Apple Inc.v.Smartflash LLC

Patent Trial and Appeal Board

Mar 30, 2016

12943847 (P.T.A.B. Mar. 30, 2016)

Trials@uspto.gov Paper 45
Tel: 571-272-7822 Entered: March 30, 2016
UNITED STATES PATENT AND TRADEMARK OFFICE

BEFORE THE PATENT TRIAL AND APPEAL BOARD

SAMSUNG ELECTRONICS AMERICA, INC., and
SAMSUNG ELECTRONICS CO., LTD.,
Petitioner
and
APPLE INC.,
Petitioner,
v.
SMARTFLASH LLC,
Patent Owner.

Case CBM2014-001921
Patent 8,033,458 B2

Before JENNIFER S. BISK, RAMA G. ELLURU,
JEREMY M. PLENZLER, and MATTHEW R. CLEMENTS,
Administrative Patent Judges.
PLENZLER, Administrative Patent Judge.

FINAL WRITTEN DECISION
35 U.S.C. § 328(a) and 37 C.F.R. § 42.73

1 CBM2015-00119 (Patent 8,033,458 B2) has been consolidated with this
proceeding.
CBM2014-00192
Patent 8,033,458 B2
2
INTRODUCTION
A. Background
Samsung Electronics America, Inc., Samsung Electronics Co., Ltd.,
and Samsung Telecommunications America, LLC (“Samsung”)2 filed a
Petition to institute covered business method patent review of claim 11 (the
“challenged claim”) of U.S. Patent No. 8,033,458 B2 (Ex. 1001, “the ’458
patent”) pursuant to § 18 of the Leahy-Smith America Invents Act (“AIA”).3
Paper 2 (“Pet.”). On April 2, 2015, we instituted a transitional covered
business method patent review (Paper 7, “Institution Decision” or “Inst.
Dec.”) based upon Petitioner’s assertion that claim 11 is directed to patent
ineligible subject matter under 35 U.S.C. § 101. Inst. Dec. 18.
On April 30, 2015, Apple Inc. (“Apple”) filed a Petition to institute
covered business method patent review of claim 11 of the ’458 patent based
on the same ground. CBM2015-00119 (Paper 2, “Apple Pet.”). Apple
simultaneously filed a “Motion for Joinder” of their newly filed case with
Samsung’s previously instituted case. CBM2015-00119 (Paper 3, “Apple
Mot.”). On August 6, 2015, we granted Apple’s Petition and consolidated
the two proceedings.4 Paper 29; CBM2015-00119, Paper 11.
Subsequent to institution, Smartflash LLC (“Patent Owner”) filed a
Patent Owner Response (Paper 21, “PO Resp.”)5 and Samsung and Apple

2 Samsung Telecommunications America, LLC, a petitioner at the time of
filing, merged with and into Samsung Electronics America, Inc. as of
January 1, 2015. Paper 6.
3 Pub. L. No. 112-29, 125 Stat. 284, 296–07 (2011).
4 For purposes of this decision, we will cite only to Samsung’s Petition.
5 Paper 21 is the redacted version of the Patent Owner Response. Paper 20
is the unredacted version of that Response.
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(collectively, “Petitioner”) filed a Reply (Paper 28, “Pet. Reply”) to Patent
Owner’s Response.
An oral hearing was held on November 9, 2015, and a transcript of the
hearing is included in the record. Paper 43 (“Tr.”).
We have jurisdiction under 35 U.S.C. § 6(c). This Final Written
Decision is issued pursuant to 35 U.S.C. § 328(a) and 37 C.F.R. § 42.73.
For the reasons that follow, we determine that Petitioner has shown by a
preponderance of the evidence that claim 11 of the ’458 patent is directed to
patent ineligible subject matter under 35 U.S.C. § 101.
B. The ’458 Patent
The ’458 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, 1:21–25. 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
1:29–55. The ’458 patent describes providing portable data storage together
with a means for conditioning access to that data upon validated payment.
Id. at 1:59–2:11. This combination allows data owners to make their data
available over the internet without fear of data pirates. Id. at 2:11–15.
As described, the portable data storage device is connected to a
terminal for internet access. Id. at 1:59–67. 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 2:1–5.
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The ’458 patent makes clear that the actual implementation of these
components is not critical and may be implemented in many ways. See, e.g.,
id. at 25:49–52 (“The skilled person will understand that many variants to
the system are possible and the invention is not limited to the described
embodiments.”).
C. Challenged Claims
Petitioner challenges claim 11, which depends from independent
claim 6. Claims 6 and 11 are reproduced below:
6. A data access device for retrieving stored data from
a data carrier, the device comprising:
a user interface;
a data carrier interface;
a program store storing code implementable by a
processor; and
a processor coupled to the user interface, to the data
carrier interface and to the program store for
implementing the stored code, the code comprising:
code to retrieve use status data indicating a use
status of data stored on the carrier, and use rules
data indicating permissible use of data stored on
the carrier;
code to evaluate the use status data using the use
rules data to determine whether access is
permitted to the stored data; and
code to access the stored data when access is
permitted.
Id. at 27:8–23.
11. A data access device according to claim 6 wherein
said use rules permit partial use of a data item stored on
the carrier and further comprising code to write partial
use status data to the data carrier when only part of a
stored data item has been accessed.
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Id. at 28:14–18.
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). Applying that standard, we interpret the claim terms
of the ’458 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
need not construe expressly any claim term.
B. Statutory Subject Matter
Petitioner challenges claim 11 as directed to patent-ineligible subject
matter under 35 U.S.C. § 101. Pet. 19–35. Petitioner submitted a
declaration from Jeffrey Bloom, Ph.D. in support of its Petition. Ex. 1003
(“Bloom declaration”)6.
Patent Owner contends that the challenged claims are patent-eligible.
1. Abstract Idea
Under 35 U.S.C. § 101, we must first identify whether an invention
fits within one of the four statutorily provided categories of patent-
eligibility: “processes, machines, manufactures, and compositions of

6 In its Response, Patent Owner argues that the Bloom declaration should be
given little or no weight. PO Resp. 3–6. Because Patent Owner has filed a
Motion to Exclude that includes a request to exclude the Bloom declaration
in its entirety, or in the alternative, portions of the declaration based on
essentially the same argument, we address Patent Owner’s argument as part
of our analysis of the motion, discussed below.
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matter.” Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 713–14 (Fed. Cir.
2014). Here, the challenged claim recites a “machine,” i.e., a “data access
device.” Section 101, however, “contains an important implicit exception
[to subject matter eligibility]: Laws of nature, natural phenomena, and
abstract ideas are not patentable.” Alice Corp. Pty. Ltd. v. CLS Bank Int’l.,
134 S. Ct. 2347, 2354 (2014) (citing Assoc. for Molecular Pathology v.
Myriad Genetics, Inc., 133 S. Ct. 2107, 2116 (2013) (internal quotation
marks and brackets omitted)). In Alice, the Supreme Court reiterated the
framework set forth previously in Mayo Collaborative Services v.
Prometheus Laboratories, Inc., 132 S. Ct. 1289, 1293 (2012) “for
distinguishing patents that claim laws of nature, natural phenomena, and
abstract ideas from those that claim patent-eligible applications of these
concepts.” Alice, 134 S. Ct. at 2355. The first step in the analysis is to
“determine whether the claims at issue are directed to one of those patent-
ineligible concepts.” Id.
According to the Federal Circuit, “determining whether the section
101 exception for abstract ideas applies involves distinguishing between
patents that claim the building blocks of human ingenuity—and therefore
risk broad pre-emption of basic ideas—and patents that integrate those
building blocks into something more, enough to transform them into specific
patent-eligible inventions.” Versata Dev. Grp., Inc. v. SAP Am., Inc., 793
F.3d 1306, 1332 (Fed. Cir. 2015) (emphasis added); accord id. at 1333–34
(“It is a building block, a basic conceptual framework for organizing
information . . . .” (emphasis added)). This is similar to the Supreme Court’s
formulation in Bilski v. Kappos, 561 U.S. 593, 611 (2010) (emphasis added),
noting that the concept of risk hedging is “a fundamental economic practice
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long prevalent in our system of commerce.” See also buySAFE Inc. v.
Google, Inc., 765 F.3d 1350, 1353-54 (Fed. Cir. 2014) (stating that patent
claims related to “long-familiar commercial transactions” and relationships
(i.e., business methods), no matter how “narrow” or “particular,” are
directed to abstract ideas as a matter of law). As a further example, the
“concept of ‘offer based pricing’ is similar to other ‘fundamental economic
concepts’ found to be abstract ideas by the Supreme Court and [the Federal
Circuit].” OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1362 (Fed.
Cir. 2015) (citations omitted).
Petitioner argues that the challenged claim is directed to the abstract
idea of “regulating authorized use of information.” Pet. 22. Although Patent
Owner does not concede, in its brief, that the challenged claims are directed
to an abstract idea, it does not persuasively explain how the claimed subject
matter escapes this classification. PO Resp. 9–25; see also Tr. 46:21–47:11
(Patent Owner arguing that the challenged claims are not abstract ideas, but
conceding this argument was not made in the briefs).
We agree that the challenged claim is drawn to a patent-ineligible
abstract idea. Specifically, the challenged claim is directed to conditioning
and controlling access to content (which is analogous to the characterization
of the abstract idea proposed by Petitioner). For example, claim 6 (from
which claim 11 depends) recites “code to evaluate the use status data using
the use rules data to determine whether access is permitted to the stored
data” and “code to access the stored data when access is permitted” and
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claim 11 recites “code to write partial use status data” and that “wherein said
use rules permit partial use of a data item.”7
As discussed above, the ’458 patent discusses addressing recording
industry concerns of data pirates offering unauthorized access to widely
available compressed audio recordings. Ex. 1001, 1:20–55. The ’458 patent
proposes to solve this problem by restricting access to data on a device based
upon satisfaction of use rules linked to payment data. Id. at 9:7–25. The
’458 patent makes clear that the claimed subject matter is directed to paying
for data and providing access to data. See id. at 2:20–23 (“This invention is .
. . particularly . . . relate[d] . . . to computer systems for providing access to
data.”). Although the specification discusses data piracy on the Internet (see
id. at 1:29–39), the challenged claims are not limited to the Internet. The
underlying concept of the challenged claims, particularly when viewed in
light of the ’458 patent specification, is controlling access to content, as
Petitioner contends. As discussed further below, this is a fundamental
economic practice long in existence in commerce. See Bilski, 561 U.S. at
611.
We are, thus, persuaded, based on the ’458 patent specification and
the language of the challenged claim, that claim 11 is directed to an abstract
idea. See Alice, 134 S. Ct. at 2356 (holding that the concept of

7 Although our final decision in CBM2015-00016 determined claim 11 to be
indefinite, that determination does not prevent us from determining whether
claim 11 is patent-eligible under § 101. For example, the determination that
claim 11 is indefinite was based on the uncertainty as to whether “said use
rules” in claim 11 refers to the “use rule data” recited in claim 6 or a new
“use rule” limitation. Neither interpretation saves the claim from being
directed to an abstract idea. Nor does either interpretation involve an
inventive concept, as discussed below.
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intermediated settlement at issue in Alice was an abstract idea); Accenture
Global Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1344
(Fed. Cir. 2013) (holding the abstract idea at the heart of a system claim to
be “generating tasks [based on] rules . . . to be completed upon the
occurrence of an event”).
2. Inventive Concept
“A claim that recites an abstract idea must include ‘additional
features’ to ensure ‘that the [claim] is more than a drafting effort designed to
monopolize the [abstract idea].’” Alice, 134 S. Ct. at 2357 (quoting Mayo,
132 S. Ct. at 1297). “This requires more than simply stating an abstract idea
while adding the words ‘apply it’ or ‘apply it with a computer.’ Similarly,
the prohibition on patenting an ineligible concept cannot be circumvented by
limiting the use of an ineligible concept to a particular technological
environment.” Versata, 793 F.3d at 1332 (citations omitted). Moreover, the
mere recitation of generic computer components performing conventional
functions is not enough. See Alice, 134 S. Ct. at 2360 (“Nearly every
computer will include a ‘communications controller’ and ‘data storage unit’
capable of performing the basic calculation, storage, and transmission
functions required by the method claims.”).
Petitioner argues “[t]he claims of the ’458 patent . . . cover nothing
more than the basic financial idea of enabling limited use of paid for and/or
licensed content using ‘conventional’ computer systems and components.”
Pet. Reply 11 (quoting Ex. 1003 ¶ 126). Petitioner persuades us that claim
11 of the ’458 patent does not add an inventive concept sufficient to ensure
that the patent in practice amounts to significantly more than a patent on the
abstract idea itself. Alice, 134 S. Ct. at 2355; see also Accenture Global
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Servs., 728 F.3d at 1344 (holding claims directed to the abstract idea of
“generating tasks [based on] rules . . . to be completed upon the occurrence
of an event” to be unpatentable even when applied in a computer
environment and within the insurance industry). Specifically, we agree with
and adopt Petitioner’s rationale that the additional elements of the
challenged claims are generic features of a computer that do not bring the
challenged claim within § 101 patent eligibility. Pet. 23–29; Pet. Reply 11–
20.
a. Technical Elements
Petitioner argues that the challenged claim is unpatentable because it
is directed to an abstract idea and any technical elements it recites are
repeatedly described by the ’458 patent itself as “both ‘conventional’ and as
being used ‘in a conventional manner.’” Pet. 23 (citing Ex. 1001, 4:4–5,
16:46–49, 21:33–38)). Patent Owner disagrees, arguing that the challenged
claim is patentable because it “recite[s] specific ways of using distinct
memories, data types, and use rules that amount to significantly more than
the underlying abstract idea.” PO Resp. 15–16 (quoting Ex. 2049, 19). We
agree with Petitioner for the following reasons.
The specification of the ’458 patent treats as well-known all
potentially technical aspects of the claims, which simply require generic
computer components (e.g., interfaces, program store, and processor). The
linkage of existing hardware devices to existing supplier-defined access
rules appear to be “‘well-understood, routine, conventional activit[ies]’
previously known to the industry.” Alice, 134 S. Ct. at 2359; Mayo,
132 S. Ct. at 1294.
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Further, the claimed computer code simply performs generic
computer functions, such as retrieving, accessing, evaluating, and writing.
See Pet. 23–29. The recitation of these generic computer functions is
insufficient to confer specificity. See Content Extraction and Transmission
LLC v. Wells Fargo Bank, 776 F.3d 1343, 1347 (Fed. Cir. 2014) (“The
concept of data collection, recognition, and storage is undisputedly well-
known. Indeed, humans have always performed these functions.”).
Moreover, we are not persuaded that claim 11 “recite[s] specific ways
of using distinct memories, data types, and use rules that amount to
significantly more than the underlying abstract idea.” See PO Resp. 15. The
challenged claim does not recite any particular or “distinct memories.” To
the extent Patent Owner argues that the claimed “program store” recited in
claim 6 is a memory, Patent Owner does not provide any argument as to how
it is constructed or implemented in an unconventional manner. Moreover,
the challenged claim lists several generic data types, such as “use status
data,” “use rules data,” and “code.” We are not persuaded that the listing of
these data types, by itself, amounts to significantly more than the underlying
abstract idea. Patent Owner does not point to any inventive concept in the
’458 patent related to the way these data types are constructed or used. The
recitation of generic data types, being used in the conventional manner, is
insufficient to confer the specificity required to elevate the nature of the
claim into a patent-eligible application. Alice, 134 S. Ct. at 2355 (quoting
Mayo, 132 S. Ct. at 1294) (“We have described step two of this analysis as a
search for an ‘inventive concept’—i.e., an element or combination of
elements that is ‘sufficient to ensure that the patent in practice amounts to
significantly more than a patent on the [ineligible concept] itself.’”)
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(brackets in original). In addition, the ’458 patent simply recites data types
with no description of the underlying implementation or programming that
results in these data types. See Content Extraction and Transmission LLC,
776 F.3d at 1347 (“The concept of data collection, recognition, and storage
is undisputedly well-known. Indeed, humans have always performed these
functions.”).
In addition, because the recited elements can be implemented on a
general purpose computer, the challenged claim does not cover a “particular
machine.” Pet. 31–33; see Bilski, 561 U.S. at 604–05 (stating that machine-
or-transformation test remains “a useful and important clue” for determining
whether an invention is patent eligible). And the challenged claim does not
transform an article into a different state of thing. Pet. 33–35.
Thus, we determine, the potentially technical elements of the claim
are nothing more than “generic computer implementations” and perform
functions that are “purely conventional.” Alice, 134 S. Ct. at 2358–59;
Mayo, 132 S. Ct. at 1294.
To the extent Patent Owner argues that the challenged claim includes
an “inventive concept” because of the specific combination of elements in
the challenged claim, we disagree. Patent Owner contends that
[b]y using a system that combines on the data carrier both the
digital content and use rules/use status data, and by using “code
to evaluate the use status data using the use rules data to
determine whether access is permitted to the stored data” and
“code to access the stored data when access is permitted,” access
control to the digital content can be continuously enforced prior
to access to the digital content, allowing subsequent use (e.g.,
playback) of the digital content to be portable and disconnected.
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PO Resp. 11. Patent Owner further contends that “the claimed data access
terminals enable the tracking of partial use of a stored data item (e.g., so that
the rest can be used/played back later)” and
[b]y comparison, unlike a system that uses use rules/use status
data as claimed, when a DVD was physically rented for a rental
period, there was no mechanism to write partial use status data
to the DVD when only part of the DVD had been accessed
(e.g., to track whether a renter had “finished with” the DVD
yet).
Id.
The concept of storing two different types of information in the same
place or on the same device is an age old practice. For example, storing
names and phone numbers (two different types of information) in the same
place, such as a book, or on a storage device, such as a memory device was
known. That Patent Owner alleges two specific types of information—
content and the conditions for providing access to the content—are stored in
the same place or on the same storage device does not alter our
determination. The concept was known and Patent Owner has not persuaded
us that applying the concept to these two specific types of information
results in the claim reciting an inventive concept. Furthermore, the prior art
discloses products that could store both the content and conditions for
providing access to the content.8 See, e.g., Pet. 40–41 (citing Ex. 1004,
Abstract (describing a transportable unit storing both content and a control
processor for controller access to that content)); Pet. 46 (citing Ex. 1005,

8 We have already determined in a final written decision on the ’458 patent,
addressing claim 6 from which claim 11 depends, that the concept of
combining the content and conditions for providing access to the content on
the same device was known. See Case CBM2015-00016, Paper 56, 13–14.
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6:58–61 (“Among other things, repositories are used to store digital works,
control access to digital works, bill for access to digital works and maintain
the security and integrity of the system); see also Ex. 1005, 18:9–16
(“Defining usage rights in terms of a language in combination with the
hierarchical representation of a digital work enables the support of a wide
variety of distribution and fee schemes. An example is the ability to attach
multiple versions of a right to a work. So a creator may attach a PRINT
right to make 5 copies for $10.00 and a PRINT right to make unlimited
copies for $100.00. A purchaser may then choose which option best fits his
needs.”). To the extent Patent Owner argues that the challenged claim
covers storing, on the same device, both content and a particular type of
condition for providing access to content or information necessary to apply
that condition (e.g., “track[ing] whether a renter had ‘finished with’ the
DVD yet” (PO Resp. 11)), we remain unpersuaded that the claim recites an
inventive concept. Because the concept of combining the content and
conditions for providing access to the content on the same device was
known, claiming a particular type of condition does not make the claim
patent eligible under § 101.
b. DDR Holdings
Relying on the Federal Circuit’s decision in DDR Holdings, Patent
Owner asserts that the challenged claim is directed to statutory subject
matter because “the claims are rooted in computer technology in order to
overcome a problem specifically arising in the realm of computer networks.”
PO Resp. 12 (quoting DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d
1245, 1257 (Fed. Cir. 2014)). Patent Owner contends that the challenged
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claim is “directed to particular devices that can download and store digital
content into a data carrier.” Id. at 11. Patent Owner contends that
[b]y using a system that combines on the data carrier both the
digital content and use rules/use status data, and by using “code
to evaluate the use status data using the use rules data to
determine whether access is permitted to the stored data” and
“code to access the stored data when access is permitted,” access
control to the digital content can be continuously enforced prior
to access to the digital content, allowing subsequent use (e.g.,
playback) of the digital content to be portable and disconnected.
Id.
Petitioner responds that the challenged claim is distinguishable from
the claims in DDR Holdings. Pet. Reply 18–20. The DDR Holdings patent
is directed at retaining website visitors when clicking on an advertisement
hyperlink within a host website. 773 F.3d at 1257. Conventionally, clicking
on an advertisement hyperlink would transport a visitor from the host’s
website to a third party website. Id. The Federal Circuit distinguished this
Internet-centric problem over “the ‘brick and mortar’ context” because
“[t]here is . . . no possibility that by walking up to [a kiosk in a warehouse
store], the customer will be suddenly and completely transported outside the
warehouse store and relocated to a separate physical venue associated with
the third party.” Id. at 1258. The Federal Circuit further determined that the
DDR Holdings claims specify “how interactions with the Internet are
manipulated to yield a desired result—a result that overrides the routine and
conventional sequence of events ordinarily triggered by the click of a
hyperlink.” Id. The unconventional result in DDR Holdings is the website
visitor is retained on the host website, but is still is able to purchase a
product from a third-party merchant. Id. at 1257–58. The limitation referred
to by the Federal Circuit in DDR Holdings recites “using the data retrieved,
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automatically generate and transmit to the web browser a second web page
that displays: (A) information associated with the commerce object
associated with the link that has been activated, and (B) the plurality of
visually perceptible elements visually corresponding to the source page.” Id.
at 1250. Importantly, the Federal Circuit identified this limitation as
differentiating the DDR Holdings claims from those held to be unpatentable
in Ultramercial, which “broadly and generically claim ‘use of the Internet’
to perform an abstract business practice (with insignificant added activity).”
Id. at 1258.
We agree with Petitioner that the challenged claim is distinguishable
from the claims at issue in DDR Holdings. As an initial matter, we are not
persuaded by Patent Owner’s argument that the challenged claims “are
rooted in computer technology in order to overcome a problem specifically
arising in the realm of computer networks—that of digital data piracy” and
“address . . . a challenge particular to the Internet.” PO Resp. 12. Data
piracy exists in contexts other than the Internet. See Pet. Reply 16–17
(identifying other contexts in which data piracy is a problem). For example,
potential data piracy of CDs is addressed by copyright protection. See Ex.
1001, 5:9–12 (“where the data carrier stores . . . music, the purchase outright
option may be equivalent to the purchase of a compact disc (CD), preferably
with some form of content copy protection such as digital watermarking”).
Further, whatever the problem, the solution provided by the challenged
claim is not rooted in specific computer technology. See Pet. Reply 14–16.
Even accepting Patent Owner’s assertion that the challenged claim
addresses data piracy on the Internet (PO Resp. 11), we are not persuaded
that it does so by achieving a result that overrides the routine and
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conventional use of the recited devices and functions. In fact, the
differences between the challenged claim and the claim at issue in DDR
Holdings are made clear by Patent Owner in its tables mapping claims 6 and
11 of the ’458 patent to claim 19 of the patent at issue in DDR Holdings. PO
Resp. 13–15. Patent Owner compares the limitation highlighted by the
Federal Circuit in DDR Holdings with the “code to access the stored data
when access is permitted” in claim 6.9 Id. Patent Owner, however, fails to
identify how this limitation in claim 6 is analogous to the corresponding
DDR Holdings limitation. Unlike the claims in DDR Holdings, this
limitation, like all the other limitations of the challenged claim, is “specified
at a high level of generality,” which the Federal Circuit has found to be
“insufficient to supply an ‘inventive concept.’” Ultramercial, 772 F.3d at
716. The limitations of the challenged claim merely rely on conventional
devices and computer processes operating in their “normal, expected
manner.” OIP Techs., 788 F.3d at 1363 (citing DDR Holdings, 773 F.3d at
1258-59).
The challenged claim is like the claims at issue in Ultramercial. The
Ultramercial claims condition and control access based on viewing an
advertisement. 772 F.3d at 712. Similar to the claims in Ultramercial, the
majority of limitations in the challenged claim comprise this abstract
concept of conditioning and controlling access to data. See id. at 715.
Adding routine, additional steps such as accessing stored data when access is
permitted does not transform an otherwise abstract idea into patent-eligible
subject matter. See id. at 716 (“Adding routine additional steps such as

9 Patent Owner does not identify any of the additional features specifically
recited in claim 11 as corresponding to the limitation from DDR Holdings.
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updating an activity log, requiring a request from the consumer to view the
ad, restrictions on public access, and use of the Internet does not transform
an otherwise abstract idea into patent-eligible subject matter.”).
We are, therefore, persuaded that the challenged claim is closer to the
claims at issue in Ultramercial than to those at issue in DDR Holdings.
c. Preemption
Petitioner argues that “claim 11 of the ’458 patent preempts all
effective uses of the abstract idea of regulating authorized use of
information.” Pet. 29. Patent Owner responds that the challenged claim
does not result in inappropriate preemption. PO Resp. 18–24. According to
Patent Owner, the challenged claim does not attempt to preempt every
application of the idea, but rather recites a “‘specific way . . . that
incorporates elements from multiple sources in order to solve a problem
faced by [servers] on the Internet.’” Id. at 19 (citing DDR Holdings, 773
F.3d at 1259). Patent Owner also asserts that the existence of a large
number of non-infringing alternatives shows that the challenged claim does
not raise preemption concerns. Id. at 20–24.
Patent Owner’s preemption argument does not alter our § 101
analysis. The Supreme Court has described the “pre-emption concern” as
“undergird[ing] [its] § 101 jurisprudence.” Alice, 134 S. Ct. at 2358. The
concern “is a relative one: how much future innovation is foreclosed relative
to the contribution of the inventor.” Mayo, 132 S. Ct. at 1303. “While
preemption may signal patent ineligible subject matter, the absence of
complete preemption does not demonstrate patent eligibility.” Ariosa
Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015).
Importantly, the preemption concern is addressed by the two-part test
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considered above. See id. After all, every patent “forecloses . . . future
invention” to some extent, Mayo, 132 S. Ct. at 1292, and, conversely, every
claim limitation beyond those that recite the abstract idea limits the scope of
the preemption. See Ariosa, 788 F.3d at 1379 (“The Supreme Court has
made clear that the principle of preemption is the basis for the judicial
exception to patentability. . . . For this reason, questions on preemption are
inherent in and resolved by the § 101 analysis.”).
The two-part test elucidated in Alice and Mayo does not require us to
anticipate the number, feasibility, or adequacy of non-infringing alternatives
to gauge a patented invention’s preemptive effect in order to determine
whether a claim is patent-eligible under § 101. See Pet. Reply 20–24
(arguing that Patent Owner’s position regarding non-infringement and
existence of non-infringing alternatives to the challenged claim are
immaterial to the patent eligibility inquiry).
The relevant precedents simply direct us to ask whether the claim
involves one of the patent-ineligible categories, and, if so, whether
additional limitations contain an “inventive concept” that is “sufficient to
ensure that the claim in practice amounts to ‘significantly more’ than a
patent on an ineligible concept.” DDR Holdings, 773 F.3d at 1255. This is
the basis for the rule that the unpatentability of abstract ideas “cannot be
circumvented by attempting to limit the use of the formula to a particular
technological environment,” despite the fact that doing so reduces the
amount of innovation that would be preempted. Diamond v. Diehr, 450 U.S.
175, 191 (1981); see also Alice, 134 S. Ct. at 2358; Mayo, 132 S. Ct. at
1303; Bilski, 561 U.S. at 612; Parker v. Flook, 437 U.S. 584, 593 (1978).
The Federal Circuit spelled this out, stating that “[w]here a patent’s claims
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are deemed only to disclose patent ineligible subject matter under the Mayo
framework, as they are in this case, preemption concerns are fully addressed
and made moot.” Ariosa, 788 F.3d at 1379.
As described above, after applying this two-part test, we are
persuaded that Petitioner has shown by a preponderance of the evidence that
the challenged claims are drawn to an abstract idea that does not add an
inventive concept sufficient to ensure that the patent in practice amounts to
significantly more than a patent on the abstract idea itself. The alleged
existence of a large number of non-infringing, and, thus, non-preemptive
alternatives does not alter this conclusion because the question of
preemption is inherent in and resolved by this inquiry.
d. Patent Owner’s Remaining Arguments
Patent Owner also asserts that (1) Petitioner has already lost a Motion
for Summary Judgment of Invalidity under § 101 in its related district court
litigation with Patent Owner (PO Resp. 25–26); and (2) the Office is
estopped from revisiting the issue of § 101, which was inherently reviewed
during examination (id. at 26–27).
As a preliminary matter, Patent Owner does not provide any authority
that precludes us from deciding the issue of patent eligibility under § 101 in
the context of the present AIA proceeding, even where a non-final district
court ruling on § 101 exists. See Fresenius USA, Inc. v. Baxter Int’l, Inc.,
721 F.3d 1330, 1340–42 (Fed. Cir. 2013). Moreover, Patent Owner does not
provide any authority for its assertion that “[t]he question of whether the
claims are directed to statutory subject matter has already been adjudicated
by the USPTO, and the USPTO is estopped from allowing the issues to be
raised in the present proceeding.” PO Resp. 26.
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3. Conclusion
For all of the foregoing reasons, we are persuaded that Petitioner has
established, by a preponderance of the evidence, that claim 11 of the ’458
patent is unpatentable under § 101.
C. Petitioner’s Motion to Exclude
Petitioner seeks to exclude portions of Exhibits 2056 and 2057, the
cross-examination testimony of Dr. Jeffrey Bloom as submitted by Patent
Owner. Paper 35, 3–4. As movant, Petitioner has the burden of proof to
establish that it is entitled to the requested relief. See 37 C.F.R. § 42.20(c).
For the reasons stated below, Petitioner’s Motion to Exclude is denied.
Petitioner seeks to exclude Dr. Bloom’s cross-examination testimony
recorded in Exhibit 2056 at 179:1–20 and in Exhibit 2057 at 193:17–194:8
and 195:5–16 as (1) irrelevant under Federal Rules of Evidence (“FRE”) 401
and 402 (Paper 35, 4–6); and (2) outside the scope of direct examination
under FRE 611(b) (id. at 7–8). Petitioner argues that this testimony, all
directed to the workings of a product offered by Dr. Bloom’s employer, is
“unrelated to the instant CBM proceeding” and “is of no consequence to the
validity of the patent claims at issue.” Id. at 4. Petitioner adds that “during
its direct examination of Dr. Bloom, [Petitioner] never opened [the] door to
such questions.” Id. at 8.
We are not persuaded by Petitioner’s argument. Patent Owner
proffered this particular testimony not for purposes of showing validity of
the patent claims at issue, but for purposes of challenging the credibility of
Petitioner’s expert. Although we were not persuaded by this evidence, we
did consider it for the purpose of deciding the issue of credibility. We,
therefore, decline to exclude this testimony under FRE 401, 402, or 611(b).
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In addition, Petitioner seeks to exclude the excerpts of testimony from
Exhibit 2057 as lacking proper foundation under FRE 701 and 702. Id. at 6–
7. Petitioner argues that in these excerpts, Patent Owner attempted to solicit
testimonies from Dr. Bloom regarding operation of a SiriusXM Internet
Radio product and that Patent Owner “further asserted that . . . ‘Dr. Bloom
refused to testify about its operation alleging the information was
confidential.’” Id. at 6. According to Petitioner, because “Dr. Bloom has
not been advanced as an expert with regard to subscription-based business
practice of a third-party company” and “no foundation has been laid with
regard to Dr. Bloom’s personal knowledge of such subscription-based
business practice,” this testimony should be excluded under FRE 701 and
702. Id. at 6–7.
We also are not persuaded by this argument. Petitioner does not
explain, for example, why Rules 701 and 702 apply to the excerpts at issue.
It is unclear that Dr. Bloom was being asked for his opinion, either expert or
otherwise, with these questions. Instead, it appears that he was being
questioned as a fact witness. Moreover, as explained by Petitioner, the
cross-examination did not actually elicit any substantive responses, let alone
opinion, from Dr. Bloom. Id. at 6. We, therefore, decline to exclude this
testimony under FRE 701 or 702.
D. Patent Owner’s Motion to Exclude
Patent Owner seeks to exclude Exhibits 1003, 1004, 1005, 1006,
1028, and 1039. Paper 31, 1. As movant, Patent Owner has the burden of
proof to establish that it is entitled to the requested relief. See 37 C.F.R.
§ 42.20(c). For the reasons stated below, Patent Owner’s Motion to Exclude
is denied.
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Exhibit 1003
Patent Owner seeks to exclude the entirety of Dr. Bloom’s testimony
in Exhibit 1003 and additionally seeks to exclude specific paragraphs under
various Board and Evidentiary rules. Paper 31, 1–10. First, Patent Owner
seeks to exclude Exhibit 1003 in its entirety as not disclosing the underlying
facts or data on which the opinions contains are based as required by 37
C.F.R. § 42.54(a). Id. at 2. According to Patent Owner, this is because Dr.
Bloom’s declaration “does not state the relative evidentiary weight (e.g.,
substantial evidence versus preponderance of the evidence) used by Dr.
Bloom in arriving at his conclusions.” Id. Patent Owner also seeks to
exclude this testimony under FRE 702 because “the Board cannot assess
under FRE 702 whether Dr. Bloom’s opinion testimony is ‘based on
sufficient facts or data,’ is ‘the product of reliable principles and methods,’
or if Dr. Bloom ‘reliably applied the principles and methods to the facts of
the case.’” Id. at 3–4.
Petitioner counters that, consistent with the requirements of 37 C.F.R.
§ 42.65, “Dr. Bloom’s testimony disclosed underlying facts and data upon
which his opinions were based.” Paper 38, 4. Petitioner also argues that
experts are not required to recite the “preponderance of the evidence”
standard expressly. Id. at 3–4 (citing IPR2013-00172, Paper 50 at 42). With
respect to FRE 702, Petitioner notes that Patent Owner did not rely on FRE
702 to object to Dr. Bloom’s Declaration in its entirety and has, thus, waived
this particular argument. Id. at 5. Moreover, Petitioner asserts that although
Patent Owner had the opportunity to cross-examine Dr. Bloom, it failed to
question him as to any reliable principles and methods that he used to render
his opinion. Id. at 4–5.
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We are not persuaded by Patent Owner’s arguments. Dr. Bloom has a
Bachelor in Electrical Engineering, and a Masters and Ph.D. in Electrical
and Computer Engineering. Ex. 1003 ¶¶ 15–17. He also has decades of
experience in relevant technologies. Id. at ¶¶ 5–14. We are, therefore, not
persuaded by Patent Owner’s argument that he has not provided sufficient
proof that he is an expert. And as Petitioner correctly points out, an expert is
not required to recite the “preponderance of the evidence” standard
expressly in order for the expert testimony to be accorded weight, much less
admissibility. Accordingly, we decline to exclude this testimony under FRE
702.
Patent Owner also seeks to exclude paragraphs 23–112 of Exhibit
1003 as irrelevant and inadmissible under FRE 401 and 402 because they
address grounds challenging the claims that were not instituted upon by the
Board. Paper 31, 5–6. Because these paragraphs also support Petitioner’s
assertions with respect to the underlying factual issues related to patent
eligibility, we are not persuaded that they are irrelevant under FRE 401 and
402. Accordingly, we decline to exclude these paragraphs.
Patent Owner also seeks to exclude paragraphs 23–26 and 113–128 of
Exhibit 1003 as lacking foundation and providing legal opinions on which
the lay witness is not competent to testify. Id. at 6. According to Patent
Owner, these paragraphs “relate to the strictly legal issue of statutory subject
matter under § 101, an issue for which Dr. Bloom is not an expert” and
should be excluded under FRE 401, 402, 602, 701, and 702. Id. Because
these paragraphs also relate to the underlying factual issues related to patent
eligibility, we are not persuaded that they are irrelevant under FRE 401 and
402. Accordingly, we decline to exclude these paragraphs.
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Patent Owner also seeks to exclude paragraphs 129–137 of Exhibit
1003 under 37 C.F.R. § 42.65(a) as impermissibly relating to legal concepts.
Id. at 6–7. We understand that in these paragraphs, Dr. Bloom is not giving
expert testimony about the law, but simply indicating his understanding of
the law as background foundation for the declaration. See Ex. 1003 ¶ 129.
As such, we decline to exclude these paragraphs.
Patent Owner also seeks to exclude paragraphs 102–107, 122–125,
and 128 of Exhibit 1003 as inadmissible hearsay under FRE 801 and 802.
Id. at 7–10. Petitioner responds to these objections by filing, as
supplemental evidence, supporting documents comprising the underlying
publications referred to by Dr. Bloom in these paragraphs. Paper 38, 9–11
(citing Ex. 1043). Patent Owner does not appear to object to the contents of
this evidence, but merely the form in which it was filed—that each
individual document was not filed as a separate exhibit, that the individual
documents were not numbered sequentially, and that they were not filed
with the first document in which each is cited. Paper 41, 4–5. To the extent
that Exhibit 1043 does not comply with §§ 42.6 or 42.63, we waive those
deficiencies, which relate not to the ultimate substance of this issue, but to
procedural formalities. Moreover, because Patent Owner does not explain
further why the actual contents of Exhibit 1043 do not overcome its hearsay
objections, we decline to exclude these paragraphs under FRE 801 and 802.
Exhibits 1004–1006
Patent Owner seeks to exclude Exhibits 1004–1006 as irrelevant
under FRE 401 and 402 because, while cited, they were not instituted upon
by the Board. Paper 31, 10–11.
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Petitioner counters that all of these exhibits “speak to the well-known
and conventional aspects of ‘appl[ying] generic computer technology
towards the solution of a financial problem: enabling limited use of paid-
for/licensed content’ and, thus, are relevant to the question of patent
eligibility. Paper 38, 11–12.
Because these exhibits are evidence relied upon by Petitioner to
support its assertions with respect to the underlying factual issues related to
patent eligibility, we are not persuaded that they are irrelevant under FRE
401 and 402. Accordingly, we decline to exclude these exhibits.
Exhibit 1028
Patent Owner seeks to exclude Exhibit 1028, cited by both the Petition
and the Bloom declaration, as irrelevant and inadmissible under FRE 401
and 402. Paper 31, 11. According to Patent Owner, the document, which
describes the planned establishment of credit facilities into retail
establishments is not relevant to the technological solution embodied in the
’458 patent. Id.
Petitioner responds that Exhibit 1028 is “directed to well-known
historic credit operations in support of Dr. Bloom’s observation that the ’458
Patent mimics such payment operations” and is, therefore, not irrelevant.
Paper 38, 12.
Because Exhibit 1028 is relied upon by Petitioner to support its
assertions with respect to the underlying factual issues related to patent
eligibility, we are not persuaded that it is irrelevant under FRE 401 and 402.
Accordingly, we decline to exclude Exhibit 1028.
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Exhibit 1039
Patent Owner seeks to exclude Exhibit 1039, cited by both the Petition
and Petitioner’s reply brief, as irrelevant and inadmissible under FRE 401
and 402. Paper 31, 12. According to Patent Owner, the document has an
alleged publication after the effective filing date of the ’458 patent. Id.
Patent Owner also argues that Exhibit 1039 should be excluded under FRE
901 because Petitioner has not produced evidence sufficient to support a
finding that Exhibit 1039 is what the proponent claims it is.
Petitioner does not address Exhibit 1309 in its opposition to Patent
Owner’s Motion to Exclude. See Paper 38. Petitioner, however, does
address the relevance of this document in its reply brief, stating that Exhibit
1039 was replied upon, notwithstanding the publication date, “because the
cited passages are consistent with and corroborate [Dr. Bloom’s] expert
understanding, and are relevant to his explanation of the fact that human
beings, long before the ’458 patent’s effective filing date, traditionally
engaged in mental activities aimed at enabling limited use of paid for and/or
licensed content.” Pet. Reply 9.
Because Exhibit 1039 is relied upon by Petitioner to support its
assertions with respect to the underlying factual issues related to patent
eligibility, we are not persuaded that it is irrelevant under FRE 401 and 402.
Accordingly, we decline to exclude Exhibit 1039.

ORDER
Accordingly, it is:
ORDERED that claim 11 of the ’458 patent is determined to be
unpatentable;
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FURTHER ORDERED that Patent Owner’s motion to exclude is
denied;
FURTHER ORDERED that Petitioner’s motion to exclude is denied;
and
FURTHER ORDERED that, because this is a final written decision,
parties to the proceeding seeking judicial review of the decision must
comply with the notice and service requirements of 37 C.F.R. § 90.2.

PETITIONER:
Walter Renner
Thomas Rozylowicz
FISH & RICHARDSON P.C.
axf@fr.com
cbm39843-0005cp1@fr.com
PATENT OWNER:
Michael Casey
Davidson Berquist Jackson & Gowdey
smartflash-cbm@dbjg.com