Apple Inc v. Smartflash LLC

1. Case Identification

• Case #: CBM2015-00124
• Patent #: 7,942,317
• Filed: May 7, 2015
• Petitioner(s): Apple Inc.
• Patent Owner(s): Smartflash LLC
• Challenged Claims: 1-17, 19

2. Patent Overview

• Title: Data Storage and Access Systems
• Brief Description: The ’317 patent relates to systems and methods for controlling access to digital data, such as music or video, by conditioning access on payment. The invention is described as a method of providing portable data using a storage device with payment validation means, allowing data to be downloaded from a supplier after payment is confirmed.

3. Grounds for Unpatentability

Ground 1: Patent Ineligibility under 35 U.S.C. § 101 - Claims 1-17 and 19 are directed to an abstract idea.

• Prior Art Relied Upon: While not a prior art-based ground, Petitioner cited numerous references to demonstrate that the claimed hardware and software functionalities were conventional and well-known, including Hair (Patent 5,675,734), Chernow (Patent 4,999,806), Stefik (Patent 5,629,980), Poggio (European Patent Application # EP0809221), and Kopp (Patent 5,940,805).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner argued that the challenged claims are directed to the patent-ineligible abstract idea of "payment for and controlling access to data," a fundamental and long-standing economic practice. Under the two-step framework from Alice Corp. v. CLS Bank, the claims fail both steps. First, the core concept is an abstract idea. Second, the claims do not add an "inventive concept" that is "significantly more" than the abstract idea itself. Instead, they merely recite generic and functional computer components (e.g., "computer system," "communication interface," "data access data store," "processor") and conventional software functions (e.g., receiving a request, receiving payment data, reading data, transmitting data) to implement the abstract idea. Petitioner contended that these elements, viewed individually or as an ordered combination, represent well-understood, routine, and conventional activities that do not transform the abstract idea into a patent-eligible invention. The petition drew direct analogies between the challenged claims and the claims found ineligible in Alice, asserting that the hardware is purely functional and the software functions are basic computer operations.

Ground 2: Indefiniteness under 35 U.S.C. § 112 - Claims 13 and 19 are indefinite.

• Prior Art Relied Upon: None.
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner argued that claims 13 and 19 are unpatentable for indefiniteness due to a lack of antecedent basis for key terms.
  • Claim 19: This claim recites "transmitting data access rule data to requester with the read data." However, the claim provides no antecedent basis for "the read data," as the only previously mentioned data are "a data item" and "payment data." This ambiguity fails to inform the public with reasonable certainty of the scope of the invention.
  • Claim 13: This dependent claim, which relies on claim 12, introduces a limitation related to forwarding data "to the card." However, neither claim 12 nor claim 13 recites "a card." While claim 12 recites a "data carrier," Petitioner argued that the use of a different term, "the card," renders the claim unclear as to whether it refers to the previously recited "data carrier" or some other undefined element. This lack of a clear antecedent basis makes the claim indefinite.

4. Key Claim Construction Positions

• "payment data" (claims 1-17, 19): Petitioner proposed this term be construed as "data representing payment made for requested content data." This construction was argued to be distinct from "access control data" and was intended to support the argument that the claims are directed to the abstract economic concept of payment for goods.
• "use rules data" (claims 14, 15): Petitioner proposed this term be construed as "data for rules specifying a condition under which access to content is permitted." This construction reinforces the idea that the patent claims a fundamental business practice (applying rules to a transaction) implemented on a generic computer.

5. Arguments Regarding Discretionary Denial

• Petitioner argued that the Board should not exercise its discretion under 35 U.S.C. § 325(d) to deny review. The petition asserted that it did not raise substantially the same arguments as prior petitions filed by Petitioner against the ’317 patent. Specifically, this petition raised arguments under §101 based on the Supreme Court's decision in Alice, which post-dated earlier filings. Furthermore, this petition challenged claims that were not part of prior challenges because they were not asserted against Petitioner at that time but could be asserted in a newly filed second litigation.

6. Relief Requested

• Petitioner requested institution of a Covered Business Method patent review, and a final judgment that claims 1-17 and 19 of the ’317 patent are unpatentable under 35 U.S.C. § 101, and that claims 13 and 19 are also unpatentable under 35 U.S.C. § 112.