Apple Inc v. Smartflash LLC

1. Case Identification

• Case #: CBM2015-00133
• Patent #: 8,336,772
• Filed: May 11, 2015
• Petitioner(s): Apple Inc.
• Patent Owner(s): Smartflash LLC
• Challenged Claims: 2-4, 6-7, 9, 11-13, 15-18, 20-21, 23-24, 27-29, 31, 33-36

2. Patent Overview

• Title: Data Storage and Access Systems
• Brief Description: The ’772 patent describes systems and methods for controlling access to digital content data (e.g., music, video, games) stored on a data carrier. The system links access to the content with payment validation, using rules to manage usage rights.

3. Grounds for Unpatentability

Ground 1: All Challenged Claims are Unpatentable Under 35 U.S.C. § 101

• Core Argument for this Ground: Petitioner argued that all challenged claims are directed to patent-ineligible subject matter because they claim the abstract idea of controlling access to data based on payment, implemented using only generic and conventional computer components. Petitioner’s argument followed the two-step framework from Alice Corp. v. CLS Bank Int’l.
  • Step 1 (Directed to an Abstract Idea): Petitioner asserted that the claims are directed to the longstanding and fundamental economic practice of payment for goods and controlling access based on payment and rules. This concept, Petitioner contended, is a "building block of the modern economy" that predates the patent and is not tied to a specific technological improvement. The core of the claimed invention was described as the non-technical business method of restricting data access based on payment validation, analogous to paying for a movie ticket or receiving goods after a credit card transaction.
  • Step 2 (Lacks an Inventive Concept): Petitioner argued that the claims fail to provide an "inventive concept" sufficient to transform the abstract idea into a patent-eligible application. The claims merely recite a collection of generic hardware components (e.g., "processor," "user interface," "program store," "data carrier interface") performing their well-understood, routine functions. Petitioner contended that implementing the abstract idea on a general-purpose computer does not confer patentability. The recited "code to" limitations were argued to be purely functional, claiming the ultimate objective without disclosing any specific, non-conventional software or algorithm. The patent specification itself was cited as disclaiming the importance of any particular physical embodiment, stating that the terminals and systems "can all take a variety of forms." The combination of these generic elements, Petitioner argued, results in nothing more than the abstract idea itself being performed by a conventional computer.

4. Key Claim Construction Positions

• "payment data": Petitioner proposed this term be construed as "data representing payment made for requested content data." This construction was argued to be critical to distinguish it from other data types like "access control data." Petitioner contended this definition aligns with the patent's focus on conditioning content access upon a completed or validated financial transaction.
• "use rules" / "access rule": For these related terms, Petitioner proposed constructions like "rule[s] specifying a condition under which access to content is permitted." This construction aimed to frame the rules as abstract conditions for implementing the business logic of the invention, rather than as a specific technical mechanism.

5. Key Technical Contentions (Beyond Claim Construction)

• Business Problem vs. Technical Problem: A central contention was that the ’772 patent addresses a business problem (data piracy and loss of revenue) with a business solution (linking payment to access), not a technical problem with a technical solution. Petitioner argued that the use of computers to automate this known business practice does not solve a problem rooted in computer technology itself. This argument was used to assert that the claims do not fall under the "technological invention" exception for CBM patents and lack an inventive concept under the Alice framework.

6. Arguments Regarding Discretionary Denial

• Petitioner anticipated that the Patent Owner might argue for discretionary denial under 35 U.S.C. § 325(d) based on previously filed petitions. Petitioner argued against denial, asserting that this petition raises distinct legal issues. Specifically, it presented § 101 challenges based on the Supreme Court's decision in Alice, which post-dated earlier petitions that had focused on § 102 and § 103 grounds. Furthermore, this petition challenged claims that were not being asserted against Petitioner at the time the prior petitions were filed, making the current challenge necessary in light of new litigation.

7. Relief Requested

• Petitioner requested institution of a Covered Business Method patent review and cancellation of claims 2-4, 6-7, 9, 11-13, 15-18, 20-21, 23-24, 27-29, 31, and 33-36 of the ’772 patent as unpatentable under 35 U.S.C. § 101.