`________________________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`________________________
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`APPLE INC.,
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`Petitioner,
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`v.
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`SMARTFLASH LLC,
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`Patent Owner.
`
`________________________
`Case CBM2015-00121
`Patent 8,794,516 B2
`________________________
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`PATENT OWNER’S MOTION TO EXCLUDE EVIDENCE
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`TABLE OF CONTENTS
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`B.
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`
`Statement of Precise Relief Requested ............................................................ 1
`I.
`Patent Owner Smartflash Timely Objected to Petitioner’s Exhibits ............... 1
`II.
`III. Argument ......................................................................................................... 1
`A.
`Exhibits 1002, 1042, and 1046 are Irrelevant, Inadmissible Other
`Evidence of the Content of a Writing, and Cumulative ........................ 1
`Exhibits 1003, 1004, 1006, 1007, 1008, 1011, 1012, 1013, 1014,
`1015, 1016, 1017, 1018, 1025, 1026, 1027, 1028, 1036, 1037, 1038,
`1039, 1040, 1041, and 1045 are Not Alleged to be Invalidating Prior
`Art and thus are Irrelevant ..................................................................... 5
`Exhibit 1019 Lacks Foundation, is Unreliable, and Relies on
`Irrelevant Exhibits ................................................................................. 8
`Exhibit 1044 is Irrelevant and Hearsay ............................................... 13
`D.
`IV. Conclusion ..................................................................................................... 14
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`
`C.
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`i
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`I.
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`Statement of Precise Relief Requested
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`Pursuant to 37 C.F.R. §§ 42.62 and 42.64(c), Patent Owner Smartflash LLC
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`moves to exclude Exhibits 1002, 1003, 1004, 1006, 1007, 1008, 1011, 1012, 1013,
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`1014, 1015, 1016, 1017, 1018, 1019, 1025, 1026, 1027, 1028, 1036, 1037, 1038,
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`1039, 1040, 1041, 1042, 1044, 1045, and 1046.
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`II.
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`Patent Owner Smartflash Timely Objected to Petitioner’s Exhibits
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`Patent Owner Smartflash LLC timely objected to CBM2015-00121 Exhibits
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`1002, 1003, 1004, 1006, 1007, 1008, 1011, 1012, 1013, 1014, 1015, 1016, 1017,
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`1018, 1019, 1025, 1026, 1027, 1028, 1036, 1037, 1038, 1039, 1040, 1041, 1042,
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`1044, 1045, and 1046 by filing Patent Owner’s Objections to Admissibility of
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`Evidence. Paper 10.
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`III. Argument
`Pursuant to 37 C.F.R. § 42.64(c), the Federal Rules of Evidence apply in
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`Covered Business Method Review (“CBM”) proceedings.
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`A. Exhibits 1002, 1042, and 1046 are Irrelevant, Inadmissible Other
`Evidence of the Content of a Writing, and Cumulative
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`Patent Owner moves to exclude Exhibits 1002 (Plaintiff’s First Amended
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`Complaint); 1042 (Plaintiffs’ Complaint for Patent Infringement, Smartflash LLC,
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`et al. v. Apple Inc., Civil Action No. 6:15-cv-145) and 1046 (Excerpt of Transcript
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`of Trial Afternoon Session, February 16, 2015 from Smartflash LLC v. Apple Inc.,
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`No. 6:13-cv-447) on grounds that they are: inadmissible under FRE 402 because
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`1
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`they fail the test for relevance set forth in FRE 401; inadmissible other evidence of
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`the content of a writing under FRE 1004; and, even if relevant, are unnecessary
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`cumulative evidence under FRE 403.
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`Petitioner cites to Exhibits 1002, 1042, and 1046 as support for the ‘516
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`Patent being “financial in nature” and thus CBM review eligible. Petition at 25-30.
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`Specifically, the Petition cites Exhibit 1002 to show Patent Owner’s
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`characterization of the ‘516 Patent as “generally cover[ing] a portable data carrier
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`for storing data and managing access to the data via payment information and/or
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`use status rules” and “also generally cover[ing] a computer network … that serves
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`data and manages access to data by, for example, validating payment information.”
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`Petition at 28 (citing Ex. 1002 ¶ 17). The Petition cites Exhibit 1042 to show
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`Patent Owner’s characterization of the ‘516 Patent as “generally cover[ing]devices,
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`methods, and systems for transmitting, retrieving, downloading, storing, and
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`accessing content, content information, DRM data, payment data, and
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`supplementary data. For example, some of the claims in the patents-in-suit cover
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`devices that retrieve data, store data, and manage access to the data via payment
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`information and/or use rules.” Id. (citing Ex. 1042 ¶ 15). The Petition cites to
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`Exhibit 1046 to show the inventor’s trial testimony describing the inventions as
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`“particular devices and methods for combining payment functionality, secure
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`2
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`downloading, storage, and rules for the use of content ….” Id. (citing Ex. 1046 at
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`4).
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`Patent Owner’s descriptions of the ‘516 Patent in Exhibits 1002, 1042, and
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`1046 are not relevant to any of the issues here. In a CBM on a patent in the same
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`family as the ‘516 Patent, CBM2015-00016, the Board declined to exclude the
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`same and similar exhibits because “[Patent Owner’s] characterization of the …
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`patent in prior proceedings is relevant to the credibility of its characterization of
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`the … patent in this proceeding.” CBM2015-00016, Paper 56 at 24. The Board’s
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`reasoning that a Patent Owner’s characterization of the patent, or the Patent
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`Owner’s credibility in doing so, is relevant to the analysis of whether a patent
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`qualifies for CBM review under § 18(a) of the Leahy-Smith America Invents Act
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`(“AIA”) is contrary to Federal Circuit authority. As noted by the Federal Circuit
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`Ҥ 18(d)(1) [of the AIA] directs us to examine the claims when deciding whether a
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`patent is a CBM patent.” Blue Calypso, LLC v. Groupon, Inc., 815 F.3d 1331,
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`1340 (Fed. Cir. March 1, 2016) (emphasis original). The claims are delineated in
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`the ‘516 Patent, which is in evidence as Exhibit 1001. That is all the Board needs
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`for its analysis. Moreover, there are no credibility issues here that render Exhibits
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`1002, 1042, and 1046 relevant. There is nothing about Patent Owner’s
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`characterization of the ‘516 Patent in this proceeding – that claim 14 “does not
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`recite a ‘financial product or service’” in the way Congress intended (Patent
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`3
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`Owner’s Preliminary Response, Paper 6 at 43-48) – that is contradicted by Exhibits
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`1002, 1042, and 1046 such that the credibility of Patent Owner’s characterization
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`is at issue. As such Exhibits 1002, 1042, and 1046 are irrelevant and inadmissible.
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`Further, Petitioner’s expert, John P. J. Kelly, Exhibit 1019, (“Kelly
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`Declaration”) does not cite to Exhibits 1002, 1042, and 1046. The Board’s
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`November 10, 2015 Decision – Institution of Covered Business Method Patent
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`Review 37 C.F.R. § 42.208 (“PTAB Decision”), Paper 8, does not cite Exhibits
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`1002, 1042, and 1046. Exhibits 1002, 1042, and 1046 therefore do not appear to
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`make a fact of consequence in determining this action more or less probable than it
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`would be without Exhibits 1002, 1042, and 1046. As such, Exhibits 1002, 1042,
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`and 1046 do not pass the test for relevant evidence under FRE 401 and are not
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`admissible per FRE 402.
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`Petitioner does not need to cite to Exhibits 1002, 1042, and 1046 to
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`characterize the ‘516 Patent when Exhibit 1001, the actual ‘516 Patent, is in
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`evidence. Under FRE 1004, other evidence of the content of a writing (here the
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`‘516 Patent) is admissible if the original is lost, cannot be obtained, has not been
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`produced, or the writing is not closely related to a controlling issue. None of those
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`conditions apply here, given that the ‘516 Patent is in evidence and is the subject of
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`the trial.
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`4
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`Even if Exhibits 1002, 1042, and 1046 were found to be relevant, they
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`should also be excluded under FRE 403 as cumulative of the ‘516 Patent, Exhibit
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`1001.
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`B. Exhibits 1003, 1004, 1006, 1007, 1008, 1011, 1012, 1013, 1014, 1015,
`1016, 1017, 1018, 1025, 1026, 1027, 1028, 1036, 1037, 1038, 1039, 1040,
`1041, and 1045 are Not Alleged to be Invalidating Prior Art and thus
`are Irrelevant
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`Petitioner cites Exhibits 1003 (U.S. Patent No. 5,925,127) (“Ahmad”), 1004
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`(U.S. Patent No. 5,940,805) (“Kopp”), 1006 (U.S. Patent No. 4,999,806)
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`(“Chernow”), 1007 (U.S. Patent No. 5,675,734)(“Hair”), 1008 (U.S. Patent No.
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`4,878,245) (“Bradley”), 1011 (U.S. Patent No. 5,103,392) (“Mori”), 1012 (U.S.
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`Patent No. 5,530,235) (“Stefik ‘235”), 1013 (U.S. Patent No. 5,629,980) (“Stefik’
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`980”), 1014 (U.S. Patent No. 5,915,019) (“Ginter”), 1015 (European Patent
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`Application, Publication No. EP0809221A2) (“Poggio”), 1016 (PCT Application
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`Publication No. WO 99/43136) (“Rydbeck”), 1017 (JP Publication No. H11-
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`164058 (translation)) (“Sato”), 1018 (Eberhard von Faber, Robert Hammelrath,
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`and Franz-Peter Heider, “The Secure Distribution of Digital Contents,” IEEE
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`(1997)) (“von Faber”), 1025 (U.S. Patent No. 4,337,483) (“Guillou”), 1026 (U.S.
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`Patent No. 7,725,375) (“Shepherd”), 1027 (International Publication No. WO
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`95/34857) (“Smith”), 1028 (JP Patent Application Publication No. H10-269289
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`(translation)) (“Maari”), 1036 (U.S. Patent No. 5,646,992) (“Subler”), 1037 (U.S.
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`Patent No. 5,903,721) (“Sixtus”), 1038 (International Publication No.
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`5
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`WO99/13398) (“Peterson”), 1039 (U.S. Patent No. 5,761,485) (“Munyan”), 1040
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`(R. Mohan, J.R. Smith, C.S. Li, “Adapting Multimedia Internet Content for
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`Universal Access,” IEEE (March 1999), 1041 (U.S. Patent No. 5,593,005)(“Liu”),
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`and 1045 (J. Taylor, “DVD-Video: Multimedia for the Masses,” IEEE Multimedia,
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`Vol. 6, No. 3, July-September 1999, pp. 86-92). Although cited, neither the
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`Petition nor the Kelly Declaration assert that any of these Exhibits (“the
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`Unasserted Exhibits”) are potentially invalidating prior art, either alone or in
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`combination with any other reference. The PTAB Decision did not base any of its
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`analysis on the Unasserted Exhibits. Thus, the Unasserted Exhibits do not appear
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`to make a fact of consequence in determining this action more or less probable
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`than it would be without the Unasserted Exhibits. As such, the Unasserted
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`Exhibits do not pass the test for relevant evidence under FRE 401 and are not
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`admissible per FRE 402.
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`In related CBM2015-00016 on a patent in the same patent family, the Board
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`declined to exclude similarly unasserted exhibits, finding “these exhibits are
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`relevant to the state of the art—whether the technical limitations of the challenged
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`claim were well-known, routine, and conventional—and thus, to our § 101
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`analysis.” CBM2015-00016, Paper 56 at 26. Whether the technical limitations of
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`the challenged claim were well-known, routine, and conventional is only relevant
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`after finding that a claim is directed to an abstract idea and the analysis moves to
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`6
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`the second step of whether the claims contain an “inventive concept.” Mayo
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`Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289, 1294
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`(2012). Here, the claims at issue are not directed to an abstract idea. Patent
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`Owner’s Response, Paper 17 at 21-29. The Federal Circuit recently “[found] it
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`relevant to ask whether the claims are directed to an improvement to computer
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`functionality versus being directed to an abstract idea, even at the first step of the
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`[Mayo/]Alice analysis. Enfish, LLC v. Microsoft Corp., 2016 WL 2756255, at *4
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`(Fed. Cir. May 12, 2016) (citing Alice Corp. Pty Ltd. v. CLS Bank Int’l, 134 S.Ct.
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`2347 (2014)). In Enfish, the Federal Circuit concluded that the claims were
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`directed to an improvement to computer functionality and that “the claims are
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`directed to a specific implementation of a solution to a problem in the software
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`arts. Accordingly, we find the claims at issue are not directed to an abstract idea.”
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`Id. at *8. Like the claims in Enfish, the Smartflash claims are “directed to an
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`improvement to computer functionality” and a “specific solution to a problem” in
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`computer networks – the problem of data piracy. Patent Owner’s Response, Paper
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`17 at 2-4, 32-48. As such, there is no need to reach the second step of Mayo/Alice
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`to determine if there is an “inventive concept,” so the Board’s previous rationale is
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`moot. Moreover, in determining whether there is an “inventive concept” the
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`relevant analysis is whether there is an “inventive concept” over the abstract idea
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`(if one is found) and not whether there is an “inventive concept” over the prior art.
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`7
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`The question of whether there is an “inventive concept” over the prior art is a
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`question of patentability under 35 U.S.C. §§ 102 and 103, and not subject matter
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`eligibility under 35 U.S.C. § 101.
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`Exhibits 1003, 1004, 1006, 1007, 1008, 1011, 1012, 1013, 1014, 1015, 1016,
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`1017, 1018, 1025, 1026, 1027, 1028, 1036, 1037, 1038, 1039, 1040, 1041, and
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`1045 are not relevant and should be excluded.
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`C. Exhibit 1019 Lacks Foundation, is Unreliable, and Relies on
`Irrelevant Exhibits
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`Patent Owner moves to exclude Exhibit 1019, the Kelly Declaration, in its
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`entirety as the Kelly Declaration does not demonstrate that Dr. Kelly is an expert
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`whose testimony is relevant to the issue of patent eligibility under 35 U.S.C. § 101
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`or patentability under 35 U.S.C. § 112 ¶ 2, the only issues on which this CBM was
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`instituted. Whether claims are directed to statutory subject matter is “an issue of
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`law.” Institution Decision, CBM2015-00129, Paper 8, page 18. When asked on
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`cross examination what he understood he was to do in providing his opinions in
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`this CBM, Dr. Kelly stated “I was asked to examine the … background prior art,
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`and then based on that, determine whether or not I thought that the … Smartflash
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`claims were patent eligible, and I'm not a legal expert. I'm not a lawyer, and so I'm
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`providing a technical analysis based on my understanding of the legal standards.”
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`Exhibit 2108, Kelly Deposition at 9:19-10:14. When asked if he intended any of
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`his opinions in his declaration to be considered legal opinions, Dr. Kelly responded
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`8
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`“It seems to me that that is a legal question in and of itself. I'm not here to answer
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`-- to provide legal testimony.” Id. 10:15-21 (emphasis added). Further, when
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`asked about what kinds of things he understood the USPTO “believes makes a
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`claim inventive,” Dr. Kelly reiterated “Well, there's a … statute that lays out the
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`requirements. I'm not a lawyer. I'm not here to give a legal opinion…” Id. at
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`134:11-17 (emphasis added). Thus, Dr. Kelly’s opinions on whether claims of the
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`‘516 Patent are directed to statutory subject matter, a question of law, are
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`irrelevant, and his Declaration should be excluded.
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`Moreover, given that patent eligibility under § 101 and definiteness under
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`§ 112 are purely legal issues, opinions such as those rendered by Dr. Kelly on the
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`ultimate questions of patent eligibility in ¶¶ 74-111 and of definiteness in ¶ 112 of
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`his declaration constitute testimony on United States patent law or patent
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`examination practice. Such testimony is inadmissible under 37 C.F.R. § 42.65
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`(“testimony on United States patent law or patent examination practice will not be
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`admitted”).
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`Further, Dr. Kelly has not shown that his opinions are proper expert opinions
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`upon which the PTAB can rely. There is no assurance that Dr. Kelly’s
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`methodologies used to render his opinions in this case are reliable as required by
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`FRE 702. In Daubert v. Merrell Dow Pharmaceuticals, Inc., 113 S.Ct. 2786, 509
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`
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`9
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`
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`U.S. 579 (1993), the Supreme Court set forth standards for the admissibility of
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`expert testimony. The Supreme Court noted that:
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`Faced with a proffer of expert scientific testimony … the
`trial judge must determine at the outset, pursuant to Rule
`104(a), whether the expert is proposing to testify to (1)
`scientific knowledge that (2) will assist the trier of fact to
`understand or determine a fact in issue. This entails a
`preliminary assessment of whether the reasoning or
`methodology underlying the testimony is scientifically
`valid and of whether that reasoning or methodology
`properly can be applied to the facts in issue. We are
`confident that federal judges possess the capacity to
`undertake this review. Many factors will bear on the
`inquiry, and we do not presume to set out a definitive
`checklist or test. But some general observations are
`appropriate. Ordinarily, a key question to be answered
`in determining whether a theory or technique is
`scientific knowledge that will assist the trier of fact will
`be whether it can be (and has been) tested.
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`Daubert v. Merrell Dow Pharmaceuticals, Inc., 113 S.Ct. 2786, 2796, 509 U.S.
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`579, 592-93 (1993) (emphasis added).
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`Dr. Kelly did not employ any scientifically valid reasoning or methodology
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`in reaching his opinions. When asked about his method’s false positive rate
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`(finding a claim to be not eligible when it was), Dr. Kelly could not give a rate.
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`10
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`
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`Exhibit 2108 at 26:7-19. Similarly, he could not provide a false negative rate. Id.
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`at 26:21-27:12. Dr. Kelly’s testimony did not employ any scientific reasoning or
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`methodology, but simply put Dr. Kelly in the position of a tribunal making the
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`same legal assessment.
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`Dr. Kelly also did nothing to test the method he used in arriving at his
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`opinions in this case to ensure that his method was repeatable and reliable. For
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`example, Dr. Kelly did not test his method against known decisions finding subject
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`matter either eligible or ineligible under § 101. Specifically, Dr. Kelly: did not
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`read any Supreme Court opinions on what constitutes statutory subject matter in
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`formulating his opinions for his declarations in this case (id. at 16:12-17:8); did not
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`look at any Federal Circuit Court of Appeals decisions (id. at 19:3-15); did not
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`look at any PTAB decisions post- Alice to examine what claims are computer
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`implemented but not directed to abstract ideas (id. at 137:2-10); did not look at any
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`PTAB decisions or court decisions that evaluated claims under § 101 and ruled that
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`the claims were not directed to an abstract idea (id. at 299:7-17); did not look at
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`any guidelines on subject matter eligibility under § 101 from the USPTO while
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`preparing his opinions (id. at 25:9-17); did not review any patent that was the
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`subject of a § 101 decision by a court or the USPTO and use it to test his method
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`(id. at 24:14-25:8; 27:13-25).
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`11
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`Despite rendering opinions that the claims at issue are directed to an abstract
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`idea, on cross examination, Dr. Kelly could not even define what an abstract idea
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`is. Id. at 30:9-10; 31:16-17; 32:4-5. Nor could Dr. Kelly articulate what level of
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`abstraction would be appropriate in determining whether a claim is directed to an
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`abstract idea. Id. at 297:8-298:22.
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`Further, Dr. Kelly’s opinions miss the mark, because they reflect an analysis
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`that looks for an inventive concept over the prior art, rather than over the abstract
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`idea itself. Exhibit 1019 ¶¶ 75-92; Exhibit 2108 at 304:1-15. Subject matter
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`eligibility turns on inventiveness over the abstract idea, not over the prior art. Alice
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`Corp. Pty. Ltd. v. CLS Bank Intern., 134 S.Ct. 2347, 2355 (2014) (Mayo step-two
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`analysis is “a search for an ‘inventive concept’—i.e., an element or combination of
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`elements that is ‘sufficient to ensure that the patent in practice amounts to
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`significantly more than a patent upon the [abstract idea] itself’”)(emphasis added).
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`Dr. Kelly’s analysis incorrectly compares the Smartflash claims to the prior art
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`rather than to the abstract idea. His methodology is wrong, and therefore his
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`opinions are unreliable.
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`Paragraphs of the Kelly Declaration should be excluded to the extent that
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`any paragraph relies upon an exhibit that is objected to herein for the reasons set
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`forth in those objections. Any paragraph in the Kelly Declaration that relies upon
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`any exhibit not relied upon by the PTAB to institute this proceeding is further
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`12
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`objected to as not being relevant and therefore being inadmissible under FRE 401
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`and 402.
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`D. Exhibit 1044 is Irrelevant and Hearsay
`Exhibit 1044 is the April 8-9, 2015 Deposition Transcript of Jonathan Katz,
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`Patent Owner’s expert in CBM2014-00102/106/108/112, all of which were
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`instituted on §§ 102 and/or 103 grounds rather than § 101 and § 112, the grounds
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`of institution here. Patent Owner did not proffer Dr. Katz as an expert in this case.
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`As such, Exhibit 1044 is not relevant under FRE 401 and it is not admissible per
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`FRE 402. Exhibit 1044 also is hearsay under FRE 801 and thus inadmissible under
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`FRE 802.
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`13
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`
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`IV. Conclusion
`For these reasons, Patent Owner Smartflash, LLC respectfully requests that
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`the Board exclude Exhibits 1002, 1003, 1004, 1006, 1007, 1008, 1011, 1012, 1013,
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`1014, 1015, 1016, 1017, 1018, 1019, 1025, 1026, 1027, 1028, 1036, 1037, 1038,
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`1039, 1040, 1041, 1042, 1044, 1045, and 1046.
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`Dated: June 27, 2016
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`
`
`
`
`/ Michael R. Casey /
`
`Michael R. Casey
`Registration No. 40,294
`Davidson Berquist
`
`Jackson & Gowdey, LLP
`8300 Greensboro Drive
`Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7705
`Fax: (571) 765-7200
`Email: mcasey@dbjg.com
`Attorney for Patent Owner
`
`
`
`
`
`14
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`
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that this PATENT OWNER’S MOTION
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`TO EXCLUDE EVIDENCE in CBM2015-00121 was served today, by agreement
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`of the parties by emailing a copy to counsel for the Petitioner as follows:
`
`
`
`Steven.Baughman@ropesgray.com
`James.Batchelder@ropesgray.com
`Megan.Raymond@ropesgray.com
`ApplePTABService-SmartFlash@ropesgray.com
`
`
` /
`
` Michael R. Casey /
`
`
`Michael R. Casey
`Registration No. 40,294
`Davidson Berquist
`
`Jackson & Gowdey, LLP
`8300 Greensboro Drive
`Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7705
`Fax: (571) 765-7200
`Email: mcasey@dbjg.com
`Attorney for Patent Owner
`
`
`
`Dated: June 27, 2016
`
`
`
`
`
`
`
`15