Apple Inc v. Smartflash LLC

1. Case Identification

• Case #: CBM2015-00033
• Patent #: 8,336,772
• Filed: November 25, 2014
• Petitioner(s): Apple Inc.
• Patent Owner(s): Smartflash LLC
• Challenged Claims: 25, 26, 30, and 32

2. Patent Overview

• Title: Data Storage and Access Systems
• Brief Description: The ’772 patent discloses systems for controlling access to data, such as multimedia content, stored on a portable data carrier. The system links digital rights management with payment validation to enable the downloading and paying for data while reducing the risk of unauthorized access.

3. Grounds for Unpatentability

Ground 1: Claims 25, 26, 30, and 32 are unpatentable under 35 U.S.C. §101

• Core Argument for this Ground: Petitioner argued that the challenged claims are directed to patent-ineligible subject matter.
  • Abstract Idea: The claims were asserted to be directed to the abstract idea of paying for and controlling access to content. This fundamental economic practice and method of organizing human activity, Petitioner argued, is a longstanding concept well outside the scope of §101.
  • No Inventive Concept: Petitioner contended that the claims fail to add an "inventive concept" sufficient to transform the abstract idea into a patent-eligible application. The claims merely recited implementing the abstract idea using generic and conventional computer components (e.g., processor, memory, user interface, data carrier) and routine functions (e.g., requesting, receiving, storing, and evaluating data). Petitioner argued that these elements, whether viewed individually or as an ordered combination, amounted to no more than a well-understood, routine, and conventional application of the abstract idea on a general-purpose computer, which is insufficient to confer patentability under the framework established in Alice Corp. v. CLS Bank.

Ground 2: Obviousness over Core DRM References - Claims 25, 26, 30, and 32 are obvious over Stefik, Poggio, Subler, and Ahmad

• Prior Art Relied Upon: Stefik (5,530,235 and 5,629,980), Poggio (EP0809221A2), Subler (5,646,992), and Ahmad (5,925,127).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner asserted that Stefik disclosed a foundational digital rights management (DRM) system using a portable repository ("DocuCard") to store digital works and associated "usage rights" that control access. While Stefik provided the core DRM framework, Petitioner argued the remaining references supplied the other key limitations of the challenged claims. Poggio taught a "virtual vending machine" for the secure sale, distribution, and payment processing of digital products. Subler disclosed an interactive graphical user interface (GUI) that allowed users to easily browse, search, and retrieve information about available content. Ahmad taught a system for monitoring the usage of rented software (e.g., by time or number of uses) to enforce license restrictions and prevent unauthorized use after expiration.
  • Motivation to Combine: A Person of Ordinary Skill in the Art (POSA) would combine these references to enhance Stefik's base system. A POSA would integrate Poggio’s secure payment and distribution system to improve the commercial viability and security of Stefik's DRM. Subler's user-friendly GUI would be a natural addition to improve the user experience of browsing and selecting content from a Stefik repository. Ahmad's usage monitoring would be combined to provide more robust enforcement of usage rights, particularly for rental models, which Stefik’s system was designed to support.
  • Expectation of Success: A POSA would have had a reasonable expectation of success, as the combination involved applying known software solutions (payment processing, user interfaces, usage monitoring) to a known DRM system to achieve the predictable benefits of improved usability, security, and commercial functionality.

Ground 3: Obviousness over Core DRM References and Kopp - Claims 25, 26, 30, and 32 are obvious over Stefik, Poggio, Subler, Ahmad, and Kopp

• Prior Art Relied Upon: Stefik (5,530,235 and 5,629,980), Poggio (EP0809221A2), Subler (5,646,992), Ahmad (5,925,127), and Kopp (5,940,805).

• Core Argument for this Ground:

  • Prior Art Mapping: This ground built upon the combination in Ground 2 by adding the teachings of Kopp. Petitioner argued that Kopp disclosed a vending system where a user could purchase a data record with a predetermined and customizable extent of permitted use (e.g., a specific number of plays, a specific duration of use).
  • Motivation to Combine: A POSA would be motivated to incorporate Kopp's teachings into the system of Ground 2 to expand the product offerings and provide greater flexibility. By allowing users to specify and purchase only the exact usage rights they need, the combined system would be more commercially attractive. This would be a logical extension of the DRM and payment systems taught by the other references.
  • Expectation of Success: Integrating Kopp's method for selling customized usage rights into the established DRM framework was a straightforward application of known e-commerce principles, and a POSA would expect it to function as intended.

• Additional Grounds: Petitioner asserted additional obviousness challenges based on combinations including Sato (H11-164058), which taught storing and playing media content on mobile devices using removable IC cards, to address limitations related to handheld terminals.

4. Key Claim Construction Positions

• “payment data”: For review purposes, Petitioner proposed construing this term as “data representing payment made for requested content data.” Petitioner argued this construction was consistent with the specification and necessary to distinguish it from non-payment-related "access control data."
• “use rules”: For review purposes, Petitioner adopted the Board's construction from a prior proceeding, construing the term as “rule[s] specifying a condition under which access to content is permitted.”

5. Arguments Regarding Discretionary Denial

• Petitioner argued that discretionary denial under §325(d) would be inappropriate. This petition was filed after a previous petition (CBM2014-00110/111) on the same patent was denied institution. Petitioner contended that this new petition was not substantially the same because it raised entirely new unpatentability grounds under §101 based on the intervening Alice decision. Furthermore, the new §103 grounds were supported by new prior art (Subler, Ahmad, Kopp, Sato) specifically chosen to cure the deficiencies the Board identified in the previous petition, particularly regarding the explicit disclosure of limitations like "code to request identifier data" and "use status data."

6. Relief Requested

• Petitioner requested institution of a Covered Business Method (CBM) patent review and cancellation of claims 25, 26, 30, and 32 of the ’772 patent as unpatentable.