Samsung Electronics America, Inc.v.Smartflash LLC

Patent Trial and Appeal Board

Mar 30, 2015

11336758 (P.T.A.B. Mar. 30, 2015)

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
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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.

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Patent 7,334,720 B2
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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
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Patent 7,334,720 B2
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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
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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:
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Patent 7,334,720 B2
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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).
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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.
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Patent 7,334,720 B2
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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.
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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
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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.
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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
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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
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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.
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Patent 7,334,720 B2
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PETITIONER:
W. Karl Renner
axf@fr.com

Thomas Rozylowicz
CBM39843-0003CP2@fr.com

PATENT OWNER:
Michael R. Casey
mcasey@dbjg.com