Apple Inc v. Smartflash LLC

1. Case Identification

• Case #: CBM2015-00017
• Patent #: 8,061,598
• Filed: October 30, 2014
• Petitioner(s): Apple Inc.
• Patent Owner(s): Smartflash LLC
• Challenged Claims: 1, 2, 7, 15, and 31

2. Patent Overview

• Title: Data Storage and Access Systems
• Brief Description: The ’598 patent discloses a portable data carrier, such as a smart card, designed for storing digital content and managing access to that content. The system integrates memory for content data, use rules, and payment data with a processor that implements code to enforce access restrictions based on the stored rules.

3. Grounds for Unpatentability

Ground 1: Ineligible Subject Matter - Claims 1, 2, 7, 15, and 31 are unpatentable under 35 U.S.C. §101

• Core Argument: Petitioner argued that all challenged claims are directed to the patent-ineligible abstract idea of paying for and controlling access to content. The petition asserted that this is a fundamental economic practice and a longstanding method of organizing human activity. The claims allegedly do not add an "inventive concept" sufficient to transform the abstract idea into a patent-eligible application. Petitioner contended that the claims merely recite the use of generic, conventional computer components—such as a portable data carrier, processor, and memory—to perform routine functions. The implementation of the abstract idea on this conventional hardware was argued to be insufficient to confer patent eligibility, as it does not improve the functioning of the computer itself or solve a technical problem with a technical solution.

Ground 2: Obviousness over Stefik and Ahmad - Claims 1, 2, 15, and 31 are obvious over Stefik in view of Ahmad

• Prior Art Relied Upon: Stefik (a combination of Patent 5,629,980 and Patent 5,530,235) and Ahmad (Patent 5,925,127).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner asserted that Stefik discloses the core components of the challenged claims, including a portable data carrier ("DocuCard") with a repository for storing digital works ("content data") and associated "usage rights" that function as "use rules" to control access. However, Petitioner contended that Stefik's disclosure of tracking usage against these rules was general. Ahmad was introduced to supply the specific teachings for monitoring content usage against license restrictions. Ahmad discloses a system that monitors the use of rented software and prevents access after the expiration of a licensed usage time or a licensed number of uses. This, Petitioner argued, directly teaches the claimed concepts of reading "use status data" and evaluating it against a "use rule" to determine if access is permitted.
  • Motivation to Combine: A POSITA would combine Ahmad’s explicit teachings of a rental usage monitor with Stefik’s flexible digital rights management system. The combination would serve the predictable goal of more robustly enforcing the types of usage restrictions contemplated by Stefik, such as time- or count-based rentals, thereby preventing unauthorized access.
  • Expectation of Success: A POSITA would have had a reasonable expectation of success in integrating Ahmad's known software monitoring module into Stefik's DRM framework, as it involved applying conventional programming techniques to achieve a predictable result.

Ground 3: Obviousness over Stefik, Ahmad, and Kopp - Claims 1, 2, 15, and 31 are obvious over Stefik in view of Ahmad and Kopp

• Prior Art Relied Upon: Stefik (Patent 5,629,980 and Patent 5,530,235), Ahmad (Patent 5,925,127), and Kopp (Patent 5,940,805).
• Core Argument for this Ground:
  • Prior Art Mapping: This ground builds upon the combination of Stefik and Ahmad by adding the teachings of Kopp. Kopp discloses a vending system for selling data records on chip cards where the user can purchase a predetermined, specific extent of utilization (e.g., number of uses, time limit). Petitioner argued that Kopp’s system teaches tailoring the "use rules" to a user’s specific purchase, a feature not explicitly detailed in the Stefik/Ahmad combination. This provides a direct teaching for linking payment to a specific, limited set of usage rights.
  • Motivation to Combine: A POSITA would be motivated to incorporate Kopp's teachings of user-customizable usage purchases into the system of Stefik and Ahmad. This addition would advantageously expand the product offerings of the base system by allowing a user to purchase and pay for only the specific amount of access needed. Such a feature would provide users with personalized control over the extent and price of content purchases and rentals, making the system more commercially versatile.
  • Expectation of Success: Integrating Kopp’s concept of user-specified utilization limits into the DRM and monitoring framework of Stefik and Ahmad would have been a straightforward implementation for a POSITA.

4. Key Claim Construction Positions

• "payment data" (claim 7): For review purposes, Petitioner construed this term to mean "data representing payment made for requested content data" and as distinct from "access control data." This construction was used to emphasize the financial nature of the claims for the purpose of the Covered Business Method (CBM) review.
• "use rule(s)" (claims 1, 31): For review purposes, Petitioner construed this term to mean "a rule specifying a condition under which access to content is permitted." This construction was central to the obviousness arguments, as Petitioner mapped the "usage rights" of Stefik and the license restrictions of Ahmad and Kopp directly onto this limitation.

5. Relief Requested

• Petitioner requests institution of a CBM patent review and cancellation of claims 1, 2, 7, 15, and 31 of the ’598 patent as unpatentable.