JENNIFER S. BISK, RAMA G. ELLURU, GREGG I.
`ANDERSON, and MATTHEW R. CLEMENTS, Administrative Patent Judges.
`
`
`PETITIONER APPLE INC.’S OPPOSITION TO
`PATENT OWNER’S MOTION TO EXCLUDE UNDER 37 C.F.R. § 42.64(c)
`
`
`
`
`
`1 Challenged to claims 26 and 32 based on 35 U.S.C. § 101 in CBM2015-00059
`has been consolidated with this proceeding.
`
`
`
`
`______________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`______________________
`
`APPLE INC., SAMSUNG ELECTRONICS CO., LTD., and SAMSUNG ELEC-
`TRONICS AMERICA, INC.
`Petitioner
`
`v.
`
`SMARTFLASH LLC,
`Patent Owner
`______________________
`
`Case CBM2015-000331
`Patent 8,336,772 B2
`______________________
`
`Before the Honorable JENNIFER S. BISK, RAMA G. ELLURU, GREGG I.
`ANDERSON, and MATTHEW R. CLEMENTS, Administrative Patent Judges.
`
`
`PETITIONER APPLE INC.’S OPPOSITION TO
`PATENT OWNER’S MOTION TO EXCLUDE UNDER 37 C.F.R. § 42.64(c)
`
`
`
`
`
`1 Challenged to claims 26 and 32 based on 35 U.S.C. § 101 in CBM2015-00059
`has been consolidated with this proceeding.
`
`
`
`
`
`Case CBM2015-00033
`Patent 8,336,772 B2
`
`TABLE OF CONTENTS
`
`
`I. THE BOARD SHOULD NOT EXCLUDE EXHIBIT 1402 ............................. 2
`II. THE BOARD SHOULD NOT EXCLUDE EXHIBITS 1424, 1429-30,
`1433, OR 1435 ................................................................................................... 3
`III. THE BOARD SHOULD NOT EXCLUDE EXHIBITS 1403-04, 1406-08,
`1411-18, 1425-28, OR 1436 ............................................................................... 4
`IV. THE BOARD SHOULD NOT EXCLUDE EXHIBIT 1419 ............................. 6
`
`
`
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`Case CBM2015-00033
`Patent 8,336,772 B2
`
`
`In response to Patent Owner’s (“PO”) Motion to Exclude (“Mot.”, Pap. 29),
`
`Petitioner respectfully submits that the Board, sitting as a non-jury tribunal with
`
`administrative expertise, is well-positioned to determine and assign appropriate
`
`weight to the evidence presented here, without resorting to formal exclusion that
`
`might later be held reversible error. See, e.g., S.E.C. v. Guenthner, 395 F. Supp. 2d
`
`835, 842 n.3 (D. Neb. 2005); Builders Steel Co. v. Comm’r of Internal Revenue,
`
`179 F.2d 377, 379 (8th Cir. 1950) (vacating Tax Court decision for exclusion of
`
`competent, material evidence); Donnelly Garment Co. v. Nat’l Labor Relations
`
`Bd., 123 F.2d 215, 224 (8th Cir. 1941) (NLRB’s refusal to receive testimonial evi-
`
`dence was denial of due process). See also, e.g., Samuel H. Moss, Inc. v. F.T.C.,
`
`148 F.2d 378, 380 (2d Cir. 1945), cert. denied, 326 U.S. 734 (1945) (“Even in
`
`criminal trials to a jury it is better, nine times out of ten, to admit, than to exclude, .
`
`. . and in such proceedings as these the only conceivable interest that can suffer by
`
`admitting any evidence is the time lost, which is seldom as much as that inevitably
`
`lost by idle bickering about irrelevancy or incompetence.”). But even under strict
`
`application of the Rules of Evidence, cf. 77 Fed. Reg. 48,612, 48,616 (Aug. 14,
`
`2012) (“42.5(a) and (b) permit administrative patent judges wide latitude in admin-
`
`istering the proceedings to balance the ideal of precise rules against the need for
`
`flexibility to achieve reasonably fast, inexpensive, and fair proceedings”), Petition-
`
`er’s evidence here is entirely proper while PO’s objections—many of which have
`1
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`Case CBM2015-00033
`Patent 8,336,772 B2
`already been rejected by the Board in prior proceedings on related patents—are
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`baseless.
`
`I.
`
`The Board Should Not Exclude Exhibit 1402
`
`Petitioner did not rely on Ex. 1402 for “evidence of the content” of the ’772
`
`patent (cf. Mot. 2), but rather to show that PO’s own characterization of the sub-
`
`ject matter of the ’772 patent supports Petitioner’s contention—and the Board’s
`
`conclusion—that the ’772 patent relates to a financial activity or transaction and is
`
`thus subject to the Board’s review as a covered business method patent. See Pap. 5
`
`at 8. PO’s characterization of the ’772 patent in another proceeding is not found in
`
`the patent itself; thus, Ex. 1402 is not cumulative of the ’772 patent, and FRE 1004
`
`is inapplicable. Indeed, as PO admits, the Board declined to exclude the same ex-
`
`hibit in other proceedings on related patents because the Board found “[Patent
`
`Owner’s] characterization of the [related] patent in prior proceedings are relevant
`
`to the credibility of its characterization of the [] patent in this proceeding.” Mot. 3
`
`(citing CBM2014-00102, Pap. 52 at 36); see also CBM2014-00106, Pap. 52 at 25;
`
`CBM2014-00108, Pap. 50 at 19; CBM2014-00112, Pap. 48 at 24. Contrary to
`
`PO’s claim that its characterization of the ’772 patent is not at issue (Mot. 3), PO
`
`disputed the financial nature of the ’772 patent here, see Pap. 8 at 5-11, and its
`
`highly relevant admission to the contrary should not be excluded.
`
`
`
`2
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`Case CBM2015-00033
`Patent 8,336,772 B2
`The Board Should Not Exclude Exhibits 1424, 1429-30, 1433, Or 1435
`II.
`
`PO’s assertion that Exs. 1424, 1429-30, 1433, and 1435 are not cited in the
`
`Wechselberger Declaration (Mot. 3-4) is simply wrong: all were cited as “Materi-
`
`als Reviewed and Relied Upon,” see Ex. 1419, App. C, and properly filed with the
`
`Petition. See 37 C.F.R. § 42.6(c). (Indeed, Petitioner respectfully submits PO
`
`would now be objecting if Petitioner had failed to provide these cited exhibits.)
`
`PO also incorrectly argues that “mere review” of an exhibit by an expert in reach-
`
`ing his opinions does not render an exhibit relevant or admissible because FRE 703
`
`allows experts to rely on facts or data that may not be admissible. Mot. 4. The fact
`
`that FRE 703 allows experts to rely on material that may not be admissible does
`
`not render all material relied on by experts irrelevant or inadmissible. Indeed, as
`
`PO admits, in another proceeding on a related patent, the Board denied PO’s re-
`
`quest to exclude similar exhibits, finding that “[b]ecause Mr. Wechselberger attests
`
`that he reviewed these exhibits in reaching the opinions he expressed in this case,
`
`Patent Owner has not shown that they are irrelevant under FRE 401 and 402.”
`
`Mot. 4 (citing CBM2014-00102, Pap. 52 at 37); see also CBM2014-00106, Pap. 52
`
`at 25; CBM2014-00108, Pap. 50 at 19-20; CBM2014-00112, Pap. 48 at 24. To the
`
`extent PO’s objection is based on imaginings that Petitioner will advance at oral
`
`hearing arguments about these documents not presented in previous papers, this is
`
`baseless–Petitioner intends to comply fully with the Board’s rules (e.g., Trial Prac-
`
`
`
`3
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`Case CBM2015-00033
`Patent 8,336,772 B2
`tice Guide, 77 Fed. Reg. 48,756, 48,768 (Aug. 14, 2012)).
`
`III. The Board Should Not Exclude Exhibits 1403-04, 1406-08, 1411-18,
`1425-28, Or 1436
`
`Contrary to PO’s assertions, Exs. 1406-08, 1411, 1414, 1416, 1418, and
`
`1425-28 (“Prior Art Exhibits”) are certainly relevant to the Board’s § 101 analy-
`
`sis.2 More specifically, such evidence is relevant to Mayo’s two-step inquiry for
`
`patent eligibility to determine, for example, whether the claims contain an “in-
`
`ventive concept.” Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2357,
`
`2359 (2014) (internal quotations omitted); see, e.g., YYZ, LLC v. Hewlett-Packard
`
`Co., No. 13-136-SLR, 2015 WL 5886176, at *8 (D. Del. Oct. 8, 2015) (“Although
`
`the § 101 inquiry is focused on the claim language, extrinsic evidence [, such as
`
`prior art,] may be helpful in terms of understanding the state of the art . . . , and
`
`whether the problem to which the patent was directed is solved using computer
`
`technology in unconventional ways.”); cf. Versata Dev. Grp., Inc. v. SAP Am., Inc.,
`
`793 F.3d 1306, 1334, 1336 (Fed. Cir. 2015) (affirming Board’s reliance on peti-
`
`tioner’s expert in determining claimed steps were well-known, routine, and con-
`
`ventional and Board’s finding that “claims at issue do not recite any improvement
`
`
`2 Ex. 1405 was not relied on here. While exclusion of Ex. 1405 is unnecessary, Pe-
`
`titioner would not oppose it.
`
`
`
`4
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`Case CBM2015-00033
`Patent 8,336,772 B2
`in computer technology”).3 Both the Petition and the Wechselberger Declaration
`
`describe Prior Art Exhibits as evidence of that knowledge. See, e.g., Pap. 5 at 5-7
`
`(Overview of Field of the Claimed Invention); Ex. 1419 ¶¶ 28-51 (State of the
`
`Art).
`
`Moreover, the Petition and Wechselberger Declaration specifically rely on
`
`the Prior Art Exhibits to show either that (1) the basic concept of controlling access
`
`based on payment and/or rules—to which the challenged claims are directed—was
`
`well-known in the prior art, or (2) the elements disclosed by the challenged claims
`
`were well-known, routine, and conventional. See, e.g., Pap. 5 at 28-29 (analogiz-
`
`ing challenged claims to those held ineligible in Alice (Ex. 1426)); Ex. 1419 ¶¶ 77-
`
`78 (citing “State of the Art” discussion and Exs. 1415 and 1425), ¶¶ 82-88 (citing
`
`“State of the Art” discussion and Exs. 1406-07, and 1411). The Prior Art Exhibits
`
`are unquestionably relevant to the § 101 analysis; there is no basis to exclude them.
`
`PO’s assertion that Exs. 1403-04, 1412-13, 1415, 1417, and 1436 are irrele-
`
`vant is similarly meritless. As with the other Prior Art Exhibits, these exhibits are
`
`relevant to the Board’s § 101 analysis because they provide evidence of the state of
`
`the art. See YYZ, 2015 WL 5886176, at *8. While the Board did not institute re-
`
`view based on grounds calling out Exs. 1403-04, 1412-13, 1415, 1417, and 1436,
`
`they nonetheless establish the state of the art and provide context for the § 101 in-
`
`3 All emphasis herein is added unless otherwise indicated.
`
`
`
`5
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`Case CBM2015-00033
`Patent 8,336,772 B2
`quiry—and the Wechselberger Declaration specifically relies on them for this pur-
`
`pose. See Ex. 1419 ¶¶ 34-35, 42-44, 49-51 (“State of the Art” discussion), ¶ 82
`
`(citing “State of the Art” discussion in § 101 analysis), ¶ 85 (citing Ex. 1415), ¶ 86
`
`(citing Exs. 1412-13), ¶ 88. Moreover, the named inventor has plainly admitted, in
`
`related proceedings that both parties have cited to the Board (Pap. 5 at 14; Pap. 6 at
`
`3), that he did not invent claimed concepts or elements, such as use rules or access
`
`rules in connection with the online sale of content or online systems that end ac-
`
`cess to rented content when the rental time period ends. See, e.g., Smartflash LLC,
`
`et al. v. Apple Inc., No. 6:13-cv-447, Dkt. 511 (CBM2015-00127, Ex. 1045) at
`
`118:6-119:14, 120:14-121:8, 122:19-125:25, 126:11-129:18. Nonetheless, it ap-
`
`pears that PO intends to argue in this proceeding that these admitted prior art ele-
`
`ments could somehow provide an inventive concept sufficient to satisfy the second
`
`step of the Mayo analysis (see, e.g., Patent Owner Response, Pap. 23 at 17 (arguing
`
`claims “allow[] or prohibit[] access to the downloaded or stored content in accord-
`
`ance with rules”)—making such evidence unquestionably relevant here. There is
`
`thus no merit in PO’s assertion that “nothing in the Alleged Prior Art Exhibits
`
`makes a fact of consequence in determining this action more or less probable than
`
`it would be without the Alleged Prior Art Exhibits.” Mot. 7.
`
`IV. The Board Should Not Exclude Exhibit 1419
`
`Despite the Board’s rejection on multiple occasions of PO’s argument that
`
`
`
`6
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`Case CBM2015-00033
`Patent 8,336,772 B2
`the Wechselberger Declaration should be disregarded for not reciting the eviden-
`
`tiary standard, PO repeats it again here. Mot. 8-11; see also CBM2014-00102,
`
`Pap. 8 at 4 n.8; CBM2014-00106, Pap. 8 at 4 n.11; CBM2014-00108, Pap. 8 at 16
`
`n.5; CBM2014-00112, Pap. 7 at 4 n.9; CBM2014-00102, Pap. 52 at 39;
`
`CBM2014-00106, Pap. 52 at 27-28; CBM2014-00108, Pap. 50 at 21-22;
`
`CBM2014-00112, Pap. 48 at 26. But, as the Board properly found in prior pro-
`
`ceedings on related patents, experts like Mr. Wechselberger are “not required to
`
`recite the ‘preponderance of the evidence’ standard expressly in order for the ex-
`
`pert testimony to be accorded weight, much less admissibility.” CBM2014-00102,
`
`Pap. 52 at 39; see also CBM2014-00106, Pap. 52 at 27; CBM2014-00108, Pap. 50
`
`at 21-22; CBM2014-00112, Pap. 48 at 26. “Rather, it is within [the Board’s] dis-
`
`cretion to assign the appropriate weight to be accorded to evidence based on
`
`whether the expert testimony discloses the underlying facts or data on which the
`
`opinion is based.” See IPR2013-00172, Pap. 50 at 42. The Wechselberger Decla-
`
`ration sufficiently “disclose[s] the underlying facts or data on which the opinion is
`
`based,” as required by 37 C.F.R. § 42.65(a), and cites specific evidence supporting
`
`each of the opinions. PO’s meritless request that the Board simply ignore this evi-
`
`dence should be rejected.
`
`PO also seeks to exclude the portions of the Wechselberger Declaration that
`
`identify the level of skill of a POSITA, disclose Mr. Wechselberger’s assumed
`
`
`
`7
`
`
`
`Case CBM2015-00033
`Patent 8,336,772 B2
`claim constructions, cite prior art to describe the state of the art and provide con-
`
`text for his § 101 opinions, as well as “any other portion . . . that is directed to pa-
`
`tentability under 35 U.S.C. §§ 102/103.” Mot. 11 (identifying paragraphs 24-69).
`
`First, as detailed in § III, supra, the Wechselberger Declaration’s description of the
`
`art at the relevant time is clearly relevant to the § 101 inquiry. For the same rea-
`
`sons the Prior Art Exhibits and Exs. 1403-04, 1412-13, 1415, 1417, and 1436 are
`
`relevant, expert analyses of those exhibits are relevant under FRE 401 and should
`
`not be excluded. Further, the level of skill of a POSITA is relevant in determining
`
`whether claim elements would be considered well-known, routine, and conven-
`
`tional; and claim construction is relevant because “the determination of patent eli-
`
`gibility requires a full understanding of the basic character of the claimed subject
`
`matter.” See, e.g., Bancorp Servs., LLC v. Sun Life Assurance Co. of Can., 687
`
`F.3d 1266, 1273-74 (Fed. Cir. 2012). PO provides no argument or support to the
`
`contrary; Mr. Wechselberger’s conclusions regarding what would be considered
`
`well-known, routine, and conventional (see, e.g., Ex. 1419 ¶ 75) are entitled to
`
`weight.
`
`PO further seeks to exclude the portions of the Wechselberger Declaration
`
`that provide Mr. Wechselberger’s opinions on the patent eligibility of the chal-
`
`lenged claims, arguing that § 101 is a “strictly legal issue . . . for which Mr. Wech-
`
`selberger is not an expert.” Mot. 12 (identifying paragraphs 70-97). But PO’s ar-
`
`
`
`8
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`Case CBM2015-00033
`Patent 8,336,772 B2
`gument ignores that “[p]atent eligibility under § 101 presents an issue of law . . . .
`
`[that] may contain underlying factual issues.” Accenture Global Servs., GmbH v.
`
`Guidewire Software, Inc., 728 F.3d 1336, 1340-41 (Fed. Cir. 2013); see also Ar-
`
`rhythmia Research Tech., Inc. v. Corazonix Corp., 958 F.2d 1053, 1055-56 (Fed.
`
`Cir. 1992) (“[D]etermination of [statutory subject matter] may require findings of
`
`underlying facts specific to the particular subject matter and its mode of claim-
`
`ing.”); YYZ, 2015 WL 5886176, at *8; cf. Versata, 793 F.3d at 1334 (affirming
`
`Board’s reliance on petitioner’s expert over patent owner’s expert in determining
`
`claimed steps were well-known, routine, and conventional). And there is no dis-
`
`pute that Mr. Wechselberger is competent to opine on the factual issues. Cf. Mot.
`
`12. Moreover, there is no basis for PO’s objections to Mr. Wechselberger’s expert
`
`testimony under FRE 602, as the rule plainly states it “does not apply to a wit-
`
`ness’s expert testimony under Rule 703.” Thus, PO’s FRE 602 objection to para-
`
`graphs 70-97 of the Wechselberger Declaration should be rejected for this addi-
`
`tional, independent reason.
`
`For the foregoing reasons, PO’s most recent attempts to exclude relevant,
`
`admissible evidence should again be rejected.
`
`
`
`December 3, 2015
`
`
`
`
`
`
`
`
`
`
`Respectfully submitted,
`By /J. Steven Baughman/
`J. Steven Baughman, Lead Counsel
`
`9
`
`
`
`Case CBM2015-00033
`Patent 8,336,772 B2
`
`
`
`CERTIFICATE OF SERVICE
`
`The undersigned hereby certifies that a copy of the foregoing PETITIONER
`
`APPLE INC.’S OPPOSITION TO PATENT OWNER’S MOTION TO EX-
`
`CLUDE was served on December 3, 2015, to the following counsel via e-mail,
`
`pursuant to the parties’ agreement concerning service:
`
`Michael R. Casey
`J. Scott Davidson
`DAVIDSON BERQUIST JACKSON & GOWDEY LLP
`8300 Greensboro Drive, Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7700
`Facsimile: (571) 765-7200
`mcasey@dbjg.com
`jsd@dbjg.com
`docket@dbjg.com
`
`Attorneys for Patent Owner Smartflash LLC
`
`Walter Renner
`Thomas Rozylowicz
`FISH & RICHARDSON P.C.
`axf@fr.com
`CBM39843-0008CP3@fr.com
`
`Attorneys for Petitioners Samsung Electronics Co., Ltd. and
`Samsung Electronics America, Inc.
`
`
`/s/ Sharon Lee
`Sharon Lee
`
`
`
`
`
`
`
`ROPES & GRAY LLP
`
`10
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