Apple Inc v. Smartflash LLC

1. Case Identification

• Case #: CBM2015-00130
• Patent #: 8,118,221
• Filed: May 8, 2015
• Petitioner(s): Apple Inc.
• Patent Owner(s): Smartflash LLC
• Challenged Claims: 3-10, 12-31, and 33

2. Patent Overview

• Title: Data Storage and Access Systems
• Brief Description: The ’221 patent relates to a system for managing and controlling access to digital data using a portable data carrier. The disclosed invention links payment validation to the provision of data, such as digital music or video, which is stored on the carrier and accessed via a data terminal.

3. Grounds for Unpatentability

Ground 1: Patent Ineligibility under § 101 - Claims 3-10, 12-31, and 33 are unpatentable under 35 U.S.C. § 101.

• Prior Art Relied Upon: This ground was based on legal precedent rather than prior art references, primarily citing Alice Corp. v. CLS Bank Int'l and Mayo Collaborative Servs. v. Prometheus Labs, Inc.
• Core Argument for this Ground:
  • Argument for Abstract Idea: Petitioner argued that all challenged claims are directed to the patent-ineligible abstract idea of "payment for and/or controlling access to data." This concept was characterized as a fundamental economic practice and a method of organizing human activity that is long-standing and well-known. Petitioner contended that controlling access to a resource based on payment is a "building block of the modern economy" that exists entirely outside of any specific technological implementation.
  • Argument for Lack of Inventive Concept: Petitioner asserted that the claims fail to add an "inventive concept" sufficient to transform the abstract idea into a patent-eligible application. The claims merely recited the implementation of this business method using a collection of generic, well-understood, and conventional computer components. These included a "data access terminal," "processor," "program store," "interfaces," and a "data carrier" (such as a standard smart card), all performing their ordinary and expected functions. Petitioner noted that the patent specification itself disclaimed the need for specific hardware, stating that the "physical embodiment of the system is not critical" and its components can "take a variety of forms."
  • Key Aspects: The core of the argument was that the challenged claims are analogous to those found ineligible in Alice, as they merely instruct the use of generic computers to perform a fundamental business practice without offering any improvement to computer functionality itself.

Ground 2: Indefiniteness under § 112 - Claims 6, 22, and 29 are indefinite under 35 U.S.C. § 112.

• Prior Art Relied Upon: Not applicable.
• Core Argument for this Ground:
  • Antecedent Basis Issues: Petitioner argued that several dependent claims were indefinite because they lacked a clear antecedent basis for key terms. In claim 22, the phrase "said use rules" was used, but its parent claim (claim 17) only introduced the term "use rules data," which Petitioner contended was a distinct term. In claims 6 and 29, the term "the card" was recited without any prior introduction of "a card"; the parent claims instead recited a "data carrier." This created ambiguity as to whether "the card" and "data carrier" were intended to be the same element.
  • Failure to Inform: Petitioner contended that these ambiguities would prevent a Person of Ordinary Skill in the Art (POSA) from understanding the scope of the claims with reasonable certainty. Because the claims were allegedly amenable to two or more plausible constructions, they failed to provide the public with clear notice of their boundaries and were therefore unpatentable as indefinite.

4. Key Claim Construction Positions

• "payment data": Petitioner proposed this term should be construed to mean "data representing payment made for requested content data." This construction was intended to distinguish it from other data types like access control data.
• "use rule data": Petitioner proposed this term should be construed to mean "data for rules specifying a condition under which access to content is permitted."
• "supplementary data": Petitioner proposed this term should be construed to mean "advertising data, customer reward management data, and/or hot links to web sites."

5. Arguments Regarding Discretionary Denial

• Petitioner argued that discretionary denial under 35 U.S.C. § 325(d) would be inappropriate. The petition asserted that it did not present substantially the same arguments as prior petitions filed against the ’221 patent. Petitioner highlighted that its § 101 challenge was new, relying heavily on the Supreme Court's decision in Alice, which was issued after its earlier petitions were filed. Furthermore, this petition challenged a set of claims that had not been asserted against Petitioner at the time of the earlier filings.

6. Relief Requested

• Petitioner requested the institution of a Covered Business Method Patent Review and cancellation of claims 3-10, 12-31, and 33 as unpatentable under § 101, and cancellation of claims 6, 22, and 29 as unpatentable under § 112.