`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`Attorney Docket No:
`01980-00035-22101
`
`Petitioner: Google Inc.
`
`In re Covered Business Method Review
`of:
`
`
`U.S. Patent No. 8,118,221
`
`
`Issued: February 21, 2012
`
`Inventors: Patrick Racz and
` Hermen-ard Hulst
`
`
`Application No. 12/943,872
`
`Filed: November 10, 2010
`
`For: DATA STORAGE AND
`ACCESS SYSTEMS
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`PETITION FOR COVERED BUSINESS METHOD PATENT REVIEW OF
`UNITED STATES PATENT NO. 8,118,221 PURSUANT TO 35 U.S.C. § 321
`AND § 18 OF THE LEAHY-SMITH AMERICA INVENTS ACT
`
`
`
`Mail Stop Patent Board
`Patent Trial and Appeal Board
`U.S.P.T.O.
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
`
`
`
`
`
`
`TABLE OF CONTENTS
`
`Page
`
`INTRODUCTION ..................................................................................................... 1
`
`I.
`
`PETITIONER HAS STANDING .................................................................... 2
`
`A.
`
`THE ’221 PATENT IS A COVERED BUSINESS METHOD
`PATENT ................................................................................................ 2
`
`1.
`
`2.
`
`The Board Has Repeatedly Found That Claim 32
`Qualifies The ’221 Patent As A CBM Patent ............................. 3
`
`Challenged Claim 3 Also Qualifies The ’221 Patent As A
`CBM Patent ................................................................................. 4
`
`(a) Claim 3 Covers Subject Matter That Is Financial
`In Nature ........................................................................... 6
`
`(b) Claim 3 Does Not Cover A Technological
`Invention ........................................................................... 7
`
`II. MANDATORY NOTICES UNDER 37 C.F.R. § 42.8(A)(1) ........................ 9
`
`A.
`
`B.
`
`C.
`
`PETITIONER IS A REAL PARTY IN INTEREST SUED FOR
`AND CHARGED WITH INFRINGEMENT ....................................... 9
`
`RELATED MATTERS UNDER 37 C.F.R. § 42.8(B)(2) .................... 9
`
`LEAD AND BACKUP COUNSEL UNDER 37 C.F.R. §
`42.8(B)(2) ............................................................................................ 10
`
`III. PAYMENT OF FEES ................................................................................... 11
`
`IV. CLAIM CONSTRUCTION .......................................................................... 11
`
`A.
`
`B.
`
`C.
`
`D.
`
`“DATA CARRIER” ............................................................................ 13
`
`“PAYMENT DATA” .......................................................................... 14
`
`“PAYMENT VALIDATION SYSTEM” ........................................... 15
`
`“PAYMENT VALIDATION DATA” ................................................ 16
`
`
`
`i
`
`
`
`
`
`V.
`
`
`
`E.
`
`“USE RULE DATA” .......................................................................... 17
`
`THE CHALLENGED CLAIM IS UNPATENTABLE UNDER 35
`U.S.C. § 101 ................................................................................................... 18
`
`A.
`
`THE CHALLENGED CLAIM IS DIRECTED TO A PATENT-
`INELIGIBLE ABSTRACT IDEA ...................................................... 20
`
`1.
`
`2.
`
`The Challenged Claim Is Directed To The Abstract Idea
`Of Controlling Access To Something Based On Payment ....... 21
`
`The Abstract Idea Of Controlling Access To Something
`Based On Payment Is Not Patentable ....................................... 24
`
`B.
`
`THE CHALLENGED CLAIM DOES NOT DISCLOSE AN
`“INVENTIVE CONCEPT” THAT IS “SIGNIFICANTLY
`MORE” THAN AN ABSTRACT IDEA ............................................ 25
`
`1.
`
`2.
`
`3.
`
`Field Of Use Limitations Cannot Transform An Abstract
`Idea Into A Patent Eligible Invention ....................................... 26
`
`Insignificant Pre- Or Post-Solution Activity Cannot
`Transform An Abstract Idea Into A Patent Eligible
`Invention ................................................................................... 27
`
`Tangential References To Generic Computer
`Implementation Cannot Transform An Abstract Idea Into
`A Patent Eligible Invention ....................................................... 28
`
`C.
`
`D.
`
`PREEMPTION CONCERNS CONFIRM PATENT
`INELIGIBILITY ................................................................................. 31
`
`THE MACHINE-OR-TRANSFORMATION TEST
`CONFIRMS PATENT INELIGIBILITY ........................................... 32
`
`VI. CONCLUSION .............................................................................................. 33
`
`
`
`
`
`ii
`
`
`
`Exhibit No.
`1001
`
`1002
`
`1003
`
`1004
`
`1005
`
`1006
`
`1007
`
`1008
`
`1009
`
`1010
`
`1011
`
`1012
`
`1013
`
`1014
`
`
`
`
`
`
`
`
`
`EXHIBIT LIST
`
`Description
`
`U.S. Patent No. 8,118,221 to Racz et al. (“the ’221 patent”)
`
`Declaration of Dr. Justin Douglas Tygar Regarding the ’221
`Patent
`
`Curriculum Vitae of Dr. Justin Douglas Tygar
`
`PCT Publication No. WO 99/07121 (“Fetik”)
`
`U.S. Patent No. 5,790,423 to Lau et al. (“the ’423 patent”)
`
`SOFTBOOK PRESS—Secure Information Delivery to a
`Distributed Workforce, CIO Magazine, Aug. 1, 1999
`
`Kevin Maney, Electronic Books to Hit the Shelves, New Straits
`Times (Computimes), Aug. 24, 1998
`
`Liquid Audio, Music on the Net—A Topographic Tour of the
`Online Music World (1997)
`
`Liquid Audio Indie 1000 Program, http://www.liquidaudio.com
`(archived Feb. 11, 1998)
`
`Reserved
`
`Report and Recommendation Regarding Claim Construction,
`Smartflash LLC v. Samsung Elecs. Co., No. 6:13-cv-448, Dkt.
`274 (E.D. Tex. Sept. 24, 2014)
`
`Plaintiffs Smartflash LLC’s and Smartflash Technologies
`Limited’s Opening Claim Construction Brief, Smartflash LLC v.
`Samsung Elecs. Co., No. 6:13-cv-448, Dkt. 175 (E.D. Tex. June
`13, 2014)
`
`Reserved
`
`A.M. Turing, On Computable Numbers, with an Application to
`the Entscheidungsproblem, Proceedings of the London
`Mathematical Society, Vol. 42:2, pp. 230-265 (Nov. 12, 1936)
`
`iii
`
`
`
`Exhibit No.
`1015
`
`1016
`
`1017
`
`1018
`
`1019
`
`1020
`
`1021
`
`1022
`
`1023
`
`1024
`
`
`
`Description
`
`Plaintiffs’ Original Complaint for Patent Infringement,
`Smartflash LLC v. Apple Inc., No. 6:13-cv-447, Dkt. 1 (E.D. Tex.
`May 29, 2013)
`
`U.S. Patent No. 8,118,221 Claim Chart—Google (Android),
`Exhibit 4 to Plaintiffs Smartflash LLC and Smartflash
`Technologies Limited’s P.R. 3-1 and 3-2 Disclosure of Asserted
`Claims and Infringement Contentions, Smartflash LLC v. Google
`Inc., No. 6:14-cv-435 (E.D. Tex. Aug. 22, 2014) (excerpted)
`
`Reserved
`
`U.S. Patent No. 7,942,317 to Racz et al. (“the ’317 patent”)
`
`U.S. Patent No. 8,033,458 to Hulst et al. (“the ’458 patent”)
`
`U.S. Patent No. 8,061,598 to Racz et al. (“the ’598 patent”)
`
`U.S. Patent No. 7,334,720 to Hulst et al. (“the ’720 patent”)
`
`Roger A. Cunningham et al., The Law of Property (2d ed. 1993)
`(excerpted)
`
`Michael H. Harris, History of Libraries in the Western World
`(4th ed. 1999) (excerpted)
`
`David Broderick, The First Toll Roads—Ireland’s Turnpike
`Roads 1729-1858 (2002) (excerpted)
`
`iv
`
`
`
`
`
`
`
`
`
`INTRODUCTION
`
`
`
`Pursuant to 35 U.S.C. § 321 and 37 C.F.R. § 42.304, the undersigned, on
`
`behalf of and acting in a representative capacity for petitioner Google Inc., hereby
`
`petitions for review under the transitional program for covered business method
`
`patents of claim 3 of U.S. Patent No. 8,118,221 (“challenged claim”), issued to
`
`Smartflash Technologies Limited and currently assigned to Smartflash LLC (the
`
`patent holder). Petitioner hereby asserts that it is more likely than not that the
`
`challenged claim is unpatentable for the reasons set forth herein and respectfully
`
`requests review of, and judgment against, claim 3 as unpatentable under 35 U.S.C.
`
`§ 101.
`
`The subject matter of the challenged claim is ineligible for patenting
`
`pursuant to controlling precedents from the Supreme Court and the Federal Circuit.
`
`The challenged claim is explicitly drawn to the abstract idea of controlling access
`
`based on payment. The claim recites “code to” perform steps inherent in that
`
`abstract idea, such as forwarding payment data to be validated and receiving
`
`validation of payment before providing access to content. The challenged claim
`
`contains no inventive, technological limitations concerning how to implement the
`
`claimed idea; at most, the claim simply conveys that controlling access based on
`
`payment—which has been a staple of commerce for more than a century—could
`
`be performed using a generic computer system.
`
`
`
`1
`
`
`
`
`
`
`
`For these reasons, among others, the Board has already determined that four
`
`claims of the ’221 patent (claims 1, 2, 11, and 32) “are more likely than not
`
`directed to patent-ineligible subject matter” and are thus “unpatentable under 35
`
`U.S.C. § 101.” Samsung Elecs. Am., Inc. v. Smartflash LLC, CBM2014-00194,
`
`Paper 9 at 12, 15 (P.T.A.B. March 30, 2015); Apple Inc. v. Smartflash LLC,
`
`CBM2015-00015, Paper 23 at 16, 19 (P.T.A.B. April 10, 2015). Challenged claim
`
`3 is just a combination of two of the claims that have already been found more
`
`likely than not invalid: all of claim 1 (from which claim 3 depends) combined with
`
`the limitation that appears at the end of claim 32. Just as the Board found claims 1
`
`and 32 invalid for failing to claim patentable subject matter, the Board should
`
`reach the same conclusion with respect to the challenged claim here.
`
`I.
`
`PETITIONER HAS STANDING
`
`A. THE ’221 PATENT IS A COVERED BUSINESS METHOD
`PATENT
`
`The ’221 patent is a “covered business method patent” under Section
`
`18(d)(1) of the Leahy-Smith America Invents Act (“AIA”), Pub. L. No. 112-29,
`
`125 Stat. 284, 329-31 (2011), and petitioner certifies that it is available for review
`
`under Section 42.304(a).
`
`A “covered business method patent” is “a patent that claims 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,
`
`
`
`2
`
`
`
`
`
`
`
`except that the term does not include patents for technological inventions.”
`
`AIA § 18(d)(1); 37 C.F.R. § 42.301(a). “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.’” Transitional Program for Covered
`
`Business Method Patents—Definitions of Covered Business Method Patent and
`
`Technological Invention (“CBM Definitions”), 77 Fed. Reg. 48,734, 48,735 (Aug.
`
`14, 2012) (quoting 157 Cong. Rec. S5432 (daily ed. Sept. 8, 2011) (statement of
`
`Sen. Schumer)). “Financial product or service” is interpreted broadly: for
`
`example, the term “financial . . . simply means relating to monetary matters” and
`
`does not require any link to traditional financial industries such as banks. E.g.,
`
`SAP Am., Inc. v. Versata Dev. Grp., Inc., CBM2012-00001, Paper 36 at 23
`
`(P.T.A.B. Jan. 9, 2013).
`
`1.
`
`The Board Has Repeatedly Found That Claim 32 Qualifies The
`’221 Patent As A CBM Patent
`
`The Board has already determined “that the ’221 patent is a covered
`
`business method patent under AIA § 18(d)(1) and is eligible for review under the
`
`transitional covered business method patent program.” E.g., Samsung, CBM2014-
`
`00194, Paper 9 at 12; Apple, CBM2015-00015, Paper 23 at 15. In so finding, the
`
`Board focused on claim 32 of the ’221 patent. Specifically, the Board found that
`
`claim 32 satisfies “the financial in nature requirement of § 18(d)(1)” because
`
`
`
`3
`
`
`
`
`
`
`
`“payment data is recited” in that claim. Samsung, CBM2014-00194, Paper 9 at 10;
`
`Apple, CBM2015-00015, Paper 23 at 12-13. The Board also found that “[c]laim
`
`32 is merely the recitation of a combination of known technologies to perform a
`
`method, which indicates that it is not a claim for a technological invention.”
`
`Samsung, CBM2014-00194, Paper 9 at 12; Apple, CBM2015-00015, Paper 23 at
`
`14; see also Samsung, CBM2014-00194, Paper 9 at 11 (“[W]e conclude that claim
`
`32 does not recite a technological invention and is eligible for a covered business
`
`method patent review.”); Apple, CBM2015-00015, Paper 23 at 14 (same). Based
`
`on the Board’s prior conclusions with respect to claim 32, the ’221 patent should
`
`be found eligible for review under the transitional covered business method patent
`
`program. See CBM Definitions, 77 Fed. Reg. at 48,736 (noting that a patent
`
`qualifies as a CBM patent if even one claim is directed to a covered business
`
`method).
`
`2.
`
`Challenged Claim 3 Also Qualifies The ’221 Patent As A CBM
`Patent
`
`Although the Board’s previous findings with respect to claim 32 are
`
`sufficient to establish the ’221 patent as a CBM patent here, challenged claim 3
`
`further supports the same conclusion. Claim 3 recites:
`
`3. A data access terminal as claimed in claim 1, further
`
`comprising code to retrieve from the data supplier and
`
`output to a user stored data identifier data and associated
`
`
`
`4
`
`
`
`
`
`
`
`value data and use rule data for a data item available
`
`from the data supplier.
`
`Claim 1, from which challenged claim 3 depends, recites:
`
`1. A data access terminal for retrieving data from a data
`
`supplier and providing the retrieved data to a data carrier,
`
`the terminal comprising:
`
`a first interface for communicating with the data supplier;
`
`a data carrier interface for interfacing with the data
`
`carrier;
`
`a program store storing code implementable by a
`
`processor; and
`
`a processor, coupled to the first interface, to the data
`
`carrier interface and to the program store for
`
`implementing the stored code, the code comprising:
`
`code to read payment data from the data carrier and to
`
`forward the payment data to a payment validation
`
`system;
`
`code to receive payment validation data from the
`
`payment validation system;
`
`code responsive to the payment validation data to
`
`retrieve data from the data supplier and to write the
`
`retrieved data into the data carrier.
`
`
`
`5
`
`
`
`
`
`
`
`Because claim 3 is directed to subject matter that is both financial in nature and
`
`devoid of any technological invention, the ’221 patent is eligible for review under
`
`the transitional covered business method patent program.
`
`(a) Claim 3 Covers Subject Matter That Is Financial In
`Nature
`
`The ’221 patent relates to the idea of providing data in exchange for
`
`payment and controlling access to data based on one or more conditions (such as
`
`payment). Ex. 1001 at 2:5-15. Indeed, the specification of the ’221 patent
`
`emphasizes payment in describing the purported invention. Id. at 1:59-67
`
`(“According to the present invention there is therefore provided a method of
`
`providing portable data comprising . . . payment validation means; . . . reading
`
`payment information from the payment validation means using the terminal;
`
`validating the payment information; . . . .”); see also id. at 6:60-64 (noting that the
`
`“payment data” forwarded to the “payment validation system” “may either be data
`
`relating to an actual payment made to the data supplier, or it may be a record of a
`
`payment made to an e-payment system . . . .”); id. at 20:50-52 (“Payment for the
`
`data item or items requested may either be made directly to the system owner or
`
`may be made to an e-payment system. . . .”); id. at 13:35-47 (explaining that “[e]-
`
`payment systems . . . are coupled to banks” and may be provided in accordance
`
`with “MONDEX, Proton, and/or Visa cash compliant standards”); id. at 2:16-29,
`
`3:27-35, 3:56-61, 7:62-8:9, 8:21-34 (emphasizing that the purported invention
`
`
`
`6
`
`
`
`
`
`
`
`involves controlling access to data based on payment validation). Indeed, in
`
`seeking to enforce the ’221 patent in litigation, the patent holder conceded that the
`
`alleged invention relates to a financial activity or transaction, stating that “the
`
`patents-in-suit generally cover a portable data carrier for storing data and managing
`
`access to the data via payment information and/or use status rules.” Ex. 1015 ¶ 1.
`
`Claim 3 explicitly describes reading payment data, forwarding payment data
`
`to a payment validation system, receiving payment validation data from the
`
`payment validation system, and retrieving content once payment validation data is
`
`received. It thus clearly claims activities that are “financial in nature, incidental to
`
`a financial activity or complementary to a financial activity.” CBM Definitions, 77
`
`Fed. Reg. at 48,735 (quoting 157 Cong. Rec. S5432 (daily ed. Sept. 8, 2011)
`
`(statement of Sen. Schumer)); Samsung, CBM2014-00190, Paper 9 at 8 (finding
`
`that “data access conditioned on payment validation” is an activity that is
`
`“financial in nature”); Apple, CBM2015-00015, Paper 23 at 11 (same).
`
`(b) Claim 3 Does Not Cover A Technological Invention
`
`Claim 3 of the ’221 patent does not describe a “technological invention,”
`
`because it does not claim “subject matter as a whole [that] recites a technological
`
`feature that is novel and unobvious over the prior art[] and solves a technical
`
`problem using a technical solution.” 37 C.F.R. § 42.301(b). Accordingly, the ’221
`
`
`
`7
`
`
`
`
`
`
`
`patent does not fall into the sole statutory exception that would remove it from the
`
`definition of a covered business method patent. AIA § 18(d)(1).
`
`As an initial matter, no “technological feature” of claim 3 is “novel and
`
`unobvious.” See Ex. 1002 at ¶¶ 59-66. “Mere recitation of known technologies,
`
`such as computer hardware, communication or computer networks, software,
`
`memory, computer-readable storage medium, scanners, display devices or
`
`databases, or specialized machines, such as an ATM or point of sale device” will
`
`“not typically render a patent a technological invention.” Office Patent Trial
`
`Practice Guide, 77 Fed. Reg. 48,756, 48,764 (Aug. 14, 2012). Claim 3 recites just
`
`such known technologies—i.e., a “data access terminal,” a “data carrier,” an
`
`“interface,” and a “processor.” Indeed, the ’221 patent specification confirms that
`
`such computer components are in no way novel or unobvious, explaining, for
`
`example, that a “data access terminal may be a conventional computer” and that a
`
`“data carrier” may be a “standard smart card,” an “electronic memory card,” or “an
`
`IC card . . . incorporating a processor and Flash data memory.” Ex. 1001 at 3:37,
`
`4:11-12, 11:28-29, 17:8-11; see Ex. 1002 at ¶ 53. In other words, as the Board has
`
`previously found, “the ’221 patent makes clear that the asserted novelty of the
`
`[alleged] invention is not in any specific improvement of software or hardware.”
`
`Samsung, CBM2014-00194, Paper 9 at 10; Apple, CBM2015-00015, Paper 23 at
`
`
`
`8
`
`
`
`
`
`
`
`14. Claim 3 does not recite any technological feature that is novel and unobvious
`
`over the prior art, and it is thus not a claim for a technological invention.
`
`Moreover, the subject matter of claim 3 does not solve “a technical problem
`
`using a technical solution.” 37 C.F.R. § 42.301(b). The ’221 patent purportedly
`
`solves a business problem—namely, the problem of consumers accessing content
`
`(like videos and music) without paying for it. Ex. 1001 at 1:40-55. Indeed, the
`
`’221 patent states that “there is an urgent need to find a way to address the problem
`
`of data piracy” (i.e., a business problem), while simultaneously acknowledging that
`
`the “physical embodiment of the system” for solving that problem “is not critical”
`
`(i.e., the solution is not a technical one). Id. at 1:53-55, 12:29-33. Thus, for this
`
`reason as well, claim 3 does not recite a technological invention, and the ’221
`
`patent is eligible for a covered business method patent review.
`
`II. MANDATORY NOTICES UNDER 37 C.F.R. § 42.8(A)(1)
`
`A.
`
`PETITIONER IS A REAL PARTY IN INTEREST SUED FOR
`AND CHARGED WITH INFRINGEMENT
`
`Petitioner Google is a real party-in-interest. The patent holder’s complaint
`
`in Smartflash LLC, et al. v. Google Inc., et al., No. 6:14-cv-435, pending in the
`
`Eastern District of Texas, asserts the ’221 patent against the petitioner.
`
`B. RELATED MATTERS UNDER 37 C.F.R. § 42.8(B)(2)
`
`The patent holder has also asserted the ’221 patent in the following cases to
`
`which petitioner is not a party: Smartflash LLC, et al. v. Apple Inc., et al., No.
`
`
`
`9
`
`
`
`
`
`
`
`6:13-cv-447 (E.D. Tex.), Smartflash LLC, et al. v. Samsung Electronics Corp.,
`
`Ltd., et al., No. 6:13-cv-448 (E.D. Tex.), Smartflash LLC, et al. v. Amazon.com,
`
`Inc., No. 6:14-cv-992 (E.D. Tex.), and Smartflash LLC, et al. v. Apple Inc., No.
`
`6:15-cv-145 (E.D. Tex.). Petitioner identifies the following administrative matters,
`
`including patent applications to which the ’221 patent claims the benefit of
`
`priority: App’n No. 10/111,716 (filed as No. PCT/GB00/4110); CBM Nos.
`
`CBM2014-00102, CBM2014-00103, CBM2015-00015, and CBM2015-00117,
`
`filed by Apple Inc.; and CBM Nos. CBM2014-00194 and CBM2014-00199 filed
`
`by Samsung Electronics America, Inc., Samsung Electronics Co., Ltd., and
`
`Samsung Telecommunications America, LLC (“Samsung”).
`
`C. LEAD AND BACKUP COUNSEL UNDER 37 C.F.R. § 42.8(B)(2)
`
`Petitioner designates Raymond N. Nimrod (Reg. No. 31,987) as Lead
`
`Counsel and Charles K. Verhoeven (pro hac vice motion to be filed), Melissa J.
`
`Baily (pro hac vice motion to be filed), and Andrew M. Holmes (Reg. No. 64,718)
`
`as Backup Counsel. Petitioner may be served at Quinn Emanuel Urquhart &
`
`Sullivan, LLP, 50 California Street, 22nd Floor, San Francisco, California 94111
`
`(Tel: 415-875-6600; Fax: 415-875-6700) or by electronic service at the address
`
`QE-SF-PTAB-Service@quinnemanuel.com.
`
`
`
`10
`
`
`
`
`
`III. PAYMENT OF FEES
`
`
`
`Petitioner authorizes charges to Deposit Account No. 505708 for the fee set
`
`in 37 C.F.R. § 42.15(b) for this Petition and any related additional fees.
`
`IV. CLAIM CONSTRUCTION
`
`The challenged claims must be given their broadest reasonable
`
`interpretations (“BRI”). 37 C.F.R. § 42.300(b). When there is co-pending
`
`litigation regarding the challenged claims, the patent owner’s litigation positions
`
`regarding claim scope are instructive, especially where those positions support a
`
`broad reading of the claims. See, e.g., SAP Am., Inc. v. Versata Dev. Grp., Inc.,
`
`CBM2012-00001, Paper 70 at 19-24 (P.T.A.B. June 11, 2013). Any constructions
`
`adopted by a district court are also highly relevant because it would be
`
`“incongruous to adopt a narrower construction in [a post-grant proceeding],
`
`wherein the claims are construed using the broadest reasonable interpretation
`
`standard, than was adopted in [a district court], in which a narrower, Phillips
`
`construction standard applied.” Ariosa Diagnostics v. Isis Innovation Ltd.,
`
`IPR2012-00022, Paper 166 at 24 (P.T.A.B. Sept. 2, 2014); Foursquare Labs Inc. v.
`
`Silver State Intellectual Techs., Inc., IPR2014-00159, Paper 13 at 3-4 (P.T.A.B.
`
`Aug. 1, 2014) (revisiting and broadening a previous construction to be at least as
`
`broad as the district court’s construction).
`
`
`
`11
`
`
`
`
`
`
`
`In light of these principles, any constructions adopted in this proceeding
`
`
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`should be at least as broad as those adopted by the district court in Smartflash LLC,
`
`et al. v. Samsung Electronics Co., Ltd., et al., No. 6:13-cv-448 (E.D. Tex.) and
`
`Smartflash LLC, et al. v. Apple Inc., et al., No. 6:13-cv-447 (E.D. Tex.).1 Ariosa,
`
`IPR2012-00022, Paper 166 at 24; Foursquare, IPR2014-00159, Paper 13 at 3-4.
`
`Moreover, any constructions adopted in this proceeding should be heavily
`
`informed by the patent holder’s positions in its various district court actions, as the
`
`patent holder should not be permitted to both wield broad constructions in an
`
`attempt to establish infringement in the district court and simultaneously seek to
`
`establish validity using narrower constructions here. See SAP, CBM2012-00001,
`
`Paper 70 at 20 n.16, 23; Ariosa, IPR2012-00022, Paper 166 at 24; Foursquare,
`
`IPR2014-00159, Paper 13 at 3-4. For these reasons and those noted below, the
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`Board should adopt the following constructions for the terms “data carrier,”
`
`“payment data,” “payment validation system,” and “payment validation data.”
`
`
`1 Because the standard for claim construction here is different than the
`
`standard used in litigation, Google expressly reserves the right to argue in litigation
`
`a different claim construction for any term in the ’221 patent, as appropriate to that
`
`proceeding. See In re Am. Acad. of Sci. Tech. Ctr., 367 F.3d 1359, 1364, 1369
`
`(Fed. Cir. 2004); MPEP § 2111.
`
`
`
`12
`
`
`
`
`
`A.
`
`“DATA CARRIER”
`
`Although the Board did not find it necessary to expressly construe “data
`
`
`
`
`
`carrier” in connection with its previous finding that certain claims of the ’221
`
`patent are more likely than not invalid under Section 101, the Board noted that the
`
`“data carrier” of the ’221 patent “is a generic hardware device known in the prior
`
`art.” Samsung, CBM2014-00194, Paper 9 at 10 (noting that the specification of
`
`the ’221 patent discloses that “a data carrier may be a ‘standard smart card’”)
`
`(citing Ex. 1001 at 11:28-29); Apple, CBM2015-00015, Paper 23 at 13 (same).
`
`
`
`Moreover, in the Samsung and Apple district court proceedings, the patent
`
`holder contended that the “data carrier” claimed in the ’221 patent encompasses
`
`any “medium capable of storing information.” Ex. 1012 at 17-22. The district
`
`court agreed, noting that a “data carrier” need not be limited to any particular
`
`physical structure. Ex. 1011 at 19-22. And in the Google district court action, the
`
`patent holder has continued to assert that
`
` E.g., Ex. 1016
`
`at 3, 714-15, 752.
`
`
`
`In light of the Board’s previous observations, the district court’s construction
`
`in the Samsung and Apple actions, the patent holder’s litigation position vis-à-vis
`
`the petitioner in the Google action, and the BRI standard applicable here, the Board
`
`
`
`13
`
`
`
`
`
`
`
`should construe “data carrier” to mean: “any medium, regardless of structure, that
`
`is capable of storing information.” See Ex. 1002 at ¶¶ 49-53.
`
`B.
`
`“PAYMENT DATA”
`
`
`
`The Board has not found it necessary to expressly construe “payment data”
`
`in connection with its previous findings that numerous claims in the ’221 patent
`
`and related patents are more likely than not invalid under Section 101. E.g.,
`
`Samsung, CBM2014-00190, Paper 9 at 6-7, 12-15; Apple, CBM2015-00015, Paper
`
`23 at 9-10, 15-19. Nonetheless, the breadth of the patent holder’s and the district
`
`court’s construction of the term “payment data” is worth noting here.
`
`
`
`In the Samsung and Apple actions, at the patent holder’s urging, the district
`
`court construed “payment data” to mean “data that can be used to make a payment
`
`for content.” Ex. 1011 at 11. In arriving at this construction, the district court
`
`stated that “[t]he specification and cited claim language use payment data broadly
`
`to refer to whatever data is being used ‘for making a payment.’” Id. (citing the
`
`’720 patent specification (Ex. 1021)—which is identical to the ’221 patent
`
`specification—at 21:15). In the Google district court action, the patent holder has
`
`asserted that
`
` E.g., Ex. 1016 at 808.
`
`
`
`14
`
`
`
`
`
`
`
`In light of the district court’s construction in the Samsung and Apple actions,
`
`
`
`the patent holder’s litigation position vis-à-vis the petitioner in the Google district
`
`court proceedings, and the BRI standard applicable here, the Board should construe
`
`“payment data” to mean: “any information that can be used in connection with the
`
`process of making a payment for content.” See Ex. 1002 at ¶¶ 35-38.
`
`C.
`
`“PAYMENT VALIDATION SYSTEM”
`
`
`
`Although the Board did not find it necessary to expressly construe “payment
`
`validation system” in connection with its previous finding that certain claims of the
`
`’221 patent are more likely than not invalid under Section 101, the Board noted
`
`that the specification of the ’221 patent “discloses that the required payment
`
`validation system may be one that is already in use or otherwise available.”
`
`Samsung, CBM2014-00194, Paper 9 at 10 (noting that the specification of the ’221
`
`patent discloses that a “[t]he payment validation system may be part of the data
`
`supplier’s computer systems or it may be a separate e-payment system”) (quoting
`
`Ex. 1001 at 8:63-65, 13:35-47); Apple, CBM2015-00015, Paper 23 at 13 (same).
`
`
`
`Moreover, in the Samsung and Apple actions, the district court construed
`
`“payment validation system” broadly to mean a “system that returns payment
`
`validation data based on an attempt to validate payment data.” Ex. 1011 at 11-14.
`
`And in the Google district court proceedings, the patent holder has identified
`
`
`
`15
`
`
`
`
`
`
`
` E.g., Ex. 1016 at 808.
`
`In light of the district court’s construction in the Samsung and Apple actions,
`
`
`
`
`
`the patent holder’s litigation position vis-à-vis the petitioner in the Google district
`
`court proceedings, and the BRI standard applicable here, the Board should construe
`
`“payment validation system” to mean: “any system that returns information in
`
`connection with an attempt to validate payment data” (wherein “payment data”
`
`must be construed broadly to include “any information that can be used in
`
`connection with the process of making a payment for content”). See Ex. 1002 at
`
`¶¶ 39-43.
`
`D.
`
`“PAYMENT VALIDATION DATA”
`
`
`
`The Board has not found it necessary to expressly construe “payment
`
`validation data” in connection with its previous findings that numerous claims in
`
`the ’221 patent and related patents are more likely than not invalid under Section
`
`101. E.g., Samsung, CBM2014-00190, Paper 9 at 6-7, 12-15; Apple, CBM2015-
`
`00015, Paper 23 at 9-10, 15-19. Nonetheless, the breadth of the patent holder’s
`
`and the district court’s construction of the term “payment validation data” is
`
`notable.
`
`
`
`In the Samsung and Apple actions, the district court ruled that “payment
`
`validation data” should be given its plain meaning, and the patent holder contended
`
`
`
`16
`
`
`
`
`
`
`
`that, according to its plain meaning, “payment validation data” need not indicate
`
`that a payment has been authorized. Ex. 1011 at 14-15; Ex. 1012 at 11-12 (citing
`
`the ’720 patent specification (Ex. 1021)—which is identical to the ’221 patent
`
`specification—at, e.g., 13:53-62). In the Google litigation proceedings, the patent
`
`holder has contended that the term
`
` Ex. 1016 at 759.
`
`
`
`In light of the district court’s construction in the Samsung and Apple actions,
`
`the patent holder’s litigation position vis-à-vis the petitioner in the Google
`
`litigation proceedings, and the BRI standard applicable here, the Board should
`
`construe “payment validation data” to mean: “information returned in connection
`
`with an attempt to validate payment data” (wherein “payment data” must be
`
`construed broadly to include “any information that can be used in connection with
`
`the process of making a payment for content”). See Ex. 1002 at ¶¶ 44-48.
`
`E.
`
`“USE RULE DATA”
`
`The Board has not found it necessary to expressly construe “use rule data” in
`
`connection with its previous finding that claim 32 of the ’221 patent is more likely
`
`than not invalid under Section 101. E.g., Samsung, CBM2014-00190, Paper 9 at 6-
`
`7, 12-15. Nonetheless, in the context of instituting proceedings regarding the ’221
`
`patent on other grounds, the Board previously found that “use rule data” should be
`
`
`
`17
`
`
`
`
`
`
`
`given the construction: “data for a rule specifying a condition under which access
`
`to content is permitted.” Apple Inc. v. Smartflash LLC, CBM2014-00112, -00113,
`
`Paper 7 at 7 (P.T.A.B. Sept. 30, 2014). Under that same construction for “use rule
`
`data,”2 claim 3 of the ’221 patent is invalid under Section 101. See infra Part VI.
`
`V. THE CHALLENGED CLAIM IS UNPATENTABLE UNDER 35
`U.S.C. § 101
`
`Section 101 provides that: “Whoever invents or discovers any new and
`
`useful process, machine, manufacture, or composition of matter, or any new and
`
`useful improvement thereof, may obtain a patent therefor, subject to the conditions
`
`and requirements of this title.” The Supreme Court has “long held” that this
`
`provision “contains an important implicit exception”—namely that “abstract ideas”
`
`(among other things) “are not patentable.” Alice Corp. v. CLS Bank Int’l, 134 S.
`
`
`2 Petitioner notes that the Board’s previous construction of “use rule data”
`
`is much mor
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