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 PRELIMINARY RESPONSE
`
`

`
`TABLE OF CONTENTS
`
`
`PATENT OWNER’S LIST OF EXHIBITS ............................................................ iii
`I.
`INTRODUCTION ........................................................................................... 1
`II.
`OVERVIEW OF U.S. PATENT NO. 8,118,221 ............................................ 5
`III. THE BOARD SHOULD EXERCISE ITS DISCRETION UNDER 35
`U.S.C. § 325(D) AND DECLINE TO INSTITUTE COVERED BUSINESS
`METHOD PATENT REVIEW ....................................................................... 7
`IV. CLAIM 3 OF THE ‘221 PATENT IS STATUTORY .................................... 9
`A.
`The Two-Part Test for Statutory Subject Matter .................................. 9
`
`B.
`
`C.
`
`The Claims Are Statutory Under Mayo and Alice ................................ 9
`
`Claim 3 Does Not Result in Inappropriate Preemption ...................... 15
`
`Preemption under DDR Holdings ............................................. 15
`1.
`Preemption under Mayo and Alice ............................................ 18
`2.
`Non-Infringing Alternatives Show a Lack of Preemption ........ 19
`3.
`4. The Challenged Claims are Distinguishable from the Claims in
`Ariosa Diagnostics .................................................................... 20
`V. A FEDERAL COURT HAS ALREADY FOUND RELATED CLAIMS OF
`THE ‘221 PATENT TO BE STATUTORY UNDER § 101 ........................ 23
`VI. THE USPTO IS ESTOPPED FROM REVISITING THE ISSUE OF
`WHETHER THE CLAIMS ARE DIRECTED TO STATUTORY SUBJECT
`MATTER ....................................................................................................... 25
`INVALIDATING PATENT CLAIMS VIA CBM REVIEW IS
`UNCONSTITUTIONAL ............................................................................... 25
`VIII. SECTION 101 IS NOT A GROUND THAT MAY BE RAISED IN
`COVERED BUSINESS METHOD PATENT REVIEW ............................. 27
`IX. THE CHALLENGED CLAIMS ARE NOT DIRECTED TO A
`FINANCIAL PRODUCT OR SERVICE ...................................................... 30
`THE CHALLENGED CLAIMS OF THE ‘221 PATENT ARE
`TECHNOLOGICAL INVENTIONS EXEMPT FROM CBM REVIEW .... 35
`
`VII.
`
`X.
`
`
`
`- i -
`
`

`
`XI. CONCLUSION .............................................................................................. 36
`
`CONCLUSION ............................................................................................ ..36
`
`XI.
`
`
`
`- ii -
`
`
`
`

`
`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
`
`2075
`
`Order (on Defendants’ Renewed Motion for Judgment as a
`
`
`
`- iii -
`
`

`
`Exhibit Number
`
`Exhibit Description
`
`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
`
`
`
`
`
`- iv -
`
`

`
`Pursuant to 37 C.F.R. § 42.107, Smartflash LLC (“Patent Owner”) files this
`
`preliminary response to the petition, setting forth reasons why no new covered
`
`business method review of U.S. Patent 8,118,221 should be instituted as requested
`
`by Google Inc. (“Google” or “Petitioner”). Arguments presented herein are
`
`presented without prejudice to presenting additional arguments in a later response
`
`should the Board institute a CBM review.
`
`
`
`I.
`
`INTRODUCTION
`
`Petitioner Google seeks covered business method (CBM) review of claim 3
`
`of U.S. Patent No. 8,118,221 (“the ‘221 Patent”). Redacted Petition, Paper 3 at 1.
`
`On September 26, 2014, another petitioner, Samsung Electronics America,
`
`Inc. (“Samsung”), filed a petition in CBM2014-00194 seeking CBM review of
`
`claims of claims 2, 11, and 32 of the ‘221 Patent on § 101 grounds. CBM2014-
`
`00194, Corrected Petition, Paper 4 at 1. On October 30, 2014, yet another
`
`petitioner, Apple Inc. (“Apple”) filed a petition in CBM2015-00015, seeking
`
`review of ‘221 Patent claims 1, 2, 11, and 32 as unpatentable under § 101.
`
`CBM2015-00015, Corrected Petition, Paper 9 at 1. Like claim 3 at issue here,
`
`claims 2 and 11 depend from claim 1.
`
`On March 30, 2015 the Board instituted covered business method patent
`
`review under 35 U.S.C. § 101 as to claims 2, 11, and 32 of the ‘221 Patent
`
`
`
`- 1 -
`
`

`
`(CBM2014-00194, Paper 9 at 20) and on April 10, 2015 the Board instituted
`
`covered business method patent review under 35 U.S.C. § 101 as to independent
`
`claim 1 of the ‘221 Patent (CBM2015-00015 Paper 23 at 21). Thus, the instant
`
`Google petition seeks review of a dependent claim (claim 3) of the ‘221 Patent on
`
`the same grounds (§ 101) for which its independent claim (claim 1) and two other
`
`dependent claims (2 and 11) were already instituted by the Board. The Board
`
`should exercise its discretion under 35 U.S.C. § 325(d) to decline to institute a
`
`covered business method patent review of dependent claim 3 here, given that claim
`
`3’s independent claim 1 and two other dependent claims are under review in
`
`CBM2015-00015 and CBM2014-00194.
`
`Claim 3 of the ‘221 Patent (like claim 1 from which it depends) is directed to
`
`statutory subject matter because it claims a solution “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 addresses the
`
`problem of data content piracy on the Internet by providing for legitimate
`
`acquisition of content data by storing payment data on a data carrier, retrieving
`
`data content from a data content supplier, and writing the retrieved content data to
`
`the data carrier in response to payment validation data. Ex. 1201, ‘221 Patent at
`
`25:54-56, 59-61. In other words, claim 3 of the ‘221 Patent is directed to a system
`
`
`
`- 2 -
`
`

`
`that combines on the data carrier both the digital content and payment data, and
`
`additional content can be legitimately obtained in response to payment validation
`
`data.
`
`As demonstrated below, evidence in CBM2015-00015 shows that claim 1
`
`(and thus claim 3) does not result in inappropriate preemption, nor is there any
`
`evidence that a disproportionate amount of future innovation is foreclosed by claim
`
`1 (and thus claim 3) of the ‘221 Patent.
`
`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.
`
`
`
`- 3 -
`
`

`
`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.
`
`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.
`
`
`
`
`
`- 4 -
`
`

`
`II. OVERVIEW OF U.S. PATENT NO. 8,118,221
`
`Although the claims define the actual 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.” ‘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
`
`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
`
`
`
`- 5 -
`
`

`
`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.
`
`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
`
`
`
`- 6 -
`
`

`
`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,
`
`when a DVD was physically rented for a rental period there was no mechanism
`
`associated with the DVD to purchase additional content.
`
`
`
`III. THE BOARD SHOULD EXERCISE ITS DISCRETION UNDER 35
`U.S.C. § 325(D) AND DECLINE TO INSTITUTE COVERED BUSINESS
`METHOD PATENT REVIEW
`
`Google’s § 101 unpatentable subject matter ground asserted here against
`
`dependent claim 3 is repetitive of the reviews the Board has already instituted of
`
`
`
`- 7 -
`
`

`
`independent claim 1 in CBM2015-00015 and dependent claims 2 and 11 in
`
`CBM2014-00194.
`
`Here, the Board should exercise its discretion under 35 U.S.C. § 325(d) and
`
`decline to institute a covered business method patent review of claim 3 of the ‘221
`
`Patent on 35 U.S.C. § 101 grounds in CBM2015-00126 because it has already
`
`instituted covered business method review of claim 3’s independent claim and two
`
`related dependent claims on the same purely legal § 101 grounds in CBM2015-
`
`00015 and CBM2014-00194.
`
`“[T]he Board is charged with securing the just, speedy, and inexpensive
`
`resolution of every proceeding.” EMC Corporation, et al. v. Personal Web
`
`Technologies, LLC, Case IPR2013-00082, Paper 33 at 4 (PTAB June 5,
`
`2013)(Decision, Denying Request for Rehearing)(citing 37 C.F.R. § 42.1(b)).
`
`“Rules for inter partes review proceedings were promulgated to take into account
`
`the ‘regulation on the economy, the integrity of the patent system, the efficient
`
`administration of the Office, and the ability of the Office to timely complete
`
`proceedings.’” Id. at 2 (citing 35 U.S.C. § 316(b)).
`
`Here, instituting a repetitive action on such closely related claims runs afoul
`
`of the Board’s charge to “secure the just, speedy, and inexpensive resolution” of
`
`the covered business method challenges to the ‘221 Patent. Patent Owner
`
`respectfully requests that the Board deny review on Google’s § 101 unpatentable
`
`
`
`- 8 -
`
`

`
`subject matter grounds that are repetitive of the reviews being undertaken of
`
`independent claim 1 in CBM2015-00015 and dependent claims 2 and 11 in
`
`CBM2014-00194.
`
`
`
`IV. CLAIM 3 OF THE ‘221 PATENT IS STATUTORY
`
`A.
`
`The Two-Part Test for Statutory Subject Matter
`
`The Supreme Court articulated a two-part test for patentability in Mayo
`
`Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012),
`
`which has been followed by Alice Corp. Pty. v. CLS Bank Int'l, 134 S. Ct. 2347
`
`(2014). The first step in the analysis is to determine whether the claims at issue are
`
`directed to patent-ineligible concepts. If the claims at issue are directed to a
`
`patent-ineligible concept, the second step of the analysis is to determine whether
`
`the limitations of the claims, individually and as ordered combinations, contain an
`
`inventive concept that transforms the nature of the claims into patent-eligible
`
`subject matter. Mayo, 132 S. Ct. at 1294.
`
`B.
`
`The Claims Are Statutory Under Mayo and Alice
`
`Post Mayo and Alice, the Federal Circuit has provided guidance on how to
`
`distinguish statutory claims, like those of the ‘221 Patent, from non-statutory
`
`claims. In DDR Holdings, the Federal Circuit analyzed claims, like the ‘221 Patent
`
`claim at issue here, that have technological solutions to technological problems
`
`
`
`- 9 -
`
`

`
`created by the nature of digital content and the Internet. In DDR Holdings, the
`
`system of exemplary claim 19 included (a) a computer store containing the data
`
`needed to support operation of the system and (b) a computer server (or processor)
`
`that was coupled to the computer store, where the claimed system was
`
`programmed to (by having code configured to) perform the solution to a network-
`
`specific problem. The computer server was “programmed to” perform four steps.
`
`The first two steps are “(i) receive from the web browser of a computer user a
`
`signal indicating activation of one of the links displayed by one of the first web
`
`pages; [and] (ii) automatically identify as the source page the one of the first web
`
`pages on which the link has been activated.” The third and fourth steps were “(iii)
`
`in response to identification of the source page, automatically retrieve the stored
`
`data corresponding to the source page; and (iv) using the data retrieved,
`
`automatically generate and transmit to the web browser a second web page that
`
`displays: (A) information associated with the commerce object associated with the
`
`link that has been activated, and (B) the plurality of visually perceptible elements
`
`visually corresponding to the source page.” The Court found the claims to be
`
`statutory because “the claimed solution is necessarily rooted in computer
`
`technology in order to overcome a problem specifically arising in the realm of
`
`computer networks.” Id. at 1257.
`
`
`
`- 10 -
`
`

`
`Such is the case here, too. Claim 3 of the ‘221 Patent, like claim 1 from
`
`which it depends, is not directed to mental processes or processes performed using
`
`pen and paper, rather the claims are directed to particular devices that can
`
`download and store digital content into a data carrier from which payment data was
`
`read. By using a system that combines on the data carrier both the digital content
`
`and payment data that can be forwarded to a payment validation system, and by
`
`responding to payment validation data when obtaining digital content, the claimed
`
`data access terminals enable digital content to be obtained effectively and
`
`legitimately.
`
`Thus, the claims are rooted in computer technology in order to overcome a
`
`problem specifically arising in the realm of computer networks – that of digital
`
`data piracy, and, like in DDR Holdings, “address … a challenge particular to the
`
`Internet.” Id. at 1257. The Report and Recommendation also acknowledged this
`
`distinction, finding:
`
`As in DDR Holdings, the patents here do not simply
`apply a known business practice from the pre-Internet
`world to computers or the Internet. “The claimed solution
`is necessarily rooted in computer technology in order to
`overcome a problem specifically arising in the realm of
`computer networks.” ... Digital Rights Management is a
`technology that was developed after widespread use of
`the Internet. Entry into the Internet Era presented new
`and unique problems for digital content providers in
`combatting unauthorized use and reproduction of
`protected media content.
`
`
`
`- 11 -
`
`

`
`Report and Recommendation at 19, lines 7-12 (quoting DDR Holdings, 773 F.3d at
`
`1257) (internal citation omitted).
`
`Independent claim 1 of the ‘221 Patent meets the requisites of § 101 under
`
`DDR Holdings. Challenged claim 3 depends from claim 1, and if claim 1 is
`
`statutory, then so too is challenged claim 3. Claim 1 recites a data access terminal
`
`(a system) that parallels the structure of the statutory claim 19 in DDR Holdings.
`
`The table below sets forth a mapping of claim 1 of the ‘221 Patent to claim 19 of
`
`the patent in DDR Holdings and shows that claim 1 is directed to statutory subject
`
`matter.
`
`Claim element from DDR Holding
`
`Similar claim element from claim 1
`
`19. A system useful in an outsource
`
`“1. A data access terminal for retrieving
`
`provider serving web pages offering
`
`data from a data supplier and providing
`
`commercial opportunities, the system
`
`the retrieved data to a data carrier, the
`
`comprising:
`
`terminal comprising:”
`
`(a) a computer store containing data, for
`
`“a first interface for communicating
`
`each of a plurality of first web pages,
`
`with the data supplier;
`
`defining a plurality of visually
`
`a data carrier interface for interfacing
`
`perceptible elements, which visually
`
`with the data carrier;
`
`perceptible elements correspond to the
`
`a program store storing code
`
`plurality of first web pages; (i) wherein
`
`implementable by a processor;”
`
`
`
`- 12 -
`
`

`
`Claim element from DDR Holding
`
`Similar claim element from claim 1
`
`each of the first web pages belongs to
`
`one of a plurality of web page owners;
`
`(ii) wherein each of the first web pages
`
`displays at least one active link
`
`associated with a commerce object
`
`associated with a buying opportunity of
`
`a selected one of a plurality of
`
`merchants; and (iii) …
`
`(b) a computer server at the outsource
`
`“…and a processor, coupled to the first
`
`provider, which computer server is
`
`interface, to the data carrier interface
`
`coupled to the computer store and
`
`and to the program store for
`
`programmed to:
`
`implementing the stored code, the code
`
`comprising:”
`
`(i) receive from the web browser of a
`
`“code to read payment data from the
`
`computer user a signal indicating
`
`data carrier and to forward the payment
`
`activation of one of the links displayed
`
`data to a payment validation system;”
`
`by one of the first web pages;
`
`
`
`(ii) automatically identify as the source
`
`“code to receive payment validation
`
`page the one of the first web pages on
`
`data from the payment validation
`
`
`
`- 13 -
`
`

`
`Claim element from DDR Holding
`
`Similar claim element from claim 1
`
`which the link has been activated;
`
`system;”
`
`(iii) in response to identification of the
`
`“code responsive to the payment
`
`source page, automatically retrieve the
`
`validation data to retrieve data from the
`
`stored data corresponding to the source
`
`data supplier…”
`
`page; and
`
`(iv) using the data retrieved,
`
`“code responsive to the payment
`
`automatically generate and transmit to
`
`validation data to… to write the
`
`the web browser a second web page that
`
`retrieved data into the data carrier”
`
`displays: (A) information associated
`
`with the commerce object associated
`
`with the link that has been activated, and
`
`(B) the plurality of visually perceptible
`
`elements visually corresponding to the
`
`source page.
`
`
`
`Thus, like in DDR Holdings, when “the limitations of the … claims are
`
`taken as [a] combination, the claims recite[] an invention that is not merely the
`
`routine or conventional use of the Internet.” DDR Holdings, 773 F.3d at 1259.
`
`Such a finding was further echoed by the Report and Recommendation when it
`
`
`
`- 14 -
`
`

`
`held that the “asserted claims … recite specific ways of using distinct memories,
`
`data types, and use rules that amount to significantly more than the underlying
`
`abstract idea. Although in some claims the language is functional and somewhat
`
`generic, the claims contain significant limitations on the scope of the inventions.”
`
`Report and Recommendation at 19, lines 1-4 (emphasis added).
`
`C.
`
`Claim 3 Does Not Result in Inappropriate Preemption
`
`1.
`
`Preemption under DDR Holdings
`
`The Petition alleges that “[t]he challenged claim is explicitly drawn to the
`
`abstract idea of controlling access based on payment.” Redacted Petition, Paper 3
`
`at 1. The Petition further alleges in a conclusory manner that “[h]ere, the
`
`challenged claim firmly triggers preemption concerns. The challenged claim
`
`discloses only an ultimate objective: using a generic computer to implement the
`
`steps inherent in the abstract idea of providing access to content based on
`
`payment.” Id. at 31. However, the challenged claim of the ‘221 Patent does not
`
`result in inappropriate preemption under DDR Holdings, Mayo and Alice. Using
`
`the analysis of the Federal Circuit in DDR Holdings, claims are statutory when
`
`“the claims ... do not attempt to preempt every application of the idea [relating to
`
`the field of the invention]. Rather, they recite a specific way … that incorporates
`
`elements from multiple sources in order to solve a problem faced by [servers] on
`
`the Internet.” DDR Holdings, 773 F.3d at 1259. Such a standard is consistent with
`
`
`
`- 15 -
`
`

`
`other Supreme Court precedent as well. As cited in Mayo, in “Bilski, the Court
`
`pointed out that to allow ‘petitioners to patent risk hedging would [inappropriately]
`
`preempt use of this approach in all fields.” Mayo, 132 S. Ct. at 1301 (citing Bilski
`
`v. Kappos, 561 U.S. 612 (2010)).
`
`Evidence from CBM2015-00015 brought by Apple Inc., where claim 1 is
`
`also challenged under § 101, supports that the claims of the ‘221 Patent do not
`
`result in inappropriate preemption. There, Apple also incorrectly alleged that the
`
`‘221 Patent claims result in inappropriate preemption of the “idea of paying for and
`
`controlling access to data.” See, CBM2015-00015, Corrected Petition, Paper 9 at
`
`4. This is just another way of stating Google’s allegation that the claims of the
`
`‘221 Patent are directed to “controlling access based on payment.” Redacted
`
`Petition, Paper 3 at 1.
`
`The evidence of record in CBM2015-00015, however, shows that that the
`
`claims of the ‘221 Patent do not result in inappropriate preemption because they do
`
`not preempt every application of the idea of paying for and controlling access to
`
`content, nor are a disproportionate number of applications preempted. In
`
`CBM2015-00015, Apple’s purported expert Mr. Wechselberger admitted that the
`
`claims of the ‘221 Patent “do not cover all possible ways of providing access to
`
`content based on payment or payment and rules.” Exhibit 2068, Wechselberger
`
`May 28, 2015 Deposition at 12:19-13:18. In fact, Mr. Wechselberger testified:
`
`
`
`- 16 -
`
`

`
`[I]t’s not my opinion that claim one [of the ‘221 Patent]
`covers all conceivable ways of requesting access and
`paying for content, and I'm just simply saying in my
`expansive career history I'm sure I came across
`technological solutions that would do that function that
`would be outside the scope of these claims.
`
`Id. at 18:9-15.
`
`In fact, the Report and Recommendation from the District Court that looked
`
`at claims 2 and 11 of the ‘221 Patent under § 101 found that claims 2 and 11,
`
`which like claim 3 at issue here depend from claim 1, “do not risk preempting all
`
`future inventions related to exchanging access to data for payment on the Internet.
`
`Instead, when taken as ordered combinations, the claims recite specific ways of
`
`combining system components and method steps beyond the routine use of the
`
`Internet. The claims address specific ways of managing access to digital content
`
`data based on payment validation through storage and retrieval of use status data
`
`and use rules in distinct memory types and evaluating the use data according to the
`
`use rules.” Report and Recommendation at 20.
`
`Moreover, the Petition’s assertion that “the challenged method claims firmly
`
`trigger preemption concerns” (Paper 3 at 31) is contradicted by the existence of
`
`non-infringing alternatives to the claims. As described in the Report and
`
`Recommendation, “both Smartflash and Defendants identified numerous non-
`
`infringing alternatives, such as those employed by Netflix and Spotify.” Report and
`
`Recommendation at 15. (Emphasis added.)
`
`
`
`- 17 -
`
`

`
`Thus, the Petition’s argument that the challenged claims would result in
`
`inappropriate preemption should be disregarded.
`
`
`
`2.
`
`Preemption under Mayo and Alice
`
`The Supreme Court’s analyses in Mayo and Alice further confirm that the
`
`challenged claims do not result in preemption. In Mayo, the Supreme Court
`
`clarified that “the underlying functional concern ... is a relative one: how much
`
`future innovation is foreclosed relative to the contribution of the inventor.” Mayo,
`
`132 S. Ct. at 1303. To analyze that issue, the Court looks to the “risk [of]
`
`disproportionately tying up the use of the underlying natural laws, inhibiting their
`
`use in the making of further discoveries.” Id. at 1294. However, neither the
`
`Petition nor Petitioner’s expert performed a relative analysis. The Petition merely
`
`asserts that “the claim ‘recite[s] limitations that amount to nothing more than
`
`computers doing what computers do routinely’” and that “[i]t is exactly this type of
`
`claiming that has the greatest potential to foreclose future innovation
`
`disproportionately ‘relative to the contribution of the inventor.’” Redacted Petition
`
`at 32. Thus, the Petition has failed to show that the challenged claims
`
`disproportionately inhibit the making of future discoveries.
`
`Similarly, the Court held in Alice:
`
`
`
`- 18 -
`
`

`
`Accordingly, in applying the § 101 exception, we must
`
`distinguish between patents that claim the “‘building blocks’” of
`
`human ingenuity and those that integrate the building blocks into
`
`something more, ...thereby “transforming” them into a patent-
`
`eligible invention. The former “would risk disproportionately
`
`tying up the use of the underlying” ideas, and are therefore
`
`ineligible for patent protection. The latter pose no comparable
`
`risk of pre-emption, and therefore remain eligible for the
`
`monopoly granted under our patent laws.
`
`Alice, 134 S. Ct. at 2354 (citing Mayo). (Internal citations omitted.)
`
`As discussed in greater detail below, there are numerous non-infringing
`
`alternatives. Thus, the Petition has failed to carry its burden of proof that a
`
`disproportionate amount of future innovation is foreclosed. Said differently,
`
`without an analysis of the number of “innovations” that are not foreclosed and the
`
`relative contribution of the inventor, the Petition fails to prove disproportionality or
`
`that the relative preemption results in a finding of non-statutory subject matter.
`
`
`
`3.
`
`Non-Infringing Alternatives Show a Lack of Preemption
`
`The existence of a large number of non-infringing alternatives shows that the
`
`claims of the ‘221 Patent do not raise preemption concerns. Again, evidence from
`
`
`
`- 19 -
`
`

`
`CBM2015-00015 supports the lack of preemption. There, Apple’s Declarant
`
`Anthony Wechselberger testified that in his “expansive career history” he “came
`
`across” numerous “technological solutions that would do that function” of
`
`“requesting access and paying for content” “that would be outside the scope of
`
`these claims,” including claim 1 of the ‘221 Patent. Ex. 2068, Wechselberger
`
`Deposition at 18:9-15. Mr. Wechselberger also admitted in his deposition that
`
`there were at least three other specific non-infringing alternatives that would
`
`control access and pay for content without utilizing the elements of claim 1 of the
`
`‘221 Patent. These are: 1) the pay per view system described in ¶ 87 of his
`
`declaration (Ex. 2068, Wechselberger Deposition at 78:12-79:11); 2) the system
`
`described in the Guillou patent (Id. at 79:12-81:5); and 3) a system where a user
`
`would make a telephone call to a payment validation system instead of the system
`
`reading payment data from a data carrier and forwarding it to a payment validation
`
`system (Id. at 85:3-87:2).
`
`Thus, given the number of embodiments that are not precluded, the Peti