Apple Inc v. Smartflash LLC

1. Case Identification

• Case #: CBM2014-00112
• Patent #: 7,942,317
• Filed: April 3, 2014
• Petitioner(s): Apple Inc.
• Patent Owner(s): Smartflash LLC
• Challenged Claims: 1, 6-8, 12-14, 16, and 18

2. Patent Overview

• Title: Data Storage and Access Systems
• Brief Description: The ’317 patent describes systems and methods for controlling access to and distribution of digital data, such as music or other media. The invention centers on using a data carrier to store data and associated payment and usage rules, enabling payment-validated access to content.

3. Grounds for Unpatentability

Ground 1: Claims 1, 6-8, 12-14, 16, and 18 are anticipated by Stefik

• Prior Art Relied Upon: Stefik (collectively, 5,530,235, "Stefik ’235," and 5,629,980, "Stefik ’980," which is incorporated by reference into Stefik ’235).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner argued that Stefik discloses every element of the challenged claims. Stefik describes a comprehensive system for controlling the use and distribution of "digital works" by attaching "usage rights." This system utilizes a portable "DocuCard," which functions as the claimed "computer system" and "data carrier," to store and transport digital works. Stefik's DocuCard connects to other repositories ("data requesters") to provide data, and access is conditioned upon satisfying prerequisites, including the acceptance of fees ("payment data"). Furthermore, Stefik teaches processing these transactions via credit servers and billing clearinghouses, which function as the claimed "electronic payment systems." The DocuCard includes a processor and memory ("program store") to manage these functions, thereby anticipating the limitations of the challenged independent and dependent claims.
  • Key Aspects: Petitioner contended that Stefik alone provides a complete blueprint for a secure digital content distribution system based on payment-validated access rules, rendering the ’317 patent’s claims unpatentable under 35 U.S.C. §102. As a fallback, Petitioner asserted that if any element was found not to be explicitly disclosed, it would have been obvious to a Person of Ordinary Skill in the Art (POSITA) from Stefik’s teachings alone.

Ground 2: Claims 1, 6-8, 12-14, 16, and 18 are obvious over Stefik in view of Poggio

• Prior Art Relied Upon: Stefik (Patents 5,530,235 and 5,629,980) and Poggio (European Application # EP0809221A2).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner argued that to the extent Stefik is found not to teach a particular claim element, the combination with Poggio renders the claims obvious. Poggio discloses a "virtual vending machine" for the secure sale and distribution of licensed electronic data over a distributed computer system. It describes a central server that processes content requests from client computers, manages point-of-sale electronic payments, and distributes digital products. Poggio’s teachings on a centralized client-server architecture for vending digital content were presented as a direct supplement to Stefik’s repository-based system. For instance, Poggio’s explicit disclosure of a web server and a virtual vending machine that receives orders and processes payments provides any detail that might be considered missing from Stefik’s system.
  • Motivation to Combine: A POSITA would combine Stefik and Poggio to create a more robust and commercially effective digital rights management system. Both references address the same problem of distributing paid content securely. Petitioner argued a POSITA would be motivated to implement Stefik's portable DocuCard repository system within Poggio's centralized "virtual vending machine" framework. This combination would allow users of Stefik's portable devices to access content from a central, efficient vending service, simplifying transactions rather than requiring connections to multiple, disparate repositories.
  • Expectation of Success: The combination involved integrating well-understood technologies in the field of digital content distribution. Both systems relied on standard computer components, processors, memory, and network communications. A POSITA would have had a reasonable expectation of success in combining Poggio’s server-based vending model with Stefik’s portable data carrier technology to achieve the predictable result of an enhanced, flexible content distribution system.

4. Key Claim Construction Positions

• "payment data": Petitioner proposed, for review purposes, that this term be construed as "data representing payment made for requested content data." It emphasized that this data is distinct from "access control data." This construction was central to mapping prior art that described fee-based access systems.
• Litigation Positions: Petitioner noted that for district court litigation, it intended to propose narrower constructions for terms like "data carrier" (limited to a "memory card") and "use rules." However, it asserted that the cited prior art (Stefik and Poggio) discloses embodiments that fall squarely within even these narrower constructions, underscoring the strength of its invalidity arguments.
• Means-Plus-Function: Petitioner stated its intent to argue in district court that certain claim elements reciting a "processor...for implementing...code" are indefinite means-plus-function elements under 35 U.S.C. §112(f). However, for the purpose of the Covered Business Method (CBM) review, it did not propose this construction, arguing the claims were invalid even under the broader interpretation.

5. Key Technical Contentions (Beyond Claim Construction)

• Not a "Technological Invention": A central pillar of the petition was the argument that the ’317 patent did not claim a true "technological invention" and was therefore eligible for CBM review. Petitioner contended the claims merely recited the use of generic, conventional computer hardware (e.g., processors, data stores, communication interfaces) to implement an abstract business practice: selling content in exchange for payment.
• Solving a Business Problem, Not a Technical One: Petitioner argued the problem purportedly solved by the ’317 patent was data piracy—a business problem—not a technical one. The proposed solution of "binding the data access and payment together" was described as a fundamental, non-technical business concept that was already well-known. Therefore, the patent did not use a technical solution to overcome a technical problem, further supporting its classification as a business method patent.

6. Relief Requested

• Petitioner requested institution of a CBM patent review and cancellation of claims 1, 6-8, 12-14, 16, and 18 of the ’317 patent as unpatentable under 35 U.S.C. §§ 102 and 103.