Samsung Electronics America, Inc.v.Smartflash LLCDownload PDFPatent Trial and Appeal BoardMar 30, 201511336758 (P.T.A.B. Mar. 30, 2015) Copy Citation Trials@uspto.gov Paper 7 Tel: 571-272-7822 Entered: March 30, 2015 UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE PATENT TRIAL AND APPEAL BOARD SAMSUNG ELECTRONICS AMERICA, INC. and SAMSUNG ELECTRONICS CO., LTD., Petitioner, v. SMARTFLASH LLC, Patent Owner. Case CBM2014-00196 Patent 7,334,720 B2 Before JENNIFER S. BISK, RAMA G. ELLURU, GREGG I. ANDERSON, MATTHEW R. CLEMENTS, and PETER P. CHEN, Administrative Patent Judges. ELLURU, Administrative Patent Judge. DECISION Denying Institution of Covered Business Method Patent Review 37 C.F.R. § 42.208 CBM2014-00196 Patent 7,334,720 B2 2 INTRODUCTION A. Background Petitioner, Samsung Electronics America, Inc. and Samsung Electronics Co., Ltd. (collectively “Samsung”) 1 , filed a Petition (Paper 2, “Pet.”) to institute a covered business method patent review of claims 13 and 14 (“the challenged claims”) of US Patent No. 7,334,720 B2 (Ex. 1001, “the ’720 patent”) pursuant to § 18 of the Leahy-Smith America Invents Act (“AIA”). 2 Patent Owner, Smartflash LLC (“Smartflash”), filed a Preliminary Response (Paper 5, “Prelim. Resp.”). We have jurisdiction under 35 U.S.C. § 324, which provides that a covered business method patent review may not be instituted “unless . . . it is more likely than not that at least 1 of the claims challenged in the petition is unpatentable.” B. Asserted Grounds Samsung contends that claims 13 and 14 are unpatentable as anticipated by Ginter 3 under 35 U.S.C. § 102. Pet. 4. Samsung also provides a declaration from Jeffrey A. Bloom, Ph.D. Ex. 1003. After considering the Petition and Preliminary Response, we determine that the ’720 patent is a covered business method patent. We 1 Samsung provided in its updated mandatory notice that “Samsung Electronics America, Inc., and Samsung Electronics Co., Ltd. are now the real-parties-in-interest in this Covered Business Method Review. Samsung Telecommunications America, LLC, (“STA”) originally a Petitioner and real-party-in-interest at the time of filing the Petition requesting Covered Business Method Review, has merged with and into Petitioner Samsung Electronics America, Inc. as of January 1, 2015, and therefore STA no longer exists as a separate corporate entity.” Paper 6, 1. 2 Pub. L. No. 112-29, 125 Stat. 284, 296–07 (2011) 3 U.S. Patent No. 5,915,019 (“Ginter”) (Ex. 1023). CBM2014-00196 Patent 7,334,720 B2 3 further determine, however, that Samsung has not demonstrated that it is more likely than not that at least one of the challenged claims is unpatentable. Therefore, we do not institute a covered business method patent review of claims 13 and 14 of the ’720 patent. C. Related Matters Samsung indicates that the ’720 patent is the subject of the following co-pending district court cases: Smartflash LLC v. Apple Inc., Case No. 6:13-cv-447 (E.D. Tex.); and Smartflash LLC v. Samsung Electronics Co., Case No. 6:13-cv-448 (E.D. Tex.). Pet. 1–2; Paper 4, 2–3. Patent Owner asserts that related patents claiming priority back to a common series of applications currently are the subject of CBM2014-00102, CBM2014- 00108, and CBM2014-00112, filed by Apple Inc. See Paper 4, 2. Samsung filed a concurrent petition for covered business method patent review of the ’720 patent: CBM2014-00190. 4 In addition, Samsung filed eight other Petitions for covered business method patent review challenging claims of other patents owned by Smartflash and disclosing similar subject matter: CBM2014-00192; CBM2014-00193; CBM2014-00194; CBM2014-00197; CBM2014-00198; CBM2014-00199; CBM2014-00200; and CBM2014-00204. 4 Smartflash argues that the multiple petitions filed against the ’720 patent violate the page limit requirement of 37 C.F.R. § 42.24(a)(iii), but does not cite any authority to support its position. Prelim. Resp. 9–12. The page limit for petitions requesting covered business method patent review is 80 pages (37 C.F.R. § 42.24(a)(iii)), and each of the ’190 and ’196 Petitions meets that requirement. CBM2014-00196 Patent 7,334,720 B2 4 D. The ’720 Patent The ’720 patent relates to “a portable data carrier for storing and paying for data and to computer systems for providing access to data to be stored” and the “corresponding methods and computer programs.” Ex. 1001, 1:6–10. Owners of proprietary data, especially audio recordings, have an urgent need to address the prevalence of “data pirates,” who make proprietary data available over the Internet without authorization. Id. at 1:15–41. The ’720 patent describes providing portable data storage together with a means for conditioning access to that data upon validated payment. Id. at 1:46–62. According to the ’720 patent, this combination of the payment validation means with the data storage means allows data owners to make their data available over the Internet without fear of data pirates. Id. at 1:62–2:3. As described, the portable data storage device is connected to a terminal for Internet access. Id. at 1:46–55. The terminal reads payment information, validates that information, and downloads data into the portable storage device from a data supplier. Id. The data on the portable storage device can be retrieved and output from a mobile device. Id. at 1:56–59. The ’720 patent makes clear that the actual implementation of these components is not critical and the alleged invention may be implemented in many ways. See, e.g., id. at 26:13–16 (“The skilled person will understand that many variants to the system are possible and the invention is not limited to the described embodiments.”). E. Challenged Claims Samsung challenges claims 13 and 14 of the ’720 patent. Claim 13 depends from independent claim 3, which is not explicitly challenged in this CBM2014-00196 Patent 7,334,720 B2 5 proceeding, and claim 14 is independent. Claims 3 and 14 are illustrative of the claims at issue and recite the following. 3. A data access terminal for retrieving data from a data supplier and providing the retrieved data to a data carrier, the terminal comprising: a first interface for communicating with the data supplier; a data carrier interface for interfacing with the data carrier; a program store storing code; and a processor coupled to the first interface, the data carrier interface, and the program store for implementing the stored code, the code comprising: code to read payment data from the data carrier and to forward the payment data to a payment validation system; code to receive payment validation data from the payment validation system; code responsive to the payment validation data to retrieve data from the data supplier and to write the retrieved data into the data carrier; and code responsive to the payment validation data to receive at least one access rule from the data supplier and to write the at least one access rule into the data carrier, the at least one access rule specifying at least one condition for accessing the retrieved data written into the data carrier, the at least one condition being dependent upon the amount of payment associated with the payment data forwarded to the payment validation system. Ex. 1001, 26:41–67. 14. A method of providing data from a data supplier to a data carrier, the method comprising: reading payment data from the data carrier; forwarding the payment data to a payment validation system; retrieving data from the data supplier; writing the retrieved data into the data carrier; receiving at least one access rule from the data supplier; and CBM2014-00196 Patent 7,334,720 B2 6 writing the at least one access rule into the data carrier, the at least one access rule specifying at least one condition for accessing the retrieved data written into the data carrier, the at least one condition being dependent upon the amount of payment associated with the payment data forwarded to the payment validation system. Id. at 28:5–20. ANALYSIS A. Claim Construction In a covered business method patent review, claim terms are given their broadest reasonable interpretation in light of the specification in which they appear and the understanding of others skilled in the relevant art. See 37 C.F.R. § 42.300(b); see also In re Cuozzo Speed Techs., LLC, No. 2014- 1301, 2015 WL 448667, at *7 (Fed. Cir. Feb. 4, 2015) (“We conclude that Congress implicitly adopted the broadest reasonable interpretation standard in enacting the AIA.”). Applying that standard, we interpret the claim terms of the ’720 patent according to their ordinary and customary meaning in the context of the patent’s written description. See In re Translogic Tech., Inc., 504 F.3d 1249, 1257 (Fed. Cir. 2007). For purposes of this Decision, we construe the claim term “access rule,” recited in claim 3, from which challenged claim 13 depends, and claim 14. Independent claim 3 requires “at least one access rule specifying at least one condition for accessing the retrieved data written into the data carrier.” Independent claim 14 recites a similar limitation. Similarly, in describing a particular embodiment, the ’720 patent Specification explains that each content data item has an associated “use rule” 5 “to specify under 5 The ’720 patent Specification imparts the same meaning to “access rule” as “use rule.” For example, when discussing a particular embodiment, the Specification states: CBM2014-00196 Patent 7,334,720 B2 7 what conditions a user of the smart Flash card is allowed access to the content data item.” Ex. 1001, 22:4–9; see id. at 4:62–63 (a data carrier may store content “use rules pertaining to allowed use of stored data items.”) (emphasis added). The Specification explains that the data access device uses the use status data and “use rules” to determine what access is permitted to data stored on the data carrier. Id. at 9:21–23. Accordingly, pursuant to the claim language and the ’720 patent Specification, for purposes of this Decision, we construe “access rule” as “a rule specifying a condition under which access to content is permitted.” B. Covered Business Method Patent Section 18 of the AIA provides for the creation of a transitional program for reviewing covered business method patents. A “[c]overed business method patent” is a patent that “claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.” AIA § 18(d)(1); see 37 C.F.R. § 42.301(a). A patent need have only one claim directed to a covered business method to be eligible for review. See Transitional Program for Covered Business Method Patents—Definitions of Covered Business Method Patent and Technological Invention; Final Rule, 77 Fed. Reg. 48,734, 48,736 (Aug. 14, 2012) (“CBM Rules”) (Comment 8). [O]ne or more content access rules is received from the system owner data supply computer and written to the smart Flash card so that each content data item has an associated use rule to specify under what conditions a user of the smart Flash card is allowed access to the content data item. Ex. 1001 at 22:4–9 (emphases added). CBM2014-00196 Patent 7,334,720 B2 8 1. Financial Product or Service Samsung asserts that claim 14 “unquestionably is used for data processing in the practice, administration and management of financial products and services; specifically, for processing payments for data downloads.” Pet. 9. Based on this record, we agree with Samsung that the subject matter recited by claim 14 is directed to activities that are financial in nature, namely, data access conditioned on payment validation. Claim 14 recites: writing the at least one access rule into the data carrier, the at least one access rule specifying at least one condition for accessing the retrieved data written into the data carrier, the at least one condition being dependent upon the amount of payment associated with the payment data forwarded to the payment validation system. We are persuaded that payment validation is a financial activity, and conditioning data access based on payment validation amounts to a financial service. This is consistent with the Specification of the ’720 patent, which confirms claim 14’s connection to financial activities by stating that the invention “relates to a portable data carrier for storing and paying for data.” Ex. 1001, 1:6–7. The Specification also states repeatedly that the disclosed invention involves managing access to data based on payment validation. See, e.g., Ex. 1001, 1:46–49, 2:4–19, 3:19–27, 3:50–54, 7:62–8:9, 8:21–35. Smartflash disagrees that claim 14 satisfies the financial in nature requirement of AIA § 18(d)(1), arguing that that section should be interpreted narrowly to cover only technology used specifically in the financial or banking industry. Prelim. Resp. 3–7. Smartflash cites to various portions of the legislative history as support for its proposed interpretation. Id. CBM2014-00196 Patent 7,334,720 B2 9 Although we agree with Smartflash that the statutory language controls whether a patent is eligible for a covered business method patent review, we do not agree that the phrase “financial product or service” is as limited as Smartflash proposes. The AIA does not include as a prerequisite for covered business method patent review, a “nexus” to a “financial business,” but rather a “method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service.” AIA § 18(d)(1). Further, contrary to Smartflash’s view of the legislative history, the legislative history indicates that the phrase “financial product or service” is not limited to the products or services of the “financial services industry,” and is to be interpreted broadly. CBM Rules, 77 Fed. Reg. at 48,735–36. For example, the “legislative history explains that the definition of covered business method patent was drafted to encompass patents ‘claiming activities that are financial in nature, incidental to a financial activity or complementary to a financial activity.’” Id. (citing 157 Cong. Rec. S5432 (daily ed. Sept. 8, 2011) (statement of Sen. Schumer)). In addition, Smartflash asserts that claim 14 is not directed to an apparatus or method that is financial in nature because claim 14 “omits the specifics of how payment is made.” Prelim. Resp. 7. We are not persuaded by this argument because § 18(d)(1) of the AIA does not include such a requirement, nor does Smartflash point to any other authority that makes such a requirement. Id. We determine that because payment data is recited by claim 14, the financial in nature requirement of § 18(d)(1) is satisfied. CBM2014-00196 Patent 7,334,720 B2 10 For the reasons stated above, and based on the particular facts of this proceeding, we conclude that the ’720 patent includes at least one claim that meets the financial in nature requirement of § 18(d)(1) of the AIA. 2. Exclusion for Technological Inventions Samsung asserts that the claims of the ’720 patent do not fall within § 18(d)(1)’s exclusion for “technological inventions.” Pet. 11–13. In particular, Samsung argues that the claims do not recite a technological feature that is novel and unobvious, or solve a technical problem using a technical solution. Id. Smartflash disagrees and argues that claim 14, as a whole, recites at least one technological feature that is novel and unobvious over the prior art. Prelim. Resp. 7–9. We are persuaded that claim 14 as a whole does not recite a technological feature that is novel and unobvious over the prior art. Claim 14 does recite a “data carrier.” The claimed “data carrier,” however, is a generic hardware device known in the prior art. The Specification discloses, for instance, that a portable data carrier may be a “standard smart card.” See Ex. 1001, 11:36–39; Pet. 17. Claim 14 also recites a “payment validation system.” The Specification, however, discloses that the required payment validation system may be one that is already in use or otherwise commercially available. For example, “[t]he payment validation system may be part of the data supplier’s computer systems or it may be a separate e-payment system.” Ex. 1001, 8:64–66; see id. at 13:46–58. In addition, the ’720 patent makes clear that the asserted novelty of the invention is not in any specific improvement of software or hardware, but in the method of controlling access to data. For example, the ’720 patent states that “there is an urgent need to find a way to address the problem of CBM2014-00196 Patent 7,334,720 B2 11 data piracy,” (id. at 1:40–41) while acknowledging that the “physical embodiment of the system is not critical and a skilled person will understand that the terminals, data processing systems and the like can all take a variety of forms” (id. at 12:38–41). Thus, we determine that claim 14 is merely the recitation of a combination of known technologies, which indicates that it is not a claim for a technological invention. See Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,764 (Aug. 14, 2012). Smartflash also argues that claim 14 falls within § 18(d)(1)’s exclusion for “technological inventions” because it is directed towards solving the technological problem of “writing data and at least one access rule from a data supplier into a data carrier” with the technological solution of “a data carrier from which payment data is read and to which retrieved data and at least one access rule from a data supplier are written.” Prelim. Resp. 8. We are not persuaded by this argument because, as Samsung argues, the problem being solved by claim 14 is a business problem—data piracy. Pet. 12–13. For example, the specification states that “[b]inding data access and payment together allows the legitimate owners of the data to make the data available themselves over the internet without fear of loss of revenue, thus undermining the position of data pirates.” Ex. 1001, 1:66–2:3. Therefore, based on the particular facts of this proceeding, we conclude that claim 14 does not recite a technological invention and is eligible for a covered business method patent review. 3. Conclusion In view of the foregoing, we conclude that the ’720 patent is a covered business method patent under AIA § 18(d)(1) and is eligible for review under the transitional covered business method patent program. CBM2014-00196 Patent 7,334,720 B2 12 D. Anticipation by Ginter Samsung asserts that claims 13 and 14 are anticipated by Ginter. Pet. 4. Ginter discloses a portable “virtual distribution environment” (“VDE”) that can “control and/or meter or otherwise monitor use of electronically stored or disseminated information.” Ex. 1023, Abstract; Fig. 71; 52:26–27. Claim 3, from which claim 13 depends, recites “code responsive to the payment validation data to receive at least one access rule from the data supplier and to write the at least one access rule into the data carrier, the at least one access rule specifying at least one condition for accessing the retrieved data written into the data carrier, the at least one condition being dependent upon the amount of payment associated with the payment data forwarded to the payment validation system” Ex. 1001, 26:41–67 (emphasis added). Claim 14 includes a similar limitation. See Pet. 48–50; Ex. 1001, 28:5–20. Samsung identifies in a parenthetical Ginter’s “billing method MDE and/or budget method UDE” as the recited “access rule.” Id. at 40. The quoted portions of Ginter, however, do not show sufficiently that the billing method map MDE and/or budget method UDE reflect “a rule specifying a condition under which access to content is permitted,” as we construe “access rule.” The quoted portions of Ginter relate to billing for use of a VDE content object, but not to “a rule specifying a condition under which access to content is permitted.” See id. (citing Ex. 1023, 190:45–57; 59:17–23). Ginter describes billing method map MDE as “a price list, table, or parameters to the billing amount calculation algorithm” (id. at 190:47–50), and budget method UDE as “limitations on usage of information content CBM2014-00196 Patent 7,334,720 B2 13 304, and how usage will be paid for” (id. at 59:17–20). Petitioner does not explain sufficiently, however, why a price list (billing method map MDE) and/or limitations on information content usage (budget method UDE), for example, disclose “access rule.” Dr. Bloom’s conclusory testimony on this issue (Ex. 1003 ¶ 96) does not convince us otherwise. Furthermore, Petitioner has not sufficiently persuaded us that Ginter discloses the recited “at least one access rule specifying at least one condition for accessing the retrieved data written into the data carrier, the at least one condition being dependent upon the amount of payment associated with the payment data forwarded to the payment validation system” (emphasis added), required by claim 3 and the similar limitation of claim 14. In support of its assertion that Ginter discloses this limitation, Samsung asserts the following: The retrieved access rule (e.g., a billing method MDE and/or budget method UDE) specifies at least one condition for accessing the retrieved content object, where the at least one access rule depends upon the amount of payment associated with the payment data forwarded to the payment validation system (e.g., clearinghouse); specifying, e.g., a per unit cost of accessing the retrieved content object and/or an access limit. Pet. 49 (citing Ex. 1023, 190:45–57) (emphasis added). Samsung, however, does not explain how this disclosure—i.e., “a per unit cost of accessing the retrieved content object” or “access limit”—shows that accessing the data written into the data carrier is dependent upon the amount of payment associated with the payment data forwarded to the payment validation system. Samsung likewise does not sufficiently explain how Ginter’s “pricing algorithm” (see Pet. 49–50) shows that accessing the data written into the data carrier is dependent upon the amount of payment associated CBM2014-00196 Patent 7,334,720 B2 14 with the payment data forwarded to the payment validation system. Thus, Samsung has not persuaded us sufficiently that Ginter discloses the limitations referred to above. 6 On this record, we are not persuaded that Petitioner has established that it is more likely than not that claims 13 and 14 are anticipated by Ginter. CONCLUSION For the foregoing reasons, we determine that the information presented in the Petition does not establish that it is more likely than not that Samsung would prevail in establishing the unpatentability of claims 13 and 14 as anticipated by Ginter under 35 U.S.C. § 102. ORDER For the reasons given, it is: ORDERED that a covered business method patent review of claims 13 and 14 of the ’720 patent is denied. 6 Given that we do not institute a covered business method review based on this ground, we need not address Smartflash’s argument that we should reject the petition under 35 U.S.C § 325(d). See PO Resp. 12–13. CBM2014-00196 Patent 7,334,720 B2 15 PETITIONER: W. Karl Renner axf@fr.com Thomas Rozylowicz CBM39843-0003CP2@fr.com PATENT OWNER: Michael R. Casey mcasey@dbjg.com Copy with citationCopy as parenthetical citation