Trials@uspto.gov
`Tel: 571-272-7822
`
`Paper 7
`Entered: November 10, 2015
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`APPLE INC.,
`Petitioner,
`
`v.
`
`SMARTFLASH LLC,
`Patent Owner.
`
`Case CBM2015-00127
`Patent 7,334,720 B2
`
`
`
`
`
`
`
`
`
`Before JENNIFER S. BISK, RAMA G. ELLURU,
`JEREMY M. PLENZLER, and MATTHEW R. CLEMENTS,
`Administrative Patent Judges.
`
`ELLURU, Administrative Patent Judge.
`
`DECISION
`
`Institution of Covered Business Method Patent Review
`37 C.F.R. § 42.208
`
`
`
`
`
`
`Tel: 571-272-7822
`
`Paper 7
`Entered: November 10, 2015
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`APPLE INC.,
`Petitioner,
`
`v.
`
`SMARTFLASH LLC,
`Patent Owner.
`
`Case CBM2015-00127
`Patent 7,334,720 B2
`
`
`
`
`
`
`
`
`
`Before JENNIFER S. BISK, RAMA G. ELLURU,
`JEREMY M. PLENZLER, and MATTHEW R. CLEMENTS,
`Administrative Patent Judges.
`
`ELLURU, Administrative Patent Judge.
`
`DECISION
`
`Institution of Covered Business Method Patent Review
`37 C.F.R. § 42.208
`
`
`
`
`
`
`
`CBM2015-00127
`Patent 7,334,720 B2
`
`A. Background
`
`INTRODUCTION
`
`Petitioner, Apple Inc. (“Apple”), filed a Petition (Paper 2, “Pet.”) to
`
`institute a covered business method patent review of claims 4–12 and 16–18
`
`(“the challenged claims”) of U.S. Patent No. 7,334,720 B2 (Ex. 1001, “the
`
`’720 patent”) pursuant to § 18 of the Leahy-Smith America Invents Act
`
`(“AIA”).1 Patent Owner, Smartflash LLC (“Smartflash”), filed a
`
`Preliminary Response (Paper 5, “Prelim. Resp.”).
`
`We have jurisdiction under 35 U.S.C. § 324(a), which provides that a
`
`covered business method patent review may not be instituted “unless . . . it is
`
`more likely than not that at least 1 of the claims challenged in the petition is
`
`unpatentable.”
`
`After considering the Petition and Preliminary Response, we
`
`determine that the ’720 patent is a covered business method patent. We
`
`further determine that Apple has demonstrated that it is more likely than not
`
`that challenged claims 4–12 and 16–18 are unpatentable. Accordingly, we
`
`institute a covered business method review of claims 4–12 and 16–18 of the
`
`’720 patent, as discussed below.
`
`B. Asserted Ground
`
`Apple contends that claims 4–12 and 16–18 are unpatentable under 35
`
`U.S.C. § 101, as being directed to patent-ineligible subject matter, and that
`
`claim 17 also is unpatentable under 35 U.S.C. § 112, as indefinite. Pet. 1, 74.
`
`Apple provides a declaration from John P.J. Kelly, Ph.D. to support its
`
`challenges. Ex. 1019 (“the Kelly Declaration”).
`
`
`1 Pub. L. No. 112–29, 125 Stat. 284, 296–307 (2011).
`
`2
`
`
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`CBM2015-00127
`Patent 7,334,720 B2
`
`C. Related Matters
`
`The parties indicate that the ’720 patent is the subject of the following
`
`district court cases: Smartflash LLC v. Apple Inc., Case No. 6:15-cv-145
`
`(E.D. Tex.); Smartflash LLC v. Google, Inc., Case No. 6:14-cv-435 (E.D.
`
`Tex.); Smartflash LLC v. Apple Inc., Case No. 6:13-cv-447 (E.D. Tex.);
`
`Smartflash LLC v. Samsung, Case No. 6:13-cv-448 (E.D. Tex.), and;
`
`Smartflash LLC v. Amazon.Com, Inc., Case No. 6:14-cv-992 (E.D. Tex.).
`
`Pet. 2, 35–36; Paper 4, 4–5.
`
`Apple previously has filed five petitions requesting covered business
`
`method patent review of the ’720 patent: CBM2014-00104, CBM2014-
`
`00105, CBM2015-00028, CBM2015-00029, and CBM2015-00118. Pet. 36.
`
`We denied institution in CBM2014-00104 and CBM2014-00105. Apple Inc.
`
`v. Smartflash LLC, Case CBM2014-00104, slip. op. at 20 (PTAB Sept. 30,
`
`2014) (Paper 9); Apple Inc. v. Smartflash LLC, Case CBM2014-00105, slip.
`
`op. at 21 (PTAB Sept. 30, 2014) (Paper 9). Trial was instituted in
`
`CBM2015-00028 and CBM2015-00029. Apple Inc. v. Smartflash LLC,
`
`Case CBM2015-00028, slip. op. at 18 (PTAB May 28, 2015) (Paper 11)
`
`(instituting covered business method patent review of claims 1 and 2 under
`
`35 U.S.C. § 101); Apple Inc. v. Smartflash LLC, Case CBM2015-00029,
`
`slip. op. at 19 (PTAB May 28, 2015) (Paper 11) (instituting covered
`
`business method patent review of claims 3 and 15 under 35 U.S.C. § 101).
`
`Trial was instituted in CBM2015-00118 with respect to challenged claims
`
`13 and 14 under 35 U.S.C. § 101, the proceeding was consolidated with
`
`CBM2014-00190, and CBM2015-00118 was terminated. Apple Inc. v.
`
`Smartflash LLC, Case CBM2015-00118, slip. op. at 6–7 (PTAB Aug. 6,
`
`2015) (Paper 11).
`
`3
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`
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`CBM2015-00127
`Patent 7,334,720 B2
`
`Apple and other Petitioners have filed additional petitions requesting
`
`covered business method patent reviews of related patents. See Pet. 36–37;
`
`Paper 4, 2–4.
`
`D. The ’720 Patent
`
`The ’720 patent relates to “a portable data carrier for storing and
`
`paying for data and to computer systems for providing access to data to be
`
`stored,” and the “corresponding methods and computer programs.”
`
`Ex. 1001, 1:6–10. Owners of proprietary data, especially audio recordings,
`
`have an urgent need to address the prevalence of “data pirates,” who make
`
`proprietary data available over the Internet without authorization. Id. at
`
`1:15–41. The ’720 patent describes providing portable data storage together
`
`with a means for conditioning access to that data upon validated payment.
`
`Id. at 1:46–62. According to the ’720 patent, this combination of the
`
`payment validation means with the data storage means allows data owners to
`
`make their data available over the Internet without fear of data pirates. Id. at
`
`1:62–2:3.
`
`As described, the portable data storage device is connected to a
`
`terminal for Internet access. Id. at 1:46–55. The terminal reads payment
`
`information, validates that information, and downloads data into the portable
`
`storage device from a data supplier. Id. The data on the portable storage
`
`device can be retrieved and output from a mobile device. Id. at 1:56–59.
`
`The ’720 patent makes clear that the actual implementation of these
`
`components is not critical, and the alleged invention may be implemented in
`
`many ways. See, e.g., id. at 26:13–16 (“The skilled person will understand
`
`that many variants to the system are possible and the invention is not limited
`
`to the described embodiments.”).
`
`4
`
`
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`CBM2015-00127
`Patent 7,334,720 B2
`
`E. Challenged Claims
`
`Apple challenges claims 4–12 and 16–18 of the ’720 patent. Claims
`
`4–12 depend, directly or indirectly, from independent claim 3. Claims 16–
`
`18 depend, directly or indirectly, from independent claim 14.
`
` Claims 3 and 14 are illustrative of the claimed subject matter and
`
`recite the following:
`
`A data access terminal for retrieving data from a data
`3.
`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; and
`
`a processor coupled to the first interface, the data carrier
`interface, and 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; and
`
`code responsive to the payment validation data to receive
`at least one access rule from the data supplier and to write the at
`least one access rule into the data carrier, the at least one access
`rule specifying at least one condition for accessing the retrieved
`data written into the data carrier, the at least one condition
`being dependent upon the amount of payment associated with
`the payment data forwarded to the payment validation system.
`
`Ex. 1001, 26:41–67.
`
`14. A method of providing data from a data supplier to a data
`carrier, the method comprising:
`
`5
`
`
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`CBM2015-00127
`Patent 7,334,720 B2
`
`reading payment data from the data carrier;
`
`forwarding the payment data to a payment validation
`system;
`
`retrieving data from the data supplier;
`
`writing the retrieved data into the data carrier;
`
`receiving at least one access rule from the data supplier;
`
`and
`
`writing the at least one access rule into the data carrier,
`the at least one access rule specifying at least one condition for
`accessing the retrieved data written into the data carrier, the at
`least one condition being dependent upon the amount of
`payment associated with the payment data forwarded to the
`payment validation system.
`
`Id. at 28:5–20.
`
`A. Claim Construction
`
`ANALYSIS
`
`In a covered business method patent review, claim terms are given
`
`their broadest reasonable interpretation in light of the specification in which
`
`they appear and the understanding of others skilled in the relevant art. See
`
`37 C.F.R. § 42.300(b). Applying that standard, we interpret the claim terms
`
`of the ’720 patent according to their ordinary and customary meaning in the
`
`context of the patent’s written description. See In re Translogic Tech., Inc.,
`
`504 F.3d 1249, 1257 (Fed. Cir. 2007). For purposes of this Decision, we
`
`determine that “payment data” is the only term requiring an express
`
`construction in order to conduct properly our analysis.
`
`Apple asserts that “for review purposes, [payment data] should be
`
`construed to mean ‘data representing payment made for requested content
`
`data’ and is distinct from ‘access control data.’” Pet. 40.
`
`6
`
`
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`CBM2015-00127
`Patent 7,334,720 B2
`
`The plain and ordinary meaning of the two words that make up the
`
`term—“payment” and “data”—do not incorporate any notion of time and
`
`nothing about their combination changes that determination. As used in the
`
`’720 patent, “payment data” encompasses data relating to future, current,
`
`and past payments. For example, the ’720 patent states that “payment data
`
`for making a payment to the system owner is received from the smart Flash
`
`card by the content access terminal and forwarded to an e-payment system.”
`
`Ex. 1001, 21:15–18. This language indicates that payment data exists prior
`
`to the payment being made for the requested content. The ’720 patent also
`
`explains that “payment data received 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 6:58–61. This indicates that “payment data”
`
`includes data for payments that have already been made.
`
`Moreover, the plain and ordinary meaning of data does not implicate
`
`changes in character based on when it is used in a transaction. For example,
`
`a credit card number may qualify as “data relating to payment” before the
`
`number is processed, while the number is being processed, and after the
`
`number is processed. See Ex. 1014, 232:14–24 (providing credit or debit
`
`card information to a retail terminal). Thus, without an express description
`
`to the contrary, we presume that “payment data” retains the same meaning
`
`before, during, and after the payment operation. Neither party points to any
`
`such contrary description. In fact, the ’720 patent describes “payment data”
`
`in several instances as data relating to payment for the requested data item.
`
`Ex. 1001, 10:12–13; 10:34–35; 10:45–46.
`
`7
`
`
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`CBM2015-00127
`Patent 7,334,720 B2
`
`For purposes of this decision, we determine that the broadest
`
`reasonable interpretation of “payment data” as used in the ’720 patent is
`
`“data relating to payment for the requested data item.”
`
`B. Covered Business Method Patent
`
`Section 18 of the AIA provides for the creation of a transitional
`
`program for reviewing covered business method patents. 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,
`
`except that the term does not include patents for technological inventions.”
`
`AIA § 18(d)(1); see 37 C.F.R. § 42.301(a). A patent need have only one
`
`claim directed to a covered business method to be eligible for review. See
`
`Transitional Program for Covered Business Method Patents—Definitions of
`
`Covered Business Method Patent and Technological Invention; Final Rule,
`
`77 Fed. Reg. 48,734, 48,736 (Aug. 14, 2012) (“CBM Rules”) (Comment 8).
`
`We previously have determined that the ’720 patent is a “covered
`
`business method patent.” See, e.g., CBM2014-00104, Paper 9, 8–13
`
`(determining that the ’720 patent is eligible for covered business method
`
`patent reviewed based on claim 14), and; CBM2014-00190, Paper 9, 7–11
`
`(determining that the ’720 patent is eligible for covered business method
`
`patent reviewed based on claim 14). In this case, Apple asserts that claim
`
`16, which depends indirectly from claim 14, qualifies the ’720 patent for
`
`covered business method patent review. Pet. 24.
`
`1. Financial Product or Service
`
` Apple asserts that because “claim 14, from which claim 16
`
`ultimately depends, explicitly describes electronically transferring money
`
`8
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`
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`CBM2015-00127
`Patent 7,334,720 B2
`
`and allowing such a transfer, as well as restricting access based on payment
`
`. . . [it] clearly relates to a financial activity and providing a financial
`
`service.” Pet. 28. Based on this record, we agree with Apple that the subject
`
`matter recited by claim 16, which by its dependency incorporates the
`
`limitations of claim 14, is directed to activities that are financial in nature,
`
`namely “reading payment data,” “forwarding the payment data,” and “the at
`
`least one condition being dependent upon the amount of payment associated
`
`with the payment data forwarded to the payment validation system.” The
`
`transfer of data relating to payment and providing data in response to data
`
`relating to payment are financial activities, and providing for such transfers
`
`amounts to a financial service. This is consistent with the Specification of
`
`the ’720 patent, which confirms claim 16’s connection to financial activities
`
`by stating that the invention “relates to a portable data carrier for storing and
`
`paying for data.” Ex. 1001, 1:6–7. The Specification also states repeatedly
`
`that the disclosed invention involves managing access to data based on
`
`payment validation. See, e.g., id. at 1:46–49, 2:4–19, 3:19–27, 3:50–54,
`
`7:62–8:9, 8:21–35.
`
`Smartflash disagrees that claim 16 satisfies the financial in nature
`
`requirement of AIA § 18(d)(1), arguing that that section should be
`
`interpreted narrowly to cover only technology used specifically in the
`
`financial or banking industry. Prelim. Resp. 39–41. Smartflash cites to
`
`various portions of the legislative history as support for its proposed
`
`interpretation. Id.
`
`The Federal Circuit has expressly determined, however, that “the
`
`definition of ‘covered business method patent’ is not limited to products and
`
`services of only the financial industry, or to patents owned by or directly
`
`9
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`
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`CBM2015-00127
`Patent 7,334,720 B2
`
`affecting the activities of financial institutions, such as banks and brokerage
`
`houses.” Versata Dev. Grp., Inc. v. SAP America, Inc., 793 F.3d 1306, 1325
`
`(Fed. Cir. 2015). Rather, “it covers a wide range of finance-related
`
`activities.” Id. Further, contrary to Smartflash’s view of the legislative
`
`history, the legislative history overall indicates that the phrase “financial
`
`product or service” is not limited to the products or services of the “financial
`
`services industry” and is to be interpreted broadly. CBM Rules, 77 Fed.
`
`Reg. at 48,735–36. 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.’” Id. (citing 157
`
`Cong. Rec. S5432 (daily ed. Sept. 8, 2011) (statement of Sen. Schumer)).
`
`In addition, Smartflash asserts that claim 16 is not directed to an
`
`apparatus or method that is financial in nature because claim 16 “omits the
`
`specifics of how payment is made.” Prelim. Resp. 42–43. We are not
`
`persuaded by this argument because § 18(d)(1) of the AIA does not include
`
`such a requirement, nor does Smartflash point to any other authority that
`
`makes such a requirement. Id. We determine that because claim 16 recites
`
`“payment data” (as a result of depending from claim 14), as Smartflash
`
`acknowledges (id. at 41–42), the financial in nature requirement of
`
`§ 18(d)(1) is satisfied.
`
`For the reasons stated above, and based on the particular facts of this
`
`proceeding, we conclude that the ’720 patent includes at least one claim that
`
`meets the financial in nature requirement of § 18(d)(1) of the AIA.
`
`10
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`CBM2015-00127
`Patent 7,334,720 B2
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`2. Exclusion for Technological Inventions
`
`Apple asserts that claim 16 does not fall within § 18(d)(1)’s exclusion
`
`for “technological inventions.” Pet. 29–35. In particular, Apple argues that
`
`claim 16 “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.’” Pet. 29 (quoting 37
`
`C.F.R. § 42.301(b)).
`
`We are persuaded that claim 16 as a whole does not recite a
`
`technological feature that is novel and unobvious over the prior art. The
`
`’720 patent makes clear that the asserted novelty of the invention is not in
`
`any specific improvement of software or hardware, but in the method of
`
`controlling access to data. For example, the ’720 patent states that “there is
`
`an urgent need to find a way to address the problem of data piracy,” (Ex.
`
`1001, 1:40–41), while acknowledging that the “physical embodiment of the
`
`system is not critical and a skilled person will understand that the terminals,
`
`data processing systems and the like can all take a variety of forms” (id. at
`
`12:38–41). For example, the ’720 patent provides the example of a “smart
`
`Flash card” for a data carrier, referring to “the ISO (International Standards
`
`Organization) series of standards, including ISO 7810, ISO 7811, ISO 7812,
`
`ISO 7813, ISO 7816, ISO 9992 and ISO 10102” (id. at 17:23–32) for further
`
`details on smart cards. Thus, we determine that claim 16 recites merely
`
`known technological features, which indicates that it is not a patent for a
`
`technological invention. See Office Patent Trial Practice Guide, 77 Fed.
`
`Reg. 48,756, 48,764 (Aug. 14, 2012).
`
`Smartflash also argues that claim 16 falls within § 18(d)(1)’s
`
`exclusion for “technological inventions” because it is directed towards
`
`11
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`CBM2015-00127
`Patent 7,334,720 B2
`
`solving the technological problem of “associating with the retrieved data at
`
`least one access rule specifying at least one condition for accessing the
`
`retrieved data written into the data carrier” with the technological solution of
`
`“a data carrier to which both the retrieved data and the at least one access
`
`rule specifying at least one condition for accessing the retrieved data written
`
`into the data carrier can be written.’” Prelim. Resp. 43–44. We are not
`
`persuaded by this argument because, as Apple argues, the problem being
`
`solved by claim 16 is a business problem—data piracy. Pet. 34. For
`
`example, the Specification states that “[b]inding the data access and payment
`
`together allows the legitimate owners of the data to make the data available
`
`themselves over the internet without fear of loss of revenue, thus
`
`undermining the position of data pirates.” Ex. 1001, 1:66–2:3. Therefore,
`
`based on the particular facts of this proceeding, we conclude that claim 16
`
`does not recite a technological invention.
`
`3. Conclusion
`
`In view of the foregoing, we conclude that the ’720 patent is a covered
`
`business method patent under AIA § 18(d)(1) and is eligible for review
`
`using the transitional covered business method patent program.
`
`C. Section 101 Patent-Eligible Subject Matter
`
`Apple challenges claims 4–12 and 16–18 as directed to patent-
`
`ineligible subject matter under 35 U.S.C. § 101. Pet. 43–73. Apple argues
`
`that the challenged claims are directed to an abstract idea without additional
`
`elements that transform it into a patent-eligible application of that idea (id. at
`
`44–70), triggers preemption concerns (id. at 70–72), and fails the machine-
`
`or-transformation test (id. at 73).
`
`12
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`CBM2015-00127
`Patent 7,334,720 B2
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`Smartflash disagrees, arguing that the limitations of each of the
`
`challenged claims, taken as a combination, “‘recite specific ways of using
`
`distinct memories, data types, and use rules that amount[s] to significantly
`
`more than the underlying abstract idea”’ (Prelim. Resp. 17 (quoting Ex.
`
`2049, 19)), and does not result in inappropriate preemption (id. at 18–28).
`
`Smartflash also asserts that (1) the Office is precluded, by the District
`
`Court’s decisions on Petitioner’s Motions involving the invalidity of claims
`
`1, 13, 14, and 15 of the ’720 patent, from instituting a review of challenged
`
`claims 4–12 and 16–18 of the ’720 patent (id. at 29–31); (2) the Office is
`
`estopped from revisiting the issue of § 101, which was inherently reviewed
`
`during examination (id. at 33); (3) invalidating patent claims via covered
`
`business method patent review is unconstitutional (id. at 33–35); and (4)
`
`section 101 is not a ground that may be raised in a covered business method
`
`patent review (id. at 35–37).
`
`1. Abstract Idea
`
`Under 35 U.S.C. § 101, we must first identify whether an invention
`
`fits within one of the four statutorily provided categories of patent-
`
`eligibility: “processes, machines, manufactures, and compositions of
`
`matter.” Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 713–14 (Fed. Cir.
`
`2014). Here, each of the challenged claims recites a “machine,” i.e., a “data
`
`access terminal” (claims 4–12) or a “process,” i.e., a “method” (claims 16–
`
`18), under § 101. Section 101, however, “contains an important implicit
`
`exception to subject matter eligibility: Laws of nature, natural phenomena,
`
`and abstract ideas are not patentable.” Alice Corporation Pty. Ltd. V. CLS
`
`Bank Int’l., 134 S. Ct. 2347, 2354 (2014) (citing Assoc. for Molecular
`
`Pathology v. Myriad Genetics, Inc., 133 S.Ct. 2107, 2116 (2013) (internal
`
`13
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`CBM2015-00127
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`
`quotation marks and brackets omitted)). In Alice, the Supreme Court
`
`reiterated the framework set forth previously in Mayo Collaborative Services
`
`v. Prometheus Laboratories, 132 S. Ct. 1289, 1293 (2012) “for
`
`distinguishing patents that claim laws of nature, natural phenomena, and
`
`abstract ideas from those that claim patent-eligible applications of these
`
`concepts.” Alice, 134 S. Ct. at 2355. The first step in the analysis is to
`
`“determine whether the claims at issue are directed to one of those patent-
`
`ineligible concepts.” Id.
`
`Apple argues that the challenged claims are directed to the abstract
`
`idea of “payment for and controlling access to data.” Pet. 43. Smartflash
`
`does not dispute that the challenged claims are directed to an abstract idea.
`
`See Prelim. Resp. 11–28.
`
`We are persuaded that the challenged claims are more likely than not
`
`drawn to a patent-ineligible abstract idea. As discussed above, the ’720
`
`patent discusses addressing recording industry concerns of data pirates
`
`offering unauthorized access to widely available compressed audio
`
`recordings. Ex. 1001, 1:26–41. The ’720 patent proposes to solve this
`
`problem by restricting access to data on a portable data carrier based upon
`
`payment validation. Id. at 1:46–1:59. The ’720 patent makes clear that the
`
`heart of the claimed subject matter is restricting access to stored data based
`
`on supplier-defined access rules and validation of payment. Id. at 1:60–2:3.
`
`We are persuaded, on this record, that the challenged claims are directed to
`
`an abstract idea. See Alice, 134 S. Ct. at 2356 (holding that the concept of
`
`intermediated settlement at issue in Alice was an abstract idea); Accenture
`
`Global Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1344
`
`(Fed. Cir. 2013) (holding the abstract idea at the heart of a system claim to
`
`14
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`be “generating tasks [based on] rules . . . to be completed upon the
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`occurrence of an event”).
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`2. Inventive Concept
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`Turning to the second step of the analysis, we look for additional
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`elements that can “transform the nature of the claim” into a patent-eligible
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`application of an abstract idea. Mayo, 132 S. Ct. at 1297. On this record,
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`we are not persuaded that the challenged claims of the ’720 patent add an
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`inventive concept sufficient to ensure that the patent in practice amounts to
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`significantly more than a patent on the abstract idea itself. Alice, 134 S. Ct.
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`at 2355; see also Accenture Global Servs., 728 F.3d at 1345 (holding claims
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`directed to the abstract idea of “generating tasks [based on] rules . . . to be
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`completed upon the occurrence of an event” to be unpatentable even when
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`applied in a computer environment and within the insurance industry).
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`Smartflash argues that the challenged claims are patentable because
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`they “recite specific ways of using distinct memories, data types, and use
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`rules that amount[s] to significantly more than the underlying abstract idea.”
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`Prelim. Resp. 17 (quoting Ex. 2049, 19). Smartflash, however, does not
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`elaborate as to how these claim limitations amount to significantly more than
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`the underlying abstract idea.
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`Independent claims 3 and 14, for example, recite a “data carrier” and a
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`“payment validation system.” The Specification, however, notes that the
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`data carrier may be a generic, known, hardware device such as a “standard
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`smart card,” and that “[t]he payment validation system may be part of the
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`data supplier’s computer systems or it may be a separate e-payment system.”
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`See Ex. 1001, 8:22–25, 8:64–66, 11:36–39, 13:46–58. Moreover, on this
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`record, Smartflash has not shown sufficiently that any of the other
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`15
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`potentially technical additions to the claims—including, for example,
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`“processor,” “program store,” “accessing,” and code to receive/retrieve/write
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`data (claim 3); “reading,” “forwarding,” “retrieving,” “writing,” “receiving,”
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`and “transmitting” (claim 14)—performs a function that is anything other
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`than “purely conventional.” See Alice, 134 S.Ct. at 2359. The linkage of
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`existing hardware devices to existing payment validation processes and
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`supplier-defined access rules, as claimed here, appear to be “‘well-
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`understood, routine, conventional activit[ies]’ previously known to the
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`industry.” Id.; Mayo, 132 S. Ct. at 1294. Based on the present record, we
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`determine that none of these limitations, viewed “both individually and ‘as
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`an ordered combination,’” transform the nature of the claims into patent-
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`eligible subject matter. See Alice, 134 S. Ct. at 2355 (quoting Mayo, 132
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`S.Ct. at 1297, 1298).
`
`Smartflash also asserts that the challenged claims are like those in
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`DDR Holdings, which the Federal Circuit held were directed to statutory
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`subject matter because “they claim a solution ‘necessarily rooted in
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`computer technology in order to overcome a problem specifically arising in
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`the realm of computer networks.’” Prelim. Resp. 2–3 (quoting DDR
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`Holdings, LLC v. Hotels.Com, L.P., 773 F.3d 1245, 1257 (Fed. Cir. 2014)).
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`According to Smartflash, the challenged claims overcome the problem of
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`“digital data piracy,” “‘a challenge particular to the Internet.’” Prelim. Resp.
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`13 (quoting DDR Holdings, 773 F.3d at 1257).
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`We are not persuaded that the challenged claims are like those at issue
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`in DDR Holdings. In DDR Holdings, the Federal Circuit found that the
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`challenged claims were directed to patentable subject matter because they
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`“specif[ied] how interactions with the Internet are manipulated to yield a
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`16
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`desired result—a result that overrides the routine and conventional aspects
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`of the technology.” 773 F.3d at 1258. We are not persuaded that the
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`challenged claims specify interactions that depart from the routine use of the
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`recited devices. Instead, we determine, based on the current record, that the
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`claims merely apply conventional computer processes to restrict access to
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`data based on payment.
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`The differences between the challenged claims and those at issue in
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`DDR Holdings are made clear by Smartflash in its tables mapping the
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`challenged claims of the ’720 patent to claim 19 of the patent at issue in
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`DDR Holdings. Prelim. Resp. 14–16. For example, claim 3 of the ’720
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`patent, from which claims 4–12 depend, recites:
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`code responsive to the payment validation data to receive at
`least one access rule from the data supplier and to write the at
`least one access rule into the data carrier, the at least one access
`rule specifying at least one condition for accessing the retrieved
`data written into the data carrier, the at least one condition
`being dependent upon the amount of payment associated with
`the payment data forwarded to the payment validation system
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`There is no language in this, or any other limitation of claim 3, in any of the
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`other challenged claims, or in the Specification of the ’720 patent, that
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`demonstrates that the generic computer components—“code responsive to,”
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`“code . . . to receive,” “code . . . to write,” “data,” “data carrier,” and
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`“payment validation system”—function in an unconventional manner or
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`employ sufficiently specific programming. Instead, these limitations, like all
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`the other limitations of the challenged claims, are “specified at a high level
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`of generality,” which the Federal Circuit has found to be “insufficient to
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`supply an inventive concept.” Ultramercial, 772 F.3d at 716.
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`17
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`The limitation of claim 19 in DDR Holdings, which Smartflash
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`contends corresponds to the “code responsive to” limitation identified above
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`from claim 3 of the ’720 patent, recites “using the data retrieved,
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`automatically generate and transmit to the web browser a second web page
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`that displays: (A) information associated with the commerce object
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`associated with the link that has been activated, and (B) the plurality of
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`visually perceptible elements visually corresponding to the source page.”
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`Prelim. Resp. 16. It was this limitation from claim 19 in DDR Holdings,
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`according to the Federal Circuit, that specifies “how interactions with the
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`Internet are manipulated to yield a desired result—a result that overrides the
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`routine and conventional sequence of events ordinarily triggered by the click
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`of a hyperlink.” 773 F.3d at 1258. Importantly, the Federal Circuit
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`identified this limitation as differentiating the DDR Holdings claims from
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`those held to be unpatentable in Ultramercial, which “broadly and
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`generically claim ‘use of the Internet’ to perform an abstract business
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`practice (with insignificant added activity).” Id. We are persuaded, at this
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`point in the proceeding, that the challenged claims are closer to the claims at
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`issue in Ultramercial than to those at issue in DDR Holdings. The claims at
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`issue in Ultramercial, like the challenged claims of the ’720 patent, were
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`also directed to a method for distributing media products. Similar to
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`restricting data based on payment, as in the challenged claims, the
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`Ultramercial claims restricted access based on viewing an advertisement.
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`Ultramercial, 772 F.3d at 712.
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`Thus, on this record, we are persuaded that Apple has shown that it is
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`more likely than not that the challenged claims—claims 4–12 and 16–18—
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`of the ’720 patent do not add an inventive concept sufficient to ensure that
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`18
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`the patent in practice amounts to significantly more than a patent on the
`
`abstract idea itself. Alice, 134 S. Ct. at 2355; see also Accenture, 728 F.3d at
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`1345 (holding claims directed to the abstract idea of “generating tasks [based
`
`on] rules . . . to be completed upon the occurrence of an event” to be
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`unpatentable even when applied in a computer environment and within the
`
`insurance industry).
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`3. Preemption
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`Apple argues that “the challenged claims’ attempt to achieve broad
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`functional coverage—with no relative contribution from the named
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`inventors—firmly triggers preemption concerns.” Pet. 71. Smartflash
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`responds that the challenged claims do not result in inappropriate
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`preemption. Prelim. Resp. 18–28. According to Smartflash, the challenged
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`claims of the ’720 patent recite “specific ways of managing access to digital
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`content data based on payment validation through storage and retrieval of
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`use status data and use rules in distinct
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