`
`_________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_________
`
`APPLE INC.,
`Petitioner,
`
`v.
`
`SMARTFLASH LLC,
`Patent Owner.
`
`_________
`
`Case CBM2015-00121
`
`Patent 8,794,516 B2
`
`_________
`
`
`
`PATENT OWNER’S REQUEST FOR REHEARING
`
`
`
`
`
`
`
`TABLE OF CONTENTS
`
`
`I.
`STATEMENT OF PRECISE RELIEF REQUESTED ................................... 2
`BACKGROUND ............................................................................................. 3
`II.
`III. ARGUMENT ................................................................................................... 4
`A.
`The Challenged Claims Are Patent Eligible Because They Are Similar
`to the Claims in DDR Holdings, Enfish, and BASCOM ........................ 5
`The Challenged Claims Are Patent Eligible Because They Are Similar
`to the Claims in McRO and Amdocs ................................................... 11
`The Challenged Claims Are Similar to the Claims in McRO ... 11
`1.
`The Challenged Claims Are Similar to the Claims in Amdocs . 14
`2.
`IV. CONCLUSION .............................................................................................. 15
`
`B.
`
`
`
`i
`
`
`
`
`
`
`
`Patent Owner Smartflash LLC files this Request for Rehearing pursuant to
`
`37 CFR § 42.71. The Board’s final written decision (Paper 32) finding claims 1-28
`
`(“the challenged claims”) of U.S. Patent No. 8,794,516 (“the ‘516 Patent”) to be
`
`unpatentable misapprehends and overlooks the Supreme Court’s and Federal
`
`Circuit’s guidance on patent eligible subject matter under 35 U.S.C. § 101, the
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`Federal Circuit’s most recent decisions clarifying patent eligible subject matter,
`
`and Smartflash’s arguments as to the eligibility of the challenged claims.
`
`The Federal Circuit has made clear that while “the analysis [for patent
`
`eligible subject matter] presumably would be based on a generally-accepted and
`
`understood definition of, or test for, what an ‘abstract idea’ encompasses,” “a
`
`search for a single test or definition in the decided cases concerning § 101 from
`
`[the Federal Circuit], and indeed from the Supreme Court, reveals that at present
`
`there is no such single, succinct, usable definition or test.” Amdocs (Israel)
`
`Limited v. Openet Telecom, Inc., 2016 WL 6440387, at *4 (Fed. Cir. November 1,
`
`2016). In the absence of such a generally accepted definition or test, the Federal
`
`Circuit approach is to use the “classic common law methodology” of “examin[ing]
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`earlier cases in which a similar or parallel descriptive nature can be seen—what
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`prior cases were about, and which way they were decided.” Id. This is the
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`approach taken by Smartflash – comparing the challenged claims to, among other
`
`cases, DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014)
`
`
`
`1
`
`
`
`(Paper 17 at 32-48); Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir.
`
`2016) (Paper 29 at 1-3); and BASCOM Global Internet Services, Inc. v. AT&T
`
`Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016) (Paper 29 at 3-5).
`
`The challenged claims are directed to a novel content delivery system for
`
`distributing digital content over the Internet solving the problem of Internet data
`
`piracy. The Board misapprehended how the challenged claims are subject matter
`
`eligible as: being “necessarily rooted in computer technology in order to overcome
`
`a problem specifically arising in the realm of computer networks” (DDR Holdings,
`
`773 F.3d at 1257); teaching “an improvement to computer functionality itself.”
`
`(Enfish, 822 F.3d at 1336); and “representing a ‘software-based invention[ ] that
`
`improve[s] the performance of the computer system itself.’” BASCOM, 827 F.3d at
`
`1351.
`
`Moreover, the Board overlooked recent Federal Circuit decisions in McRO,
`
`Inc. v. Bandai Namco Games America Inc., 837 F.3d 1299 (Fed. Cir. September
`
`13, 2016) and Amdocs, where the Federal Circuit found claims similar to the
`
`challenged claims to be patent eligible.
`
`I.
`
`STATEMENT OF PRECISE RELIEF REQUESTED
`
`Patent Owner requests that the Board reverse its original decision (Paper 32,
`
`November 7, 2016) and hold that challenged claims 1-28 of the ‘516 Patent are
`
`patent eligible.
`
`
`
`2
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`
`
`II. BACKGROUND
`
`Distribution of digital content over the Internet “introduces a problem that
`
`does not arise” with content distributed on physical media. DDR Holdings, LLC v.
`
`Hotels.com, L.P., 773 F.3d 1245, 1258 (Fed. Cir. 2014). By the late 1990s,
`
`improved data compression and increasing bandwidth for Internet access enabled
`
`content providers, for the first time, to offer content data for purchase over the
`
`Internet; at the same time, unprotected data files could be easily pirated and made
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`available “essentially world-wide.” Ex. 1001, 1:32-52. Conventional operation of
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`the Internet does not solve the problem of data piracy: on the contrary, the Internet
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`facilitates the distribution of data without restriction or protection. Id. 1:52-58.
`
`Content providers faced piracy before—a CD can be copied onto another
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`CD and the pirated copy sold—but the problem presented by distribution of pirated
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`content over the Internet was unprecedented. There had never before been a way
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`to make free, identical, and flawless copies of physical media available to millions
`
`of people instantaneously at virtually no incremental cost. See generally Metro-
`
`Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 929-30 (2005). The
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`Internet gave rise to an urgent need to address data piracy associated with digital
`
`content distribution over the Internet.
`
`The inventor devised a data storage and access system for downloading and
`
`paying for data, described in the specification and claimed in this patent and others,
`
`
`
`3
`
`
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`comprising specific elements designed to overcome problems inherent in making
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`digital content available over the Internet and in accessing that content. Ex. 1001,
`
`at 1 (Abstract). The claims of the ’516 patent are directed to various devices of
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`that system: a “handheld multimedia terminal” id. at 25:65 (claim 1), a “content
`
`data supply server” id. at 26:58 (claim 5), a “computer system for providing
`
`multimedia data items” id. at 28:38-39 (claim 21); and methods by which that
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`system operates: a “method of providing an item of multimedia content to a
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`handheld multimedia terminal” id. at 27:61-62 (claim 14), and a “method of
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`downloading multimedia content from a content data supply server to a handheld
`
`multimedia terminal.” Id. at 29:9-10 (claim 25).
`
`III. ARGUMENT
`
`The Board should reverse its decision and find the claims directed to
`
`statutory subject matter because, in evaluating whether challenged claims 1-28
`
`comply with § 101, the Board failed to give effect to the actual language of the
`
`claims and their specific limitations. The actual claim language, read in light of
`
`the specification, reflects a specific and concrete technical solution to a novel
`
`problem associated with distribution of digital content over the Internet. Such a
`
`technological advance is patent eligible.
`
`
`
`4
`
`
`
`A. The Challenged Claims Are Patent Eligible Because They Are
`Similar to the Claims in DDR Holdings, Enfish, and BASCOM
`
`The Board found the challenged claims to be patent ineligible. First, the
`
`Board found that the challenged claims “are drawn to a patent-ineligible abstract
`
`idea ... [and] are directed to performing the fundamental economic practice of
`
`conditioning and controlling access to data.” Paper 32 at 9. The Board also found
`
`“that the additional elements . . . are either field of use limitations and/or generic
`
`features of a computer.” Id. 15. In so doing, the Board (at 12-14) rejected
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`Smartflash’s argument that, like the claims in Enfish, LLC v. Microsoft Corp., 822
`
`F.3d 1327, 1336 (Fed. Cir. 2016), the challenged claims were “directed to an
`
`improvement to computer functionality” and thus not directed to an abstract idea.
`
`The Board misapprehends Enfish and Smartflash’s arguments. The claims
`
`of the ‘516 patent are patent eligible because they embody concrete aspects of a
`
`particular solution to the Internet-specific problem of digital piracy – “a specific
`
`improvement to the way computers operate.” Enfish, 822 F.3d at 1336. This is not
`
`a patent that simply claims “use of the Internet” or a computer to perform an
`
`established business method. Cf. Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709,
`
`716 (Fed. Cir. 2014). This is no digital telephone book. Cf. Paper 32, at 25. On
`
`the contrary, the challenged claim limitations reflect specific technical choices
`
`involving the secure access, transmission, and storage of specific data types.
`
`
`
`5
`
`
`
`For example, by sending payment data responsive to a user selection rather
`
`than requiring the user to enter payment data manually into the data access
`
`terminal with each purchase, the invention improves the function of user devices
`
`over prior systems that required separate submission of payment information or
`
`post-use billing. See Ex. 1001, 4:36-38. By transmitting payment validation data
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`to the data access terminal and retrieving multimedia content responsive to that
`
`validation data, controlling access to the multimedia data in response to the
`
`validation data, the patent inventively allows the same data carrier to be compatible
`
`with independent and integrated validation systems. See id. at 8:26-30. “[T]he
`
`claimed solution amounts to an inventive concept for resolving this particular
`
`Internet-centric problem.” DDR Holdings, 773 F.3d at 1259.
`
`The claims teach specific technical solutions to a problem associated with
`
`distribution of digital content through specific organization of distinct data types,
`
`implemented on a specific device. There is no risk that the patents monopolize a
`
`“fundamental economic practice,” as the Board held (at 10). The claims are not
`
`directed to every way of paying for and controlling access to data content but to
`
`specific devices and methods involving a novel organization of designated data
`
`types to solve the technological problem of data piracy on the Internet.
`
`Recognizing the patent-eligibility of these claims will not “impede innovation” or
`
`“improperly t[ie] up . . . building blocks of human ingenuity.” Alice, 134 S. Ct. at
`
`
`
`6
`
`
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`2354. On the contrary, each claim teaches a “specific way” to control access to
`
`stored digital content; the claims do not attempt to “preempt every application of
`
`the idea.” DDR Holdings, 773 F.3d at 1259.
`
`The Board (at 20-21) rejected Patent Owner’s reliance on DDR Holdings on
`
`the grounds that “data piracy exists in contexts other than the Internet,” “the
`
`solution provided by the challenged claim is not rooted in specific computer
`
`technology,” and the “result” does not “override[] the routine and conventional use
`
`of the recited devices and functions.” That is incorrect: the claims discuss specific
`
`computer functions and interactions to perform a specific series of operations.
`
`Indeed, the Board’s own summary of the ‘516 patent (at 3-4) states:
`
`The ‘516 patent describes providing portable data storage together
`with a means for conditioning access to that data upon validated
`payment. . . . This combination of the payment validation means with
`the data storage means allows data owners to make their data
`available over the internet without fear of data pirates.
`
`The specification further explains that the purpose of the invention is to
`
`“make . . . data available . . . over the internet without fear of loss of revenue.” Ex.
`
`1001 at 2:14-19. “The growing prevalence of so-called data pirates” is a problem
`
`that arises by virtue of “increasingly wide use of the internet.” Id. at 1:32-36. The
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`types of pre-existing data piracy cited by the Board (at 20) are different. Because
`
`the Internet facilitates “essentially world-wide” distribution of flawless, identical
`
`copies of digital content data, the data piracy problems it creates are qualitatively
`
`
`
`7
`
`
`
`different from the problem of copying of physical media (videotapes, CDs,
`
`software, books), which necessarily takes significant time, imparts imperfections,
`
`and/or imposes incremental costs. See Grokster, Ltd., 545 U.S. at 929-30.
`
`Rather than generically claiming use of the Internet to perform an abstract
`
`business practice, the claims solve problems faced by digital content providers in
`
`the Internet Era and teach “an improvement to computer functionality itself.”
`
`Enfish, 822 F.3d at 1336.
`
`The Board also held (at 22) that the challenged claims contained
`
`limitations—unlike the claims in DDR Holdings—that were “specified at a high
`
`level of generality.” But the challenged claims and the specification discuss a
`
`specific organization of data types to carry out transactions according to a
`
`particular scheme, not mere generalities. “Payment data,” “payment validation
`
`data” and “code responsive to payment validation data to retrieve . . . multimedia
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`content” and are at least as specific as the claims terms in DDR Holdings. See 773
`
`F.3d at 1249 (reciting “link,” “source page,” “commerce object,” and “visually
`
`perceptible elements”). See also the claim terms of Amdocs discussed infra.
`
`The Board further held (at 18) that the claims could be performed by “a
`
`general purpose computer.” But that is generally true of software inventions, and
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`“[s]oftware can make non-abstract improvements to computer technology just as
`
`hardware improvements can.” Enfish, 822 F.3d at 1335. These claims teach a
`
`
`
`8
`
`
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`specific scheme for validating payment, and storing payment data and content data
`
`governing access on a terminal and using those data types to control access to
`
`content data according to a specific transaction sequence. As the specification
`
`explains, when digital data is sent over the Internet operating in its normal,
`
`expected manner and stored by a recipient, the content owner has no means to
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`exert further control over access to downloaded content. The claims provide a
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`specific mechanism to ensure that content, once downloaded, can be accessed only
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`in accordance with associated access control responsive to payment validation
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`data. Just as the claims in DDR Holdings “specify how interactions with the
`
`Internet are manipulated to yield a desired result,” 773 F.3d at 1258, the claims
`
`here specify how manipulation of specific data types facilitates convenient and
`
`secure provision of digital content, a result that neither the Internet nor unimproved
`
`computers can produce. See Enfish, 822 F.3d at 1337. The patent “improve[s] the
`
`functioning” and the functionality of handheld multimedia terminals and content
`
`data supply servers, which likewise improves the functioning of data
`
`communications networks used for digital content distribution. Alice, 134 S. Ct. at
`
`2359.
`
`The Board (at 23-24) rejected Smartflash’s argument that the challenged
`
`claims were like those in BASCOM because they involve known components
`
`“arranged in a non-conventional and non-generic way,” by requiring “a handheld
`
`
`
`9
`
`
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`multimedia terminal to store both payment data and multimedia content data – thus
`
`‘improv[ing] an existing technological process.’” Paper 29 at 5 (citing BASCOM,
`
`827 F.3d at 1351). Instead, the Board found that “[t]he concept of storing two
`
`different types of information in the same place or on the same device is an age old
`
`practice,” so “[a]s a result, the challenged claims do not achieve a result that
`
`overrides the routine and conventional use of the recited devices and functions.
`
`Rather, each of the challenged claims is ‘an abstract-idea-based solution
`
`implemented with generic technical components in a conventional way,’ making it
`
`patent ineligible.” Paper 32 at 24 (citing BASCOM, 827 F.3d at 1351). But the
`
`Board misapprehends Smartflash’s argument and “‘oversimplify[ies] the claims’
`
`by looking at them generally and failing to account for the specific requirements of
`
`the claims,” exactly what the Federal Circuit has “cautioned that courts ‘must be
`
`careful to avoid.’” McRO, 837 F.3d at 1313 (citations omitted). The challenged
`
`claims do not simply “store[] two different types of information in the same place
`
`or on the same device,” but rather have other specific requirements relating to the
`
`interaction of the two types of data, such as “code to control access to said at least
`
`one selected item of multimedia content on said terminal responsive to said
`
`payment validation data.” Ex. 1001 at 26:35-37 (claim 1). Contrary to the Board’s
`
`conclusion, the challenged claims do override the routine and conventional use of
`
`the recited devices and functions. Instead of multimedia content data that can be
`
`
`
`10
`
`
`
`readily copied and easily distributed over the Internet, the Smartflash invention
`
`results in multimedia content available to purchasers over a computer network but
`
`distributed conveniently and securely.
`
`B.
`The Challenged Claims Are Patent Eligible Because They Are
`Similar to the Claims in McRO and Amdocs
`
`In addition to the challenged claims being similar to the patent eligible claims
`
`in DDR Holdings, Enfish, and BASCOM, their patent eligibility is supported by
`
`their similarity to the claims in McRO and Amdocs.
`
`1.
`
`The Challenged Claims Are Similar to the Claims in McRO
`
`In McRO, the invention related to a “method for automatically ... producing
`
`accurate and realistic lip synchronization and facial expressions in animated
`
`characters.” McRO, 837 F.3d at 1307. The Federal Circuit analyzed as
`
`representative the following claim:
`
`A method for automatically animating lip
`synchronization and facial expression of three-
`dimensional characters comprising:
`obtaining a first set of rules that define output morph
`weight set stream as a function of phoneme sequence and
`time of said phoneme sequence;
`obtaining a timed data file of phonemes having a
`plurality of sub-sequences;
`generating an intermediate stream of output morph
`weight sets and a plurality of transition parameters
`between two adjacent morph weight sets by evaluating
`said plurality of sub-sequences against said first set of
`rules;
`
`
`
`11
`
`
`
`generating a final stream of output morph weight sets at a
`desired frame rate from said intermediate stream of
`output morph weight sets and said plurality of transition
`parameters; and
`applying said final stream of output morph weight sets to
`a sequence of animated characters to produce lip
`synchronization and facial expression control of said
`animated characters.
`
`Id. at 1307–08. In analyzing this claim, the Court “look[ed] to whether the claims
`
`in these patents focus on a specific means or method that improves the relevant
`
`technology or are instead directed to a result or effect that itself is the abstract idea
`
`and merely invoke generic processes and machinery.” Id. at 1314. The Court
`
`noted that “[t]he claimed process uses a combined order of specific rules that
`
`renders information into a specific format that is then used and applied to create
`
`desired results… .” Id. at 1315. The Court concluded that “[w]hen looked at as a
`
`whole, [the claim] is directed to a patentable, technological improvement over the
`
`existing, manual 3–D animation techniques. The claim uses the limited rules in a
`
`process specifically designed to achieve an improved technological result in
`
`conventional industry practice” and “therefore, is not directed to an abstract idea.”
`
`Id. at 1316.
`
`Here, the challenged claims are directed to a technological improvement
`
`over how then-existing computer systems and media players transferred, stored,
`
`and retrieved for use multimedia content data. The pre-existing technology
`
`allowed multimedia content data to be readily copied and distributed through file
`
`
`
`12
`
`
`
`sharing programs. As noted above, this was a major problem for the entertainment
`
`industry due to distribution of pirated content over the Internet. The challenged
`
`claims provided a technological improvement over that existing technology by
`
`storing the multimedia content data with payment validation data along with “code
`
`to control access” to the multimedia content “responsive to [the] payment
`
`validation data” so that the multimedia content could not be used or distributed
`
`absent payment validation. See Ex. 1001 at 26:35-37 (claim 1). The ‘516 Patent
`
`method claims have similar specific limitations that limit retrieval and transmittal
`
`of multimedia content based on payment validation, such as requiring steps of
`
`“receiving payment validation data validating a user purchase of an item of
`
`multimedia content” and “responsive to the payment validation data validating the
`
`user purchase, retrieving the purchased item of multimedia content data from a
`
`multimedia content store and transmitting the purchased item of multimedia
`
`content to the handheld multimedia terminal.” Id. at 28:3-9 (claim 14).
`
`Because the challenged claims are a technological improvement over the
`
`then-existing systems and methods, and limit transfer and retrieval of multimedia
`
`content based on payment validation in a process specifically designed to achieve
`
`an improved technological result in conventional industry practice, the challenged
`
`claims are not directed to an abstract idea.
`
`
`
`
`
`13
`
`
`
`2.
`
`The Challenged Claims Are Similar to the Claims in
`Amdocs
`
`In Amdocs, the invention generally was “designed to solve an accounting
`
`and billing problem faced by network service providers” and included “a system,
`
`method, and computer program for merging data in a network-based filtering and
`
`aggregating platform as well as a related apparatus for enhancing networking
`
`accounting data records.” Amdocs, 2016 WL 6440387, at *1. The Federal Circuit
`
`analyzed the following claim as representative of one of the patents:
`
`A computer program product embodied on a computer
`readable storage medium for processing network
`accounting information comprising:
`computer code for receiving from a first source a first
`network accounting record;
`computer code for correlating the first network
`accounting record with accounting information available
`from a second source; and
`computer code for using the accounting information with
`which the first network accounting record is correlated to
`enhance the first network accounting record.
`Id. at *9. The Court found this claim to be patent eligible, even though it “requires
`
`arguably generic components, including network devices and ‘gatherers’ which
`
`‘gather’ information” because it “entails an unconventional technological solution
`
`(enhancing data in a distributed fashion) to a technological problem (massive
`
`record flows which previously required massive databases).” Id. at *10. Notably,
`
`the Court did not find the “computer code for receiving,” “computer code for
`
`
`
`14
`
`
`
`correlating,” and “computer code for using” to be “so general that they do no more
`
`than describe a desired function or outcome without providing any limiting detail
`
`that confines the claim to a particular solution to an identified problem” as the
`
`Board did for the challenged claims’ “code to” elements. Paper 32 at 13 (citing
`
`Affinity Labs of Texas, LLC v. Amazon.com Inc., No. 2015-2080, slip op. 7 (Fed.
`
`Cir. Sept. 23, 2016)). And yet this patent-eligible Amdocs claim is comprised
`
`exclusively of such “code for” limitations.
`
`Here, the challenged claims of the ‘516 Patent are like the eligible claim in
`
`Amdocs because they solve a problem unique to computer networks, such as the
`
`Internet (how to make multimedia content data available to purchasers over a
`
`computer network conveniently and securely in a realm where identical copies of
`
`content can be easily made for free and widely distributed, unlike any physically
`
`manufactured item) and use an unconventional technological approach (using a
`
`system that combines on the handheld multimedia terminal both the multimedia
`
`content and the payment data and/or access rule data). PO Response, Paper 17 at
`
`47-48.
`
`IV. CONCLUSION
`
`The Board should reverse its original decision and hold challenged
`
`claims 1-28 are patent eligible.
`
`15
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`
`
`Dated: December 7, 2016
`
`/ 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
`
`
`
`
`
`
`
`
`16
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`
`
`
`CERTIFICATE OF SERVICE
`
`The undersigned hereby certifies that this PATENT OWNER’S REQUEST
`
`FOR REHEARING in CBM2015-00121 was served today by emailing a copy to
`
`counsel for the Petitioners as follows:
`
`J. Steven Baughman (steven.baughman@ropesgray.com)
`Megan Raymond (megan.raymond@ropesgray.com)
`James R. Batchelder (james.batchelder@ropesgray.com)
`ApplePTABService-SmartFlash@ropesgray.com
`Attorneys for Petitioner Apple Inc.
`
`
`
`
`
`Dated: December 7, 2016
`
`
`
`
`
` /
`
` 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
`
`17