PTAB

CBM2015-00119

Apple Inc v. Smartflash LLC

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Key Events
Petition
petition

1. Case Identification

2. Patent Overview

  • Title: DATA STORAGE AND ACCESS SYSTEMS
  • Brief Description: The ’458 patent describes systems for managing access to digital content on a portable data carrier. The technology aims to solve the business problem of data piracy by combining digital rights management with content data storage, linking data access and payment to control usage based on predefined rules.

3. Grounds for Unpatentability

Ground 1: Claim 11 is Patent-Ineligible under 35 U.S.C. §101 as an Abstract Idea

  • Supporting Authorities Relied Upon: Petitioner’s argument relied primarily on legal precedent regarding patent eligibility (e.g., Alice Corp. v. CLS Bank, Mayo v. Prometheus) and the historical, non-computerized business practices of royalty-collecting organizations (e.g., ASCAP) and radio broadcasters, as detailed in the Declaration of Dr. Jeffrey Bloom.
  • Core Argument for this Ground:
    • Abstract Idea Analysis: Petitioner argued that claim 11 is directed to the abstract idea of "regulating authorized use of information." This fundamental concept, petitioner asserted, has been practiced for decades without computers, such as by radio station operators manually tracking song plays against licensing rules to manage royalty payments. The claim limitations, such as retrieving use status and use rules, evaluating them to permit access, and recording partial use, are all analogous to mental processes and manual steps performed by humans using pen and paper in the context of content licensing.
    • Lack of Inventive Concept: Petitioner contended that claim 11 fails to transform the abstract idea into a patent-eligible application. The recitation of generic computer components—a user interface, data carrier interface, processor, and program store—was argued to be nothing more than the application of the abstract idea using conventional technology in a conventional manner. The ’458 patent specification itself allegedly confirms the conventional nature of these components. Therefore, these elements do not supply an "inventive concept" sufficient to confer patent eligibility.
    • Preemption and Transformation: Petitioner further argued that claim 11 impermissibly preempts the abstract idea of regulating information use. Because the claim merely implements a longstanding business practice on a generic computer, it provides no meaningful limitations beyond the abstract idea itself. Additionally, Petitioner asserted that the claim fails the machine-or-transformation test, as it is not tied to a particular machine and does not transform any article into a different state or thing. The recited data and code are manipulated, but no physical or tangible transformation occurs.

4. Key Claim Construction Positions

  • "use rules": Petitioner noted that in a related proceeding (CBM2014-00192), the PTAB construed the term "use rules" as "rules specifying a condition under which access to content is permitted." Petitioner submitted that it would be appropriate for the Board to adopt this same construction, which is based on the patent’s description of the term as controlling access and indicating permissible use of data. This construction is central to the argument that the claims merely recite a set of abstract conditions for information access.

5. CBM Eligibility Contentions

  • Petitioner dedicated significant argument to establishing that the ’458 patent qualifies as a Covered Business Method (CBM) patent and is not exempt as a "technological invention."
  • CBM Qualification: The petition argued the patent claims a method or apparatus for performing operations used in a financial product or service, namely "downloading and paying for data." The claimed "use rules" are explicitly linked in the specification to payments, rental options, and purchase events, which constitute financial activities.
  • Not a Technological Invention: Petitioner contended that the ’458 patent does not meet the criteria for a technological invention. The claims allegedly fail to recite a novel and unobvious technological feature or solve a technical problem with a technical solution. Instead, the patent addresses the non-technical, business problem of lost revenue from data piracy. The solution, which uses conventional and generic computer hardware, was argued to be a straightforward combination of known business practices and technology, not a technical innovation.

6. Relief Requested

  • Petitioner requested the institution of a Covered Business Method patent review and the cancellation of claim 11 of the ’458 patent as unpatentable under 35 U.S.C. §101.