Apple Inc v. Smartflash LLC

1. Case Identification

• Case #: CBM2014-00108
• Patent #: 8,061,598
• Filed: April 1, 2014
• Petitioner(s): Apple Inc.
• Patent Owner(s): Smartflash LLC
• Challenged Claims: 1, 2, 7, 13, 15, 26, and 31

2. Patent Overview

• Title: Data Storage and Access Systems
• Brief Description: The ’598 patent describes a portable data carrier system for storing and managing access to digital content. The system uses an interface, dedicated memory for content and use rules, a program store, and a processor to control data access based on predefined rules, which may be linked to payment information.

3. Grounds for Unpatentability

Ground 1: Anticipation Under §102 - Claims 1, 2, 7, 13, 15, and 31 are anticipated by Stefik.

• Prior Art Relied Upon: Stefik (5,530,235 and 5,629,980).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner argued that Stefik discloses every element of the challenged claims through its "DocuCard" system. The DocuCard was described as a transportable repository ("portable data carrier") featuring an I/O port ("interface"), a control processor, and nonvolatile storage. This storage was partitioned into a "contents file" for digital works ("content data memory") and a separate "description file" containing "usage rights" and access conditions ("use rule memory"). Petitioner asserted Stefik’s processor implements code from a program store to enforce these usage rights, thus mapping to all limitations of independent claim 1. For claims requiring payment functionality, Petitioner argued Stefik discloses systems where fee acceptance is a prerequisite for access and describes credit servers that report transactions to billing clearinghouses ("payment validation systems").

Ground 2: Obviousness Under §103 - Claim 7 is obvious over Stefik in view of Poggio.

• Prior Art Relied Upon: Stefik (5,530,235 and 5,629,980) and Poggio (EP Application # EP0809221A2).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner argued that if Stefik did not fully anticipate claim 7, its combination with Poggio rendered the claim obvious. Poggio taught a "virtual vending machine" for distributing licensed electronic data. This system explicitly disclosed a user providing a credit card number, which was then encrypted and transmitted through a "digital cash interface" to an "electronic banking network" for processing. Petitioner asserted this directly teaches the "payment data memory" and code for providing "payment data to a payment validation system" recited in claim 7.
  • Motivation to Combine: A POSITA would combine Stefik and Poggio to enhance Stefik's digital rights management system with a more sophisticated and automated payment infrastructure. Both references addressed the common goal of secure, paid content distribution. Integrating Poggio's streamlined payment process into Stefik's portable repository framework would have been a predictable step to improve commercial viability.
  • Expectation of Success: A POSITA would have had a high expectation of success, as the combination merely involved integrating a known e-commerce payment solution with a known content management system using conventional software and networking protocols.

Ground 3: Obviousness Under §103 - Claim 26 is obvious over Stefik in view of Sato.

• Prior Art Relied Upon: Stefik (5,530,235 and 5,629,980) and Sato (JP Application # H11-164058).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner argued claim 26, which adds a "Subscriber Identity Module (SIM) portion," was obvious over the combination. Stefik taught a generic "DocuCard" as the portable repository. Sato taught a portable music system implemented on a mobile phone that downloads content over a wireless network to a removable IC card. Petitioner contended a POSITA would understand that a mobile phone of that era necessarily includes a SIM to identify the subscriber to the network operator, thus providing the "SIM portion" limitation.
  • Motivation to Combine: A POSITA would combine the references to apply Stefik's secure content management and access control technology to the mobile device platform taught by Sato. This would leverage the rapidly growing mobile phone market to expand the distribution network for digital works, a well-understood business goal. The combination represented a straightforward application of a security framework to a new, popular hardware platform.
  • Expectation of Success: Success was expected as it required programming a mobile device—a capable computing platform as shown by Sato—to function as a Stefik repository, an adaptation involving known software principles.
• Additional Grounds: Petitioner asserted that claims 1, 2, 7, 13, 15, 26, and 31 are obvious over Stefik alone. An additional ground argued claim 26 is obvious over Stefik in view of Rydbeck (WO 99/43136), which, similar to Sato, taught a cellular phone with an integrated digital entertainment module for storing and playing content.

4. Key Claim Construction Positions

• The petition proposed a construction for the term "payment data" as recited in claim 7.
• Petitioner argued the term should be construed as "data representing payment made for requested content data."
• This construction was presented to distinguish payment data from general "access control data" and to clarify the scope of the claim in relation to the prior art's disclosure of financial transaction systems.

5. Key Technical Contentions (Beyond Claim Construction)

• A central argument in the petition was that the ’598 patent did not claim a "technological invention," a requirement for it to be excluded from Covered Business Method (CBM) patent review.
• Petitioner contended that the patent solved a business problem (data piracy) rather than a technical one, using only a combination of well-known and conventional components (e.g., standard smart cards, memory, processors). The alleged novelty was in the business method of linking payment to data access, not in any new technology.

6. Relief Requested

• Petitioner requested the institution of a Covered Business Method Patent Review and cancellation of claims 1, 2, 7, 13, 15, 26, and 31 of Patent 8,061,598 as unpatentable under 35 U.S.C. §§ 102 and 103.