UNITED STATES PATENT AND TRADEMARK OFFICE
`
`_________
`
`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 REQUEST FOR REHEARING
`
`
`
`
`
`_________
`
`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 REQUEST FOR REHEARING
`
`
`
`
`
`
`
`TABLE OF CONTENTS
`
`
`I.
`STATEMENT OF PRECISE RELIEF REQUESTED ................................... 3
`BACKGROUND ............................................................................................. 3
`II.
`III. ARGUMENT ................................................................................................... 4
`A.
`The Challenged Claims Are Patent Eligible Because They Are Similar
`to the Claims in DDR Holdings, Enfish, and BASCOM ........................ 4
`The Challenged Claims Are Patent Eligible Because They Are Similar
`to the Claims in McRO and Amdocs ................................................... 11
`The Challenged Claims Are Similar to the Claims in McRO ... 11
`1.
`The Challenged Claims Are Similar to the Claims in Amdocs . 13
`2.
`IV. CONCLUSION .............................................................................................. 15
`
`B.
`
`
`
`i
`
`
`
`
`
`
`
`Patent Owner Smartflash LLC files this Request for Rehearing pursuant to
`
`37 CFR § 42.71. The Board’s final written decision (Paper 33) finding claims 3-6,
`
`8-14, 16-25, 27-30, and 32-41 (“the challenged claims”) of U.S. Patent No.
`
`8,061,598 (“the ‘598 Patent”) to be unpatentable misapprehends and overlooks the
`
`Supreme Court’s and Federal Circuit’s guidance on patent eligible subject matter
`
`under 35 U.S.C. § 101, the Federal Circuit’s most recent decisions clarifying patent
`
`eligible subject matter, and Smartflash’s arguments as to the eligibility of the
`
`challenged claims.
`
`The Federal Circuit has made clear that while “the analysis [for patent
`
`eligible subject matter] presumably would be based on a generally-accepted and
`
`understood definition of, or test for, what an ‘abstract idea’ encompasses,” “a
`
`search for a single test or definition in the decided cases concerning § 101 from
`
`[the Federal Circuit], and indeed from the Supreme Court, reveals that at present
`
`there is no such single, succinct, usable definition or test.” Amdocs (Israel)
`
`Limited v. Openet Telecom, Inc., 2016 WL 6440387, at *4 (Fed. Cir. November 1,
`
`2016). In the absence of such a generally accepted definition or test, the Federal
`
`Circuit approach is to use the “classic common law methodology” of “examin[ing]
`
`earlier cases in which a similar or parallel descriptive nature can be seen—what
`
`prior cases were about, and which way they were decided.” Id. This is the
`
`approach taken by Smartflash – comparing the challenged claims to, among other
`
`
`
`1
`
`
`
`cases, DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014)
`
`(Paper 18 at 26-31); Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir.
`
`2016) (Paper 30 at 1-3); and BASCOM Global Internet Services, Inc. v. AT&T
`
`Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016) (Paper 30 at 3-5).
`
`The challenged claims are directed to a novel content delivery system for
`
`distributing digital content over the Internet solving the problem of Internet data
`
`piracy. The Board misapprehended how the challenged claims are subject matter
`
`eligible as: being “necessarily rooted in computer technology in order to overcome
`
`a problem specifically arising in the realm of computer networks” (DDR Holdings,
`
`773 F.3d at 1257); teaching “an improvement to computer functionality itself.”
`
`(Enfish, 822 F.3d at 1336); and “representing a ‘software-based invention[ ] that
`
`improve[s] the performance of the computer system itself.’” BASCOM, 827 F.3d at
`
`1351.
`
`Moreover, the Board overlooked recent Federal Circuit decisions in McRO,
`
`Inc. v. Bandai Namco Games America Inc., 837 F.3d 1299 (Fed. Cir. September
`
`13, 2016) and Amdocs, where the Federal Circuit found claims similar to the
`
`challenged claims to be patent eligible.
`
`
`
`
`
`2
`
`
`
`I.
`
`STATEMENT OF PRECISE RELIEF REQUESTED
`
`Patent Owner requests that the Board reverse its original decision (Paper 33,
`
`November 10, 2016) and hold that challenged claims 3-6, 8-14, 16-25, 27-30, and
`
`32-41 of the ‘598 Patent are patent eligible.
`
`II. BACKGROUND
`
`Distribution of digital content over the Internet “introduces a problem that
`
`does not arise” with content distributed on physical media. DDR Holdings, LLC v.
`
`Hotels.com, L.P., 773 F.3d 1245, 1258 (Fed. Cir. 2014). By the late 1990s,
`
`improved data compression and increasing bandwidth for Internet access enabled
`
`content providers, for the first time, to offer content data for purchase over the
`
`Internet; at the same time, unprotected data files could be easily pirated and made
`
`available “essentially world-wide.” Ex. 1001, 1:29-49. Conventional operation of
`
`the Internet does not solve the problem of data piracy: on the contrary, the Internet
`
`facilitates the distribution of data without restriction or protection. Id. 1:49-55.
`
`Content providers faced piracy before—a CD can be copied onto another
`
`CD and the pirated copy sold—but the problem presented by distribution of pirated
`
`content over the Internet was unprecedented. There had never before been a way
`
`to make free, identical, and flawless copies of physical media available to millions
`
`of people instantaneously at virtually no incremental cost. See generally Metro-
`
`Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 929-30 (2005). The
`
`
`
`3
`
`
`
`Internet gave rise to an urgent need to address data piracy associated with digital
`
`content distribution over the Internet.
`
`The inventor devised a data storage and access system for downloading and
`
`paying for data, described in the specification and claimed in this patent and others,
`
`comprising specific elements designed to overcome problems inherent in making
`
`digital content available over the Internet and in accessing that content. Ex. 1001,
`
`at 1 (Abstract). The claims of the ‘598 patent are directed to various devices of
`
`that system, in particular: a “portable data carrier” id. at 25:54 (claims 3-6, 8-14,
`
`16-17); 26:63 (claims 18-20); 27:17 (claims 21-25); 27:54 (claims 27-30).
`
`III. ARGUMENT
`
`The Board should reverse its decision and find the claims directed to
`
`statutory subject matter because, in evaluating whether challenged claims 3-6, 8-
`
`14, 16-25, 27-30, and 32-41 comply with § 101, the Board failed to give effect to
`
`the actual language of the claims and their specific limitations. The actual claim
`
`language, read in light of the specification, reflects a specific and concrete
`
`technical solution to a novel problem associated with distribution of digital content
`
`over the Internet. Such a technological advance is patent eligible.
`
`A. The Challenged Claims Are Patent Eligible Because They Are
`Similar to the Claims in DDR Holdings, Enfish, and BASCOM
`
`The Board found the challenged claims to be patent ineligible. First, the
`
`Board found that the challenged claims “are drawn to a patent-ineligible abstract
`
`
`
`4
`
`
`
`idea ... [and] are directed to performing the fundamental economic practice of
`
`conditioning and controlling access to content.” Paper 33 at 8. The Board also
`
`found “that the additional elements . . . are either field of use limitations and/or
`
`generic features of a computer.” Id. 14. In so doing, the Board (at 11-13) rejected
`
`Smartflash’s argument that, like the claims in Enfish, LLC v. Microsoft Corp., 822
`
`F.3d 1327, 1336 (Fed. Cir. 2016), the challenged claims were “directed to an
`
`improvement to computer functionality” and thus not directed to an abstract idea.
`
`The Board misapprehends Enfish and Smartflash’s arguments. The claims
`
`of the ‘598 patent are patent eligible because they embody concrete aspects of a
`
`particular solution to the Internet-specific problem of digital piracy – “a specific
`
`improvement to the way computers operate.” Enfish, 822 F.3d at 1336. This is not
`
`a patent that simply claims “use of the Internet” or a computer to perform an
`
`established business method. Cf. Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709,
`
`716 (Fed. Cir. 2014). This is no digital telephone book. Cf. Paper 33, at 22-23.
`
`On the contrary, the challenged claim limitations reflect specific technical choices
`
`involving the secure access, transmission, and storage of specific data types.
`
`For example, by sending payment data responsive to a user selection rather
`
`than requiring the user to enter payment data manually into the data access
`
`terminal with each purchase, the invention improves the function of user devices
`
`over prior systems that required separate submission of payment information or
`
`
`
`5
`
`
`
`post-use billing. See Ex. 1001, 4:32-34. By transmitting payment validation data
`
`to the data access terminal and retrieving multimedia content responsive to that
`
`validation data, controlling access to the multimedia data in response to the
`
`validation data, the patent inventively allows the same data carrier to be compatible
`
`with independent and integrated validation systems. See id. at 8:21-25. “[T]he
`
`claimed solution amounts to an inventive concept for resolving this particular
`
`Internet-centric problem.” DDR Holdings, 773 F.3d at 1259.
`
`The claims teach specific technical solutions to a problem associated with
`
`distribution of digital content through specific organization of distinct data types,
`
`implemented on a specific device. There is no risk that the patents monopolize a
`
`“fundamental economic practice,” as the Board held (at 8). The claims are not
`
`directed to every way of paying for and controlling access to data content but to
`
`specific devices involving a novel organization of designated data types to solve
`
`the technological problem of data piracy on the Internet. Recognizing the patent-
`
`eligibility of these claims will not “impede innovation” or “improperly t[ie] up . . .
`
`building blocks of human ingenuity.” Alice, 134 S. Ct. at 2354. On the contrary,
`
`each claim teaches a “specific way” to control access to stored digital content; the
`
`claims do not attempt to “preempt every application of the idea.” DDR Holdings,
`
`773 F.3d at 1259.
`
`
`
`6
`
`
`
`The Board (at 18-19) rejected Patent Owner’s reliance on DDR Holdings on
`
`the grounds that “data piracy exists in contexts other than the Internet,” “the
`
`solution provided by the challenged claim is not rooted in specific computer
`
`technology,” and the “result” does not “override[] the routine and conventional use
`
`of the recited devices and functions.” That is incorrect: the claims discuss specific
`
`computer functions and interactions to perform a specific series of operations.
`
`Indeed, the Board’s own summary of the ‘598 patent (at 3-4) states:
`
`The ‘598 patent describes providing portable data storage together
`with a means for conditioning access to that data upon validated
`payment. . . . This combination allows data owners to make their data
`available over the internet without fear of data pirates.
`
`The specification further explains that the purpose of the invention is to
`
`“make . . . data available . . . over the internet without fear of loss of revenue.” Ex.
`
`1001 at 2:11-15. “The growing prevalence of so-called data pirates” is a problem
`
`that arises by virtue of “increasingly wide use of the internet.” Id. at 1:29-31. The
`
`types of pre-existing data piracy cited by the Board (at 18) are different. Because
`
`the Internet facilitates “essentially world-wide” distribution of flawless, identical
`
`copies of digital content data, the data piracy problems it creates are qualitatively
`
`different from the problem of copying of physical media (videotapes, CDs,
`
`software, books), which necessarily takes significant time, imparts imperfections,
`
`and/or imposes incremental costs. See Grokster, Ltd., 545 U.S. at 929-30.
`
`
`
`7
`
`
`
`Rather than generically claiming use of the Internet to perform an abstract
`
`business practice, the claims solve problems faced by digital content providers in
`
`the Internet Era and teach “an improvement to computer functionality itself.”
`
`Enfish, 822 F.3d at 1336.
`
`The Board also held (at 19) that the challenged claims contained
`
`limitations—unlike the claims in DDR Holdings—that were “specified at a high
`
`level of generality.” But the challenged claims and the specification discuss a
`
`specific organization of data types to carry out transactions according to a
`
`particular scheme, not mere generalities. “Use rule memory,” “content data
`
`memory,” “code for storing at least one content data item in the content data
`
`memory and at least one use rule in the use rule memory” and “code to provide
`
`access to the at least one content data item in accordance with the at least one use
`
`rule” are at least as specific as the claims terms in DDR Holdings. See 773 F.3d at
`
`1249 (reciting “link,” “source page,” “commerce object,” and “visually perceptible
`
`elements”). See also the claim terms of Amdocs discussed infra.
`
`The Board further held (at 16) that the claims could be performed by “a
`
`general purpose computer.” But that is generally true of software inventions, and
`
`“[s]oftware can make non-abstract improvements to computer technology just as
`
`hardware improvements can.” Enfish, 822 F.3d at 1335. These claims teach a
`
`specific scheme for and storing use rules and content data governing access on a
`
`
`
`8
`
`
`
`portable data carrier and using those data types to control access to content data
`
`according to a specific transaction sequence. As the specification explains, when
`
`digital data is sent over the Internet operating in its normal, expected manner and
`
`stored by a recipient, the content owner has no means to exert further control over
`
`access to downloaded content. The claims provide a specific mechanism to ensure
`
`that content, once downloaded, can be accessed only in accordance with associated
`
`access control based on use rules. Just as the claims in DDR Holdings “specify
`
`how interactions with the Internet are manipulated to yield a desired result,” 773
`
`F.3d at 1258, the claims here specify how manipulation of specific data types
`
`facilitates convenient and secure provision of digital content, a result that neither
`
`the Internet nor unimproved computers can produce. See Enfish, 822 F.3d at 1337.
`
`The patent “improve[s] the functioning” and the functionality of portable data
`
`carriers, which likewise improves the functioning of data communications
`
`networks used for digital content distribution. Alice, 134 S. Ct. at 2359.
`
`The Board (at 20-23) rejected Smartflash’s argument that the challenged
`
`claims were like those in BASCOM because they involve known components
`
`“arranged in a non-conventional and non-generic way,” by, for example, requiring
`
`“a handheld multimedia terminal to store both payment data and multimedia
`
`content data – thus ‘improv[ing] an existing technological process.’” Paper 30 at 5
`
`(citing BASCOM, 827 F.3d at 1351). Instead, the Board found that “[t]he concept
`
`
`
`9
`
`
`
`of storing two different types of information in the same place or on the same
`
`device is an age old practice,” so “[a]s a result, the challenged claims do not
`
`achieve a result that overrides the routine and conventional use of the recited
`
`devices and functions. Rather, each of the challenged claims is ‘an abstract-idea-
`
`based solution implemented with generic technical components in a conventional
`
`way,’ making it patent ineligible.” Paper 33 at 21-22 (citing BASCOM, 827 F.3d at
`
`1351). But the Board misapprehends Smartflash’s argument and “‘oversimplif[ies]
`
`the claims’ by looking at them generally and failing to account for the specific
`
`requirements of the claims,” exactly what the Federal Circuit has “cautioned that
`
`courts ‘must be careful to avoid.’” McRO, 837 F.3d at 1313 (citations omitted).
`
`The challenged claims do not simply “store[] two different types of information in
`
`the same place or on the same device,” but rather have other specific requirements
`
`relating to the interaction of the two types of data, such as “code to provide access
`
`to the at least one content data item in accordance with the at least one use rule.”
`
`Ex. 1001 at 26:8-10 (claim 3). Contrary to the Board’s conclusion, the challenged
`
`claims do override the routine and conventional use of the recited devices and
`
`functions. Instead of content data that can be readily copied and easily distributed
`
`over the Internet, the Smartflash invention results in content data available to
`
`purchasers over a computer network but distributed conveniently and securely.
`
`
`
`
`
`10
`
`
`
`B.
`The Challenged Claims Are Patent Eligible Because They Are
`Similar to the Claims in McRO and Amdocs
`
`In addition to the challenged claims being similar to the patent eligible claims
`
`in DDR Holdings, Enfish, and BASCOM, their patent eligibility is supported by
`
`their similarity to the claims in McRO and Amdocs.
`
`1.
`
`The Challenged Claims Are Similar to the Claims in McRO
`
`In McRO, the invention related to a “method for automatically ... producing
`
`accurate and realistic lip synchronization and facial expressions in animated
`
`characters.” McRO, 837 F.3d at 1307. The Federal Circuit analyzed as
`
`representative the following claim:
`
`A method for automatically animating lip
`synchronization and facial expression of three-
`dimensional characters comprising:
`obtaining a first set of rules that define output morph
`weight set stream as a function of phoneme sequence and
`time of said phoneme sequence;
`obtaining a timed data file of phonemes having a
`plurality of sub-sequences;
`generating an intermediate stream of output morph
`weight sets and a plurality of transition parameters
`between two adjacent morph weight sets by evaluating
`said plurality of sub-sequences against said first set of
`rules;
`generating a final stream of output morph weight sets at a
`desired frame rate from said intermediate stream of
`output morph weight sets and said plurality of transition
`parameters; and
`applying said final stream of output morph weight sets to
`a sequence of animated characters to produce lip
`
`
`
`11
`
`
`
`synchronization and facial expression control of said
`animated characters.
`
`Id. at 1307–08. In analyzing this claim, the Court “look[ed] to whether the claims
`
`in these patents focus on a specific means or method that improves the relevant
`
`technology or are instead directed to a result or effect that itself is the abstract idea
`
`and merely invoke generic processes and machinery.” Id. at 1314. The Court
`
`noted that “[t]he claimed process uses a combined order of specific rules that
`
`renders information into a specific format that is then used and applied to create
`
`desired results… .” Id. at 1315. The Court concluded that “[w]hen looked at as a
`
`whole, [the claim] is directed to a patentable, technological improvement over the
`
`existing, manual 3–D animation techniques. The claim uses the limited rules in a
`
`process specifically designed to achieve an improved technological result in
`
`conventional industry practice” and “therefore, is not directed to an abstract idea.”
`
`Id. at 1316.
`
`Here, the challenged claims are directed to a technological improvement
`
`over how then-existing portable data carriers and content suppliers transferred,
`
`stored, and retrieved for use content data. The pre-existing technology allowed
`
`content data to be readily copied and distributed through file sharing programs. As
`
`noted above, this was a major problem for the entertainment industry due to
`
`distribution of pirated content over the Internet. The challenged claims provided a
`
`technological improvement over that existing technology by storing the content
`
`
`
`12
`
`
`
`data with use rules and/or payment data along with “code to provide access” to the
`
`“in accordance with the use rule and use status” so that the content data could not
`
`be used or distributed absent payment validation or use rule permission. See Ex.
`
`1001 at 26:5-11 (claim 3).
`
`Because the challenged claims are a technological improvement over the
`
`then-existing systems, and limit transfer and retrieval of content data based on
`
`payment validation and/or rules in a process specifically designed to achieve an
`
`improved technological result in conventional industry practice, the challenged
`
`claims are not directed to an abstract idea.
`
`2.
`
`The Challenged Claims Are Similar to the Claims in
`Amdocs
`
`In Amdocs, the invention generally was “designed to solve an accounting
`
`and billing problem faced by network service providers” and included “a system,
`
`method, and computer program for merging data in a network-based filtering and
`
`aggregating platform as well as a related apparatus for enhancing networking
`
`accounting data records.” Amdocs, 2016 WL 6440387, at *1. The Federal Circuit
`
`analyzed the following claim as representative of one of the patents:
`
`A computer program product embodied on a computer
`readable storage medium for processing network
`accounting information comprising:
`computer code for receiving from a first source a first
`network accounting record;
`
`
`
`13
`
`
`
`computer code for correlating the first network
`accounting record with accounting information available
`from a second source; and
`computer code for using the accounting information with
`which the first network accounting record is correlated to
`enhance the first network accounting record.
`Id. at *9. The Court found this claim to be patent eligible, even though it “requires
`
`arguably generic components, including network devices and ‘gatherers’ which
`
`‘gather’ information” because it “entails an unconventional technological solution
`
`(enhancing data in a distributed fashion) to a technological problem (massive
`
`record flows which previously required massive databases).” Id. at *10. Notably,
`
`the Court did not find the “computer code for receiving,” “computer code for
`
`correlating,” and “computer code for using” to be “so general that they do no more
`
`than describe a desired function or outcome without providing any limiting detail
`
`that confines the claim to a particular solution to an identified problem” as the
`
`Board did for the challenged claims’ “code to” elements. Paper 33 at 12 (citing
`
`Affinity Labs of Texas, LLC v. Amazon.com Inc., No. 2015-2080, slip op. 7 (Fed.
`
`Cir. Sept. 23, 2016)). And yet this patent-eligible Amdocs claim is comprised
`
`exclusively of such “code for” limitations.
`
`Here, the challenged claims of the ‘598 Patent are like the eligible claim in
`
`Amdocs because they solve a problem unique to computer networks, such as the
`
`Internet – how to make digital content available (e.g., over a computer network or
`
`using a portable data carrier conveniently and securely in a realm where identical
`
`
`
`14
`
`
`
`copies of content can be made for free and widely distributed unlike any physically
`
`manufactured item) and uses unconventional technological approaches (e.g., use
`
`rule memories, use rules, and/or use status data). PO Response, Paper 18 at 30.
`
`IV. CONCLUSION
`
`The Board should reverse its original decision and hold challenged
`
`claims 3-6, 8-14, 16-25, 27-30, and 32-41 are patent eligible.
`
` /
`
` Michael R. Casey /
`
`
`Michael R. Casey
`Registration No. 40,294
`Davidson Berquist Jackson & Gowdey, LLP
`8300 Greensboro Drive
`Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7705
`Fax: (571) 765-7200
`Email: mcasey@dbjg.com
`Attorney for Patent Owner
`
`
`
`
`Dated: December 12, 2016
`
`
`
`
`
`
`
`15
`
`
`
`
`
`CERTIFICATE OF SERVICE
`
`The undersigned hereby certifies that this PATENT OWNER’S REQUEST
`
`FOR REHEARING in CBM2015-00131 was served today by emailing a copy to
`
`counsel for the Petitioners as follows:
`
`J. Steven Baughman (steven.baughman@ropesgray.com)
`Megan Raymond (megan.raymond@ropesgray.com)
`James R. Batchelder (james.batchelder@ropesgray.com)
`ApplePTABService-SmartFlash@ropesgray.com
`Attorneys for Petitioner Apple Inc.
`
`
`
`
`
`Dated: December 12, 2016
`
`
`
`
`
` /
`
` Michael R. Casey /
`
`
`Michael R. Casey
`Registration No. 40,294
`Davidson Berquist Jackson & Gowdey, LLP
`8300 Greensboro Drive
`Suite 500
`McLean, VA 22102
`Telephone: (571) 765-7705
`Fax: (571) 765-7200
`Email: mcasey@dbjg.com
`Attorney for Patent Owner
`
`16
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