UNITED STATES PATENT AND TRADEMARK OFFICE
`
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`GOOGLE INC.,
`
`Petitioner,
`
`v.
`
`SMARTFLASH LLC,
`
`Patent Owner.
`
`____________
`
`Case CBM2015-00126
`Patent 8,118,221 B2
`
`____________
`
`PATENT OWNER’S RESPONSE
`
`
`
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`GOOGLE INC.,
`
`Petitioner,
`
`v.
`
`SMARTFLASH LLC,
`
`Patent Owner.
`
`____________
`
`Case CBM2015-00126
`Patent 8,118,221 B2
`
`____________
`
`PATENT OWNER’S RESPONSE
`
`
`
`TABLE OF CONTENTS
`
`STATEMENT OF MATERIAL FACTS ........................................................ 4
`
`INTRODUCTION ........................................................................................... 1
`
`I.
`
`II.
`
`III. THE TYGAR DECLARATION SHOULD BE GIVEN LITTLE OR NO
`WEIGHT .......................................................................................................... 5
`A. Dr. Tygar Admits that His Opinions Are Not Legal Opinions ............. 5
`B.
`No Evidentiary Standard Is Disclosed in the Tygar Declaration .......... 5
`C.
`There Is No Assurance that Dr. Tygar’s Methodology Is Reliable ...... 7
`
`
`IV. OVERVIEW OF U.S. PATENT NO. 8,118,221 .......................................... 11
`A. Overview of the Technology of the Patent ......................................... 11
`B.
`Claim Construction ............................................................................. 14
`
`
`V.
`
`CLAIM 3 IS NOT DIRECTED TO A FINANCIAL PRODUCT OR
`SERVICE ....................................................................................................... 15
`
`
`VI. CLAIM 3 OF THE ‘221 PATENT FALLS WITHIN THE
`“TECHNOLOGICAL INVENTION” EXCEPTION TO CBM REVIEW .. 20
`
`
`VII. CLAIM 3 OF THE ‘221 PATENT IS NOT DIRECTED TO AN
`ABSTRACT IDEA ........................................................................................ 22
`
`
`VIII. EVEN IF CLAIM 3 OF THE ‘221 PATENT WAS DIRECTED TO AN
`ABSTRACT IDEA, CLAIM 3 IS DIRECTED TO STATUTORY
`SUBJECT MATTER AND PETITIONER HAS NOT PROVEN
`OTHERWISE ................................................................................................ 26
`A.
`The Two-Part Test for Statutory Subject Matter ................................ 26
`B.
`Petitioner Cannot Meet Its Burden Of Proving That Claim 3 Does Not
`Amount To Significantly More Than A Patent Upon The Abstract
`Idea Itself ............................................................................................. 26
`
`
`
`- i -
`
`
`
`C.
`D.
`
`E.
`
`The Claims Are Statutory Under Mayo and Alice .............................. 28
`Claim 3 In Practice Amounts To Significantly More Than A Patent
`Upon The Abstract Idea Itself ............................................................. 36
`1.
`Evidence Shows That Claim 3 Does Not Amount To A Patent
`On The Abstract Idea Of Controlling Access Based On
`Payment ..................................................................................... 36
`The Existence Of Alternative Technologies That Control
`Access Based On Payment Outside The Scope Of Claim 3
`Show Claim 3 Does Not Amount To A Patent On The Abstract
`Idea Of Controlling Access Based On Payment ....................... 40
`Claim 3 Does Not Result In Inappropriate Preemption ...................... 43
`
`2.
`
`
`IX. A FEDERAL COURT HAS ALREADY FOUND RELATED CLAIMS OF
`THE ‘221 PATENT TO BE STATUTORY UNDER § 101 ........................ 46
`
`
`X.
`
`
`XI.
`
`THE USPTO IS ESTOPPED FROM REVISITING THE ISSUE OF
`WHETHER THE CLAIMS ARE DIRECTED TO STATUTORY SUBJECT
`MATTER ....................................................................................................... 47
`
`INVALIDATING PATENT CLAIMS VIA CBM REVIEW IS
`UNCONSTITUTIONAL ............................................................................... 48
`
`
`XII. SECTION 101 IS NOT A GROUND THAT MAY BE RAISED IN
`COVERED BUSINESS METHOD PATENT REVIEW ............................. 50
`
`
`XIII. CONCLUSION .............................................................................................. 53
`
`
`
`
`
`
`
`
`- ii -
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`
`
`
`
`PATENT OWNER’S LIST OF EXHIBITS
`
`Exhibit Number
`
`Exhibit Description
`
`2001
`
`2002
`
`Congressional Record - House, June 23, 2011, H4480-4505
`
`Congressional Record - Senate, Sep. 8, 2011, S5402-5443
`
`2003-2048
`
`Reserved
`
`2049
`
`2050
`
`Report and Recommendation (on Defendants’ Motions for
`Summary Judgment of Invalidity Pursuant to 35 U.S.C. 101),
`from Smartflash LLC et al. v. Apple, Inc., et al., Case No.
`6:13-CV-447 (E.D. Tex.) and Smartflash LLC et al. v.
`Samsung Electronics Co. Ltd, et al., Case No. 6:13-CV-448
`(E.D. Tex.), dated Jan. 21, 2015
`
`Order adopting Report and Recommendation (on
`Defendants’ Motions for Summary Judgment of Invalidity
`Pursuant to 35 U.S.C. 101), from Smartflash LLC et al. v.
`Apple, Inc., et al., Case No. 6:13-CV-447 (E.D. Tex.) and
`Smartflash LLC et al. v. Samsung Electronics Co. Ltd, et al.,
`Case No. 6:13-CV-448 (E.D. Tex.), dated Feb. 13, 2015
`
`2051-2067
`
`Reserved
`
`2068
`
`Deposition Transcript of Anthony J. Wechselberger dated
`May 28, 2015 taken in CBM2015-00015, -00016, -00017
`and -00018
`
`2069-2074
`
`Reserved
`
`
`
`- iii -
`
`
`
`Exhibit Number
`
`2075
`
`Exhibit Description
`
`Order (on Defendants’ Renewed Motion for Judgment as a
`Matter of Law on the Issue of § 101 under Rule 50(b)); Dkt.
`# 585; from Smartflash LLC, et al. v. Apple Inc., et al., Case
`No. 6:13-CV-447 (E.D. Tex.) dated July 8, 2015.
`
`2076-2087
`
`Reserved
`
`2088
`
`Declaration of Emily E. Toohey in Support of Patent
`Owner’s Preliminary Response
`
`2089-2104
`
`Reserved
`
`2105
`
`2106
`
`Transcript of Deposition of Justin Douglas Tygar, Ph.D.
`dated January 19, 2016 taken in CBM2015-00126 and -
`00129
`
`Declaration of Emily E. Toohey in Support of Patent
`Owner’s Response
`
`
`
`
`
`
`
`- iv -
`
`
`
`I.
`
`INTRODUCTION
`
`Covered business method review (“CBM review”) was instituted for U.S.
`
`Patent 8,118,221 (“the ‘221 Patent”) claim 3 on the ground that it is patent
`
`ineligible under 35 U.S.C. § 101. Decision - Institution of Covered Business
`
`Method Patent Review 37 C.F.R. § 42.208, Paper 8 at 19 (PTAB November 16,
`
`2015).
`
`CBM review is unwarranted here, because claim 3 of the ‘221 Patent is not
`
`directed to a financial product or service. Even if the Board’s conclusion that
`
`“financial product or service” “is to be interpreted broadly” (Institution Decision,
`
`Paper 8 at 7) is correct and claim 3 qualifies for CBM review, it falls within the
`
`“technological invention” exception to CBM review. The Board therefore lacks
`
`authority to conduct this covered business method review and should terminate it.
`
`If the Board nevertheless conducts a CBM review of claim 3 of the ‘221
`
`Patent, it should find the claims eligible under § 101 because claim 3 of the ‘221
`
`Patent is not directed to an abstract idea but instead is directed to a machine
`
`comprised of various structural components – a data access terminal with
`
`specifically defined elements.
`
`Even if claim 3 could be said, at some level of generality, to be directed to
`
`an abstract idea claim 3 has an “inventive concept” sufficient to ensure that claim 3
`
`in practice “amounts to significantly more than a patent on the [abstract idea]
`
`
`
`- 1 -
`
`
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`itself.” Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct.
`
`1289, 1294 (2012)
`
`Moreover, claim 3 of the ‘221 Patent (like claim 1 from which it depends) is
`
`directed to statutory subject matter because the invention it claims is “necessarily
`
`rooted in computer technology in order to overcome a problem specifically arising
`
`in the realm of computer networks.” DDR Holdings, LLC v. Hotels.com, L.P., 773
`
`F.3d 1245, 1257 (Fed. Cir. 2014). In particular, claim 3 of the ‘221 Patent claims a
`
`data access terminal that provides for secure and convenient acquisition of content
`
`data by using a single data carrier both to store payment data that can be forwarded
`
`to a data supplier and to store content data that is retrieved in response to payment
`
`validation data. Ex. 1001, ‘221 Patent at 25:54-56, 59-61. In so doing, the
`
`invention makes it easy for users to acquire content data legitimately and
`
`effectively prevents data piracy.
`
`As demonstrated below, claim 3 does not result in inappropriate preemption
`
`of the “idea of controlling access based on payment.” Redacted Petition, Paper 3
`
`at 4; Exhibit 1002 at ¶ 59. Such lack of preemption is shown by the elements of
`
`claim 3 that are not necessary to be in a system that controls access based on
`
`payment, as well as existing alternative technologies that control access based on
`
`payment that do not have the elements of claim 3.
`
`
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`- 2 -
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`
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`Further, to prevail in this CBM, Petitioner Google must show that claim 3 of
`
`the ‘221 Patent in practice does not amount to significantly more than a patent
`
`upon the abstract idea of controlling access based on payment itself. As set out
`
`below, the evidence shows that Google’s expert did not do the analysis required to
`
`draw this conclusion. As such, Petitioner cannot meet its burden of proof.
`
`Additionally, in February 2015, The United States District Court for the
`
`Eastern District of Texas examined the purely legal issue of whether claims 2 and
`
`11 (which, like claim 3 at issue, here depend from independent claim 1) are
`
`directed to statutory subject matter under 35 U.S.C. § 101, and found those claims
`
`to be statutory. See Exhibit 2049, Report and Recommendation (on Defendants’
`
`Motions for Summary Judgment of Invalidity Pursuant to 35 U.S.C. § 101)
`
`(hereinafter “Report and Recommendation”), from Smartflash LLC, et al. v. Apple
`
`Inc., et al., Case No. 6:13-CV-447 (E.D. Tex.) and Smartflash LLC, et al. v.
`
`Samsung Electronics Co. Ltd, et al., Case No. 6:13-CV-448 (E.D. Tex.), dated Jan.
`
`21, 2015, and Exhibit 2050, Order adopting Report and Recommendation (on
`
`Defendants’ Motions for Summary Judgment of Invalidity Pursuant to 35 U.S.C. §
`
`101), from Smartflash LLC, et al. v. Apple Inc., et al., Case No. 6:13-CV-447 (E.D.
`
`Tex.) and Smartflash LLC, et al. v. Samsung Electronics Co. Ltd, et al., Case No.
`
`6:13-CV-448 (E.D. Tex.), dated Feb. 13, 2015.
`
`
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`- 3 -
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`
`
`On July 8, 2015 the same District Court “decline[d] to revise or revisit its
`
`Rule 56 Order” on post-trial motion, finding that “[t]he § 101 issue has already
`
`received full and fair treatment.” See Exhibit 2075, Order (on Defendants’
`
`Renewed Motion for Judgment as a Matter of Law on the Issue of § 101 under
`
`Rule 50(b)); Dkt. # 585; Smartflash LLC, et al. v. Apple Inc., et al., Case No. 6:13-
`
`CV-447 (E.D. Tex. July 8, 2015) (emphasis added).
`
`Patent Owner submits that the USPTO has already adjudicated the threshold
`
`question of whether the challenged claims comport with 35 U.S.C. § 101, which is
`
`a question of law, during the prosecution of the ‘221 Patent. The USPTO is
`
`estopped from re-litigating this purely legal issue already considered and
`
`adjudicated by the USPTO.
`
`Patent Owner further submits that the CBM review process is an
`
`unconstitutional violation of Separation of Powers principles.
`
`Finally, Patent Owner submits that § 101 is not a ground on which CBM
`
`review may be instituted.
`
`II.
`
`STATEMENT OF MATERIAL FACTS
`
`1.
`
`The Tygar Declaration, Exhibit 1002, does not state that Dr. Tygar’s
`
`opinions presented therein are based on a “preponderance of the evidence”
`
`standard.
`
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`- 4 -
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`
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`2.
`
`The Tygar Declaration does not state that Dr. Tygar’s opinions
`
`presented therein are based on a “more likely than not” evidentiary weight
`
`standard.
`
`3. When asked during his deposition what standard of evidence he used in
`
`preparing his declaration, Dr. Tygar did not allege that he used the preponderance
`
`of the evidence standard. Exhibit 2105, 195:17-196:13.
`
`III. THE TYGAR DECLARATION SHOULD BE GIVEN LITTLE OR NO
`WEIGHT
`A. Dr. Tygar Admits that His Opinions Are Not Legal Opinions
`Whether claims are directed to statutory subject matter is “an issue of law.”
`
`Institution Decision, CBM2015-00129, Paper 8, page 18. When asked if he
`
`intended any of his opinions in this matter to be considered legal opinions, he
`
`responded “absolutely not.” Exhibit 2105, Tygar Deposition at 7:4-7. Thus, Dr.
`
`Tygar’s opinions on whether claim 3 is directed to statutory subject matter are
`
`irrelevant, and his Declaration should be given little or no weight.
`
`B. No Evidentiary Standard Is Disclosed in the Tygar Declaration
`The Tygar Declaration does not disclose the underlying facts on which Dr.
`
`Tygar’s opinions are based and is, therefore, entitled to little or no weight. 37 CFR
`
`§ 42.65 (“Expert testimony that does not disclose the underlying facts or data on
`
`which the opinion is based is entitled to little or no weight.”). More specifically,
`
`the Tygar Declaration does not state the evidentiary weight standard (e.g.,
`- 5 -
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`
`
`
`
`substantial evidence versus preponderance of the evidence) that Dr. Tygar used in
`
`arriving at his conclusions. Given that there is no evidence that Dr. Tygar even
`
`knows how much weight need be relied upon to show that a claim is non-statutory
`
`(Exhibit 2105, Tygar Deposition at 195:13-196:13; 202:21-204:18), the PTAB can
`
`only afford little or no weight to the testimony therein. To do otherwise would be
`
`to accept his opinions without knowing “the underlying facts ... on which the
`
`opinion is based” (i.e., how much evidence he thinks supports any of his opinions
`
`discussed therein).
`
`Similarly, the Board cannot assess under FRE 702 whether Dr. Tygar’s
`
`opinion testimony is “the product of reliable principles and methods” or if Dr.
`
`Tygar “reliably applied the principles and methods to the facts of the case” given
`
`that Dr. Tygar did not disclose the standard against which he measured the
`
`evidence in arriving at his opinions.
`
`For example, when Dr. Tygar “considered each of the documents cited” in
`
`his declaration (Tygar Declaration at ¶ 6) and opined that “[i]t is my opinion that
`
`claim 3 of the ’221 patent is directed to the abstract idea of controlling access
`
`based on payment.” (id. at ¶ 56) and “[i]t is my opinion that claim 3 does not add
`
`anything of significance to the underlying abstract idea of controlling access based
`
`on payment” (id. at ¶ 59) are those opinions based on less than a preponderance of
`
`the evidence, or more? Without Dr. Tygar having disclosed what evidentiary
`
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`- 6 -
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`
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`standard he used in forming his opinions, and given that there is no evidence that
`
`he even knew what evidentiary standard he was supposed to be using, the PTAB
`
`cannot rely on his opinions. Thus, the PTAB should find that the Tygar
`
`Declaration is entitled to little or no weight.
`
`C. There Is No Assurance that Dr. Tygar’s Methodology Is Reliable
`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
`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).
`
`
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`- 7 -
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`
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`Dr. Tygar did not employ any scientifically valid reasoning or methodology
`
`in reaching his opinions. In fact, when asked given what his methodology was,
`
`what his “false-positive rate would be for analyzing patents under 101,” Dr. Tygar
`
`responded that “to measure false-positive, one has to have ground truth, and I am
`
`not aware of any generally accepted ground truth of -- [f]or these sorts of
`
`questions. Courts can differ in their opinion.” Exhibit 2105, Tygar Deposition at
`
`15:5-13. He further testified “to define false-negative as to define false-positive,
`
`one needs ground truth, and I'm not aware of any generally accepted ground truth
`
`for 101 questions.” Id. at 16:23-17:1. Dr. Tygar’s testimony did not employ any
`
`scientific reasoning or methodology, but simply put Dr. Tygar in the position of a
`
`tribunal making the same legal assessment.
`
`Dr. Tygar 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. Tygar did not test his method against known decisions finding
`
`subject matter either eligible or ineligible under § 101. Dr. Tygar did not read any
`
`Supreme Court opinions in formulating his opinions for this case. Exhibit 2105,
`
`Tygar Deposition at 12:3-18. Nor did he look at any Federal Circuit Court of
`
`Appeals decisions. Id. at 12:19-22. In preparing his declaration in this case, Dr.
`
`Tygar did not look at any patent decisions that found that a computer-implemented
`
`invention was not an abstract idea. Id. at 41:4-8. Nor did Dr. Tygar look at any
`
`
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`- 8 -
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`
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`guidelines on statutory subject matter issued by the U.S. Patent and Trademark
`
`Office. Id. at 41:9-13.
`
`Dr. Tygar did not apply his methodology to any other non-Smartflash
`
`patents as a test of his methodology. Id. at 12:23-13:5. Importantly, Dr. Tygar did
`
`not review any patent that was the subject of a § 101 decision by the Federal
`
`Circuit and use it to test his method. He did not “read a patent that had a [Federal
`
`Circuit] decision without reading the decision, determine for [him]self whether or
`
`not [he] thought that the patent … was an abstract idea or was statutory subject
`
`matter for some other reason, and then cross-check[] it with what the Federal
`
`Circuit said about the same case.” Id. at 14:15-22. More specifically, Dr. Tygar
`
`“did not apply [his] method … to DDR Holdings.” Id. at 14:23-15:4.
`
`In describing his methodology, Dr. Tygar states that he looked at claim 3 of
`
`the ‘221 Patent and concluded that it was directed to the abstract idea of
`
`controlling access based on payment. Id. at 65:25-67:9. But Dr. Tygar did not
`
`consider any other possible abstract ideas. Id. at 67:10-11. Dr. Tygar did not
`
`consider whether the abstract idea of claim 3 “could have been controlling access
`
`to a data item stored by a data supplier.” Id. at 35:2-8.
`
`Dr. Tygar acknowledged on cross examination a potentially different
`
`“starting point for an abstract idea, but that's not where I started. I started here and
`
`then, having found it was directed to an abstract idea, applied part 2.” Id. at 67:13-
`
`
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`- 9 -
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`
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`17. Dr. Tygar admitted, however, “You know, it's possible that if I started at
`
`another place, I may or may not have reached a conclusion.” Id. at 67:18-20. Dr.
`
`Tygar’s admission that if he started with a different abstract idea for his analysis he
`
`may not have reached a conclusion that claim 3 is directed to patent ineligible
`
`subject matter should give the Board pause. It shows that how the witness defined
`
`the abstract idea, an arbitrary step in the process, can change the outcome. Where
`
`does one draw the line between the abstract idea and claim elements that might
`
`constitute something “significantly more?” Arguably, if Dr. Tygar had defined the
`
`abstract idea as merely “controlling access to a data item stored by a data supplier,”
`
`then the claim elements relating to payment data and payment validation data
`
`could amount to “significantly more.” For example, Dr. Tygar testified that one
`
`could “implement a data access terminal that retrieves data from a data supplier
`
`and provides the retrieved data to the data carrier that does not read payment data
`
`from the data carrier and forward the payment data to a payment validation
`
`system” as required by claim 3 if one “ma[d]e the material available for free,” to
`
`be downloaded. Id. at 36:24-37:6 (emphasis added). In that situation, one could
`
`construct a data access terminal where material could be downloaded without
`
`payment, but still “could control the access using some other method, such as
`
`password protection.” Id. at 37:7-14. Adding “code to read payment data,” “code
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`
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`- 10 -
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`to receive payment data,” and “code responsive to payment data” such as required
`
`by claim 3 would be significantly more if the abstract idea was defined differently.
`
`For these reasons, Dr. Tygar’s declaration, Exhibit 1002, should be given
`
`little or no weight.
`
`
`
`IV. OVERVIEW OF U.S. PATENT NO. 8,118,221
`A.
`Overview of the Technology of the Patent
`
`Although the claims define the scope of coverage of the patent, as described
`
`in the first paragraph of the BACKGROUND OF THE INVENTION, the ‘221
`
`Patent generally describes “data storage and access systems ... [and] is particularly
`
`useful for managing stored audio and video data, but may also be applied to
`
`storage and access of text and software, including games, as well as other types of
`
`data.” Exhibit 1001, ‘221 Patent at 1:20-28.
`
`Preferred embodiments described in the ‘221 Patent at 15:53-62 illustrate
`
`this further: “FIG. 7 ... shows a variety of content access terminals for accessing
`
`data supply computer system 120 over internet 142. The terminals are provided
`
`with an interface to a portable data carrier or ‘smart Flash card’ (SFC) as generally
`
`described with reference to FIG. 2 and as described in more detail below. In most
`
`embodiments of the terminal the SFC interface allows the smart Flash card data
`
`carrier to be inserted into and removed from the terminal, but in some
`
`
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`- 11 -
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`
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`embodiments the data carrier may be integral with the terminal.” Exemplary
`
`terminals include, but are not limited to, set-top boxes 154, CD/DVD Players 170
`
`and mobile communications devices 152. ‘221 Patent at 16:5-17.
`
`Referring to preferred embodiments, the ‘221 Patent discloses that a data
`
`supply system may provide users with a seamless purchase and content delivery
`
`experience. ‘221 Patent at 23:61-66. Users are able to purchase content from a
`
`variety of different content providers even if they do not know where the content
`
`providers are located or how the content is delivered. See id. The exemplary
`
`system is operated by a “content data supply ‘system owner,’” who may act as an
`
`intermediary between a user seeking to purchase content and content providers,
`
`such as record labels, movie studios, and software providers. See, ‘221 Patent at
`
`13:60-67. When a user accesses the system, he or she is able to select content to
`
`purchase or rent from a variety of different content providers. See, ‘221 Patent at
`
`4:64-5:8. If the user finds a content item to buy, his or her device will transmit
`
`stored “payment data” to a “payment validation system” to validate the payment
`
`data. See, ‘221 Patent at 8:3-6. The payment validation system returns proof that
`
`the payment data has been validated, in the form of “payment validation data,” and
`
`the user is able to retrieve the purchased content from the content provider. See,
`
`‘221 Patent at 8:6-9.
`
`
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`- 12 -
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`
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`The ‘221 Patent at 24:14-16 discloses that “FIG. 13 ... shows a flow chart
`
`for user access of stored data on a smart Flash card using a data access device such
`
`as the MP3 player of FIG. 1.” The ‘221 Patent at 9:20-22 discloses “The data
`
`access device uses the use status data and use rules to determine what access is
`
`permitted to data stored on the data carrier.” The ‘221 Patent at 4:64-5:8 discloses
`
`“The carrier may ... store content use rules pertaining to allowed use of stored data
`
`items. These use rules may be linked to payments made from the card to provide
`
`payment options such as access to buy content data outright; rental access to
`
`content data for a time period or for a specified number of access events; and/or
`
`rental/purchase, for example where rental use is provided together with an option
`
`to purchase content data at the reduced price after rental access has expired.”
`
`Further, as described in ‘221 Patent at 9:33-35, “use status data [is retrieved] from
`
`the data carrier [to] indicat[e] past use of the stored data.” Thus, as described in
`
`‘221 Patent at 5:29-33, “[b]y combining digital rights management with content
`
`data storage using a single carrier, the stored content data becomes mobile and can
`
`be accessed anywhere while retaining control over the stored data for the data
`
`content provider or data copyright owner.” By using a system that combines on
`
`the data carrier the digital content and payment data, access control to the digital
`
`content can be continuously enforced prior to access to the digital content and
`
`additional content can be purchased. By comparison, unlike a system as claimed,
`
`
`
`- 13 -
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`
`
`when a DVD was physically rented for a rental period, there was no mechanism
`
`associated with the DVD to purchase additional content or “to retrieve from the
`
`data supplier ... use rule data for a data item available from the data supplier.”
`
`
`
`B.
`
`Claim Construction
`
`Petitioner argues that “payment data” should be construed “to mean ‘any
`
`information that can be used in connection with the process of making a payment
`
`for content.’” Redacted Petition, Paper 3 at 15. However, “payment data” in the
`
`context of the claims of the ‘221 Patent should be interpreted to mean “data that
`
`can be used to make payment for content” when using a broadest reasonable
`
`interpretation.1
`
`The ‘221 Patent at 20:59-62, states “payment data for making a payment …
`
`is received from the smart Flash card by the content access terminal and forwarded
`
`to an e-payment system.” That is, the payment data is used for making a payment.
`
`1 Patent Owner’s use of the “broadest reasonable interpretation” (BRI)
`
`standard herein is not an admission that the BRI standard is the proper standard for
`
`CBM proceedings such as this one. However, for the purposes of this proceeding
`
`based on the issues in the instituted proceeding, Patent Owner has presented its
`
`arguments utilizing the BRI standard for “payment data.” Patent Owner reserves
`
`its right to argue for a different standard at a later date or in a different proceeding.
`
`
`
`- 14 -
`
`
`
`Furthermore, as can be seen in Figure 12c of the ‘221 Patent, step S54 reads
`
`“PAYMENT FOR SCHEME OWNER RECEIVED FROM CARD BY
`
`CONTENT ACCESS TERMINAL AND FORWARDED TO e-PAYMENT
`
`SYSTEM.” Step S55 then reads “PAYMENT RECORD DATA RECEIVED
`
`FROM e-PAYMENT SYSTEM BY CONTENT ACCESS TERMINAL AND
`
`FORWARDED TO CARD.” Both of those steps precede step S56 which recites
`
`“PAYMENT RECORD DATA, PURCHASE REQUEST AND CARD
`
`REGISTRATION DATA TRANSMITTED TO SCHEME OWNER.” Thus, as
`
`payment has not yet been made when the payment data of step S54 is sent,
`
`“payment data” should be interpreted to mean “data that can be used to make
`
`payment for content.”
`
`
`
`V. CLAIM 3 IS NOT DIRECTED TO A FINANCIAL PRODUCT OR
`SERVICE
`
`As set forth in 37 CFR 42.301(a), to be eligible for CBM review, claim 3
`
`must be found to be claiming “a method or corresponding apparatus for performing
`
`data processing or other operations used in the practice, administration, or
`
`management of a financial product or service.” Although the Petition argues that
`
`claim 3 qualifies the ‘221 Patent as a CBM patent (Redacted Petition, Paper 3 at 4-
`
`7), claims 1 and 3 do not recite a “financial product or service” as required for a
`
`CBM review to be instituted, especially in light of the legislative history showing
`
`
`
`- 15 -
`
`
`
`Congress’ intent of the narrow meaning of that phrase. In the publication of the
`
`Final Rules for “Transitional Program for Covered Business Method Patents -
`
`Definitions of Covered Business Method Patent and Technological Invention,” the
`
`PTO stated:
`
`The definition set forth in § 42.301(a) for covered business
`method patent adopts the definition for covered business method
`patent provided in section 18(d)(1) of the AIA. In administering the
`program, the Office will consider the legislative intent and history
`behind the public law definition and the transitional program itself.
`For example, the legislative history explains that the definition of
`covered business method patent was drafted to encompass patents
`“claiming activities that are financial in nature, incidental to a
`financial activity or complementary to a financial activity.” 157
`CONG. REC. S5432 (daily ed. Sept. 8, 2011) (statement of Sen.
`Schumer). This remark tends to support the notion that “financial
`product or service” should be interpreted broadly.
`
`Regardless of this explanation, it is improper for this tribunal to rely on the
`
`legislative history of the AIA to determine the specific issue before it, i.e., whether
`
`trial should be instituted on the present petition. The Supreme Court has “stated
`
`time and again that courts must presume that a legislature says in a statute what it
`
`means and means in a statute what it says. When the words of a statute are
`
`unambiguous, then, this first canon of construction is also the last: judicial inquiry
`
`is complete.” Connecticut Nat’l Bank v. Germain, 503 U.S. 249, 253–54 (1992).
`
`
`
`- 16 -
`
`
`
`“[W]hen the language of the statute is plain, legislative history is irrelevant.”
`
`Zedner v. United States, 547 U.S. 489, 510–11 (2006) (Scalia, J., concurring-in-
`
`part). This long standing rule is based on the constitutional limitation that
`
`legislators cannot achieve through floor statements what “they were unable to
`
`achieve through the statutory text.” Exxon Mobil Corp. v. Allapattah Servs., Inc.,
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`545 U.S. 546, 568 (2005). Because Section 18 is unambiguously limited to
`
`“financial product[s] and service[s],” there is no reason to look to the statements of
`
`a single Senator to re-tool text that was approved by both houses of Congress and
`
`signed by the President.
`
`Moreover, the PTO’s synopsis of the legislative history is an improper
`
`oversimplification and does not address that “financial product or service” was
`
`intended to be defined narrowly. In fact, when the House of Representatives
`
`debated Congressman Schock’s Amendment to remove Section 18 in its entirety
`
`from the America Invents Act, several members of Congress discussed their
`
`understanding of that narrower definition. For example, Mr. Schock himself
`
`discussed at the beginning of his remarks that “Section 18 carves out a niche of
`
`business method patents covering technology used specifically in the financial
`
`industry and would create a special class of patents in the financial services field
`
`subject to their own distinctive post-grant administrative review.” (Exhibit 2001,
`
`Congressional Record - House, June 23, 2011, H4496.) (Emphasis added.)
`
`
`
`- 17 -
`
`
`
`Similarly, Congressman Shuster discussed his understanding of the narrow
`
`scope of the legislation. He stated:
`
`Mr. Chair, I would like to place in the record my understanding
`that the definition of ‘‘covered business method patent,’’ Section
`18(d)(1) of H.R. 1249, the America Invents Act, is intended to be
`narrowly construed to target only those business method patents that
`are unique to the financial services industry in the sense that they are
`patents which only a financial services provider would use to
`furnish a financial product or service. The example that I have been
`given is a patent relating to electronic check scanning, which is the
`type of invention that only the financial services industry would
`utilize as a means of providing improved or more efficient banking
`services. In contrast, Section 18 would not encompass a patent that
`can be used in other industries, but which a financial services
`provider might also use. Lastly, it is also my understanding from
`discussions with the Committee that Section 18 is targeted only
`towards patents for non-technological inventions.
`
`
`
`Id. at H4497. (Emphasis added.) It was based on that understanding that
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`Congressman Shuster then voted to keep Section 18 in the bill. (See Id. at H4503.)
`
`Likewise, Congresswoman Waters discussed that Section 18 was directed to
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`cost savings measures in the ban
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