Covered Business Method Patent Review
`United States Patent No. 8,033,458
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`Petitioner: Apple Inc.
`
`Attorney Docket No.:
`
` 104677-5008-808
`Customer No. 28120
`
`§
`Inventor: Hulst et al.
`United States Patent No.: 8,033,458 §
`Formerly Application No.: 12/943,847 §
`Issue Date: October 11, 2011
`§
`Filing Date: November 10, 2010
`§
`Former Group Art Unit: 2887
`§
`Former Examiner: Thien M. Le
`§
`
`For: Data Storage and Access Systems
`
`MAIL STOP PATENT BOARD
`Patent Trial and Appeal Board
`United States Patent and Trademark Office
`Post Office Box 1450
`Alexandria, Virginia 22313-1450
`
`PETITION FOR COVERED BUSINESS METHOD PATENT REVIEW OF
`UNITED STATES PATENT NO. 8,033,458 PURSUANT TO 35 U.S.C. § 321,
`37 C.F.R. § 42.304
`
`
`
`

`

`
`
` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`
`TABLE OF CONTENTS
`
`B. 
`
`INTRODUCTION ....................................................................................................... 1 
`I. 
`II.  OVERVIEW OF FIELD OF THE CLAIMED INVENTION ......................... 4 
`III.  PETITIONER HAS STANDING .......................................................................... 13 
`A. 
`The ’458 Patent Is a Covered Business Method Patent ............................. 13 
`1. 
`Exemplary Claim 1 Is Financial In Nature ...................................... 14 
`2. 
`Claim 1 Does Not Cover A Technological Invention ................... 16 
`Related Matters; Petitioner Is a Real Party In Interest Sued for and
`Charged With Infringement ........................................................................... 21 
`IV.  DETAILED EXPLANATION OF REASONS FOR RELIEF REQUESTED,
`SHOWING IT IS MORE LIKELY THAN NOT THAT AT LEAST ONE
`OF THE CHALLENGED CLAIMS IS UNPATENTABLE ............................ 22 
`A. 
`Claim Construction .......................................................................................... 23 
`B. 
`The Challenged Claims Are Invalid Under §§ 102 and 103 ...................... 28 
`1. 
`Overview of Ginter .............................................................................. 28 
`2. 
`Motivation to Combine Ginter With Poggio................................... 32 
`3. 
`Motivation to Combine Ginter With Stefik ..................................... 35 
`4. 
`Motivation to Combine Ginter with Poggio and Stefik ................. 39 
`5. 
`Motivation to Combine Ginter with Sato ........................................ 40 
`6. 
`Motivation to Combine Ginter With Maari ..................................... 42 
`7. 
`Claims 1, 6, 7, 8, 10, and 11 are Anticipated by Ginter
`(Ground 1), Obvious in Light of Ginter (Ground 2),
`Obvious in Light of Ginter in View of Stefik (Ground 3),
`and Obvious in Light of Ginter in View of Sato (Ground 4);
`Claim 1 is Obvious in Light of Ginter in View of Poggio
`(Ground 5); and Obvious in Light of Ginter in View of
`Poggio and Stefik (Ground 6); and Claim 8 is Obvious in
`Light of Ginter in View of Maari (Ground 7) ................................. 44 
`CONCLUSION........................................................................................................... 79 
`
`V. 
`
`
`ii
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`

`

`
`EXHIBIT LIST
`1101
`
`1102
`
`1103
`
`1104
`
`1105
`
`1106
`
`1107
`
`1108
`
`1109
`
`1110
`
`1111
`
`1112
`
`1113
`
`1114
`
`1115
`
`1116
`
`1117
`
`1118
`
`1119
`
`1120
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`
`U.S. Patent No. 8,033,458
`
`Plaintiffs’ First Amended Complaint
`
`U.S. Patent No. 8,061,598
`
`File History for U.S. Patent No. 8,033,458
`
`File History for U.S. Patent No. 8,118,221
`
`U.S. Patent No. 4,999,806
`
`U.S. Patent No. 5,675,734
`
`File History for U.S. Patent No. 8,336,772
`
`U.S. Patent No. 4,878,245
`
`U.S. Patent No. 7,334,720
`
`U.S. Patent No. 7,942,317
`
`U.S. Patent No. 5,103,392
`
`U.S. Patent No. 5,530,235
`
`U.S. Patent No. 5,629,980
`
`U.S. Patent No. 5,915,019
`
`European Patent Application, Publication No. EP0809221A2
`
`PCT Application Publication No. WO 99/43136
`
`JP Patent Application Publication No. H11-164058 (transla-
`tion)
`JP Patent Application Publication No. H10-269289 (transla-
`tion)
`Eberhard von Faber, Robert Hammelrath, and Franz-Peter
`Heider, “The Secure Distribution of Digital Contents,” IEEE
`(1997)
`
`iii
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`

`

` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`
`Declaration of Anthony J. Wechselberger In Support of Apple
`Inc.’s Petition for Covered Business Method Patent Review
`U.S. Patent No. 5,754,654
`
`Declaration of Michael P. Duffey In Support of Apple Inc.’s
`Petition for Covered Business Method Patent Review
`Declaration of Flora D. Elias-Mique In Support of Apple
`Inc.’s Petition for Covered Business Method Patent Review
`U.S. Patent No. 8,118,221
`
`U.S. Patent No. 8,336,772
`
`File History for U.S. Patent No. 7,334,720
`
`File History for U.S. Patent No. 7,942,317
`
`File History for U.S. Patent No. 8,061,598
`
`EXHIBIT LIST
`1121
`
`1122
`
`1123
`
`1124
`
`1125
`
`1126
`
`1127
`
`1128
`
`1129
`
`iv
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`

`

` Covered Business Method Patent Review
`United States Patent No. 8,033,458
`
`I.
`
`INTRODUCTION
`
`Pursuant to 35 U.S.C. § 321 and 37 C.F.R. § 42.304, the undersigned, on behalf
`
`of and acting in a representative capacity for petitioner, Apple Inc. (“Petitioner” and
`
`the real party in interest), hereby petitions for review under the transitional program
`
`for covered business method patents of claims 1, 6-8, 10, and 11 of U.S. Patent No.
`
`8,033,458 (“the ’458 Patent”), issued to Smartflash Technologies Limited and current-
`
`ly assigned to Smartflash LLC (“Smartflash,” also referred to as “Applicant,” “Patent
`
`Owner,” or “Patentee”). Petitioner hereby asserts that it is more likely than not that
`
`at least one of the challenged claims is unpatentable for the reasons set forth herein
`
`and respectfully requests review of, and judgment against, claims 1, 6-8, 10 and 11 as
`
`invalid under 35 U.S.C. § § 102 and/or 103.1
`
`As discussed in Section III.B, infra, Petitioner has concurrently filed a Petition
`
`seeking covered business method review of the ’458 patent, requesting judgment
`
`against these same claims based on different prior art. Petitioner notes that the Direc-
`
`tor, pursuant to Rule 325(c), may determine at the proper time that merger of these
`
`proceedings, or at minimum coordination of proceedings involving the same patent, is
`
`appropriate.
`
`The challenged claims of the ’458 Patent merely recite “[d]ata storage and ac-
`
`
`1 Petitioner is demonstrating, in pending litigation, that these claims are invalid for
`
`numerous additional reasons. All emphasis herein added unless otherwise noted.
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`cess systems [that] enable downloading and paying for data,” including a well-known
`
`“portable data carrier” and a “data access device for retrieving stored data from a data
`
`carrier.” Ex. 1101 at Abstract, claims 1 and 6. Independent Claim 1, for example, re-
`
`cites six rudimentary components of a portable data carrier (e.g., smart card)—(A) an
`
`interface, (B and C) non-volatile memory, (D) a program store storing code im-
`
`plementable by a processor, (E) a processor . . . for implementing code, and (F) a
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`SIM (subscriber identity module) portion. The recited code is similarly elementary,
`
`outputting payment data and providing external access to data memory (F):
`
`1. A portable data carrier comprising:
`[A] an interface for reading and writing data from and to the carrier;
`[B] non-volatile data memory, coupled to the interface, for storing da-
`ta on the carrier;
`[C] non-volatile payment data memory, coupled to the interface, for
`providing payment data to an external device;
`[D] a program store storing code implementable by a processor;
`[E] a processor, coupled to the content data memory, the payment data
`memory, the interface and to the program store for implementing code
`in the program store; and
`[F] a subscriber identity module (SIM) portion to identify a subscrib-
`er to a network operator
`[F] wherein the code comprises code to output payment data from the
`payment data memory to the interface and code to provide external
`access to the data memory.
`Ex. 1101. But at the ’458 patent’s earliest claimed priority date, these simple elements
`
`2
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`and their combination would have been well known to any person of ordinary skill
`
`(“POSITA”). Indeed, the patent itself acknowledges that the idea of providing access
`
`to data in exchange for a payment (such as the purchase of music on a CD) was well
`
`known at the time. E.g., Ex. 1101 at 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”).
`
`The idea of purchasing digital data for payment was similarly well-known. See, e.g., Ex.
`
`1107. And, as demonstrated herein, the prior art was teeming with disclosures of this
`
`basic concept and its straightforward implementation in physical systems.
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`Moreover, as its language makes clear, Claim 1 involves no “technology” at all oth-
`
`er than a “portable data carrier” with interface, non-volatile memory, program
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`store/processor, and SIM features—which the patent itself concedes was well known
`
`and entirely commonplace at the time. See e.g., Ex. 1101 11:28-29 (“standard smart
`
`card”), 3:37, 4:9-13, 6:19-11, 11:27-44, 17:6-18:4, Figs. 2, 9. Thus, as the intrinsic rec-
`
`ord reflects, Claim 1 recites nothing more than a system for reading and writing data
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`while outputting payment data. And the other challenged independent claim, relating
`
`to a “data access device,” is nothing more than the computer system that retrieves da-
`
`ta from the data carrier (smart card), id. 11:22-24, and contains equally generic com-
`
`ponents (such as a user interface, program store, and processor).2 Indeed, the ’458
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`2 Claim 6 further recites code for retrieving use status data, evaluating use status data
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`3
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`Patent states that “[t]he 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.” See, e.g., Ex. 1101 Fig 1; 12:29-32. It is thus little surprise that,
`
`as detailed herein, each and every element of the challenged claims of the ’458 Patent
`
`and their claimed combinations have been disclosed in the prior art, either by individ-
`
`ual references, or by those references or systems in combination. Accordingly, each
`
`of the challenged claims is invalid under 35 U.S.C. §§ 102 and/or 103.
`
`II. OVERVIEW OF FIELD OF THE CLAIMED INVENTION
`By October 25, 1999, electronic sale, distribution, and content protection for
`
`digital products would have been well-known to a POSITA,3 and their combination as
`
`to determine if access to the data is permitted, and accessing the stored data when ac-
`
`cess is permitted. Dependent claim 7 merely adds to claim 6 the well-known notion
`
`of code for updating use status data. Ex. 1101. Dependent claim 8 merely adds to
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`claim 6 the well-known notion of code for inputting user access data and receiving
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`user access permission data. Id. Dependent claim 10 merely adds to claim 6 the well-
`
`known notion of code for retrieving and outputting supplementary data. Id. De-
`
`pendent claim 11 specifies only that the use rules permit partial use of data and corre-
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`sponding code. Id.
`
`3 All references to a person of ordinary skill in the art (“POSITA”) refer to the
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`knowledge or understanding of a person of ordinary skill in the art as of October 25,
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`4
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`claimed also would have been well-known or at minimum obvious to a POSITA. See,
`
`e.g., Ex. 1121 (Wechselberger Decl.) Sec. V. For example, nearly a decade earlier, on
`
`March 12, 1991, U.S. Patent No. 4,999,806 (“Chernow”), “Software Distribution Sys-
`
`tem,” issued. See Ex. 1106 (filed September 4, 1987). Chernow discloses a system and
`
`method for the sale and distribution of digital products by telephone, with a focus on
`
`software, and also discloses content protection for those digital products. See, e.g., id.
`
`Abstract (“A central station distributes software by telephone. The central station ac-
`
`cepts credit card information, transmits an acceptance code to a caller and then termi-
`
`nates the call. After verifying the credit card information, the station calls the purchaser back
`
`and continues with the transaction only after receiving the acceptance code.”); 1:67-2:9 (objects of
`
`the claimed invention include “provid[ing] a means for selling and distributing pro-
`
`tected software using standard telephone lines for transferring the software from the
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`seller to the purchaser,” “permit[ting] the purchaser to rent the protected software for
`
`a period of time after which it will self destruct,” and “to rent the protected software
`
`for a specific number of runs which would be useful, e.g., if the software were a
`
`game.”). As illustrated above, Chernow discloses making different types of access available,
`
`1999, unless specifically noted. A POSITA would have at least a Bachelor of Science
`
`degree in electrical engineering, computer science or a telecommunications related
`
`field, and at least three years of industry experience that included client-server
`
`data/information distribution and management architectures. Ex. 1121 ¶ 25.
`
`5
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`such as purchase versus rental. Further, Chernow discloses a Control Transfer Pro-
`
`gram and a Primary Protection Program that ensure the computer receiving a down-
`
`loaded program does not have another program present that could create unauthor-
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`ized copies. See Ex. 1106 Abstract (“The central station . . . transmits a Control
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`Transfer Program and Initialization Program to the purchaser, [which] executes the
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`Initialization Program to turn over control of the purchaser computer to the central
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`station. The Control Transfer Program is then executed to transfer first a Protection
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`program for ensuring that no memory resident copying programs are running”); see
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`also id. 2:65-3:23.
`
`In April 1992, U.S. Patent No. 5,103,392 (“Mori,” filed Dec. 5, 1990), “System
`
`for Storing History of Use of Programs Including User Credit Data and Having Ac-
`
`cess by the Proprieter,” issued, disclosing storing data about customer use of digital
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`products so a customer can be charged according to its use. E.g., Ex. 1112 1:64-2:17:
`
`The data processing apparatus includes user-specific credit data storage
`means for storing data identifying the user of the data processing appa-
`ratus and indicating credit for payment capacity, use time length, or the
`like of the user of the data processing apparatus. Also included is use de-
`cision means for determining permission to use the program on the data pro-
`cessing apparatus on the basis of program-specific data supplied from the pro-
`gram storage means or user-specific credit data supplied from the user-
`specific credit data storage means, the use decision means delivering ei-
`ther an affirmative or negative signal corresponding to results of the de-
`
`6
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`cision. Also included is program use history storage means connected to
`the use decision means for storing program use history data derived
`from the program-specific data or the user-specific credit data.
`Mori’s emphasis on determining whether a user has permission to access a program
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`and making sure program providers are compensated for the use of their programs
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`underscores this existing focus in the art on digital rights management (“DRM”), over
`
`eight years before Smartflash’s claimed October 25, 1999 priority date.
`
`Another prior art example of a secure content distribution system with content
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`protection is EP0809221A2 (“Poggio”), “Virtual vending system and method for
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`managing the distribution, licensing and rental of electronic data.” See Ex. 1116.
`
`Poggio—published November 26, 1997—discloses a “virtual vending machine” sys-
`
`tem for the sale and distribution of digital products. See, e.g., id. Abstract (“A virtual
`
`vending machine manages a comprehensive vending service for the distribution of li-
`
`censed electronic data (i.e., products) over a distributed computer system. . . . The vir-
`
`tual vending machine distributes licenses for the electronic data for the complete
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`product or for components thereof and for a variety of time frames, including perma-
`
`nent licenses and rental period licenses. The virtual vending machine provides client
`
`computers with the capability to obtain information regarding the available products
`
`and the associated license fees and rental periods, to receive the product upon receipt of a cor-
`
`responding electronic payment, and to reload the product during the term of the license.”). Like
`
`Chernow, Poggio discloses different types of access, including rentals, and re-
`
`7
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`

`

`download capabilities for already-purchased content. See, e.g., id.
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`
`Also in 1997, IEEE published “The Secure Distribution of Digital Contents”
`
`(“von Faber”). See Ex. 1120. In its introduction, von Faber made the well-known ob-
`
`servation that “[e]lectronic commerce systems dealing with the distribution of digital
`
`contents like software or multimedia data have to couple the use of the provided digital goods
`
`with a prior payment for the goods in a way which cannot be bypassed.” See id. at 7. Von
`
`Faber proposed a system where customers purchase keys required to utilize distribut-
`
`ed encrypted content. See, e.g., id. (“The basic idea of one possible solution is to dis-
`
`tribute the contents in encrypted form, and to have the customer pay for the key which he needs to
`
`transform the encrypted content in an usable form. The security problem can in this way be
`
`transformed into a problem of key distribution.”); id. at 8 (“The Content Provider
`
`provides digital contents in encrypted form being distributed by the Content Distribu-
`
`tor. The Key Management System holds the keys for the contents to be decrypted.
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`The Authorisation System permits the distribution of the appropriate key after settling of the fees
`
`payable by the Customer, who will enjoy the decrypted digital contents. The role of the
`
`Content Distributor is not essential for the subsequent discussion but, of course, for the
`
`business to take place.”); see also id. at Fig. 1. Von Faber also notes its system could be
`
`used with a variety of known content distribution and payment methods. See, e.g., id.
`
`at 13 (“Different methods can be used to distribute the encrypted contents (standard
`
`techniques). This includes broadcasting, point-to-point networking, as well as offering disks. Dif-
`
`8
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`ferent electronic payment methods can be integrated independent from the number of pro-
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`tocol steps needed. This includes credit card based systems as well as electronic purses. This
`
`flexibility leads to the fact that totally different authorisation methods can be integrated.”). Von
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`Faber further addressed the known issue of payment distribution to content providers.
`
`See, e.g., id. at 13 (“The system will support re-selling in a simple way. Re-sellers can
`
`integrate other manufacturer’s products into own packages without the need of sign-
`
`ing any extra contract. The system automatically divides the package price (payments)
`
`and guarantees that the money is transferred to each Content Provider”).
`
`Also in 1997, the second of two Stefik patents issued, incorporating the first by
`
`reference. U.S. Patent No. 5,530,235, “Interactive Contents Revealing Storage De-
`
`vice” (“Stefik ’235,” filed Feb. 16, 1995 and issued June 25, 1996), incorporates by
`
`reference U.S. Patent No. 5,629,980, “System for Controlling the Distribution and
`
`Use of Digital Works” (“Stefik ’980,” filed Nov. 23, 1994 and issued May 13, 1997).
`
`See Ex. 1113 2:47-52 (“The currently preferred embodiment of a DocuCard is an in-
`
`stance of a repository, as defined in co-pending application. . . herein incorporated by refer-
`
`ence.”). Stefik ’235 and Stefik ’980 will be referred to collectively herein as “Stefik.”4
`
`4 Because Stefik ’235 incorporates Stefik ’980 by reference, they should be considered
`
`a single reference. For clarity in citing to disclosures, however, separate cites are pro-
`
`vided to the Stefik ’235 and’980 Exhibits (Exs. 1113 and 1114, respectively). To the
`
`extent Stefik ’235 (Ex. 1113) and Stefik ’980 (Ex. 1114) are argued to be separate ref-
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`9
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`Stefik discloses “[a] Document Card (DocuCard) for storing documents and
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`which is content revealing. The DocuCard is a transportable unit having a nonvolatile
`
`storage means for storing information in a digital form, a control processor for pro-
`
`cessing user initiated functions; an I/O port for interfacing to external devices for
`
`reading and writing digital information, and a user interface for allowing a user to di-
`
`rectly interact with the DocuCard.” See, e.g., Ex. 1113 Abstract; see also, e.g., Ex. 1114
`
`Abstract (“Digital work playback devices, coupled to the repository containing the
`
`work, are used to play, display or print the work.”).
`
`Stefik also discloses a broader framework within which the DocuCard is used,
`
`including the protection of content with “usage rights.” See, e.g., Ex. 1114 Abstract
`
`(“A system for controlling use and distribution of digital works. In the present inven-
`
`tion, the owner of a digital work attaches usage rights to that work.”); Ex. 1114 Ab-
`
`stract (“Usage rights are granted by the ‘owner’ of a digital work to ‘buyers’ of the dig-
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`ital work [and] define how a digital work may be used and further distributed by the
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`buyer. Each right has associated with it certain optional specifications which outline
`
`erences, there is explicit motivation to implement the repository disclosed by Stef-
`
`ik ’980 using the Document Card (DocuCard) of Stefik ’235. See, e.g., Ex. 1113 2:47-53;
`
`Ex. 1114 16:56-58 (“For example, the repository could be embedded in a ‘card’ that is
`
`inserted into an available slot in a computer system.”); See also, e.g., Ex. 1121 ¶ 40,
`
`App’x D.
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`10
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`the conditions and fees upon which the right may be exercised.”). Stefik’s digital
`
`works are stored in a “repository” that processes requests for access—e.g., for such
`
`actions as utilizing content (viewing, executing, or printing) or transporting content
`
`(copying, borrowing, or transferring)—and evaluates the relevant usage rights to de-
`
`termine whether such access is permitted. See, e.g., id. Abstract (“Digital works are
`
`stored in a repository. A repository will process each request to access a digital work
`
`by examining the corresponding usage rights . . . Access to digital works for the pur-
`
`poses of transporting between repositories (e.g. copying, borrowing or transfer) is car-
`
`ried out using a digital work transport protocol. Access [for] replay by a digital work
`
`playback device (e.g. printing, displaying or executing) is carried out using a digital
`
`work playback protocol.”).
`
`Storage and utilization of content stored on portable devices, including mobile
`
`communication devices such as cellular phones, was also well-known before Smart-
`
`flash’s claimed October 25, 1999 priority date. As one example, PCT Application
`
`Publication No. WO 99/43136 (“Rydbeck,” published on August 26, 1999) discloses
`
`a cellular phone as a user device for storing digital content in non-volatile memory
`
`and accessing that content. E.g., Ex. 1117 5 (“Because of its integration into the cellu-
`
`lar phone, the digital entertainment module can share components already present in
`
`the cellular phone. Such savings would not be available if a CD player were simply ag-
`
`gregated with the phone. Further, the use of solid state RAM or ROM, as opposed to
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`disc storage, eliminates the need for bounce control circuitry[, enabling the] invention
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`to provide cellular communications and entertainment during leisure activities.”). In
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`addition, JP Patent Application Pub. No. H11-164058 (“Sato,” pub’d June 18, 1999),
`
`“Portable Music Selection and Viewing System,” discloses storing media content onto
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`mobile user devices and playing the media content from these mobile devices. Sato
`
`further discloses storing that media content on a removable IC card. See, e.g., Ex.
`
`1118 ¶ 9 (“portable music selection and viewing device 70 provides a removable storage
`
`device 76 on a main body 71. This storage device 76 is a memory card similar to, for ex-
`
`ample, a magnetic card, a magnetic tape, a CD, a DVD, or an IC card. The user, after
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`downloading the music software to the storage device (medium) 76 . . . can enjoy this
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`music software on a display 72 or a receiver 74 of . . . device 70, and can also enjoy
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`higher quality music playback by removing this storage device (medium) and inserting it into an-
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`other audio unit. Further, the user can store the music software from another audio unit
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`into the storage device 76”); ¶ 13 (“A music storage medium 250 such as . . . a memory
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`card such as an IC card stores the music software, and this storage medium 250 can be
`
`removed and used on other audio units.”).
`
`Thus, as these background examples and the additional prior art detailed below
`
`in Section Error! Reference source not found. (including the primary prior art
`
`Ginter patent) illustrate, the prior art was rife with awareness and discussion of the
`
`same supposed “invention” now memorialized in the challenged claims of the ’458
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`12
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`Patent. Long before the ’458 Patent’s first purported October 25, 1999 priority date,
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`disclosures abounded of the very features that Smartflash now seeks to claim as its ex-
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`clusive property. As outlined in more detail below, the challenged claims are therefore
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`invalid under §§ 102 and/or 103.
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`III. PETITIONER HAS STANDING
`A.
`Petitioner certifies that the ’458 Patent is available for review under 37 C.F.R.
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`The ’458 Patent Is a Covered Business Method Patent
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`§ 42.304(a). The ’458 Patent is a “covered business method patent” under § 18(d)(1)
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`of the Leahy-Smith America Invents Act, Pub. L. 112-29 (“AIA”) and § 42.301. Alt-
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`hough in fact numerous claims of the ’458 Patent qualify, a patent with even one
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`claim covering a covered business method is considered a CBM patent. See CBM
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`2012-00001, Paper 36 at 26; 77 Fed. Reg. 48,709 (Aug. 14, 2012). Accordingly, Peti-
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`tioner addresses here exemplary Claim 1 (Ex. 1101):
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`1. A portable data carrier comprising:
`[A] an interface for reading and writing data from and to the carrier;
`[B] non-volatile data memory, coupled to the interface, for storing data
`on the carrier;
`[C] non-volatile payment data memory, coupled to the interface, for
`providing payment data to an external device;
`[D] a program store storing code implementable by a processor;
`[E] a processor, coupled to the content data memory, the payment data
`memory, the interface and to the program store for implementing code
`in the program store; and
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`[F] a subscriber identity module (SIM) portion to identify a subscriber to
`a network operator
`[G] wherein the code comprises code to output payment data from
`the payment data memory to the interface and code to provide external
`access to the data memory.
`1.
`Exemplary Claim 1 Is Financial In Nature
`A “covered business method patent” is “a patent that claims a method or corre-
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`sponding apparatus for performing data processing or other operations used in the practice, admin-
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`istration, or management of a financial product or service, except that the term does not in-
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`clude patents for technological inventions.” AIA § 18(d)(1); 37 C.F.R. § 42.301. “The
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`‘legislative history explains that the definition of covered business method patent was
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`drafted to encompass patents claiming activities that are financial in nature, incidental to a
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`financial activity or complementary to a financial activity.’” 77 Fed. Reg. 48,734, 48,735 (Aug.
`
`14, 2012) (citing 157 Cong. Rec. S5432 (daily ed. Sept. 8, 2011) (stmt. of Sen. Schum-
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`er)). “[F]inancial product or service” is to be interpreted broadly, id., and the term “fi-
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`nancial . . . simply means relating to monetary matters”—it does not require any link to tradi-
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`tional financial industries such as banks. See, e.g., CBM2012-00001, Paper 36 at 23.
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`This Board has previously found, for example, that a claim for “transferring
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`money electronically via a telecommunication line to the first party . . . from the sec-
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`ond party” met the financial product or service requirement, concluding that “the
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`electronic transfer of money is a financial activity, and allowing such a transfer
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`amounts to providing a financial service.” CBM2013-00020, Paper 14 at 11-12. See
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`

` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`also, e.g., CBM2013-00017, Paper 8 at 5-6 (finding patent sufficiently financial based on
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`reference in the specification to e-commerce and the fact that a POSITA “would have
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`understood that [one of the claim limitations] may be associated with financial ser-
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`vices”).
`
`As discussed above, the ’458 Patent includes claims directed to a “portable data
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`carrier” (such as a standard smart card) that stores content, use rules, payment data,
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`and code that provides payment data to a payment validation system. See AIA
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`§ 18(d)(1); 37 C.F.R. § 42.301(a). The ’458 Patent alleges that this allows content
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`owners to make content available to users without fearing loss of revenue. Ex. 1101at
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`2:11-15. More generally, the patent is about “[d]ata storage and access systems [that]
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`enable downloading and paying for data . . .” Id. at Abstract. “The combination of
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`payment data and stored content data and use rule data helps reduce the risk of unau-
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`thorized access to data.” Id. And in seeking to enforce the ’458 Patent in litigation,
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`Smartflash itself conceded that the alleged invention relates to a financial activity or
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`transaction, stating that “[t]he patents-in-suit generally cover a portable data carrier for
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`storing data and managing access to the data via payment information and/or use sta-
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`tus rules. The patents-in-suit also generally cover a computer network . . . that serves
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`data and manages access to data by, for example, validating payment information.”
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`Ex. 1102 ¶ 17.
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`Indeed, the specification confirms the recited “portable data carrier” is “for
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` Covered Business Method Patent Review
`United States Patent No. 8,033,458
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`storing and paying for data.” Ex. 1101 1:22. Claim 1 further requires memory to store
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`payment data and code to “output payment data from the payment data memory to
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`the interface . . . .” Id. 26:1-3. Thus Claim 1, which explicitly describes storing and
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`providing payment data to a payment validation system, clearly concerns a computer system
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`(corresponding to methods discussed and claimed elsewhere in the patent family) for
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`performing data processing and other operations used in the practice, administration,
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`or management of a financial activity and service. Exs. 1110 cl. 14; 1125 cl. 12. In-
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`deed, claim 1 expressly recites softwa