IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`
`In re Patent of: Racz et al.
`U.S. Patent No.: 8,061,598
`Issue Date:
`November 22, 2011
`Appl. Serial No.: 13/012,541
`Filing Date:
`January 24, 2011
`Title:
`DATA STORAGE AND ACCESS SYSTEMS
`
`Attorney Docket No.: 104677-5008-828
`
`
`
`Mail Stop Patent Board
`Patent Trial and Appeal Board
`U.S. Patent and Trademark Office
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
`PETITION FOR COVERED BUSINESS METHOD PATENT REVIEW
`OF UNITED STATES PATENT NO. 8,061,598 PURSUANT TO 35 U.S.C.
`§ 321 AND § 18 OF THE LEAHY-SMITH AMERICA INVENTS ACT
`
`
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`

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`Attorney Docket No 104677-5008-828
`CBM of U.S. Patent No. 8,061,598
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`TABLE OF CONTENTS
`
`I. MANDATORY NOTICES UNDER 37 C.F.R § 42.8(a)(1) ........................... 1
`A.
`Real Party-In-Interest Under 37 C.F.R. § 42.8(b)(1) ............................ 1
`B.
`Related Matters Under 37 C.F.R. § 42.8(b)(2 ....................................... 1
`C.
`Lead And Back-Up Counsel Under 37 C.F.R. § 42.8(b)(3 ................... 2
`PAYMENT OF FEES ..................................................................................... 2
`II.
`III. REQUIREMENTS FOR CBM UNDER 37 C.F.R. § 42.304 ......................... 2
`A. Grounds for Standing Under 37 C.F.R. § 42.304(a .............................. 2
`B.
`Challenge Under 37 § 42.304(b) and Relief Requested ........................ 2
`C.
`Claim Construction under 37 C.F.R. §§ 42.304(b)(3) .......................... 4
`D.
`The ‘598 Patent is a Covered Business Method Patent ........................ 5
`E.
`The ‘598 Patent Is Not Directed to a Technological Invention, And
`Thus, Should Not Be Excluded From the Definition of a CBM
`Patent. .................................................................................................... 8
`IV. SUMMARY OF THE ‘598 Patent ................................................................ 11
`A.
`Brief Description ................................................................................. 11
`B.
`Summary of the Prosecution History of the ‘598 Patent .................... 13
`C. OMITTED ........................................................................................... 14
`V. DEMONSTRATION OF A REASONABLE LIKELIHOOD THAT AT
`LEAST ONE CLAIM OF THE ‘598 PATENT IS UNPATENTABLE ................. 14
`A. GROUND 1 – Claim 7 is Patent-Ineligible under 35 U.S.C. § 101
`For Abstractness .................................................................................. 14
`1.
`Legal Standard .......................................................................... 14
`2.
`Claim 7 of the ‘598 Patent Recites an Abstract Idea, as Each
`of the Limitations Can be Performed in the Human Mind
`and by a Human Using a Pen and Paper ................................... 17
`(i)
`interface for reading and writing data ............................ 17
`(ii)
`use rule memory to store one or more use rules ............. 18
`(iii) program store storing code for storing at least one
`content data item in the content data memory and at
`least one use rule in the use rule memory ....................... 19
`(iv) a processor ...................................................................... 20
`(v)
`payment data memory to store payment data and code
`to provide the payment data to a payment validation
`system ............................................................................. 20
`Claim 7 of the ‘598 Patent Recites an Abstract Idea, as it
`Preempts All Effective Uses of the Abstract Idea of
`Enabling Limited Use of Paid-for/Licensed Content ............... 21
`
`3.
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`Attorney Docket No 104677-5008-828
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`4.
`
`Claim 7 of the ‘598 Patent is Not Tied to a Particular
`Machine in any Manner that Would Make Claim 7 Patent-
`Eligible ...................................................................................... 23
`Claim 7 of the ‘598 Patent Does Not Transform Anything in
`any Manner that Would Make it Patent-Eligible ...................... 26
`B. OMITTED ........................................................................................... 27
`VI. CONCLUSION .............................................................................................. 27
`
`
`5.
`
`
`
`ii
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`

`
`Exhibit 1001
`Exhibit 1002
`Exhibit 1003
`Exhibit 1004
`
`Exhibit 1005
`Exhibit 1006
`Exhibit 1007
`
`Exhibit 1008
`
`Exhibit 1009
`
`Exhibit 1010
`
`Exhibit 1011
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`Attorney Docket No 104677-5008-828
`CBM of U.S. Patent No. 8,061,598
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`EXHIBITS
`
`U.S. Patent No. 8,061.598 (“the ‘598 Patent” or “‘598”)
`File history of U.S. Patent No. 8,061,598
`Declaration of Dr. Jeffrey Bloom (“Bloom”)
`U.S. Patent No. 5,530,235 (incorporating 5,629,980)
`(“Stefik ‘235”)
`U.S. Patent No. 5,629,980 (“Stefik ‘980”)
`PCT Publication No. WO 00/08909 (“Gruse”)
`PCT Application PCT/GB00/04110 (“the ‘110 Appln.”
`or “‘110”), which is the application as filed for U.S.
`Patent Application No. 11/336,758 (“the ‘758 Appln.” or
`‘758”) and U.S. Patent Application No. 10/111,716 (“the
`‘716 Appln.” or “‘716”)
`United Kingdom Patent Application GB9925227.2 (“the
`‘227.2 Appln.” or “‘227.2”)
`Transitional Program for Covered Business Method
`Patents—Definitions of Covered Business Method Patent
`and Technological Invention, 77 Fed. Reg. 157
`(August14, 2012)
`A Guide to the Legislative History of the America
`Invents Act; Part II of II, 21 Fed. Cir. Bar J. No. 4
`Interim Guidance for Determining Subject Matter
`Eligibility for Process Claims in View of Bilski v.
`Kappos (July 27, 2010)
`
`
`
`iii
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`

`
`Exhibit 1012
`
`Exhibit 1013
`
`Exhibit 1014
`
`Exhibit 1015
`Exhibit 1016
`Exhibit 1017
`Exhibit 1018
`Exhibit 1019
`Exhibit 1020
`
`Exhibit 1021
`Exhibit 1022
`Exhibit 1023
`Exhibit 1024
`Exhibit 1025
`
`Exhibit 1026
`Exhibit 1027
`Exhibit 1028
`
`Exhibit 1029
`
`Attorney Docket No 104677-5008-828
`CBM of U.S. Patent No. 8,061,598
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`Apple Inc. v. Sightsound Technologies, LLC, CBM2013-
`00019 Paper No. 17 (entered October 8, 2013) at 11-13
`Volusion, Inc. v. Versata Software, Inc. and Versata
`Development Group, Inc., CBM2013-00017 Paper No. 8
`(entered October 24, 2013)
`Salesforce.com, Inc. v. VirtualAgility, Inc., CBM2013-
`00024 Paper No. 16 (entered November 19, 2013)
`U.S. Patent No. 8,336,772 (“the ‘772 Patent” or ‘772”)
`U.S. Patent No. 8,118,221 (“the ‘221 Patent” or “‘221”)
`RESERVED
`U.S. Patent No. 8,033,458 (“the ‘458 Patent” or ‘458”)
`U.S. Patent No. 7,942,317 (“the ‘317 Patent” or “‘317”)
`U.S. Patent Application No. 12/014,558 (“the ‘558
`Appln.” or “558”)
`U.S. Patent No. 7,334,720 (“the ‘720 Patent” or “‘720”)
`RESERVED
`RESERVED
`RESERVED
`U.S. Patent Application No. 13/012,541 (“the ‘541
`Appln.” or “541”)
`RESERVED
`RESERVED
`Weinstein “MasterCard Plans Point-of-Sale Product for
`Merchants Leery of Bank Cards”
`Mayo Collaborative Serv v. Prometheus Labs., Inc., 132
`S. Ct. 1289 (2012)
`
`
`
`iv
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`Attorney Docket No 104677-5008-828
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`Gottschalk v. Benson, 409 U.S. 63 (1972)
`Cybersource Corp. v. Retail Decisions, Inc., 654 F.3d
`1366 (Fed. Cir. 2011)
`Bilski v. Kappos, 130 S. Ct. 3218 (2010)
`Alice Corp. v. CLS Bank Internationa1,134 S. Ct. 2347
`(2014)
`Bancorp Serv., L.L.C. v. Sun Life Assur. Co. (U.S.) 687
`F.3d 1266 (Fed. Cir. 2012)
`Dealertrack, Inc. v. Huber, 674 F.3d 1323 (Fed. Cir.
`SiRF Tech., Inc. v. Int’l Trade Comm’n, 601 F.3d 1319
`(Fed. Cir. 2010)
`In re Bilski, 545 F.3d 943, 88 U.S.P.Q.2d 1385 (Fed. Cir.
`2008)
`Accenture Global Services, GmbH v. Guidewire
`Software, Inc., 728 F.3d 1336 (Fed. Cir. 2013)
`Keith, Michael C., The Radio Station Broadcast, Satellite
`and Internet, Eighth Edition, 2009
`
`v
`
`Exhibit 1030
`Exhibit 1031
`
`Exhibit 1032
`Exhibit 1033
`
`Exhibit 1034
`
`Exhibit 1035
`Exhibit 1036
`
`Exhibit 1037
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`Exhibit 1038
`
`Exhibit-1039
`
`
`
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`Attorney Docket No 104677-5008-828
`CBM of U.S. Patent No. 8,061,598
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`Apple Inc. (“Petitioner” or “Apple”) petitions for Covered Business
`
`Method Patent Review (“CBM”) under 35 U.S.C. §§ 321 and § 18 of the
`
`Leahy-Smith American Invents Act of claim 7 (“the Challenged Claim”) of
`
`U.S. Patent No. 8,061,598. As explained in this petition, there exists a
`
`reasonable likelihood that Apple will prevail in demonstrating
`
`unpatentability with respect to at least one of the Challenged Claims based
`
`on teachings set forth in at least the references presented in this petition.
`
`Apple respectfully submits that a CBM should be instituted, and that the
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`Challenged Claims should be canceled as unpatentable.
`
`I. MANDATORY NOTICES UNDER 37 C.F.R § 42.8(a)(1)
`A. Real Party-In-Interest Under 37 C.F.R. § 42.8(b)(1)
`Apple Inc. is filing this Petition and is the real party-in-interest.
`
`B. Related Matters Under 37 C.F.R. § 42.8(b)(2
`Apple is not aware of any disclaimers or reexamination certificates
`
`for the ‘598 Patent. The ‘598 Patent is the subject of a number of civil
`
`actions including: Smartflash LLC et al. v. Apple, Inc., Case No. 6:13-cv-
`
`00447, Smartflash et al v. Samsung Electronics Co. Ltd. et al, Case No.
`
`6:13-cv-00448, Smartflash LLC et al v. Google, Inc. et al., Case No. 6:14-
`
`cv-00435, Smartflash LLC et al. v. Amazon.Com, Inc., et al., No. 6:14-cv-
`
`992, and Smartflash LLC et al. v. Apple, Inc., Case No. 6:15-cv-00145. It
`
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`Attorney Docket No 104677-5008-828
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`is also the subject of the following Petitions for Covered Business Method
`
`Review: Apple Inc. v. Smartflash LLC, CBM2014-00108, CBM2014-
`
`00109, CBM2014-00193, CBM2014-00198, and CBM2015-00017.
`
`C. Lead And Back-Up Counsel Under 37 C.F.R. § 42.8(b)(3
`Apple designates J. Steven Baughman, Reg. No. 47,414, as Lead
`
`Counsel and Ching-Lee Fukuda, Reg. No. 44,334, and Megan Raymond,
`
`Reg. No. 72,997, as Backup Counsel, all available for service at Ropes &
`
`Gray LLP, IPRM – Floor 43, Prudential Tower, 800 Boylston Street,
`
`Boston, MA 02199-3600 or by electronic service by email at
`
`ApplePTABService-SmartFlash@ropesgray.com.
`
`II. PAYMENT OF FEES
`Apple authorizes charges to Deposit Account No. 061075 for the fee
`
`set in 37 C.F.R. § 42.15(b) for this Petition and any related additional fees.
`
`III. REQUIREMENTS FOR CBM UNDER 37 C.F.R. § 42.304
`A. Grounds for Standing Under 37 C.F.R. § 42.304(a
`Apple certifies that the ‘598 Patent is eligible for CBM. Apple is not
`
`barred or estopped from requesting this review challenging the Challenged
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`Claims on the below-identified grounds.
`
`B. Challenge Under 37 § 42.304(b) and Relief Requested
`Apple requests a CBM review of the Challenged Claims on the
`
`grounds set forth in the table shown below, and requests that each of the
`2
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`Attorney Docket No 104677-5008-828
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`Challenged Claims be found unpatentable. An explanation of how these
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`claims are unpatentable under the statutory grounds identified below is
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`provided in the form of detailed description that follows. Additional
`
`explanation and support for the ground of rejection is set forth in Exhibit-1003,
`
`the Declaration of Dr. Jeffrey Bloom (“Bloom”), originally filed by Samsung
`
`in CBM2014-00193 and re-filed and relied upon here by Apple only as it
`
`relates to the ground of rejection under 35 U.S.C. § 101 set forth in referenced
`
`throughout this Petition.
`
`‘598 Patent Claims
`
`Basis for Rejection
`
`§ 101
`
`
`Ground 1 7
`
`
`
`The ‘598 Patent issued Nov. 22, 2011 from the ‘541 Appln. (Exhibit
`
`1025), which was filed on Jan. 24, 2011. The ‘541 appln is a continuation of
`
`the `558 Appln. (Exhibit 1020), which was filed Jan. 15, 2008 (now US Patent
`
`No. 7,942,317, Exhibit-1019), which is a continuation of the ‘758 Appln.
`
`(Exhibit 1007) filed Jan. 19, 2006 (now US Patent No. 7,334,720, Exhibit-
`
`1021), which is a continuation of the ‘716 Appln. (Exhibit-1007) filed Sep. 17,
`
`2002 (now abandoned), which is a National Stage Entry of the ‘110 Appln.
`
`(Exhibit-1007) filed Oct. 25, 2000. The ‘110 Appln. claimed priority to United
`
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`3
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`Kingdom Patent Appln. GB9925227.2 (Exhibit-1008, “the 227.2 Appln.” or
`
`“227.2”), which was filed Oct. 25, 1999.
`
`C. Claim Construction under 37 C.F.R. §§ 42.304(b)(3)
`In the institution decision in CBM2014-00193, the PTAB construed only the
`
`term “access rule,” and decided that the other terms should be interpreted
`
`according to their ordinary and customary meaning:
`
`In a covered business method patent review, claim terms are given
`their broadest reasonable interpretation in light of the specification in which
`they appear and the understanding of others skilled in the relevant art. See
`37 C.F.R. § 42.300(b); see also In re Cuozzo Speed Techs., LLC, 2015 WL
`448667 at *7 (Fed. Cir. Feb. 4, 2015) (“We conclude that Congress
`implicitly adopted the broadest reasonable interpretation standard in
`enacting the AIA.”). Applying that standard, we interpret the claim terms of
`the ’598 patent according to their ordinary and customary meaning in the
`context of the patent’s written description. See In re Translogic Tech., Inc.,
`504 F.3d 1249, 1257 (Fed. Cir. 2007). For purposes of this decision, we
`construe the claim term “use rule.”
`The term “use rule” is recited in independent claim 1. Neither party
`proposes a construction of “use rule.” The ’598 patent describes “use rules”
`as “for controlling access to the stored content” (Ex. 1001, Abstract) and as
`“indicating permissible use of data stored on the carrier” (id. at 9:14-16).
`The ’598 patent also describes “evaluating the use status data using the use
`rules to determine whether access to the stored data is permitted.” Id. at
`6:38-40; see also id. at 21:48-53 (“[E]ach content data item has an
`
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`associated use rule to specify under what conditions a user of the smart Flash
`card is allowed access to the content data item.”). Accordingly, for purposes
`of this decision, we construe “use rule” as “a rule specifying a condition
`under which access to content is permitted.”
`
`See 4/2/2015 Decision in CBM2014-00193 (Pap. 7) at 6-7. Petitioner
`
`submits that, under these circumstances and the broadest reasonable interpretation
`
`standard applicable in this review, it would be appropriate for the Patent Trial and
`
`Appeal Board (“PTAB”) to adopt these constructions in this Covered Business
`
`Method review.1
`
`D. The ‘598 Patent is a Covered Business Method Patent
`The ‘598 Patent, which generally relates to systems and methods “for
`
`downloading and paying for data” is a “covered business method patent”
`
`(“CBM patent”) as defined under § 18 of the AIA and 37 C.F.R. § 42.301.
`
`‘598 at Abstract.
`
`The AIA defines a CBM patent as “a patent that claims a method or
`
`corresponding apparatus for performing data processing or other operations
`
`
`1 Because the standards of claim interpretation applied in litigation differ from
`
`PTO proceedings, any interpretation of claim terms in this CBM is not binding
`
`upon Petitioner in any litigation related to the subject patent. See In re Zletz, 893
`
`F.2d 319, 321-22 (Fed. Cir. 1989).
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`used in the practice, administration, or management of a financial product
`
`or service” (emphases added). AIA § 18(d)(1); see also 37 C.F.R. §
`
`The AIA’s legislative history demonstrates that the term “financial product
`
`or service” should be “interpreted broadly,” encompassing patents
`
`“‘claiming activities that are financial in nature, incidental to a financial
`
`activity or complementary to a financial activity.’” Exhibit-1009 at 48735
`
`(quoting 157 Cong. Rec. S5432 (daily ed. Sept. 8, 2011) (statement of Sen.
`
`Schumer)). Moreover, as the Guide to the Legislative History of the America
`
`Invents Act indicates, the language “practice, administration, or
`
`management” is “intended to cover any ancillary activities related to a
`
`financial product or service, including . . . marketing, customer interfaces
`
`[and] management of data . . .” (emphases added). Exhibit-1010 at 635-36.
`
`Augmenting the statutory language with the above-referenced
`
`clarifications from the legislative history, and from the Guide to that
`
`legislative history, yields the following definition of a CBM patent: a
`
`patent that claims a method or corresponding apparatus for performing data
`
`processing or other operations used in activities that are financial in nature,
`
`incidental to a financial activity, or complementary to a financial activity,
`
`including the management of data. See AIA § 18(d)(1); Exhibit-1009 at
`
`48735; and Exhibit-1010 at 635-26.
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`In the words of the Patent Owner, the claims of the ‘598 Patent are
`
`directed to a “portable data carrier” for “storing and paying for data.” See
`
`‘598 at 1:21-23. Claim 7 of the ‘598 Patent, for example, recites a
`
`“portable data carrier,” that includes “payment data memory to store
`
`payment and code to provide the payment data to a payment validation
`
`system.”
`
`As an example, the purported data carrier and payment validation
`
`system of claim 7 unquestionably are used for data processing in the
`
`practice, administration, and management of financial products and
`
`services; specifically, for processing payments for data downloads. Bloom
`
`at, e.g., ¶23. Indeed, in a recent decision involving highly similar claims,
`
`the Board determined that selling a desired digital audio signal to a user
`
`constitutes financial activity. See Exhibit-1012 at 11-13 (“The cited
`
`entities may not provide typical financial services, but . . . they do sell
`
`digital content, which is the financial activity recited in claim 1”).
`
`The specification of the ‘598 Patent, moreover, is replete with
`
`examples of financial activity, stating that payment data forwarded to a
`
`payment validation system may be “data relating to an actual payment
`
`made to the data supplier, or . . . a record of a payment made to an e-
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`payment system” that can be “coupled to banks.” See ‘598 at 6:60-64,
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`13:36-41. Even if claim 7 did not explicitly reference financial activity,
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`and it does, this description alone would be sufficient to establish that the
`
`claimed method is a method for performing data processing used in the
`
`practice, administration, or management of a financial product or service
`
`and that, therefore, the ‘598 Patent is a CBM patent. See Exhibit-1012 at 5,
`
`6 (determining, based on a specification statement that ‘embodiments of the
`
`present invention have application to a wide range of industries’ including
`
`‘financial services,’ despite the apparent lack of financial-related language
`
`in the claims); see also Exhibit-1013 at 9-15 (“Although claim 8 does not
`
`expressly refer to financial activity . . . When applied to the activities listed
`
`[in the patent’s specification] . . . the method of claim 8 represents a
`
`financial product or service”).
`
`Thus, for at least the reasons described above, the ‘598 Patent is a
`
`CBM patent that is eligible for the review requested by Petitioner.
`
`E. The ‘598 Patent Is Not Directed to a Technological
`Invention, And Thus, Should Not Be Excluded From the
`Definition of a CBM Patent.
`
`The AIA excludes “patents for technological inventions” from the
`
`definition of CBM patents. AIA § 18(d)(2). To determine when a patent
`
`covers a technological invention, “the following will be considered on a case-
`
`by-case basis: whether the claimed subject matter as a whole recites a
`
`
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`technological feature that is novel and unobvious over the prior art; and solves
`
`a technical problem using a technical solution.” 37 C.F.R. § 42.301 (emphasis
`
`added); see also Exhibit-1009 at 48736-37 (USPTO clarified that to qualify as
`
`a technological invention, a patent must have a novel, unobvious technological
`
`feature and a technical problem solved by a technical solution). “[A]bstract
`
`business concepts and their implementation, whether in computers or
`
`otherwise,” are not included in the definition of “technological inventions.”
`
`Exhibit-1010 at 634. Indeed, Congress has explained that accomplishing a
`
`business process or method is not technological, whether or not that process or
`
`method is novel. See id. Finally, to institute a CBM, a patent need only have
`
`one claim directed to a covered business method, and not a technological
`
`invention. See, e.g., Exhibit-1009 at 48736-37.
`
`The claims of the ‘598 Patent fail to recite a novel and unobvious
`
`technological feature, and fail to recite a technical problem solved by a
`
`technical solution. See Bloom at, e.g., ¶24. Thus, the patent is subject to
`
`Section 18 review. Although the independent claims of the ‘598 Patent recite
`
`computer-related terms such as “non-volatile memory”, “data terminal”, and
`
`“data carrier”, Congress has explained that simply reciting words describing
`
`generic technology such as “computer hardware, . . .software, memory,
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`computer-readable storage medium, [or] databases” does not make a patent a
`
`technological invention. Exhibit-1010 at 634.
`
`The specification of the ‘598 Patent confirms that the computer-related
`
`terms recited in the ‘598 Patent’s claims relate to technology that is merely, in
`
`the words of the Patent Owner, “conventional”: the specification states, for
`
`example, that “[t]he data access terminal may be a conventional computer or,
`
`alternatively, it may be a mobile phone” that terminal memory “can comprise
`
`any conventional storage device,” and that a “data access device . . . such as a
`
`portable audio/video player . . . comprises a conventional dedicated computer
`
`system including a processor . . . program memory . . . and timing and control
`
`logic . . . coupled by a data and communications bus.” ‘598 at 4:4-5, 16:46-53,
`
`18:7-11. Consequently, the `598 Patent claim is not transformed into a
`
`technological invention by their recitation of these computer-related terms.
`
`The ‘598 Patent fails even to recite a technical problem, and instead
`
`addresses the non-technical task of allowing “owners of . . . data to make the
`
`data available themselves over the internet without fear of loss of revenue . . .
`
`undermining the position of data pirates.” ‘598 at 2:11-15, 5:17-19. The
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`‘598 Patent’s solution to this non-technical problem is nothing more the
`
`combination of prior art structures to achieve a normal, expected, and
`
`predictable result: the use of a data supply system, content provision
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`system, data terminal and data carrier to restrict access to data based on
`
`payment. See, e.g., ‘598 at Abstract, 13:25-34. A teaching of a
`
`combination of prior art structures that achieves a predictable result does
`
`not “render a patent a technological invention.” Exhibit-1009 at 48755.
`
`Indeed, “[a] person having ordinary skill in the art at the time that the ‘598
`
`Patent was filed would not have considered the methods described and
`
`claimed by the ‘598 Patent to be technical”. Bloom at, e.g., ¶24.
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`In sum, the AIA’s exclusion of “patents for technological inventions”
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`from the definition of CBM patents is not applicable here because the ‘598
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`Patent fails to recite a novel and unobvious technological feature, and fails
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`to recite a technical problem solved by a technical solution. CBM review is
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`therefore appropriate for the ‘598 Patent.
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`IV. SUMMARY OF THE ‘598 PATENT
`A. Brief Description
`The ‘598 Patent includes 41 claims, of which claims 1, 18, 21, 26, 27,
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`29, 31 and 35 are independent.
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`The claims of the ‘598 Patent generally relates to systems and
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`methods “for downloading and paying for data such as audio and video
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`data, text, software, [and] games . . . .” ‘598 at Abstract. The ‘598 Patent
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`purports to address a specific problem: “the growing prevalence of so-
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`called data pirates” who “obtain data either by unauthorized or legitimate
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`means and then make this data available essentially world-wide over the
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`internet without authorization.” ‘598 at 1:31-33. Within this context, the
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`‘598 Patent describes “combining digital right management with content
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`data storage,” and states that “[b]inding the data access and payment
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`together allows the legitimate owners of the data to make the data available
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`themselves over the internet without fear of loss of revenue, thus
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`undermining the position of data pirates.” ‘598 at 2:7-11, 5:29-33.
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`Specifically, the ‘598 Patent also discloses a “portable data carrier for
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`storing and paying for data.” ‘598 at 1:21-22. The portable data carrier
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`stores, in a parameter memory, use rules that are used to control access to
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`content data and, in a content memory, the portable data carrier stores
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`content data. See ‘598 at Figs. 5-6, 13: 25-27. This disclosure is reflected
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`in the limitations of independent claims 1 and 31, the latter of which recites
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`“reading the use status data and one or more use rules from parameter
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`memory ... evaluating the use status data using the one or more use rules to
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`determine whether access to the content data item is permitted....” ‘598 at
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`28:22-27.
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`Summary of the Prosecution History of the ‘598 Patent
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`B.
`The ‘598 Patent issued Nov. 22, 2011 from the ‘541 Appln. (Exhibit
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`1025), which was filed on Jan. 24, 2011 with 41 claims.
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`During prosecution of the ‘541 Appln., a Non-Final Office Action
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`rejected claims 1, 21, and 31-37 on the ground of nonstatutory obviousness-
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`type double patenting as being unpatentable over claims of U.S. Patent No.
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`7,334,720. See Non-Final Office Action of April 14, 2011 at 3 and 7-8.
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`Claims 9, 18, 23-30, 38-41 were rejected on the same double patenting ground
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`over claims of the ‘720 patent in view of U.S. Patent No. 6,415,156 to
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`Stademann. Id. Dependent claims 10, 12-14, and 19-20 were deemed to
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`contain allowable subject matter. Id. Subsequently, the Patent Owner filed a
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`Terminal Disclaimer (TD) without substantive amendments. See Patent
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`Owner’s Response May 20, 2011 at 9. After the Power of Attorney has been
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`duly corrected, the Patent Office accepted the Terminal Disclaimer and mailed
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`a Notice of Allowance to allow all pending claims, noting that “the prior art
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`fails to disclose a portal data carrier comprising: (i) an interface for reading
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`and writing data; (ii) a content data memory; (iii) a use rule memory; (iv) a
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`program store; and having the functions and characteristics as recited in claim
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`1. The prior art also fails to disclose the limitations of claims 18, 21, 26, 27,
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`31 and 35.” See Notice of Allowance September 12, 2011 at 2. After
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`allowance, formality errors in claims 26 and 29 were corrected. See Patent
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`Owner’s Amendment under Rule 312 Oct. 19, 2011.
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`C. OMITTED
`V. DEMONSTRATION OF A REASONABLE LIKELIHOOD
`THAT AT LEAST ONE CLAIM OF THE ‘598 PATENT IS
`UNPATENTABLE
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`Claim 7 is challenged. Claim 7 depends from claim 1 and, therefore,
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`incorporates the subject matter of claim 1. As demonstrated below, claim 7
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`is directed toward ineligible subject matter.
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`A. GROUND 1 – Claim 7 is Patent-Ineligible under 35
`U.S.C. § 101 For Abstractness
`1. Legal Standard
`Laws of nature, abstract ideas and natural phenomena cannot be
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`patented. Mayo Collaborative Serv v. Prometheus Labs., Inc., 132 S. Ct.
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`1289, 1293 (2012). Allowing patents on such matters would effectively
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`grant impermissible monopolies over entire concepts. See, e.g., Gottschalk
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`v. Benson, 409 U.S. 63, 71-72 (1972). Thus, when claims of a patent recite
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`abstract ideas, such as those that “can be performed in the human mind, or
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`by a human using a pen and paper,” and those that preempt an entire
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`concept or field, they must add “significantly more” to be patent-eligible.
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`CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1372 (Fed. Cir.
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`207); See also Mayo, 132 S. Ct. at 1294; Bilski v. Kappos, 130 S. Ct. 3218,
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`3230 (2010).
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`As the Supreme Court recently reiterated, mere recitation of “a
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`particular technological environment” does not make eligible a claim that is
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`otherwise improperly abstract. Alice Corp. v. CLS Bank Internationa1,134
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`S. Ct. 2347, 2358 (2014) (quoting Bilski at 3230). Nor does addition of
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`“insignificant post solution activity” or “well-understood, routine,
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`conventional activity.” Mayo at 1291 (quoting Bilski at 3230), 1294, 1297-
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`98. Instead, a claim involving an unpatentable abstract idea must contain
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`“other elements or a combination of elements, sometimes referred to as the
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`inventive concept,” sufficient to prevent patenting the underlying idea
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`itself. Mayo at 1294 (internal quotations omitted). One indication that a
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`claim recites more than an abstract idea is that it is “tied to a particular
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`machine or apparatus” or “transform[s] a particular article into a different
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`state or thing.” Bilski at 3230.
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`An abstract claim is not salvaged, however, by “claiming only its
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`performance by computers, or by claiming the process embodied in
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`program instructions on a computer readable medium.” CyberSource at
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`1375. Instead, to impart patent-eligibility to otherwise unpatentable subject
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`matter “under the theory that the [claimed subject matter] is linked to a
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`machine, the use of the machine must impose meaningful limits on the
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`claim’s scope.” Id. at 1369 (internal quotations omitted); see also Bancorp
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`Serv., L.L.C. v. Sun Life Assur. Co. (U.S.), 687 F.3d 1266, 1278 (Fed. Cir.
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`2012) (“To salvage an otherwise patent-ineligible process, a computer must
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`be integral to the claimed invention, facilitating the process in a way that a
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`person making calculations or computations could not”). Using a computer
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`“for no more than its most basic function—making calculations or
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`computations—fails to circumvent the prohibition against patenting
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`abstract ideas and mental processes.” Id. As such, and as explained below,
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`the mere fact that claim 7 of the ‘598 Patent incorporates “a portable data
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`carrier,” “an interface,” various “memory,” a “program store,” and
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`“processor,” does not salvage this otherwise patent ineligible claim.
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`the ‘598 Patent itself repeatedly describes its computing systems as both
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`“conventional” and as being used “in a conventional manner.” See, e.g., ‘598
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`at 4:4-5, 16:46-49, 21:33-38.
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`As explained in detail below, claim 7 of the ‘598 Patent recites and
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`impermissibly preempts an abstract idea that can be performed in the human
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`mind and by paper and pen, namely the abstract idea of enabling limited use of
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`paid for/licensed content, without being “tied to a particular machine” and
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`without “transform[ing] a particular article” into anything different.
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`2.
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`Claim 7 of the ‘598 Patent Recites an Abstract
`as Each of the Limitations Can be Performed in the
`Human Mind and by a Human Using a Pen and
`Paper
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`Claim 7, by virtue of dependence on base claim 1, requires the following
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`limitations: (i) an interface for reading and writing data, (ii) use rule memory
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`to store one or more use rules, (iii) program store storing code for storing at
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`least one content data item in the content data memory and at least one use rule
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`in the use rule memory (iv) a processor, and (v) payment data memory to store
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`payment data and code to provide the payment data to a payment validation
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`system. See ‘598 Patent, claim 7 (Samsung-1001). From the plain claim
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`language, the conclusion is inescapable that the recited components performing
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`the actions merely describe an abstract idea, namely, the abstract idea of
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`enabling limited use of paid-for/licensed content, i.e., paid for, and that
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`copyright requirements regulate how content can be used (e.g., ASCAP use
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`