Apple Inc v. Smartflash LLC

1. Case Identification

• Case #: CBM2015-00120
• Patent #: 8,061,598
• Filed: April 30, 2015
• Petitioner(s): Apple Inc.
• Patent Owner(s): Smartflash LLC
• Challenged Claims: 7

2. Patent Overview

• Title: DATA STORAGE AND ACCESS SYSTEMS
• Brief Description: The ’598 patent discloses systems and methods for controlling access to digital content (e.g., audio, video, games) on a portable data carrier. The system uses stored "use rules" and payment data to manage permissions, aiming to allow content owners to distribute data over the internet while preventing revenue loss from unauthorized use.

3. Grounds for Unpatentability

Ground 1: Claim 7 is patent-ineligible under 35 U.S.C. § 101 as directed to an abstract idea.

• Core Argument for this Ground: Petitioner argued that claim 7 is directed to the abstract idea of enabling the limited use of paid-for or licensed content. This fundamental concept, akin to managing copyright and royalty payments, is a long-standing business practice that cannot be patented merely because it is implemented using generic computer components. Petitioner asserted that the claim fails both prongs of the Alice/Mayo test for patent eligibility.
  • Abstract Idea Analysis: Petitioner contended that the core concept of claim 7—controlling access to content based on predefined rules and payment—is an abstract mental process. The petition analogized this to the decades-old practice of radio stations managing compulsory licenses for music, a process that could be performed by a human program director using pen and paper to track usage and ensure compliance with copyright rules. The claim limitations, such as an "interface for reading and writing data," "use rule memory," and "payment data memory," were described as mere implementations of these mental steps.
  • Lack of Inventive Concept: Petitioner argued that claim 7 fails to add an inventive concept sufficient to transform the abstract idea into a patent-eligible application. The claim's recitation of a "portable data carrier," "processor," and various "memory" components does not salvage its eligibility because these are merely generic, conventional computer elements performing their most basic functions. The specification itself was cited as describing the claimed computing systems as "conventional." Petitioner asserted that the claim is not tied to any particular machine in a meaningful way and does not transform any article into a different state or thing. The use of a general-purpose computer to automate a fundamental economic practice was argued to be insufficient to confer patentability.
  • Preemption: A central argument was that claim 7 impermissibly preempts the entire field of enabling limited use of paid-for content. By couching the abstract idea in generic computer terminology without adding meaningful limitations, the claim effectively monopolizes the abstract concept itself, preventing others from implementing the idea in any practical way. This was argued to be precisely the type of overreach that 35 U.S.C. §101 is designed to prevent.

4. Key Claim Construction Positions

• "use rule": Petitioner noted that in a related proceeding (CBM2014-00193), the PTAB construed this term as "a rule specifying a condition under which access to content is permitted." Petitioner submitted that it would be appropriate for the PTAB to adopt this same construction, which is based on the patent's own description of "use rules" as "controlling access to the stored content."

5. Key Technical Contentions (Beyond Claim Construction)

• Use of Conventional Technology: A core technical contention underpinning the entire petition was that the ’598 patent is not a "technological invention" because it fails to solve a technical problem and instead uses only conventional, off-the-shelf computer components to address a business problem (i.e., "fear of loss of revenue"). Petitioner argued that the specification repeatedly confirms that the hardware elements—such as the data access terminal, storage devices, and processors—are "conventional." This contention supported both the threshold argument that the patent is eligible for Covered Business Method (CBM) review and the substantive argument that the claims lack an inventive concept under §101.

6. Relief Requested

• Petitioner requested that the Board institute a Covered Business Method patent review and cancel claim 7 of the ’598 patent as unpatentable under 35 U.S.C. §101.