Samsung Electronics America, Inc.v.Smartflash LLC,

Patent Trial and Appeal Board

Mar 31, 2015

12943847 (P.T.A.B. Mar. 31, 2015)

Trials@uspto.gov Paper 7
Tel: 571-272-7822 Entered: March 31, 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 CBM2014-00197
Patent 8,033,458 B2

Before JENNIFER S. BISK, RAMA G. ELLURU, GREGG I. ANDERSON,
MATTHEW R. CLEMENTS, and PETER P. CHEN,
Administrative Patent Judges.
CHEN, Administrative Patent Judge.
DECISION
Denying Institution of Covered Business Method Patent Review
37 C.F.R. § 42.208
CBM2014-00197
Patent 8,033,458 B2
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INTRODUCTION
A. Background
Samsung Electronics America, Inc. and Samsung Electronics Co.,
Ltd. (“Petitioner”)
1
filed a Petition requesting covered business method
patent review of claim 11 (the “challenged claim”) of U.S. Patent No.
8,033,458 (Ex. 1001, “the ’458 patent”) pursuant to § 18 of the Leahy-Smith
America Invents Act (“AIA”)
2
. Paper 2 (“Pet.”). Smartflash LLC (“Patent
Owner”) 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.”
After considering the Petition and Preliminary Response, we
determine that the ’458 patent is a covered business method patent, but that
Petitioner has not demonstrated that it is more likely than not that the
challenged claim is unpatentable. Accordingly, we deny institution of a
covered business method patent review of claim 11 of the ’458 patent.
B. Asserted Grounds
Petitioner contends that the challenged claim is unpatentable under
35 U.S.C. § 102(b) as anticipated by Ginter.
3
Pet. 14. Petitioner also
provides a declaration from Jeffrey A. Bloom, Ph.D. Ex. 1003.

1
Samsung Telecommunications America LLC, originally a Petitioner and
real-party-in-interest at the time of filing the Petition, has merged with and
into Petitioner Samsung Electronics America, Inc. as of January 1, 2015, and
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 (Ex. 1023) (“Ginter”).
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C. Related Matters
The parties indicate that the ’458 patent is the subject of the following
district court cases: Smartflash LLC v. Apple Inc., Case No. 6:13-cv-447
(E.D. Tex.); Smartflash LLC v. Samsung Electronics Co. Ltd., Case No.
6:13-cv-448 (E.D. Tex.). Pet. 1; Paper 4, 2-3. Patent Owner also indicates
that the ’458 patent is the subject of a third district court case: Smartflash
LLC v. Google, Inc., Case No. 6:14-cv-435 (E.D. Tex.). Paper 4, 3. Patent
Owner asserts that related patents claiming priority back to a common series
of applications are currently the subject of CBM2014-00102, CBM2014-
00106, CBM2014-00108, and CBM2014-00112, filed by Apple Inc. See
Paper 4, 2.
Petitioner filed a concurrent Petition for covered business method
patent review of the ’458 patent: CBM2014-00192 (“the 192 Petition”).
4
In
addition, Petitioner filed eight other Petitions for covered business method
patent review challenging claims of other patents owned by Patent Owner
and disclosing similar subject matter: CBM2014-00190; CBM2014-00193;
CBM2014-00194; CBM2014-00196; CBM2014-00198; CBM2014-00199;
CBM2014-00200; and CBM2014-00204. Paper 4, 2.
D. 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 “corresponding methods and computer programs,” and to a data

4
Patent Owner argues that the multiple Petitions filed against the
’458 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 a Petition requesting covered business method patent
review is 80 pages (37 C.F.R. § 42.24(a)(iii)), and each of this Petition and
the 192 Petition meets that requirement.
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Patent 8,033,458 B2
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access device for retrieving stored data from a data carrier, where the data
access device uses “use status data and use rules to determine what access is
permitted to data stored on the data carrier.” Ex. 1001, 1:21–25, 9:7–22.
Owners of proprietary data, especially audio recordings, have an urgent need
to address the growing 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 revenue loss caused by 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. In
addition, the data access device comprises a user interface, a data carrier
interface, a program store storing code implementable by a processor, and a
processor coupled to the user interface, data carrier interface and program
store. Id. at 9:7–13. 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.”).
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E. Challenged Claim
Petitioner challenges claim 11 of the ’458 patent. Claim 11 depends
from claim 6. Claims 6 and 11 recite the following:
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.

Ex. 1001, 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.
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
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they appear and the understanding of others skilled in the relevant art. See
37 C.F.R. § 42.100(b); see also In re Cuozzo Speed Techs., LLC, 778 F.3d.
1271, 1281(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
’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
construe the claim term “use rules.”
The term “use rules” is recited in claim 11. Neither party proposes a
construction of “use rules.” The ’458 patent describes “use rules” as “for
controlling access to the stored content” (Ex. 1001, Abstract) and as
“indicating permissible use of data stored on the carrier” (id. at 9:14–16).
The ’458 patent also describes “evaluating the use status data using the use
rules to determine whether access to the stored data is permitted.” Id. at
6:38–40; see also id. at 21:48–53 (“[E]ach 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.”). Accordingly, for purposes
of this decision, we construe “use rules” as rules 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 “covered
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,
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Patent 8,033,458 B2
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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).
1. Financial Product or Service
Petitioner refers to independent claim 6 and challenged dependent
claim 11 in arguing that the ’458 patent is eligible for covered business
method patent review. Petitioner asserts that:

As the specification explains, the claimed use rules [in claim 6]
pertain to ‘allowed use of stored data items,’ and ‘[t]hese use rules
may be linked to payments made from the [standard smart] card to
provide payment options such as access to buy content data outright;
rental access to content data for a time period or for a specified
number of access events; and/or rental/purchase.

Pet. 6–7; Ex. 1001, 5:1–8. We agree with Petitioner that claim 6, while not
specifically reciting payment validation, satisfies the financial-in-nature
requirement by virtue of its recitation of use rules.
Challenged claim 11 recites “[a] data access device according to
claim 6 wherein said use rules permit partial use of a data item stored on the
carrier.” Ex. 1001, 28:14–16. As with claim 6, the limitations of claim 11
recite conditional access to data, although not explicitly reciting payment
validation. Claim 11, however, requires that access is conditioned on
satisfaction of use rules, which the Specification states “may be linked to
payments made from the card to provide payment options such as access to
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buy content data outright; rental access to content data . . . and/or rental/
purchase.” Ex. 1001, 5:1–8.
Based on this record, we agree with Petitioner that the subject matter
recited by claim 11 is directed to activities that are financial in nature,
namely data access conditioned on satisfaction of use rules that are linked to
payment data. We are persuaded that such access is a financial activity, and
conditioning data access based on use rules linked to payment data amounts
to a financial service. This is consistent with the Specification of the
’458 patent, which confirms claim 11’s connection to financial activities by
stating that the invention “relates to a portable data carrier for storing and
paying for data.” Ex. 1001, 1:21–23.
Patent Owner disagrees that claim 11 satisfies the financial-in-nature
requirement of AIA § 18(d)(1), arguing that the section should be interpreted
narrowly to cover only technology used specifically in the financial or
banking industry. Prelim. Resp. 3–8. Patent Owner cites to various portions
of the legislative history as support for its proposed interpretation. Id.
Although we agree with Patent Owner 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 Patent Owner 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 Patent Owner’s view of the legislative
history, the legislative history indicates that the phrase “financial product or
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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)).
Moreover, to the extent Patent Owner alleges that a specifically challenged
claim must claim a financial product or service, it is mistaken. A patent
need have only one claim directed to a covered business method to be
eligible for review. See CBM Rules, 77 Fed. Reg. 48,734, 48,736.
In addition, Patent Owner asserts that claim 11 is not directed to an
apparatus or method that is financial in nature because claim 11 “actually
makes no mention of payment or 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 Patent Owner
point to any other authority that makes such a requirement. Prelim. Resp. 7.
We determine that the financial in nature requirement of § 18(d)(1) is
satisfied.
For the reasons stated above, and based on the particular facts of this
proceeding, we conclude that the ’458 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
Petitioner asserts that the ’458 patent does not fall within § 18(d)(1)’s
exclusion for “technological inventions.” Pet. 8–9. In particular, Petitioner
argues that the ’458 claims do not recite a technological feature that is novel
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and unobvious, or solve a technical problem using a technical solution. Id.
Patent Owner disagrees and argues that claim 11, as a whole, recites at least
one technological feature that is novel and unobvious over the prior art.
Prelim. Resp. 8–9.
We are persuaded that claim 11 as a whole does not recite a
technological feature that is novel and unobvious over the prior art.
Petitioner states that even “the computer-related terms recited in the
’458 patent’s claims do in fact relate to technology that is merely, in the
words of the patentee, ‘conventional.’” Pet. 9; Ex. 1001, 4:4–5. We note
that claim 6, upon which claim 11 depends, recites well known computer
hardware components such as a “user interface,” a “processor,” and a
storage component (“program store storing code”). Ex. 1001, 27:10–14.
Claim 11 further recites a data carrier. The Specification, however, indicates
that a data carrier may be 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, 11:28–29.
In addition, the ’458 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 ’458 patent
states that “there is an urgent need to find a way to address the problem of
data piracy” (id. at 1:52–55), 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 12:29–32). Thus, we determine that claim 11 is merely the
recitation of a combination of known technologies, which indicates that it is
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not a patent for a technological invention. See Office Patent Trial Practice
Guide, 77 Fed. Reg. 48,756, 48,764 (Aug. 14, 2012).
Patent Owner also argues that claim 11 falls within § 18(d)(1)’s
exclusion for “technological inventions” because it is directed toward
solving the technological problem of “retrieving stored data from a data
carrier” with the technological solution of “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.”
Prelim. Resp. 8. We are not persuaded by this argument because, as
Petitioner argues, the problem being solved by claim 11 is a business
problem—data piracy. Pet. 9–11. For example, the Specification states that
“[b]inding the 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, 2:11–15. Thus, based on the particular facts of this
proceeding, we conclude that claim 11 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 ’458 patent is a covered
business method patent under AIA § 18(d)(1) and is eligible for review
using the transitional covered business method patent program.
C. Anticipation by Ginter
1. 35 U.S.C. § 325(d)
Patent Owner argues that we should reject this Petition under § 325(d)
because the same prior art reference, Ginter, has been applied to the same
claim 11 in CBM2014-00107. Prelim. Resp. 12–13. We are cognizant of
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the burden on the patent owner and Office to rehear the same or substantially
the same prior art or arguments that are being considered by the Office in
another proceeding. We are persuaded, however, that as described in the
record before us, there are sufficient differences in the way Ginter has been
asserted in the two cases. For example, this case proposes that Ginter
anticipates the challenged claim 11, but according to Patent Owner, in
CBM2014-00107, “only obviousness was raised as to claim 11.” Prelim.
Resp. 12. We therefore decline to exercise our discretion under § 325(d) to
reject this Petition.
2. Claim 11
Petitioner argues that dependent claim 11 is unpatentable under
35 U.S.C. § 102(b) as anticipated by Ginter. Pet. 14–42. 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.
In light of the arguments and evidence, Petitioner has not established
that it is more likely than not that claim 11 is unpatentable as anticipated by
Ginter. Specifically, we are not persuaded that Petitioner has shown
sufficiently that Ginter discloses “use rules data” as recited in independent
claim 6 or “use rules” as recited in claim 11.
Petitioner identifies, in a parenthetical, Ginter’s billing method MDE
“indicating a cost per access of a content object and/or budget method UDE
indicating an access limit for a content object” as the recited “use rules data”
of independent claim 6. Pet. 31–33 (citing Ex. 1023, Fig. 71, 48:65–49:14,
63:34–41, 169:4–6). Petitioner also cites Ginter’s disclosure of billing
method MDE “containing, e.g., price list information,” as satisfying the “use
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rules data” limitation of claim 6. Pet. 36; Ex. 1023, 186:19–20. The cited
portions of Ginter relate to billing for use of a VDE content object.
Ex. 1023, 190:45–57, 59:17–23. Billing for use of a VDE content object
may disclose some type of data, but Petitioner does not explain why or how
such billing discloses use rules data regarding use rules, which are “rules
specifying a condition under which access to content is permitted.”
For challenged claim 11, which recites that “use rules permit partial
use of a data item . . . and further comprising code to write partial use status
data” (Ex. 1001, 28:15–16), Petitioner only reiterates that “Ginter discloses
that use rules (e.g., billing method MDE and/or budget method UDE) may
permit partial use of a data item (e.g., content object) stored on a data
carrier,” without any further evidence as to the billing method MDE or
budget method UDE. Pet. 40–41. The cited portions of Ginter do not show
sufficiently that the billing method map MDE and/or budget method UDE
disclose “rules specifying a condition under which access to content is
permitted,” as we construed “use rules” to mean above. As with claim 6,
Petitioner does not explain why a price list (billing method MDE) or access
limits for a content object (budget method UDE) disclose a “rule specifying
a condition under which access to content is permitted.” Dr. Bloom’s
conclusory testimony on this issue (e.g., Ex. 1003 ¶ 48) does not convince us
otherwise.
On this record, we are not persuaded that Petitioner has established
that it is more likely than not that claim 11 is 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
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Petitioner would prevail in establishing the unpatentability of claim 11 of the
’458 patent.
ORDER
For the reasons given, it is:
ORDERED that the Petition for covered business method review of
the ’458 patent is denied.
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PETITIONER:
W. Karl Renner
Thomas Rozylowicz
FISH & RICHARDSON P.C.
axf@fr.com
CBM39843-0006CP1@fr.com

PATENT OWNER:

Michael R. Casey
DAVIDSON BERQUIST JACKSON & GOWDEY LLP
mcasey@dbjg.com