Apple Inc v. Smartflash LLC

1. Case Identification

• Case #: CBM2015-00028
• Patent #: 7,334,720
• Filed: November 24, 2014
• Petitioner(s): Apple Inc.
• Patent Owner(s): Smartflash LLC
• Challenged Claims: 1-2

2. Patent Overview

• Title: Data Storage and Access Systems
• Brief Description: The ’720 patent describes a method for controlling access to digital content stored on a portable data carrier. The method involves receiving an access request, reading stored "use status data" and "use rules," and evaluating this information to determine whether access to the content is permitted.

3. Grounds for Unpatentability

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

• Prior Art Relied Upon: Not applicable (§101 challenge).
• Core Argument for this Ground:
  • Petitioner argued that claims 1 and 2 are directed to the patent-ineligible abstract idea of controlling access to data based on payment and usage rules. This concept was framed as a fundamental economic practice and a longstanding method of organizing human activity, analogous to renting a movie or paying for a subscription.
  • Applying the two-step framework from Alice Corp. v. CLS Bank Int'l, Petitioner asserted the claims fail both steps. First, they are drawn directly to the abstract idea of conditioned access. Second, the claims lack an "inventive concept" sufficient to transform the idea into a patent-eligible application. The claims merely recite generic and conventional computer components, such as a "data carrier" and "memory," performing well-understood functions like "receiving," "reading," and "evaluating." Petitioner contended that simply implementing an abstract idea on a generic computer is not enough to confer patent eligibility.

Ground 2: Obviousness over Stefik and Ahmad - Claim 1 is obvious over Stefik in view of Ahmad

• Prior Art Relied Upon: Stefik (Patent 5,530,235 in view of Patent 5,629,980) and Ahmad (Patent 5,925,127).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner asserted that Stefik taught a digital rights management (DRM) system using a "repository" (a data carrier) to store and distribute "digital works" (content). This repository enforces "usage rights" (use rules) that specify conditions for access, such as copy counts and fees, and processes access requests by evaluating these rights. This supplied the basic framework of claim 1. Ahmad was argued to disclose a system for monitoring rented software that tracks usage (use status data) against licensed limits, such as an expiration time or a number of uses. Ahmad’s system prevents further access once the limits are exhausted.
  • Motivation to Combine: A Person of Ordinary Skill in the Art (POSITA) would combine Ahmad’s explicit usage monitoring and enforcement techniques with Stefik’s flexible DRM system. The motivation would be to create a more robust system for enforcing usage restrictions, particularly for rental or limited-use models, thereby preventing unauthorized access more effectively. Ahmad's teachings provided a known method for implementing the time- and use-based rules described conceptually in Stefik.
  • Expectation of Success: Both references operate in the predictable field of software and digital content access control, ensuring a POSITA would have a high expectation of success in combining their respective features.

Ground 3: Obviousness over Stefik, Ahmad, Kopp, and Maari - Claim 1 is obvious over Stefik in view of Ahmad, Kopp, and Maari

• Prior Art Relied Upon: Stefik (Patents 5,530,235 & 5,629,980), Ahmad (Patent 5,925,127), Kopp (Patent 5,940,805), and Maari (JP Application # H10-269289).

• Core Argument for this Ground:

  • Prior Art Mapping: This ground builds upon the combination of Stefik and Ahmad. Kopp was introduced for its disclosure of a vending system where a user can specify and purchase a predetermined extent of utilization for a data record (e.g., time limit, number of uses). This provides user-customizable rules. Maari was introduced for its disclosure of a portable system that displays messages and warnings to the user regarding content access status.
  • Motivation to Combine: A POSITA would be motivated to further modify the Stefik/Ahmad system with Kopp's teachings to provide greater commercial flexibility, allowing users to purchase and pay for only the specific amount of access they need. This would expand the product offerings of the base system. A POSITA would also incorporate Maari's user-notification features to provide necessary feedback, such as displaying whether access is permitted or denied. This would improve the user experience and encourage authorized use by clearly communicating access status.
  • Expectation of Success: The combination involved integrating known features for user-customized purchasing and user-interface feedback into a DRM system, all within the same technical field, leading to a predictable result.

• Additional Grounds: Petitioner asserted additional obviousness challenges against claim 1 based on the combinations of Stefik/Ahmad/Kopp and Stefik/Ahmad/Maari, which relied on the same core arguments presented above.

4. Key Claim Construction Positions

• Petitioner argued that, for purposes of the review, two terms were central to the invalidity analysis and required construction under the Broadest Reasonable Interpretation (BRI) standard.
  • "use rules": Proposed as "rule[s] specifying a condition under which access to content is permitted." Petitioner noted this construction was previously adopted by the Board in a prior proceeding on the ’720 patent.
  • "payment data": Proposed as "data representing payment made for requested content data."
• The importance of these constructions was that Petitioner selected new prior art (Ahmad and Kopp) specifically because they explicitly disclosed limitations meeting these construed terms, which Petitioner argued was a deficiency in the art cited in its previously denied petitions.

5. Arguments Regarding Discretionary Denial

• Petitioner argued that discretionary denial under 35 U.S.C. §325(d) would be inappropriate, despite having previously filed unsuccessful petitions against the ’720 patent.
• The argument was that this petition did not present "substantially the same" prior art or arguments. Petitioner contended this petition was distinct because it raised a new ground under §101 based on the Supreme Court's Alice decision, which was issued after the original petitions were filed. Furthermore, the petition presented new prior art references (Ahmad and Kopp) that were specifically chosen to cure deficiencies identified by the Board in the prior proceedings.

6. Relief Requested

• Petitioner requested the institution of a Covered Business Method patent review and the cancellation of claims 1 and 2 of the ’720 patent as unpatentable.