Apple Inc v. Smartflash LLC

1. Case Identification

• Case #: CBM2015-00031
• Patent #: 8,336,772
• Filed: November 25, 2014
• Petitioner(s): Apple Inc.
• Patent Owner(s): Smartflash LLC
• Challenged Claims: 1, 5, 8, and 10

2. Patent Overview

• Title: Data Storage and Access Systems
• Brief Description: The ’772 patent describes a system for controlling access to digital content (e.g., music, videos) stored on a data carrier. The system uses a data access terminal that manages user interaction, payment validation with an external system, and the subsequent granting of access to the selected content.

3. Grounds for Unpatentability

Ground 1: Ineligibility Under §101 - Claims 1, 5, 8, and 10

• Core Argument: Petitioner argued that the challenged claims are directed to patent-ineligible subject matter under 35 U.S.C. §101. Applying the two-step framework from Alice Corp. v. CLS Bank Int’l, Petitioner contended the claims fail both steps.
  • Step 1 (Abstract Idea): The claims are directed to the abstract idea of "paying for and controlling access to content." Petitioner asserted this is a long-standing and fundamental economic practice, a method of organizing human activity that is not patent-eligible. The claims recite functional steps like requesting identifier data, receiving a selection, transmitting payment data for validation, and controlling access based on that validation, which are hallmarks of this abstract concept.
  • Step 2 (Inventive Concept): The claims lack an inventive concept sufficient to transform the abstract idea into a patent-eligible application. Petitioner argued the claims merely add generic computer components (processor, memory, user interface, data carrier) performing their conventional functions. Implementing the abstract idea on a generic computer, as recited, is not an inventive concept. The limitations do not improve the functioning of the computer itself or any other technology but simply use technology as a tool to perform the abstract practice.

Ground 2: Obviousness over Ginter, Poggio, and Subler - Claims 1, 5, 8, and 10 are obvious over Ginter in view of Poggio and Subler.

• Prior Art Relied Upon: Ginter (Patent 5,915,019), Poggio (European Application # EP0809221A2), and Subler (Patent 5,646,992).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner asserted that the combination of these references teaches all limitations of the challenged claims. Ginter disclosed a base system for secure digital rights management (DRM), where a portable electronic appliance stores and controls access to content (VDE content objects) and communicates with a clearinghouse for validation. However, Ginter's user interface and payment transaction details were less specific. Poggio taught a "virtual vending machine" system that explicitly disclosed transmitting payment data (e.g., credit card numbers) to a payment validation system and receiving confirmation before providing content. Subler taught a system with an interactive graphical user interface (GUI) for a user to easily browse, search, and select digital items available for purchase from local storage (e.g., a CD-ROM).
  • Motivation to Combine: A person of ordinary skill in the art (POSITA) would combine Poggio's well-understood electronic payment methods with Ginter's secure DRM system to create a more complete and commercially viable platform that mirrors traditional retail transactions. To improve the user experience of the combined Ginter/Poggio system, a POSITA would incorporate the powerful, user-friendly browsing and search GUI taught by Subler. This would allow users to more easily find and select content for purchase within the secure environment.
  • Expectation of Success: A POSITA would have a reasonable expectation of success in making this combination, as it involved integrating known user interface technologies and standard payment processing methods with a known DRM framework to achieve the predictable result of a more functional and user-friendly system.

Ground 3: Obviousness over Ginter, Poggio, Subler, and Sato - Claims 1, 5, 8, and 10 are obvious over Ginter, Poggio, Subler, and Sato.

• Prior Art Relied Upon: Ginter (Patent 5,915,019), Poggio (European Application # EP0809221A2), Subler (Patent 5,646,992), and Sato (JP Application # H11-164058).
• Core Argument for this Ground:
  • Prior Art Mapping: This ground builds on the combination in Ground 2 by adding the teachings of Sato. Sato disclosed storing and playing media content on mobile devices, including storing content on a removable IC card that could be used across different devices.
  • Motivation to Combine: A POSITA would be motivated to further modify the Ginter/Poggio/Subler system with the teachings of Sato to expand its capabilities to mobile devices and removable media, which were becoming increasingly common. Adding support for removable IC cards as taught by Sato would provide users with greater flexibility to download content wirelessly and use it on multiple devices. Integrating this functionality within Ginter’s DRM framework would be a logical step to ensure content remained protected, thereby making the system attractive to content providers.
  • Expectation of Success: Combining these known elements would have been straightforward for a POSITA, as it involved applying known mobile and removable storage concepts to an existing content distribution model to enhance its flexibility and market appeal.

4. Key Claim Construction Positions

• "payment data" (claims 1, 5, 8, 10): Petitioner proposed this term be construed as "data representing payment made for requested content data," clarifying that it is distinct from "access control data."
• "supplementary data" (claim 5): Petitioner proposed this term be construed as "advertising data, customer reward management data, and/or hot links to web sites," based on disclosures in the specification.

5. Arguments Regarding Discretionary Denial

• Petitioner argued that discretionary denial under 35 U.S.C. §325(d) would be inappropriate. This petition was filed after a previous petition on the same patent (CBM2014-00110) was denied institution. Petitioner contended that this petition was not substantially the same as the prior one because it raised a new ground of unpatentability under §101 based on the Supreme Court's Alice decision, which was issued after the original petition was filed. Further, Petitioner introduced new prior art (Subler) that it argued explicitly disclosed limitations the Board found absent in the art cited in the earlier petition.

6. Relief Requested

• Petitioner requests institution of a Covered Business Method Patent Review and cancellation of claims 1, 5, 8, and 10 of the ’772 patent as unpatentable under 35 U.S.C. §§ 101 and 103.