Apple Inc v. Smartflash LLC

1. Case Identification

• Case #: CBM2015-00127
• Patent #: 7,334,720
• Filed: May 7, 2015
• Petitioner(s): Apple Inc.
• Patent Owner(s): Smartflash LLC
• Challenged Claims: 4-12, 16-18

2. Patent Overview

• Title: Data Storage and Access Systems
• Brief Description: The ’720 patent relates to systems and methods for controlling access to digital data. The invention describes using a portable data carrier to store and pay for data, and computer systems that provide access to the data based on payment validation and supplier-defined access rules.

3. Grounds for Unpatentability

Ground 1: Claims 4-12 and 16-18 are unpatentable under 35 U.S.C. § 101 as being directed to patent-ineligible subject matter.

• Prior Art Relied Upon: This ground does not rely on a specific combination of prior art references but rather argues that the claimed concepts are abstract ideas. Petitioner cited numerous references, including Kopp (Patent 5,940,805) and Ginter (Patent 5,915,019), to demonstrate that the individual hardware and software elements recited in the claims were well-understood, routine, and conventional at the time of the invention.
• Core Argument for this Ground: Petitioner argued that the challenged claims are directed to the abstract idea of controlling access to data based on payment, a fundamental and long-standing economic practice. The argument followed the two-step framework from Alice Corp. v. CLS Bank Int’l.
  • Step 1 (Abstract Idea): Petitioner asserted that the core concept of the challenged claims is restricting access to data based on validating a payment, which is a method of organizing human activity and a basic commercial practice. This abstract idea existed long before the patent, analogous to paying for goods, renting a movie, or using a ticket for entry. Petitioner argued that limiting this concept to the context of digital data does not make it any less abstract.
  • Step 2 (Inventive Concept): Petitioner contended that the claims lack an inventive concept sufficient to transform the abstract idea into a patent-eligible application. The claims merely recite generic computer components (e.g., "data access terminal," "processor," "program store," "interface") performing their conventional and well-known functions (e.g., reading, writing, forwarding, and comparing data). The implementation of the abstract idea on this generic hardware does not improve the functioning of the computer itself or any other technology. The functional language, such as "code to," simply instructs one to implement the abstract idea using conventional programming, which is insufficient to confer patentability.
  • Key Aspects: Petitioner drew direct analogies between the challenged claims and the claims found patent-ineligible in Alice and Accenture. It argued that, like the claims in those cases, the ’720 patent’s claims simply take an abstract business practice and apply it using generic computer hardware, adding nothing that is not already well-understood, routine, and conventional.

Ground 2: Claim 17 is unpatentable under 35 U.S.C. § 112 as indefinite.

• Prior Art Relied Upon: Not applicable for this ground.
• Core Argument for this Ground: Petitioner argued that claim 17 is indefinite because it lacks a proper antecedent basis for a key limitation.
  • Antecedent Basis Issue: Dependent claim 17 recites "said value data." However, its claim chain (depending from claims 16, 15, and 14) contains no prior mention of "value data" to provide a clear reference for the term "said value data." While other claims in the patent (e.g., claim 5) introduce "value data," they are not in the dependency chain of claim 17.
  • Lack of Clarity: This lack of antecedent basis creates ambiguity, making it impossible for a Person of Ordinary Skill in the Art (POSA) to determine with reasonable certainty what "said value data" refers to—whether it is the "payment data" of claim 14, the "payment validation data" of claim 15, or some other undefined data. Petitioner asserted this ambiguity fails to apprise the public of the scope of the claim, rendering it indefinite under the standard set forth in Nautilus, Inc. v. Biosig Instruments, Inc.

4. Key Claim Construction Positions

• "payment data": For review purposes, Petitioner proposed this term be construed as "data representing payment made for requested content data" and noted it should be considered distinct from "access control data."
• "access rule": Petitioner proposed this term be construed as a "rule specifying a condition under which access to content is permitted."
• "supplementary data": Petitioner proposed this term be construed as "advertising data, customer reward management data, and/or hot links to web sites." Petitioner noted that if the term were construed more broadly, it would be indefinite.

5. Arguments Regarding Discretionary Denial

• Petitioner argued that discretionary denial under 35 U.S.C. § 325(d) would be inappropriate. This petition was distinguished from prior petitions filed by Petitioner against the ’720 patent because it raised new invalidity grounds. Specifically, this petition asserted unpatentability under § 101 based on the Supreme Court's decision in Alice, an argument not raised in its earlier petitions. Furthermore, this petition challenged a different set of claims (4-12, 16-18) that were not the subject of Petitioner's prior challenges and which Patent Owner could assert in a newly filed second litigation.

6. Relief Requested

• Petitioner requested institution of a Covered Business Method (CBM) patent review and cancellation of claims 4-12 and 16-18 of the ’720 patent as unpatentable.