Apple Inc v. Smartflash LLC

1. Case Identification

• Case #: CBM2014-00109
• 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, such as a smart card, for managing access to digital content. The carrier is equipped with an interface, a processor, and distinct memory areas for storing content data, use rules that govern access, and payment data, thereby creating a self-contained system for secure content distribution and monetization.

3. Grounds for Unpatentability

Ground 1: Anticipation over Ginter - Claims 1, 2, 7, 13, 15, 26, and 31 are anticipated by Ginter

• Prior Art Relied Upon: Ginter (Patent 5,915,019).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner argued that Ginter, which disclosed a "virtual distribution environment" (VDE) for secure electronic rights management, taught every element of the challenged claims. Ginter’s "Portable Electronic Appliance" (PEA)—described as a smart card—was asserted to be the claimed "portable data carrier." This PEA was disclosed as containing a Secure Processing Unit (SPU), memory for storing VDE content objects (content data) and associated "control information" (use rules), a program store in ROM, and a processor. Petitioner contended that Ginter’s system, which used "audit information" to track payments and controlled access based on stored rules, fully anticipated independent claims 1 and 26, method claim 31, and the dependent claims related to payment (7), content location data (13), and PINs (15).

Ground 2: Obviousness over Ginter and Stefik - Claims 1, 2, 7, 13, 15, and 26 are obvious over Ginter in view of Stefik

• Prior Art Relied Upon: Ginter (Patent 5,915,019) and Stefik (collectively referring to Patent 5,530,235 and Patent 5,629,980).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner contended that if Ginter alone did not anticipate, the combination with Stefik rendered the claims obvious. Ginter provided the foundational VDE, while Stefik disclosed an analogous portable device—the "DocuCard"—for storing and controlling access to digital works using attached "usage rights." Stefik explicitly taught using a Personal Identification Number (PIN) to log into the DocuCard, directly supplying the limitation of claim 15. The combination of Ginter’s VDE framework with Stefik’s specific DocuCard implementation provided a complete mapping for the challenged apparatus claims.
  • Motivation to Combine: A POSITA would combine Ginter's flexible VDE framework with the concrete and advantageous features of Stefik's DocuCard. Integrating Stefik’s user-friendly features, such as PIN protection and a clear repository structure, into Ginter's broader system would have been a predictable design choice to enhance security and usability, thereby encouraging wider consumer adoption.
  • Expectation of Success: A POSITA would have reasonably expected success because both references addressed the same fundamental problem of secure content distribution on portable devices, making their respective teachings highly compatible and their integration technologically straightforward.

Ground 3: Obviousness over Ginter and Poggio - Claim 7 is obvious over Ginter in view of Poggio

• Prior Art Relied Upon: Ginter (Patent 5,915,019) and Poggio (European Application # EP0809221A2).

• Core Argument for this Ground:

  • Prior Art Mapping: This ground specifically addressed claim 7, which adds a "payment data memory" for providing payment data to a "payment validation system." Petitioner argued Poggio’s "virtual vending machine" explicitly taught this functionality. Poggio described a system where a user provides a credit card number, which is forwarded to an "electronic banking network" for validation, after which licensed content is delivered. Petitioner asserted this directly taught the payment validation functionality if it were deemed absent from Ginter.
  • Motivation to Combine: A POSITA would be motivated to integrate Poggio's well-defined payment validation process into Ginter's system to create a more complete and commercially viable product. Ginter's system was designed to be flexible; incorporating Poggio’s method for handling credit card payments would be a natural way to implement the payment aspect of Ginter’s VDE, enhancing its utility for facilitating impulse purchases.
  • Expectation of Success: Integrating a standard electronic payment process (Poggio) into a digital rights management framework (Ginter) was a well-understood and predictable task for a POSITA, ensuring a high expectation of success.

• Additional Grounds: Petitioner asserted alternative obviousness challenges, including that the claims were obvious over Ginter standing alone, over Ginter in view of Sato (JP Application # H11-164058) to add teachings of a Subscriber Identity Module (SIM) for mobile devices, and over Ginter in view of a combination of Poggio and Stefik.

4. Key Claim Construction Positions

• "payment data" (claim 7): Petitioner proposed construing this term as "data representing payment made for requested content data." This construction was argued to be critical for distinguishing payment-specific information from general "access control data." Petitioner noted this was the only term that the Patent Owner asserted required construction in parallel district court litigation.

5. Key Technical Contentions (Beyond Claim Construction)

• Invention Lacks Technological Nature: A central contention, foundational to this Covered Business Method (CBM) review, was that the ’598 patent does not claim a true "technological invention." Petitioner argued that the claimed "portable data carrier" was merely a commonplace device like a "standard smart card" and that its recited components (processor, memory, interface) and functions were all well-known. The petition asserted the patent solved a business problem (data piracy) by applying conventional technology, rather than providing a novel technical solution to a technical problem. This argument was intended to defeat the exception that would otherwise exclude a patent from CBM review.

6. Relief Requested

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