Apple Inc v. Smartflash LLC

1. Case Identification

• Case #: CBM2015-00123
• Patent #: 8,033,458
• Filed: May 6, 2015
• Petitioner(s): Apple Inc.
• Patent Owner(s): Smartflash LLC
• Challenged Claims: 2-5, 7, 9, and 12

2. Patent Overview

• Title: Data Storage and Access Systems
• Brief Description: The ’458 patent describes data storage and access systems that use a portable data carrier (e.g., a smart card) to enable the downloading of and payment for digital content. The system aims to control access to stored data based on supplier-defined use rules and associated payment data.

3. Grounds for Unpatentability

Ground 1: Unpatentable Subject Matter under §101 - Claims 2-5, 7, 9, and 12 are directed to an abstract idea

• Core Argument for this Ground: Petitioner argued that the challenged claims are directed to the patent-ineligible abstract idea of controlling access to data based on payment or rules, and fail to provide an inventive concept sufficient to transform the idea into a patent-eligible application. The argument followed the two-step framework from Alice Corp. v. CLS Bank Int'l.
  • Step 1 (Abstract Idea): Petitioner asserted that the claims are directed to the concepts of payment and controlling access, which are fundamental economic practices and longstanding methods of organizing human activity. The petition contended that every challenged claim expressly recites "payment" and/or "access" and that the patent’s specification confirms that the core of the invention relates to "paying" and "providing access." Petitioner argued these concepts are more commonplace than ideas previously found abstract by the Supreme Court.
  • Step 2 (Inventive Concept): Petitioner argued the claims lack an inventive concept because they merely implement the abstract idea using generic, conventional computer components and functions. The recited hardware—including a "portable data carrier," "interface," "processor," "program store," and "non-volatile memory"—were all described as well-understood and routine. The functional "code to" limitations (e.g., code for outputting data, retrieving status, evaluating rules) were characterized as generic computer functions that do not improve the functioning of the computer itself or any other technology. Petitioner concluded that the claims amount to nothing more than stating an abstract idea and adding the words "apply it with a computer," which is insufficient under Alice. The claims were analogized to those found ineligible in Alice and Accenture Global Servs. v. Guidewire Software.

Ground 2: Indefiniteness under §112 - Claims 3-5 are indefinite

• Core Argument for this Ground: Petitioner argued that claims 3, 4, and 5 are unpatentable under 35 U.S.C. §112 because they are indefinite and lack clear antecedent basis for key terms, failing to provide clear notice of the claimed scope to a person of ordinary skill in the art (POSA).
  • Lack of Antecedent Basis for "the code": Claims 3, 4, and 5 each recite multiple distinct types of "code" (e.g., "code implementable by a processor," "code to update," "synthesis code"). The claims then refer to "the code," creating ambiguity as to which of the previously recited types of code is being referenced. Petitioner contended a POSA would be unable to determine the scope of this limitation.
  • Lack of Antecedent Basis for "the content data memory": Claims 3, 4, and 5 introduce the limitation "the content data memory" without a prior recitation of "content data memory" to serve as an antecedent. While the claims also recite "data memory" and "payment data memory," Petitioner argued that the use of a different term implies a different meaning. This ambiguity would prevent a POSA from discerning what "the content data memory" refers to, rendering the claims indefinite.

4. Key Claim Construction Positions

• "payment data" (Claims 2-5): Petitioner proposed this term be construed to mean "data representing payment made for requested content data," distinct from "access control data." This construction was argued to be consistent with the specification's focus on linking payment to content.
• "supplementary data" (Claims 4, 10): Petitioner proposed construing this term as "advertising data, customer reward management data, and/or hot links to web sites." This construction was based on examples in the specification and was noted as being consistent with a construction agreed to in parallel district court litigation.
• "use rules data" (Claims 7, 9): Petitioner proposed this term be construed as "data for rules specifying a condition under which access to content is permitted." This construction aimed to capture the patent's description of using rules to govern access based on conditions like payment or usage limits.

5. Arguments Regarding Discretionary Denial

• Petitioner preemptively argued against discretionary denial under 35 U.S.C. §325(d), asserting that this petition was substantially different from its prior filings on the ’458 patent. The petition raised new unpatentability grounds under §101 based on the Supreme Court's post-filing Alice decision, which had not been argued in its earlier petitions. Furthermore, this petition challenged a new set of claims (2-5, 7, 9, 12) that were not asserted against Petitioner at the time of the earlier filings but were at risk of being asserted in a newly filed second litigation.

6. Relief Requested

• Petitioner requested institution of a Covered Business Method (CBM) patent review and cancellation of claims 2-5, 7, 9, and 12 of the ’458 patent as unpatentable under 35 U.S.C. §101 and/or §112.