`
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`APPLE INC.,
`
`Petitioner,
`
`v.
`
`SMARTFLASH LLC,
`
`Patent Owner.
`
`____________
`
`Case CBM2015-00131
`
`Patent 8,061,598 B2
`
`____________
`
`PATENT OWNER’S PRELIMINARY RESPONSE
`
`
`
`TABLE OF CONTENTS
`
`I.
`
`II.
`
`
`PATENT OWNER’S LIST OF EXHIBITS ............................................................ iii
`
`INTRODUCTION ........................................................................................... 1
`
`OVERVIEW OF U.S. PATENT NO. 8,061,598 ............................................ 5
`
`III. APPLE’S REPETITIVE AND UNTIMELY § 101 CHALLENGES
`RESULT IN PIECEMEAL LITIGATION AND WILL NOT SECURE THE
`JUST, SPEEDY, AND INEXPENSIVE RESOLUTION OF THE
`BOARD’S PROCEEDINGS ........................................................................... 8
`
`IV. THE CLAIMS OF THE ‘598 PATENT ARE STATUTORY ...................... 11
`A.
`The Two-Part Test for Statutory Subject Matter ................................ 11
`
`B.
`
`C.
`
`The Claims Are Statutory Under Mayo and Alice .............................. 11
`
`The Claims Do Not Result in Inappropriate Preemption .................... 15
`
`Preemption under DDR Holdings ............................................. 15
`1.
`Preemption under Mayo and Alice ............................................ 19
`2.
`Non-Infringing Alternatives Confirm a Lack of Preemption ... 21
`3.
`4. The Challenged Claims are Distinguishable from the Claims in
`Ariosa Diagnostics .................................................................... 23
`
`V.
`
`
`PETITIONER HAS ALREADY LOST A CHALLENGE TO RELATED
`CLAIMS ON THE SAME STATUTORY GROUNDS IN ITS
`LITIGATION WITH PATENT OWNER BASED ON EVIDENCE THAT
`IT HAS NOT PROVIDED TO THE PTAB.................................................. 26
`
`VI. PETITIONER’S EXPERT IS UNCROSSED AND NOT PROVEN TO BE
`RELIABLE .................................................................................................... 29
`
`
`
`
`- i -
`
`
`
`VII.
`
`SECTION 101 IS NOT A GROUND THAT MAY BE RAISED IN
`
`COVERED BUSINESS METHOD PATENT REVIEW ........................... ..3O
`
`VIII.
`
`THE USPTO IS ESTOPPED FROM REVISITING THE ISSUE OF
`
`WHETHER THE CLAIMS ARE DIRECTED TO STATUTORY SUBJECT
`
`MATTER ..................................................................................................... ..32
`
`IX.
`
`IX.
`
`X.
`
`INVALIDATING PATENT CLAIMS VIA CBM REVIEW IS
`
`UNCONSTITUTIONAL ............................................................................. . .33
`
`THE CHALLENGED CLAIMS ARE NOT DIRECTED TO A
`
`FINANCIAL PRODUCT OR SERVICE .................................................... ..35
`
`VII. SECTION 101 IS NOT A GROUND THAT MAY BE RAISED IN
`COVERED BUSINESS METHOD PATENT REVIEW ............................. 30
`
`VIII. THE USPTO IS ESTOPPED FROM REVISITING THE ISSUE OF
`WHETHER THE CLAIMS ARE DIRECTED TO STATUTORY SUBJECT
`MATTER ....................................................................................................... 32
`
`INVALIDATING PATENT CLAIMS VIA CBM REVIEW IS
`UNCONSTITUTIONAL ............................................................................... 33
`
`THE CHALLENGED CLAIMS ARE NOT DIRECTED TO A
`FINANCIAL PRODUCT OR SERVICE ...................................................... 35
`
`XI. THE CHALLENGED CLAIMS OF THE ‘598 PATENT ARE
`TECHNOLOGICAL INVENTIONS EXEMPT FROM CBM REVIEW .... 40
`
`XII. CONCLUSION .............................................................................................. 41
`
`XI.
`
`THE CHALLENGED CLAIMS OF THE ‘598 PATENT ARE
`
`TECHNOLOGICAL INVENTIONS EXEMPT FROM CBM REVIEW....40
`
`XII.
`
`CONCLUSION ............................................................................................ ..41
`
`
`
`- 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
`
`2051-2057
`
`Reserved
`
`2058
`
`
`
`Memorandum Opinion and Order (on Defendants’ Motions
`for Stay Pending the Outcome of CBMs) from Smartflash
`LLC, et al. v. Apple Inc., et al., Case No. 6:13-CV-447 (E.D.
`Tex.), Smartflash LLC, et al. v. Samsung Electronics Co. Ltd,
`et al., Case No. 6:13-CV-448 (E.D. Tex.), Smartflash LLC, et
`al. v. Google, Inc., et al., Case No. 6:14-CV-435 (E.D. Tex.),
`
`- iii -
`
`
`
`Exhibit Number
`
`Exhibit Description
`
`and Smartflash LLC, et al. v. Amazon, Inc., et al., Case No.
`6:14-CV-992 (E.D. Tex.) dated May 29, 2015
`
`2059-2067
`
`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
`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.
`
`2076-2081
`
`Reserved
`
`2082
`
`Trial Transcript from Virnetx Inc. v. Apple Inc., Case No.
`6:10-cv-417 (E.D. Tex.) dated November 2, 2012.
`
`2083-2089
`
`Reserved
`
`2090
`
`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 8,061,598 should be instituted as requested
`
`by Apple Inc. (“Apple” 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 Apple seeks covered business method (CBM) review of claims 3-
`
`6, 8-14, 16-30, and 32-41 of U.S. Patent No. 8,061,598 (“the ‘598 Patent”).
`
`Petition, Paper 1 at 1.
`
`On April 1, 2014, Apple filed two earlier petitions, in CBM2014-00108 and
`
`-00109, seeking CBM review of claims 1, 2, 7, 13, 15, 26, and 31 of the ‘598
`
`patent on §§ 102 and 103 grounds. Claims 13 and 26, at issue here, were also put
`
`at issue in the 00108/00109 petitions. The PTAB granted review of claim 26 on 35
`
`U.S.C. § 103 obviousness grounds but denied review of claims 1, 2, 7, 13, 15, and
`
`31. Apple Inc. v. Smartflash LLC, Cases CBM2014-00108 and -00109, Paper 8 at
`
`24-25 (PTAB September 30, 2014) (hereinafter “00108/00109 Institution
`
`Decision”).
`
`
`
`- 1 -
`
`
`
`On September 26, 2014, another petitioner, Samsung Electronics America,
`
`Inc. (“Samsung”), filed two petitions in CBM2014-00193 and -00198 seeking
`
`CBM review of claim 7 of the ‘598 Patent on § 101 and § 103 grounds
`
`(CBM2014-00193, Petition, Paper 2 at 1, 3) and on § 102 grounds (CBM2014-
`
`00198, Petition, Paper 2 at 1, 3).
`
`On October 30, 2014 petitioner Apple filed another petition, in CBM2015-
`
`00017, seeking review of ‘598 Patent claims 1, 2, 7, 15, and 31 as non-statutory
`
`under § 101. CBM2015-00017, Corrected Petition, Paper 9 at 1.
`
`On April 2, 2015 the Board instituted covered business method patent
`
`review under 35 U.S.C. § 101 as to claim 7 of the ‘598 Patent (CBM2014-00193,
`
`Paper 7 at 19) and on April 10, 2015 the Board instituted covered business method
`
`patent review under 35 U.S.C. § 101 as to claims 1, 2, 15, and 31 of the ‘598
`
`Patent (CBM2015-00017 Paper 22 at 21).
`
`On April 30, 2015 Apple filed yet another petition, in CBM2015-00120,
`
`seeking CBM review of claim 7 of the ‘598 Patent as non-statutory under § 101.
`
`CBM2015-00120, Petition, Paper 2 at 1, 3.
`
`In the instant petition – Apple’s fifth CBM petition, and the seventh CBM
`
`petition against the ‘598 Patent – Apple raises a 35 U.S.C. § 101 non-statutory
`
`subject matter challenge to claims 3-6, 8-14, 16-30, and 32-41. Petition at 1, 38.
`
`
`
`- 2 -
`
`
`
`As the Board has already correctly noted in CBM2015-00016, “[t]he 2015
`
`set of petitions assert … challenges pursuant to 35 U.S.C. § 101, which raise
`
`purely legal issues.” CBM2015-00016, Paper 6 at 2. The Board should decline to
`
`institute review of claims 3-6, 8-14, 16-30, and 32-41 on Apple’s § 101 non-
`
`statutory subject matter grounds because Apple’s purely legal challenge is
`
`repetitive and untimely and thus does not “secure the just, speedy, and inexpensive
`
`resolution” of the Board’s proceedings reviewing the ‘598 patent claims. 37
`
`C.F.R. § 42.1(b). Specifically, the instant Petition seeks review of dependent
`
`claims (claims 3-6, 8-14, 16, and 17) of the ‘598 Patent on the same grounds
`
`(§ 101) for which their independent claim (claim 1) and three other dependent
`
`claims (claims 2, 7, and 15) were already instituted by the Board in CBM2015-
`
`00017 and CBM2014-00193. Similarly, the Petition seeks review of dependent
`
`claims 32-34 on the same grounds (§ 101) for which their independent claim
`
`(claim 31) was instituted by the Board in CBM2015-00017. The Board should
`
`exercise its discretion and decline to institute a covered business method patent
`
`review given the § 101 CBM reviews already instituted on the ‘598 Patent in
`
`CBM2015-00017 and CBM2014-00193.
`
`The claims of the ‘598 Patent are directed to statutory subject matter because
`
`they claim a solution “necessarily rooted in computer technology in order to
`
`overcome a problem specifically arising in the realm of computer networks.” DDR
`
`
`
`- 3 -
`
`
`
`Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 1257 (Fed. Cir. 2014). The
`
`claims of the ‘598 Patent address the problem of data content piracy on the
`
`Internet.
`
`As demonstrated below, evidence in CBM2015-00017 shows that the claims
`
`of the ‘598 Patent do not result in inappropriate preemption, nor is there any
`
`evidence that a disproportionate amount of future innovation is foreclosed by the
`
`claims of the ‘598 Patent.
`
`Additionally, in February 2015, Petitioner lost in Federal Court the purely
`
`legal issue of whether claims 2, 7, 15, and 31 of the ‘598 Patent are directed to
`
`statutory subject matter under 35 U.S.C. § 101. See Exhibit 2049, Report and
`
`Recommendation (on Defendants’ Motions for Summary Judgment of Invalidity
`
`Pursuant to 35 U.S.C. § 101) (hereinafter “Report and Recommendation”), from
`
`Smartflash LLC, et al. v. Apple Inc., et al., Case No. 6:13-CV-447 (E.D. Tex.) and
`
`Smartflash LLC, et al. v. Samsung Electronics Co. Ltd, et al., Case No. 6:13-CV-
`
`448 (E.D. Tex.), dated Jan. 21, 2015, and Exhibit 2050, Order adopting Report and
`
`Recommendation (on Defendants’ Motions for Summary Judgment of Invalidity
`
`Pursuant to 35 U.S.C. § 101), from Smartflash LLC, et al. v. Apple Inc., et al., Case
`
`No. 6:13-CV-447 (E.D. Tex.) and Smartflash LLC, et al. v. Samsung Electronics
`
`Co. Ltd, et al., Case No. 6:13-CV-448 (E.D. Tex.), dated Feb. 13, 2015. Claims 2,
`
`7, and 15, which like claims 3-6, 8-14, 16, and 17 put at issue here depend from
`
`
`
`- 4 -
`
`
`
`claim 1, were found to be statutory in District Court. Claims 32-34, put at issue
`
`here, depend from claim 31, which was found to be statutory in District Court.
`
`On July 8, 2015 the 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 during
`
`the prosecution of the ‘598 Patent. The USPTO is estopped from re-litigating
`
`these purely legal issues already considered and adjudicated by the USPTO.
`
`Patent Owner further submits that the CBM review process is an
`
`unconstitutional violation of Separation of Powers principles.
`
`Finally, Patent Owner submits that § 101 is not a ground on which CBM
`
`review may be instituted.
`
`
`
`II. OVERVIEW OF U.S. PATENT NO. 8,061,598
`
`Although the claims define the actual scope of coverage of the patent, as
`
`described in the first paragraph of the BACKGROUND OF THE INVENTION,
`
`
`
`- 5 -
`
`
`
`the patent-at-issue, the ‘598 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.” Ex. 1001, ‘598 Patent at 1:20-28.
`
`Preferred embodiments described in the ‘598 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. Id. at 15:65-16:17.
`
`Referring to preferred embodiments, the ‘598 Patent discloses that a data
`
`supply system may provide users with a seamless purchase and content delivery
`
`experience. Id. at 23:63-24:1. Users are able to purchase content from a variety of
`
`different content providers even if they do not know where the content providers
`
`are located or how the content is delivered. See id. The exemplary system is
`
`operated by a “content data supply ‘system owner,’” who may act as an
`
`
`
`- 6 -
`
`
`
`intermediary between a user seeking to purchase content and content providers,
`
`such as record labels, movie studios, and software providers. See id. 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 id. 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 id. 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 id. at 8:6-9.
`
`The ‘598 Patent 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.” Id. at 24:16-18. “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.” Id. at 9:20-22. “The carrier may ... store content use rules pertaining to
`
`allowed use of stored data items. These use rules may be linked to payments made
`
`from the card to provide payment options such as access to buy content data
`
`outright; rental access to content data for a time period or for a specified number of
`
`access events; and/or rental/purchase, for example where rental use is provided
`
`together with an option to purchase content data at the reduced price after rental
`
`access has expired.” Id. at 4:67-5:8. Further, “use status data [is retrieved] from
`
`
`
`- 7 -
`
`
`
`the data carrier [to] indicat[e] past use of the stored data.” Id. at 9:33-35. Thus, as
`
`described in the ‘598 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 both the digital content
`
`and the use rules/use status data, access control to the digital content can be
`
`continuously enforced prior to access to the digital content. By comparison, unlike
`
`a system that uses use rules/use status data as claimed, when a DVD was
`
`physically rented for a rental period, there was no mechanism to write partial use
`
`status data to the DVD when only part of the DVD had been accessed (e.g., to
`
`track whether a renter had “finished with” the DVD yet).
`
`
`
`III. APPLE’S REPETITIVE AND UNTIMELY § 101 CHALLENGES
`RESULT IN PIECEMEAL LITIGATION AND WILL NOT SECURE THE
`JUST, SPEEDY, AND INEXPENSIVE RESOLUTION OF THE
`BOARD’S PROCEEDINGS
`Petitioner Apple seeks covered business method review of claims 3-6, 8-14,
`
`16-30, and 32-41 of the ‘598 Patent as being directed to ineligible subject matter
`
`under 35 U.S.C. § 101. This is Apple’s fifth covered business review petition filed
`
`against the ‘598 Patent. Apple filed CBM2014-00108 and -00109 on April 1,
`
`2014, CBM2015-00017 on October 30, 2014, and CBM2015-00120 on April 30,
`
`
`
`- 8 -
`
`
`
`2015. Both CBM2015-00017 and -00120 raise challenges to the ‘598 Patent under
`
`§ 101, including against independent claims 1 and 31 whose dependent claims 3-6,
`
`8-14, 16, and 17 and 32-34 are challenged in the instant petition. The Board
`
`should exercise its discretion under 35 U.S.C. § 325(d) and deny the petition here
`
`because it raises substantially the same § 101 arguments previously presented to
`
`the Board and that should have been brought earlier. The Petition is repetitive,
`
`untimely, and results in expensive and inefficient piecemeal proceedings.
`
`Instituting covered business method review here will not secure the just, speedy,
`
`and inexpensive resolution of Apple’s challenges to the ‘598 Patent.
`
`“[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)).
`
`Apple’s § 101 non-statutory subject matter ground asserted here constitutes
`
`Apple’s third § 101 subject matter attack against the ‘598 Patent. CBM2015-
`
`00017 and CBM2015-00120 also challenge the ‘598 Patent under § 101. As the
`
`
`
`- 9 -
`
`
`
`Board acknowledged in CBM2015-00016, “challenges pursuant to 35 U.S.C. § 101
`
`… raise purely legal issues.” CBM2015-00016, Paper 6 at 2. Apple provides no
`
`valid reason why it did not raise this purely legal issue as grounds for review of
`
`claims 3-6, 8-14, 16-30, and 32-41 when it filed CBM2015-00017 on October 30,
`
`2014 and/or CBM2015-00120 on April 30, 2015.
`
`Apple’s multiple duplicative petitions are resulting in inefficient and
`
`expensive proceedings. In fact in the current petition, Apple relies on a declaration
`
`from a different supporting witness than in its prior ‘598 Patent petitions, including
`
`CBM2015-00017. Instituting review will require Smartflash to undertake
`
`discovery based on the new declaration and take the deposition of a completely
`
`new witness. Smartflash will not even enjoy any efficiencies from previously
`
`having taken the deposition of Apple’s prior § 101 declarant.
`
`Here, allowing Apple to raise grounds for review that it could have and
`
`should have raised in its October 30, 2014 CBM2015-00017 petition or its April
`
`30, 2015 CBM2015-00120 petition, if not sooner, encourages Apple’s piecemeal
`
`challenges to Patent Owner’s patent claims and runs afoul of the Board’s charge to
`
`“secure the just, speedy, and inexpensive resolution” of Apple’s covered business
`
`method challenges to the ‘598 Patent. Patent Owner respectfully requests that the
`
`Board deny review on Apple’s repetitive § 101 non-statutory subject matter
`
`grounds.
`
`
`
`- 10 -
`
`
`
`
`
`IV. THE CLAIMS OF THE ‘598 PATENT ARE 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 598 Patent, from non-statutory
`
`claims. In DDR Holdings, the Federal Circuit analyzed claims, like the ‘598 Patent
`
`claims at issue here, that have technological solutions to technological problems
`
`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)
`
`
`
`- 11 -
`
`
`
`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.
`
`Such is the case here, too. The claims of the ‘598 Patent are not directed to
`
`mental processes or processes performed using pen and paper, rather the claims are
`
`directed to particular devices and methods that can download and store digital
`
`content into a data carrier. By using a system that combines on the data carrier the
`
`
`
`- 12 -
`
`
`
`digital content data item and at least one use rule (claim 1), and “code to provide
`
`access to the at least one content data item in accordance with the at least one use
`
`rule” (claim 2), or “a content access PIN memory store to store a PIN number for
`
`controlling access to the content data memory” (claim 15), or “evaluating the use
`
`status data using the one or more use rules to determine whether access to the
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`content data item is permitted; and enabling access to the content data item
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`responsive to a determination that access to the content data item is permitted”
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`(claim 31), access control to the digital content data item can be continuously
`
`enforced prior to access to the digital content data item, allowing subsequent use
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`(e.g., playback) of the digital content to be portable and disconnected, and
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`additional content can be obtained.
`
`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
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`data piracy, and, like in DDR Holdings, “address … a challenge particular to the
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`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
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`
`
`
`
`and unique problems for digital content providers in
`combatting unauthorized use and reproduction of
`protected media content.
`
`Report and Recommendation at 19, lines 7-12 (quoting DDR Holdings, 773 F.3d at
`
`1257) (internal citation omitted).
`
`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
`
`held that the “asserted claims … recite specific ways of using distinct memories,
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`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.”
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`Report and Recommendation at 19, lines 1-4 (emphasis added).
`
`The Petition incorrectly alleges that the challenged claims recite
`
`“rudimentary components” and “conventional and well-known components,” as
`
`well as “conventional and well-known code.” Petition at 18-19. The method
`
`claims are incorrectly alleged to recite “conventional and well-known steps.” Id. at
`
`19.
`
`Claim 1, and its dependent claims 3-6, 8-14, 16, and 17, however, recite that
`
`one or more use rules and the content data item are stored in the same data carrier.
`
`
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`- 14 -
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`
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`Ex. 1001, ‘598 Patent at 25:54-67. The Petition does not show that such a
`
`configuration relates to mental or pen-and-paper processes. By ignoring that the
`
`one or more use rules and the content data item are stored in the same data carrier,
`
`it can be seen that the Petition is ignoring even the context of the problem – that a
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`technological solution is necessary to address the technological problem created by
`
`the nature of digital content and the Internet. Accordingly, the claims of the ‘598
`
`Patent are directed to statutory subject matter under the two-part test of Mayo and
`
`Alice.
`
`C.
`
`The Claims Do Not Result in Inappropriate Preemption
`
`1.
`
`Preemption under DDR Holdings
`
`The Petition incorrectly alleges that “the challenged claims are directed to
`
`nothing more than the unpatentable abstract idea of payment for and/or controlling
`
`access to data.” Petition at 6. The Petition further incorrectly alleges that “the
`
`challenged claims’ attempt to achieve broad functional coverage—with no relative
`
`contribution from the named inventors—firmly triggers preemption concerns.” Id.
`
`at 76. However, the challenged claims of the ‘598 Patent do 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
`
`
`
`- 15 -
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`
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`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
`
`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 CBM2015-00017 brought by Apple Inc., where independent
`
`claims 1 and 31 are challenged under § 101, supports that the claims of the ‘598
`
`Patent do not result in inappropriate preemption. There, like here, Apple
`
`incorrectly alleged that the ‘598 Patent claims result in inappropriate preemption of
`
`the “idea of paying for and controlling access to data.” See, CBM2015-00017,
`
`Corrected Petition, Paper 9 at 6. The evidence of record in CBM2015-00017,
`
`however, shows that that the claims of the ‘598 Patent do not result in
`
`inappropriate preemption because they do not preempt every application of the
`
`idea of paying for and controlling access to data, nor are a disproportionate number
`
`of applications preempted. In CBM2015-00017, Apple’s purported expert, Mr.
`
`Wechselberger, admitted that “[it is] possible to build a portable data carrier that
`
`includes a content data memory and a program store that enables access to content
`
`that does not include a use rule memory” as required by claim 1 of the ‘598 Patent.
`
`Ex. 2068, Wechselberger Deposition at 50:16-51:5 (emphasis added). Mr.
`
`
`
`- 16 -
`
`
`
`Wechselberger similarly testified that “[it is] possible to build a portable data
`
`carrier that includes content data memory and a program store that enables access
`
`to content that does not include code for storing at least one use rule in a use rule
`
`memory” as required by claim 1 of the ‘598 Patent. Id. at 51:6-19 (emphasis
`
`added). As relates to claim 2 of the ‘598 Patent, which adds the limitation of “code
`
`to provide access to the at least one content data item in accordance with the at
`
`least one use rule,” Mr. Wechselberger conceded that “[it is] possible to build a
`
`portable data carrier that does not restrict access to content data items stored
`
`therein using at least one use rule.” Id. at 52:9-53:8 (emphasis added). Similarly,
`
`as relates to claim 15 of the ‘598 Patent, Mr. Wechselberger admitted that “[it is]
`
`possible to build a portable data carrier … that does not include a content access
`
`PIN memory store to store a PIN number for controlling access to the content data
`
`memory” as required by claim 15. Id. at 55:19- 56:16 (emphasis added). Finally,
`
`as relates to method claim 31, which has a step including “reading the use status
`
`data,” Mr. Wechselberger testified that “[it is] possible to provide access to content
`
`based on payment without utilizing use status data as the term ‘use status data’
`
`would be understood in the context of the 598 Patent.” Id. at 57:7-16 (emphasis
`
`added).
`
`In fact, the Report and Recommendation from the District Court that looked
`
`at claims 2, 7, 15 of the ‘598 Patent (each of which, like claims 3-6, 8-14, 16, and
`
`
`
`- 17 -
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`
`
`17 at issue here ultimately depend from claim 1), and claim 31 of the ‘598 Patent
`
`(from which claims 32-34 at issue here depend) under § 101 found that claims 2, 7,
`
`15, and 31 “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 incorrect assertion that “the challenged claims’
`
`att