`________________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`________________________
`
`APPLE INC.,
`
`Petitioner,
`
`v.
`
`SMARTFLASH LLC,
`
`Patent Owner.
`
`________________________
`Case CBM2015-00123
`Patent 8,033,458 B2
`________________________
`
`PATENT OWNER’S MOTION TO EXCLUDE EVIDENCE
`
`
`
`
`
`
`
`
`
`
`
`
`
`TABLE OF CONTENTS
`
`B.
`
`
`Statement of Precise Relief Requested ............................................................ 1
`I.
`Patent Owner Smartflash Timely Objected to Petitioner’s Exhibits ............... 1
`II.
`III. Argument ......................................................................................................... 1
`A.
`Exhibits 1002 and 1037 are Irrelevant, Inadmissible Other Evidence
`of the Content of a Writing, and Cumulative ........................................ 1
`Exhibits 1003, 1005, 1006, 1007, 1009, 1011, 1012, 1013, 1014,
`1015, 1016, 1017, 1018, 1019, 1026, 1027, 1028, 1029, 1030, 1031,
`1032, 1034, 1035, and 1036 are Not Alleged to be Invalidating Prior
`Art and thus are Irrelevant ..................................................................... 4
`Exhibit 1020 Lacks Foundation, is Unreliable, and Relies on
`Irrelevant Exhibits ................................................................................. 7
`Exhibit 1033 is Irrelevant and Hearsay ............................................... 12
`D.
`IV. Conclusion ..................................................................................................... 12
`
`
`C.
`
`i
`
`
`
`
`
`
`I.
`
`Statement of Precise Relief Requested
`
`Pursuant to 37 C.F.R. §§ 42.62 and 42.64(c), Patent Owner Smartflash LLC
`
`moves to exclude Exhibits 1002, 1003, 1005, 1006, 1007, 1008, 1009, 1011, 1012,
`
`1013, 1014, 1015, 1016, 1017, 1018, 1019, 1020, 1024, 1026, 1027, 1028, 1029,
`
`1030, 1031, 1032, 1033, 1034, 1035, 1036, and 1037.
`
`II.
`
`Patent Owner Smartflash Timely Objected to Petitioner’s Exhibits
`
`Patent Owner Smartflash LLC timely objected to CBM2015-00123 Exhibits
`
`1002, 1003, 1005, 1006, 1007, 1008, 1009, 1011, 1012, 1013, 1014, 1015, 1016,
`
`1017, 1018, 1019, 1020, 1024, 1026, 1027, 1028, 1029, 1030, 1031, 1032, 1033,
`
`1034, 1035, 1036, and 1037 by filing Patent Owner’s Objections to Admissibility
`
`of Evidence. Paper 9.
`
`III. Argument
`Pursuant to 37 C.F.R. § 42.64(c), the Federal Rules of Evidence apply in
`
`Covered Business Method Review (“CBM”) proceedings.
`
`A. Exhibits 1002 and 1037 are Irrelevant, Inadmissible Other
`Evidence of the Content of a Writing, and Cumulative
`
`Patent Owner moves to exclude Exhibits 1002 (Plaintiff’s First Amended
`
`Complaint) and 1037 (February 16, 2015 trial testimony excerpt in Smartflash LLC
`
`v Apple Inc., Case No. 6:13 cv 447 (E.D. Tex.)) on grounds that they are:
`
`inadmissible under FRE 402 because they fail the test for relevance set forth in
`
`
`
`1
`
`
`
`
`
`FRE 401; inadmissible other evidence of the content of a writing under FRE 1004;
`
`and, even if relevant, are unnecessary cumulative evidence under FRE 403.
`
`Petitioner cites to Exhibits 1002 and 1037 as support for the ‘458 Patent
`
`being “financial in nature” and thus CBM review eligible. Petition at 25-27.
`
`Specifically, the Petition cites Exhibit 1002 to show Patent Owner’s
`
`characterization of the ‘458 Patent as “generally cover[ing] a portable data carrier
`
`for storing data and managing access to the data via payment information and/or
`
`use status rules” and “also generally cover[ing] a computer network … that serves
`
`data and manages access to data by, for example, validating payment information.”
`
`Petition at 26 (citing Ex. 1002 ¶ 17). The Petition cites to Exhibit 1037 to show
`
`the inventor’s trial testimony describing the inventions as “particular devices and
`
`methods for combining payment functionality, secure downloading, storage, and
`
`rules for the use of content ….” Id. (citing Ex. 1037 at 4).
`
`Patent Owner’s descriptions of the ‘458 Patent in Exhibits 1002 and 1037
`
`are not relevant to any of the issues here. In a CBM on the same ‘458 Patent,
`
`CBM2015-00016, the Board declined to exclude the same and similar exhibits
`
`because “[Patent Owner’s] characterization of the … patent in prior proceedings is
`
`relevant to the credibility of its characterization of the … patent in this
`
`proceeding.” CBM2015-00016, Paper 56 at 24. The Board’s reasoning that a
`
`Patent Owner’s characterization of the patent, or the Patent Owner’s credibility in
`
`
`
`2
`
`
`
`
`
`doing so, is relevant to the analysis of whether a patent qualifies for Covered
`
`Business Method (“CBM”) review under § 18(a) of the Leahy-Smith America
`
`Invents Act (“AIA”) is contrary to Federal Circuit authority. As noted by the
`
`Federal Circuit Ҥ 18(d)(1) [of the AIA] directs us to examine the claims when
`
`deciding whether a patent is a CBM patent.” Blue Calypso, LLC v. Groupon, Inc.,
`
`815 F.3d 1331, 1340 (Fed. Cir. March 1, 2016) (emphasis original). The claims
`
`are delineated in the ‘458 Patent, which is in evidence as Exhibit 1001. That is all
`
`the Board needs for its analysis. Moreover, there are no credibility issues here that
`
`render Exhibits 1002 and 1037 relevant. There is nothing about Patent Owner’s
`
`characterization of the ‘458 Patent in this proceeding – that claim 4 “does not
`
`recite a ‘financial product or service’” in the way Congress intended (Patent
`
`Owner’s Preliminary Response, Paper 5 at 49-53) – that is contradicted by Exhibits
`
`1002 and 1037 such that the credibility of Patent Owner’s characterization is at
`
`issue. As such Exhibits 1002 and 1037 are irrelevant and inadmissible.
`
`Further, Petitioner’s expert, John P. J. Kelly, Exhibit 1020, (“Kelly
`
`Declaration”) does not cite to Exhibits 1002 or 1037. The Board’s November 10,
`
`2015 Decision – Institution of Covered Business Method Patent Review 37 C.F.R.
`
`§ 42.208 (“PTAB Decision”), Paper 7, does not cite Exhibits 1002 and 1037.
`
`Exhibits 1002 and 1037 therefore do not appear to make a fact of consequence in
`
`determining this action more or less probable than it would be without Exhibits
`
`
`
`3
`
`
`
`
`
`1002 and 1037. As such, Exhibits 1002 and 1037 do not pass the test for relevant
`
`evidence under FRE 401 and are not admissible per FRE 402.
`
`Petitioner does not need to cite to Exhibits 1002 and 1037 to characterize the
`
`‘458 Patent when Exhibit 1001, the actual ‘458 Patent, is in evidence. Under FRE
`
`1004, other evidence of the content of a writing (here the ‘458 Patent) is admissible
`
`if the original is lost, cannot be obtained, has not been produced, or the writing is
`
`not closely related to a controlling issue. None of those conditions apply here,
`
`given that the ‘458 Patent is in evidence and is the subject of the trial.
`
`Even if Exhibits 1002 and 1037 were found to be relevant, they should also
`
`be excluded under FRE 403 as cumulative of the ‘458 Patent, Exhibit 1001.
`
`B. Exhibits 1003, 1005, 1006, 1007, 1009, 1011, 1012, 1013, 1014, 1015,
`1016, 1017, 1018, 1019, 1026, 1027, 1028, 1029, 1030, 1031, 1032, 1034,
`1035, and 1036 are Not Alleged to be Invalidating Prior Art and thus
`are Irrelevant
`
`Petitioner cites Exhibits 1003 (U.S. Patent No. 5,925,127) (“Ahmad”), 1005
`
`(U.S. Patent No. 5,940,805) (“Kopp”), 1006 (U.S. Patent No. 4,999,806)
`
`(“Chernow”), 1007 (U.S. Patent No. 5,675,734)(“Hair”), 1009 (U.S. Patent No.
`
`4,878,245) (“Bradley”), 1011 (U.S. Patent No. 4,337,483) (“Guillou”), 1012 (U.S.
`
`Patent No. 5,103,392) (“Mori”), 1013 (U.S. Patent No. 5,530,235) (“Stefik ‘235”),
`
`1014 (U.S. Patent No. 5,629,980) (“Stefik’ 980”), 1015 (U.S. Patent No.
`
`5,915,019) (“Ginter”), 1016 (European Patent Application, Publication No.
`
`EP0809221A2) (“Poggio”), 1017 (PCT Application Publication No. WO
`
`
`
`4
`
`
`
`
`
`99/43136) (“Rydbeck”), 1018 (JP Publication No. H11-164058 (translation))
`
`(“Sato”), 1019 (Eberhard von Faber, Robert Hammelrath, and Franz-Peter Heider,
`
`“The Secure Distribution of Digital Contents,” IEEE (1997)) (“von Faber”), 1026
`
`(U.S. Patent No. 7,725,375) (“Shepherd”), 1027 (International Publication No. WO
`
`95/34857) (“Smith”), 1028 (U.S. Patent No. 5,646,992) (“Subler”), 1029 (U.S.
`
`Patent No. 5,903,721) (“Sixtus”), 1030 (R. Mohan, J.R. Smith, C.S. Li, “Adapting
`
`Multimedia Internet Content for Universal Access,” IEEE Transactions on
`
`Multimedia, Vol. 1, No. 1, 1999, pp. 104-114), 1031 (JP Patent Application
`
`Publication No. H10-269289 (translation)) (“Maari”), 1032 (U.S. Patent No.
`
`5,761,485) (“Munyan”), 1034 (International Publication No. WO99/13398)
`
`(“Peterson”), 1035 (U.S. Patent No. 5,593,005)(“Liu”), and 1036 (J. Taylor,
`
`“DVD-Video: Multimedia for the Masses,” IEEE Multimedia, Vol. 6, No. 3, July-
`
`September 1999, pp. 86-92). Although cited, neither the Petition nor the Kelly
`
`Declaration assert that any of these Exhibits (“the Unasserted Exhibits”) are
`
`potentially invalidating prior art, either alone or in combination with any other
`
`reference. The PTAB Decision did not base any of its analysis on the Unasserted
`
`Exhibits. Thus, the Unasserted Exhibits do not appear to make a fact of
`
`consequence in determining this action more or less probable than it would be
`
`without the Unasserted Exhibits. As such, the Unasserted Exhibits do not pass the
`
`test for relevant evidence under FRE 401 and are not admissible per FRE 402.
`
`
`
`5
`
`
`
`
`
`In related CBM2015-00016, the Board declined to exclude similarly
`
`unasserted exhibits, finding “these exhibits are relevant to the state of the art—
`
`whether the technical limitations of the challenged claim were well-known,
`
`routine, and conventional—and thus, to our § 101 analysis.” CBM2015-00016,
`
`Paper 56 at 26. Whether the technical limitations of the challenged claim were
`
`well known, routine, and conventional is only relevant after finding that a claim is
`
`directed to an abstract idea and the analysis moves to the second step of whether
`
`the claims contain an “inventive concept.” Mayo Collaborative Services v.
`
`Prometheus Laboratories, Inc., 132 S. Ct. 1289, 1294 (2012). Here, the claims at
`
`issue are not directed to an abstract idea. Patent Owner’s Response, Paper 17 at
`
`19-28. The Federal Circuit recently “[found] it relevant to ask whether the claims
`
`are directed to an improvement to computer functionality versus being directed to
`
`an abstract idea, even at the first step of the [Mayo/]Alice analysis. Enfish, LLC v.
`
`Microsoft Corp., 2016 WL 2756255, at *4 (Fed. Cir. May 12, 2016) (citing Alice
`
`Corp. Pty Ltd. v. CLS Bank Int’l, 134 S.Ct. 2347 (2014)). In Enfish, the Federal
`
`Circuit concluded that the claims were directed to an improvement to computer
`
`functionality and that “the claims are directed to a specific implementation of a
`
`solution to a problem in the software arts. Accordingly, we find the claims at issue
`
`are not directed to an abstract idea.” Id. at *8. Like the claims in Enfish, the
`
`Smartflash claims are “directed to an improvement to computer functionality” and
`
`
`
`6
`
`
`
`
`
`a “specific solution to a problem” in computer networks – the problem of data
`
`piracy. Patent Owner’s Response, Paper 17 at 2, 31-50. As such, there is no need
`
`to reach the second step of Mayo/Alice to determine if there is an “inventive
`
`concept,” so the Board’s previous rationale is moot. Moreover, in determining
`
`whether there is an “inventive concept” the relevant analysis is whether there is an
`
`“inventive concept” over the abstract idea (if one is found) and not whether there
`
`is an “inventive concept” over the prior art. The question of whether there is an
`
`“inventive concept” over the prior art is a question of patentability under
`
`35 U.S.C. §§ 102 and 103, and not subject matter eligibility under 35 U.S.C. § 101.
`
`Exhibits 1003, 1005, 1006, 1007, 1009, 1011, 1012, 1013, 1014, 1015, 1016,
`
`1017, 1018, 1019, 1026, 1027, 1028, 1029, 1030, 1031, 1032, 1034, 1035, and
`
`1036 are not relevant and should be excluded.
`
`C. Exhibit 1020 Lacks Foundation, is Unreliable, and Relies on
`Irrelevant Exhibits
`
`Patent Owner moves to exclude Exhibit 1020, the Kelly Declaration, in its
`
`entirety as the Kelly Declaration does not demonstrate that Dr. Kelly is an expert
`
`whose testimony is relevant to the issue of patent eligibility under 35 U.S.C. § 101
`
`or patentability under 35 U.S.C. § 112 ¶ 2, the only issues on which this CBM was
`
`instituted. Whether claims are directed to statutory subject matter is “an issue of
`
`law.” Institution Decision, CBM2015-00129, Paper 8, page 18. When asked on
`
`cross examination what he understood he was to do in providing his opinions in
`
`
`
`7
`
`
`
`
`
`this CBM, Dr. Kelly stated “I was asked to examine the … background prior art,
`
`and then based on that, determine whether or not I thought that the … Smartflash
`
`claims were patent eligible, and I'm not a legal expert. I'm not a lawyer, and so I'm
`
`providing a technical analysis based on my understanding of the legal standards.”
`
`Exhibit 2108, Kelly Deposition at 9:19-10:14. When asked if he intended any of
`
`his opinions in his declaration to be considered legal opinions, Dr. Kelly responded
`
`“It seems to me that that is a legal question in and of itself. I'm not here to answer
`
`-- to provide legal testimony.” Id. 10:15-21 (emphasis added). Further, when
`
`asked about what kinds of things he understood the USPTO “believes makes a
`
`claim inventive,” Dr. Kelly reiterated “Well, there's a … statute that lays out the
`
`requirements. I'm not a lawyer. I'm not here to give a legal opinion…” Id. at
`
`134:11-17 (emphasis added). Thus, Dr. Kelly’s opinions on whether claims 2-5, 7,
`
`9, and 12 of the ‘458 Patent are directed to statutory subject matter, a question of
`
`law, are irrelevant, and his Declaration should be excluded.
`
`Moreover, given that patent eligibility under § 101 and definiteness under
`
`§ 112 are purely legal issues, opinions such as those rendered by Dr. Kelly on the
`
`ultimate questions of patent eligibility in ¶¶ 74-99 and of definiteness in ¶¶ 100-
`
`105 of his declaration constitute testimony on United States patent law or patent
`
`examination practice. Such testimony is inadmissible under 37 C.F.R. § 42.65
`
`
`
`8
`
`
`
`
`
`(“testimony on United States patent law or patent examination practice will not be
`
`admitted”).
`
`Further, Dr. Kelly has not shown that his opinions are proper expert opinions
`
`upon which the PTAB can rely. There is no assurance that Dr. Kelly’s
`
`methodologies used to render his opinions in this case are reliable as required by
`
`FRE 702. In Daubert v. Merrell Dow Pharmaceuticals, Inc., 113 S.Ct. 2786, 509
`
`U.S. 579 (1993), the Supreme Court set forth standards for the admissibility of
`
`expert testimony. The Supreme Court noted that:
`
`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
`
`
`
`9
`
`
`
`
`
`scientific knowledge that will assist the trier of fact will
`be whether it can be (and has been) tested.
`
`Daubert v. Merrell Dow Pharmaceuticals, Inc., 113 S.Ct. 2786, 2796, 509 U.S.
`
`579, 592-93 (1993) (emphasis added).
`
`Dr. Kelly did not employ any scientifically valid reasoning or methodology
`
`in reaching his opinions. When asked about his method’s false positive rate
`
`(finding a claim to be not eligible when it was), Dr. Kelly could not give a rate.
`
`Exhibit 2108 at 26:7-19. Similarly, he could not provide a false negative rate. Id.
`
`at 26:21-27:12. Dr. Kelly’s testimony did not employ any scientific reasoning or
`
`methodology, but simply put Dr. Kelly in the position of a tribunal making the
`
`same legal assessment.
`
`Dr. Kelly also did nothing to test the method he used in arriving at his
`
`opinions in this case to ensure that his method was repeatable and reliable. For
`
`example, Dr. Kelly did not test his method against known decisions finding subject
`
`matter either eligible or ineligible under § 101. Specifically, Dr. Kelly: did not
`
`read any Supreme Court opinions on what constitutes statutory subject matter in
`
`formulating his opinions for his declarations in this case (id. at 16:12-17:8); did not
`
`look at any Federal Circuit Court of Appeals decisions (id. at 19:3-15); did not
`
`look at any PTAB decisions post- Alice to examine what claims are computer
`
`implemented but not directed to abstract ideas (id. at 137:2-10); did not look at any
`
`
`
`10
`
`
`
`
`
`PTAB decisions or court decisions that evaluated claims under § 101 and ruled that
`
`the claims were not directed to an abstract idea (id. at 299:7-17); did not look at
`
`any guidelines on subject matter eligibility under § 101 from the USPTO while
`
`preparing his opinions (id. at 25:9-17); did not review any patent that was the
`
`subject of a § 101 decision by a court or the USPTO and use it to test his method
`
`(id. at 24:14-25:8; 27:13-25).
`
`Despite rendering opinions that the claims at issue are directed to an abstract
`
`idea, on cross examination, Dr. Kelly could not even define what an abstract idea
`
`is. Id. at 30:9-10; 31:16-17; 32:4-5. Nor could Dr. Kelly articulate what level of
`
`abstraction would be appropriate in determining whether a claim is directed to an
`
`abstract idea. Id. at 297:8-298:22.
`
`Further, Dr. Kelly’s opinions miss the mark, because they reflect an analysis
`
`that looks for an inventive concept over the prior art, rather than over the abstract
`
`idea itself. Exhibit 1020 ¶¶ 75 and 78; Exhibit 2108 at 304:1-15. Subject matter
`
`eligibility turns on inventiveness over the abstract idea, not over the prior art. Alice
`
`Corp. Pty. Ltd. v. CLS Bank Intern., 134 S.Ct. 2347, 2355 (2014) (Mayo step-two
`
`analysis is “a search for an ‘inventive concept’—i.e., an element or combination of
`
`elements that is ‘sufficient to ensure that the patent in practice amounts to
`
`significantly more than a patent upon the [abstract idea] itself’”)(emphasis added).
`
`Dr. Kelly’s analysis incorrectly compares the Smartflash claims to the prior art
`
`
`
`11
`
`
`
`
`
`rather than to the abstract idea. His methodology is wrong, and therefore his
`
`opinions are unreliable.
`
`Paragraphs of the Kelly Declaration should be excluded to the extent that
`
`any paragraph relies upon an exhibit that is objected to herein for the reasons set
`
`forth in those objections. Any paragraph in the Kelly Declaration that relies upon
`
`any exhibit not relied upon by the PTAB to institute this proceeding is further
`
`objected to as not being relevant and therefore being inadmissible under FRE 401
`
`and 402.
`
`D. Exhibit 1033 is Irrelevant and Hearsay
`Exhibit 1033 is the April 8-9, 2015 Deposition Transcript of Jonathan Katz,
`
`Patent Owner’s expert in CBM2014-00102/106/108/112, all of which were
`
`instituted on §§ 102 and/or 103 grounds rather than § 101 and § 112, the grounds
`
`of institution here. Patent Owner did not proffer Dr. Katz as an expert in this case.
`
`As such, Exhibit 1033 is not relevant under FRE 401 and it is not admissible per
`
`FRE 402. Exhibit 1033 also is hearsay under FRE 801 and thus inadmissible under
`
`FRE 802.
`
`IV. Conclusion
`For these reasons, Patent Owner Smartflash, LLC respectfully requests that
`
`the Board exclude Exhibits 1002, 1003, 1005, 1006, 1007, 1008, 1009, 1011, 1012,
`
`
`
`12
`
`
`
`
`
`1013, 1014, 1015, 1016, 1017, 1018, 1019, 1020, 1024, 1026, 1027, 1028, 1029,
`
`1030, 1031, 1032, 1033, 1034, 1035, 1036, and 1037.
`
`
`
`Dated: June 13, 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
`
`
`
`
`
`13
`
`
`
`
`
`
`
`CERTIFICATE OF SERVICE
`
`The undersigned hereby certifies that this PATENT OWNER’S MOTION
`
`TO EXCLUDE EVIDENCE in CBM2015-00123 was served today, by agreement
`
`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 13, 2016
`
`
`
`
`
`
`
`14