UNITED STATES PATENT AND TRADEMARK OFFICE
`
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`APPLE INC.,
`
`Petitioner,
`
`v.
`
`SMARTFLASH LLC,
`
`Patent Owner.
`
`____________
`
`Case CBM2015-00118
`
`Patent 7,334,720
`
`____________
`
`PATENT OWNER’S PRELIMINARY RESPONSE
`
`
`
`
`
`
`
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`APPLE INC.,
`
`Petitioner,
`
`v.
`
`SMARTFLASH LLC,
`
`Patent Owner.
`
`____________
`
`Case CBM2015-00118
`
`Patent 7,334,720
`
`____________
`
`PATENT OWNER’S PRELIMINARY RESPONSE
`
`
`
`
`
`
`
`
`
`TABLE OF CONTENTS
`
`I.
`
`II.
`
`INTRODUCTION ........................................................................................... 1
`
`BACKGROUND ............................................................................................. 2
`
`III. APPLE’S DUPLICATIVE CHALLENGE SHOULD BE DENIED
`BECAUSE IT DISREGARDS THE BOARD’S PREVIOUS EXERCISE OF
`DISCRETION UNDER 35 U.S.C. § 326(d) TO DECLINE TO INSTITUTE
`REVIEW OF CLAIMS IN IDENTICAL CIRCUMSTANCES IN
`CBM2015-00015, -00016 AND -00017 .......................................................... 5
`
`IV. APPLE’S DUPLICATIVE § 101 CHALLENGE WILL NOT SECURE
`THE JUST, SPEEDY, AND INEXPENSIVE RESOLUTION OF THE
`ISSUES SURROUNDING THE ‘720 PATENT ............................................ 7
`
`V.
`
`THE CHALLENGED CLAIMS ARE NOT DIRECTED TO A
`FINANCIAL PRODUCT OR SERVICE ...................................................... 10
`
`VI. THE CHALLENGED CLAIMS OF THE ‘720 PATENT ARE
`TECHNOLOGICAL INVENTIONS EXEMPT FROM CBM REVIEW .... 15
`
`VII. CONCLUSION .............................................................................................. 17
`
`
`
`
`
`
`
`i
`
`
`
`
`
`
`
`Exhibit Number
`
`Exhibit Description
`
`2001
`
`2002
`
`Congressional Record - House, June 23, 2011, H4480-4505
`
`Congressional Record - Senate, Sep. 8, 2011, S5402-5443
`
`2003-2057
`
`Reserved
`
`2058
`
`2059
`
`2060
`
`Memorandum Opinion and Order (on Defendants’ Motions
`for Stay Pending the Outcome CBMs) from Smartflash LLC
`et al. v. Apple, Inc., et al., Case No. 6:13-CV-447 (E.D.
`Tex.), Smartflash LLC et al. v. Samsung Electronics Co. Ltd,
`et al., Case No. 6:13-CV-448 (E.D. Tex.), Smartflash LLC et
`al. v. Google, Inc., et al., Case No. 6:14-CV-435 (E.D. Tex.),
`and Smartflash LLC et al. v. Amazon, Inc., et al., Case No.
`6:14-CV-992 (E.D. Tex.) dated May 29, 2015
`
`Reserved
`
`Declaration of Emily E. Toohey in Support of Patent
`Owner’s Preliminary Response
`
`2061-2062
`
`Reserved
`
`
`
`ii
`
`
`
`
`
`
`
`I.
`
`INTRODUCTION
`
`Pursuant to 37 C.F.R. § 42.107, Smartflash LLC (“Patent Owner”) files this
`
`preliminary response to the Petition, Paper 2, setting forth reasons why no new
`
`covered business method review of U.S. Patent 7,334,720 (“the ‘720 Patent”)
`
`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 covered
`
`business method (CBM) review.1
`
`Petitioner Apple seeks CBM review of claims 13 and 14 of the ‘720 Patent
`
`as unpatentable under 35 U.S.C. § 101. Paper 2 at 3.
`
`The Board should deny the Petition because (i) given that claims 13 and 14
`
`of the ‘720 Patent overlap with claims on which the Board instituted § 101 review
`
`in CBM2014-00190, Apple’s Petition disregards the Board’s previous exercise of
`
`discretion under 35 U.S.C. § 325(d) in CBM2015-00015, -00016 and -00017
`
`similarly declining to institute CBM patent review of Apple’s challenged claims
`
`that overlapped with claims on which the Board instituted § 101 review in
`
`CBM2014-00192, -00193, and -00194; and (ii) instituting review will not “secure
`
`
`1 If the Board institutes a CBM review, Patent Owner does not oppose
`
`Petitioner’s Motion for Joinder, Paper 3.
`
`
`
`1
`
`
`
`
`
`the just, speedy, and inexpensive resolution” of the Board’s proceedings reviewing
`
`the ‘720 Patent claims. 37 C.F.R. § 42.1(b).
`
`II. BACKGROUND
`The Petition, filed April 30, 2015, is Petitioner Apple’s fifth (out of six to
`
`date) CBM petition filed against claims of the ‘720 Patent in a 14-month span.
`
`Petitioner’s other filings are CBM2014-00104, Paper 1, and CBM2014-00105,
`
`Paper 1 both filed March 31, 2014; CBM2015-00028, Paper 2, and CBM2015-
`
`00029, Paper 1, both filed November 24, 2014; and CBM2015-00127, Paper 2,
`
`filed on May 7, 2015.
`
`Petitioner Apple has also filed petitions against each of the 7 patents in the
`
`same Smartflash, LLC patent family:
`
` U.S. Patent 7,942,317: CBM2014-00112, -00113; CBM2015-00018,
`and -00124. (4 CBM Petitions.)
` U.S. Patent 8,033,458: CBM2014-00106, -00107; CBM2015-00016, -
`00119, and -00123. (5 CBM Petitions.)
` U.S. Patent 8,061,598: CBM2014-00108, -00109; CBM2015-00017,
`00120, and -00131. (5 CBM Petitions.)
` U.S. Patent 8,118,221: CBM2014-00102, -00103; CBM2015-00015, -
`00117, and CBM2015-00130. (5 CBM Petitions.)
` U.S. Patent 8,336,772: CBM2014-00110,-00111; CBM2015-00031, -
`00032, -00033, and -00133. (6 CBM Petitions.)
` U.S. Patent 8,794,516: CBM2015-00121. (1 CBM Petition.)
`
`Petitioner Apple has filed 32 CBM Petitions against this family of patents in
`
`14 months.
`
`
`
`2
`
`
`
`
`
`Petitioner Apple’s Corrected Petition against the ‘720 Patent in CBM2015-
`
`00029 included a challenge of claims 3, 13, 14, and 15 as unpatentable under 35
`
`U.S.C. § 101. CBM2015-00029, Paper 5 at 14. Thus, this is Petitioner Apple’s
`
`second CBM petition challenging claims 13 and 14 as unpatentable under 35
`
`U.S.C. § 101.
`
`On April 2, 2015, the Board instituted CBM patent review of claims 13 and
`
`14 of the ‘720 Patent under 35 U.S.C. § 101 in CBM2014-00190 brought by
`
`Samsung.
`
`In a series of April 10, 2015 decisions in CBM2015-00015, -00016 and -
`
`00017 the Board ruled that it would “exercise [its] discretion under 35 U.S.C. §
`
`325(d) and decline to institute a covered business method patent review” of certain
`
`claims under 35 U.S.C. § 101 “because it already instituted covered business
`
`method patent review of [the same claims requested by Apple] under 35 U.S.C. §
`
`101 in [cases brought by Samsung (CBM2014-00192, -00193 and -00194)] and
`
`because whether [those] claims are directed to patent-eligible subject matter is an
`
`issue of law.” CBM2015-00015, Paper 23 at 18; CBM2015-00016, Paper 23 at 20;
`
`CBM2015-00017, Paper 22 at 16.
`
`Undoubtedly anticipating that its § 101 challenge of claims 13 and 14 of the
`
`‘720 Patent in CBM2015-00029 would be denied on the same basis as the denials
`
`in CBM2015-00015, -00016 and -00017, on April 30, 2015, 20 days after the
`
`
`
`3
`
`
`
`
`
`Board’s decisions in CBM2015-00015, -00016 and -00017 declining to institute
`
`CBM patent review of Apple’s claims that overlapped with claims on which the
`
`Board instituted § 101 review in CBM2014-00192, -00193 and -00194, Petitioner
`
`Apple filed the instant Petition seeking CBM review of claims 13 and 14 of the
`
`‘720 Patent on §101 grounds. Paper 2 at 3.
`
`Petitioner Apple’s supporting evidence is literally identical to that filed by
`
`Samsung in CBM2014-00190: “the Declaration of Dr. Jeffrey Bloom, which was
`
`originally submitted by Samsung in CBM2014-00190 and is re-filed and relied
`
`upon here by Apple.” Id.
`
`As anticipated, on May 28, 2015 the Board exercised its discretion under 35
`
`U.S.C. § 325(d) and declined to institute a CBM patent review of claims 13 and 14
`
`of the ‘720 Patent under 35 U.S.C. § 101, stating:
`
`[B]ecause we already instituted a covered business
`method patent review of claims 13 and 14 under 35
`U.S.C. § 101 in CBM2014-00190 (Samsung Elecs. Am.
`Inc. v. Smartflash LLC, Case CBM2014-00190, slip op.
`at 18 (PTAB April 2, 2015) (Paper 9)), and because
`whether these claims are directed to patent-eligible
`subject matter is an issue of law, we exercise our
`discretion under 35 U.S.C. § 325(d) to decline to institute
`a covered business method patent review of claims 13
`and 14 under this ground in this case.
`
`CBM2015-00029, Paper 11 at 15 (emphasis added).
`
`
`
`
`
`4
`
`
`
`
`
`III. APPLE’S DUPLICATIVE CHALLENGE SHOULD BE DENIED
`BECAUSE IT DISREGARDS THE BOARD’S PREVIOUS EXERCISE
`OF DISCRETION UNDER 35 U.S.C. § 326(d) TO DECLINE TO
`INSTITUTE
`REVIEW
`OF
`CLAIMS
`IN
`IDENTICAL
`CIRCUMSTANCES IN CBM2015-00015, -00016 AND -00017
`
`Given that claims 13 and 14 of the ‘720 Patent overlap with claims on which
`
`the Board instituted § 101 review in CBM2014-00190, Petitioner Apple’s
`
`duplicative challenge is an abuse of the CBM process because it disregards the
`
`Board’s clear rulings in CBM2015-00015, -00016 and -00017 declining to institute
`
`CBM patent review of Apple’s claims that overlapped with claims on which the
`
`Board instituted § 101 review in CBM2014-00192, -00193, and -00194. That the
`
`Board would similarly exercise its discretion in CBM2015-00029 on claims 13 and
`
`14 of the ‘720 Patent was confirmed on May 28, 2015. CBM2015-00029, Paper
`
`11 at 15 (declining to institute a CBM patent review of claims 13 and 14 because
`
`Board already instituted review of claims 13 and 14 under 35 U.S.C. § 101 in
`
`CBM2014-00190). The Board could not have been more clear in CBM2015-
`
`00015, -00016 and -00017 that it was exercising its discretion under 35 U.S.C. §
`
`325(d) in declining institute a CBM patent review of claims under 35 U.S.C. § 101
`
`because it already instituted review of the same claims on the same ground in
`
`CBM2014-00192, -00193, and -00194. CBM2015-00015, Paper 23 at 18;
`
`CBM2015-00016, Paper 23 at 20; CBM2015-00017, Paper 22 at 16. Nevertheless,
`
`Petitioner Apple filed the instant Petition, seeking review of claims 13 and 14 of
`
`
`
`5
`
`
`
`
`
`the ‘720 Patent as unpatentable under 35 U.S.C. § 101 alleging the same ground as
`
`its pending CBM2015-00029, and using the same evidence on file in CBM2014-
`
`00190 in which the Board instituted review of claims 13 and 14 under 35 U.S.C. §
`
`101, even though the Board already declined to institute review of claims in
`
`identical situations in CBM2015-00015, -00016 and -00017. The instant Petition
`
`is nothing more than Petitioner Apple using the Board’s prior decisions in
`
`CBM2015-00015, -00016 and -00017 coupled with its decisions in CBM2014-
`
`00190, -00192, -00193, and -00194 “to bolster challenges” that it anticipated
`
`would be unsuccessful in the CBM2015-00029 Petition. Unilever, Inc. v. The
`
`Proctor & Gamble Company, Case IPR2014-00506, Paper 17 at 8 (PTAB July 7,
`
`2014)(Decision, Denying Institution of Inter Partes Review).
`
`The instant Petition should be denied because it disregards the Board’s
`
`exercise of discretion under 35 U.S.C. § 325(d) to decline to institute CBM patent
`
`review in CBM2015-00015, -00016 and -00017, as well as the likely similar
`
`outcome in for claims 13 and 14 of the ‘720 Patent in CBM2015-0029. The
`
`Board’s exercise of discretion in CBM2015-00029 on the same basis was
`
`confirmed in its May 28, 2015 decision. CBM2015-00029, Paper 11 at 15.
`
`
`
`6
`
`
`
`
`
`IV. APPLE’S DUPLICATIVE § 101 CHALLENGE WILL NOT SECURE
`THE JUST, SPEEDY, AND INEXPENSIVE RESOLUTION OF THE
`ISSUES SURROUNDING THE ‘720 PATENT
`
`As noted above, this Petition is Petitioner Apple’s fifth (out of six total)
`
`CBM challenge filed against claims of the ‘720 Patent. Apple’s Petition in
`
`CBM2015-00029 included a challenge of claims 3 and 13-15 as unpatentable
`
`under 35 U.S.C. § 101. Given the decisions in CBM2015-00015, -00016 and -
`
`00017, and the fact that the Board instituted review of claims 13 and 14 in
`
`CBM2014-00190, Apple filed the instant Petition anticipating that the Board
`
`would deny review of claims 13 and 14 in CBM2015-00029, which the Board did.2
`
`CBM2015-00029, Paper 11 at 15.
`
`Instituting a CBM review of claims 13 and 14 of the’720 Patent here would
`
`be contrary to the PTAB’s mandate. “[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
`
`
`2 The Petition in CBM2015-00127 includes 35 U.S.C. § 101 challenges to
`
`claims 4-12 and 16-18.
`
`
`
`7
`
`
`
`
`
`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)).
`
`As the PTAB acknowledged in CBM2015-00029, “whether these claims are
`
`directed to patent-eligible subject matter is an issue of law.” CBM2015-00029,
`
`Paper 11 at 15. The Bloom declaration submitted by Apple here is dated
`
`September 25, 2014, two months before Apple filed its Petition in CBM2015-
`
`00029 on November 24, 2014. The present Petition provides no reason why any of
`
`the prior petitions, including the CBM2015-00029 petition raising the same
`
`grounds, did not then include a “full statement of the reasons for the relief
`
`requested, including a detailed explanation of the significance of the evidence
`
`including material facts, and the governing law, rules, and precedent” as required
`
`by 42.22(a)(2).
`
`Apple was criticized just last week in the parallel Federal Court litigation for
`
`its arguments that, if given credence, “would serve to encourage parties to misuse
`
`CBM review in a manner completely opposite of what Congress intended, by
`
`making it into a cost-increasing, post-trial second chance at additional litigation,
`
`rather than a cost-effective alternative to litigation.” Exhibit 2058, Smartflash LLC
`
`et al. v. Apple, Inc., et al., Case No. 6:13-CV-447 (E.D. Tex.), Smartflash LLC et
`
`al. v. Samsung Electronics Co. Ltd, et al., Case No. 6:13-CV-448 (E.D. Tex.),
`
`Smartflash LLC et al. v. Google, Inc., et al., Case No. 6:14-CV-435 (E.D. Tex.),
`
`
`
`8
`
`
`
`
`
`and Smartflash LLC et al. v. Amazon, Inc., et al., Case No. 6:14-CV-992 (E.D.
`
`Tex.)(May 29, 2015); Dkt. 558, Memorandum Opinion and Order at 16. That
`
`Court also noted the effect Apple’s untimely and duplicative CBM petitions are
`
`having in that forum; “Meanwhile, in response to Apple’s eleventh-hour petitions,
`
`the PTAB has just begun its entirely separate effort to duplicate the Court’s
`
`existing determination of a pure question of law. This situation does not reduce the
`
`litigation, it has increased the litigation.” Id. at 22 (emphasis added).
`
`Here, instituting a CBM review based on Apple’s duplicative Petition raising
`
`a purely legal ground of invalidity that has now just been denied in CBM2015-
`
`00029 encourages repetitive and piecemeal invalidity challenges to Patent Owner’s
`
`patent claims and runs afoul of the PTAB’s charge to “secure the just, speedy, and
`
`inexpensive resolution” of the CBM challenges to the ‘720 Patent. In fact, in the
`
`face of serial petitions by other Petitioners, the PTAB has already held that the
`
`PTAB’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). Patent Owner has been subjected to a
`
`continuing barrage of Petitions. In total, the seven patents in the patent family
`
`under review have now been subject to 48 separate CBM petitions – 32 from
`
`
`
`9
`
`
`
`
`
`Apple, 11 from Samsung, and 5 from Google at a cost of nearly $1.5 million in
`
`USPTO filing fees alone. As in Conopco, Smartflash’s “concern that it will ‘have
`
`to continually defend against repetitive challenges’ to the same patent claims is not
`
`without merit, given the multiplicity of grounds applied in each petition.”
`
`Conopco at 12. Patent Owner therefore respectfully requests that the Board again
`
`exercise its discretion under 35 U.S.C. § 325(d) and decline to institute a CBM
`
`patent review of claims 13 and 14 of the ‘720 Patent on § 101 nonstatutory subject
`
`matter grounds as it just did in CBM2015-00029.
`
`V. THE CHALLENGED CLAIMS ARE NOT DIRECTED TO A
`FINANCIAL PRODUCT OR SERVICE
`
`Petitioner cites claim 14 an example of the ‘720 Patent being a covered
`
`business method patent in its request that CBM review be instituted. Petition at 5-
`
`8. While Petitioner cites claim 14 as an example, the Petition does not set forth
`
`any analysis to show why, if claim 14 is not a basis for review, challenged claim
`
`13 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
`
`
`
`10
`
`
`
`
`
`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
`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).
`
`
`
`11
`
`
`
`
`
`“[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
`
`“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.)
`
`
`
`12
`
`
`
`
`
`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
`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
`13
`
`
`
`
`
`
`
`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.”)
`
`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.
`
`
`
`14
`
`
`
`
`
`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
`
`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
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`phrase.
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`VI. 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
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`other operations used in the practice, administration, or management of a financial
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`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
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`basis for instituting a CBM review) if “the claimed subject matter as a whole
`
`
`
`15
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`
`
`
`
`recites a technological feature that is novel and unobvious over the prior art; and
`
`solves a technical problem using a technical solution.”
`
`By way of example, Claim 14, as a whole, recites at least one technological
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`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 14 is controlling access, according to access rules, to data
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`(retrieved from a data supplier) stored on the data carrier. As described in the
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`second paragraph of the Background of the Invention in col. 1, “One problem
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`associated with the increasingly wide use of the internet is the growing prevalence
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`of so-called data pirates. Such pirates obtain data either by unauthorized or
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`legitimate means and then make this data available essentially world-wide over the
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`internet without authorization. Data can be a very valuable commodity, but once it
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`has been published on the internet it is difficult to police access to and use of it by
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`internet users who may not even realize that it is pirated.”
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`Moreover, claim 14 utilizes technical solutions to address the technical
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`problem of data piracy. The solutions include at least (1) a data carrier from which
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`payment data is read and to which retrieved data from a data supplier is written and
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`(2) at least one access rule, also stored on the data carrier, specifying at least one
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`condition for accessing the retrieved data written into the data carrier. As
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`
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`16
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`
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`described in the Abstract, a portable data carrier may include “content use rules for
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`controlling access to the stored content.” Id.
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`Section III.E. of the Petition also does not allege, much less prove, that
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`reading payment data from the data carrier, writing the retrieved data from the
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`data supplier into the data carrier, and writing the at least one access rule into the
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`data carrier were known at the time of the invention of the patent-at-issue. Thus,
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`as previously held in Epsilon Data Management, LLC et al. v. RPOST Comm. Ltd.,
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`CBM2014-00017, paper 21, page 8, any analysis in any other portion of the
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`Petition (other than the portion relating to whether CBM review is proper) need not
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`be considered in determining that the Petitioner has not met its burden of proving
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`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
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`was not included in the relevant portion of the Petition (Pet. 2-6), and need not be
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`considered in determining that the ... Patent[-at-issue] is a covered business method
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`patent.”) Thus, Petitioner has not proven that the claims of the ‘720 patent are not
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`directed to technological inventions exempt from CBM review.
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`VII. CONCLUSION
`Given that claims 13 and 14 of the ‘720 Patent overlap with claims on which
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`the Board instituted § 101 review in CBM2014-00190, Petitioner Apple’s
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`17
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`duplicative Petition should be denied because it disregards the previous exercise of
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`discretion under 35 U.S.C. § 325(d) in CBM2015-00015, -00016 and -00017
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`declining to institute CBM patent review of Apple’s claims that overlapped with
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`claims on which the Board instituted § 101 review in CBM2014-00192, -00193,
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`and -00194. Instituting review will not “secure the just, speedy, and inexpensive
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`resolution” of the Board’s proceedings reviewing the ‘720 Patent claims. 37
`
` /
`
` Michael R. Casey /
`
`
`Michael R. Casey
`Registration No. 40,294
`Davidson Berquist Jackson & Gowdey, LLP
`8300 Greensboro Dr., Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7700
`Fax : (571) 765-7200
`Email: mcasey@dbjg.com
`Attorney for Patent Owner
`
`18
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`C.F.R. § 42.1(b).
`
`
`Dated: June 1, 2015
`
`
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`
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`CERTIFICATE OF SERVICE
`
`
`The undersigned hereby certifies that this PATENT OWNER’S
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`PRELIMINARY RESPONSE in CBM2015-00118 and Exhibits 2001, 2002, 2058
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`and 2060 were served, by agreement of the parties, June 1, 2015 by emailing
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`copies to counsel for the Petitioner as follows:
`
`J. Steven Baughman (steven.baughman@ropesgray.com)
`Megan Raymond (megan.raymond@ropesgray.com
`Ching-Lee Fukuda (ching-lee.fukuda@ropesgray.com)
`ApplePTABService-SmartFlash@ropesgray.com
`
`
`
`
`Dated: June 1, 2015
`
` /
`
`
`
` Michael R. Casey /
`
`Michael R. Casey
`Registration No. 40,294
`Davidson Berquist Jackson & Gowdey, LLP
`8300 Greensboro Dr., Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7700
`Fax : (571) 765-7200
`Email: mcasey@dbjg.com
`Attorney for Patent Owner
`
`19
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