Paper Entered: June 3, 2015 UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE PATENT TRIAL AND APPEAL BOARD

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1 Paper Entered: June 3, 2015 UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE PATENT TRIAL AND APPEAL BOARD APPLE, INC., Petitioner, v. CONTENTGUARD HOLDINGS, INC., Patent Owner. Case CBM Before JAMESON LEE, JENNIFER S. BISK, and BARBARA A. PARVIS, Administrative Patent Judges. PARVIS, Administrative Patent Judge. DECISION Denying Institution of Covered Business Method Patent Review 37 C.F.R A. Background I. INTRODUCTION Apple, Inc. ( Petitioner ) filed a Petition (Paper 1, Pet. ) requesting a covered business method patent review of claims 1, 8, 9, 11, 12, 19, 20, and 22 ( challenged claims ) of U.S. Patent No. 8,583,556 B2 (Ex. 1001, the

2 556 Patent ). ContentGuard Holdings, Inc. ( Patent Owner ) filed a Preliminary Response. Paper 11 ( Prelim. Resp. ). We have jurisdiction under 35 U.S.C. 324(a), 1 which provides that a covered business method patent review may not be instituted unless the information presented in the petition... if such information is not rebutted, would demonstrate that it is more likely than not that at least 1 of the claims challenged in the petition is unpatentable. 35 U.S.C. 324(a). For the reasons that follow, the Petition is denied. B. Related Matters Petitioner and Patent Owner indicate that the 556 Patent has been asserted against Petitioner in the following district court case: ContentGuard Holdings, Inc. v. Amazon.com, Inc., No. 2:13-cv-1112 (E.D. Tex.). Pet. 2; see ContentGuard Holdings Inc. s Amended Mandatory Notices Pursuant to 37 C.F.R. 42.8(a)(2) ( Patent Owner Notice, Paper 9). Petitioner and Patent Owner also identify additional proceedings involving the same patent as follows: IPR , IPR , CBM (terminated), CBM (terminated), and CBM Pet. 2; Patent Owner Notice. C. The 556 Patent The 556 Patent is directed to a system and method for monitoring the transfer of digital assets within a network. 2 Ex. 1001, 9: As background, according to the 556 Patent, with the advent of the Internet, 1 See Section 18(a) of the Leahy-Smith America Invents Act, Pub. L. No , 125 Stat. 284, 329 (2011) ( AIA ). 2 In a preferred embodiment, the digital asset is an audio file in MP3 format. Ex. 1001, 9:

3 digital assets protected by intellectual property rights can now be reproduced and distributed without quality degradation or compensation to the rights holders. Id. at 1: The main difficulty has been monetizing the distribution transactions and paying royalties to the rights holders of the digital assets being traded. Id. at 9: In that regard, the 556 Patent states: This is in large part because there is no mechanism currently to track the assets as they are transferred. Id. at 9: According to the 556 Patent, it presents a new way of controlling the distribution, royalty payment, and terms of use for these digital assets, that is an improvement over various other existing ways of doing the same. Ex. 1001, 1:27 2:4. In particular, one key purpose is to allow individual customers to trade digital assets with each other while compensating rights holders for their work, and its system allows each digital asset to be identified and tracked at the time the asset is transferred. Id. at 10: In that connection, the 556 Patent states: [A] preferred embodiment of the present invention retains the advantages of a peer-to-peer distribution [system] while marking each distributed asset for later identification at the time of transfer, linking the asset to specific usage rights, and providing for royalty compensation to the Rights Holder of the asset. Id. at 9: The system and method includes a process that introduces assets for sale or trade into the system, and a process that involves actual purchase, trade, and tracking. Ex. 1001, 11: Upon requested transfer of a digital asset, a separate instantiation of the digital asset is created and given a new serial number that permits subsequent tracking of each transfer or transaction. Id. at 14:29 38; 15: When the transfer is complete, an account of the customer who just received the digital asset is debited, and a 3

4 transaction database is updated with all the necessary tracking information, including the new serial number of the instance of the digital asset just transferred to the customer whose account is debited. Id. at 15: D. Illustrative Claims Claims 1 and 12 are independent claims and are reproduced below. 1. A method implemented by one or more computing devices for providing a digital asset for distribution, the method comprising: storing, by at least one of the one or more computing devices, the digital asset, the digital asset including digital content; associating, by at least one of the one or more computing devices, an asset identifier with the digital asset to thereby generate a first instance of the digital asset, the asset identifier identifying the digital asset; receiving from a user, by at least one of the one or more computing devices, an acceptance of terms of use of digital assets; providing, by at least one of the one or more computing devices, a list of one or more digital assets to the user, the list including the digital asset; receiving from the user, by at least one of the one or more computing devices, a request for the digital asset; in response to the request for the digital asset, creating, by at least one of the one or more computing devices, a second instance of the digital asset for transfer to the user device, the second instance of the digital asset including content and at least one other portion, and embedding in the at least one other portion of the second instance of the digital asset at least a customer identification associated with the user and the asset identifier, wherein other instances of the digital asset have customer identifications embedded therein and the customer identifications are used to track instances of the digital asset; 4

5 detecting, by at least one of the one or more computing devices, a transfer of the second instance of the digital asset to the user based at least in part on the customer identification; debiting an account of the user related to the transfer of the second instance of the digital media asset to the user, and updating, by at least one of the one or more computing devices, a transaction database to reflect a transfer of the second instance of the digital media asset to the user. Ex. 1001, 20:50 21: A computer system for providing a digital asset for distribution, the system comprising: one or more processors; and one or more memories operatively coupled to at least one of the one or more processors and having instructions stored therein that, when executed by at least one of the one or more processors, cause at least one of the one or more processors to: store the digital asset, the digital asset including digital content; associate an asset identifier with the digital asset to thereby generate a first instance of the digital asset, the asset identifier identifying the digital asset; receive from a user an acceptance of terms of use of digital assets; provide a list of one or more digital assets to a user, the list including the digital asset; receive from the user a request for digital asset; in response to the request for the digital asset, create a second instance of the digital asset for transfer to a user device, the second instance of the digital asset including digital content and at least one other portion, and embedding in the at least one other portion of the second instance of the digital asset at least a customer identification associated with the user and the asset identifier, wherein other instances of the digital asset have 5

6 customer identifications embedded therein and the customer identifications are used to track instances of the digital asset; detect a transfer of the second instance of the digital content to the user based at least in part on the customer identification; debit an account of the user related to the transfer of the second instance of the digital media asset to the user; and update a transaction database to reflect a transfer of the second instance of the digital media asset to the user. Id. at 21:58 22:27. E. The Asserted Grounds of Unpatentability Petitioner challenges the claims of the 556 Patent on the following grounds. Pet. 3. Basis Claims 35 U.S.C , Written Description 1, 9, 11, 12, 20, and U.S.C , Indefiniteness 8 and U.S.C , 8, 9, 11, 12, 19, 20, and 22 II. ANALYSIS A. Financial Product or Service 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, except that the term does not include patents for technological inventions. AIA 18(d)(1); see also 37 C.F.R (a). The petitioner must demonstrate that the patent for which review is sought is a covered business method patent, and that the petitioner meets the eligibility requirements of C.F.R (a). 6

7 As Petitioner notes, claim 1 recites debiting an account, which plainly refers to a financial transaction. Pet. 5. Petitioner also notes [c]laim 12 is the mirror image of claim 1. Id. at 5 n.1. Patent Owner does not dispute Petitioner s contention. Prelim. Resp We, therefore, determine that the 556 Patent meets the financial product or service requirement under 18(d)(1) of the AIA. Accordingly, we turn to whether Petitioner has demonstrated that the 556 Patent is not a patent for a technological invention. B. Technological Invention To determine whether a patent is for a technological invention, we consider, on a case-by-case basis, whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution. 37 C.F.R (b). Petitioner states, [t]he analysis of whether the patent claims a technological invention is applied to the same claim as the financial transaction prong[,] because [o]nly one claim of the patent needs to meet the financial-and-not-technological test for the patent to qualify for CBM review. Pet. 9 n.2 (citing SAP America, Inc. v. Versata Dev. Group, Inc., Case CBM , slip op. at (PTAB Jan. 9, 2013) (Paper 36)). Petitioner, therefore, provides contentions regarding claim 1 of the 556 Patent. Pet Regarding claim 1, Petitioner contends that each of the seven limitations between the preamble and the debiting an account of the user limitation includes the generic phrase by at least one of the one or more computing devices ( the seven limitations ). Pet (citing Ex. 1001, 7

8 20:53 21:17). Petitioner asserts that claim 1 says nothing specific about particular or novel attributes of these computing devices[.] Id. at 10. Petitioner additionally points to discussion in the background section of the 556 Patent, which Petitioner contends describes two of the seven limitations, i.e., an acceptance of the terms of use of digital assets and associating... an asset identifier with the digital asset... the asset identifier identifying the digital asset[.] Id. at Petitioner also asserts that the updating, by at least one of the one or more computing devices, a transaction database to reflect a transfer of the second instance of the digital media asset to the user limitation is the mere recitation of known technologies databases. Id. at Petitioner, however, does not address the details of the remaining four of the seven limitations, instead referring to the bulk of claim 1 as [t]he financial transaction limitations. Id. at Regarding the seven limitations, Patent Owner contends that Petitioner has not addressed the[ ] technical aspects in its CBM eligibility analysis, much less established that they are old or obvious. Prelim. Resp. 13. In particular, Patent Owner contends, [n]otably, [claim 1] specifies creating a second instance of a digital asset, embedding at least a customer identification associated with the user, and detecting a transfer of the second instance of the digital asset to the user based at least in part on the customer identification. Id. at 7. Patent Owner indicates that these are interrelated novel technical features (id. at 13), and, when considered as a whole, make the challenge claims of the 556 patent ineligible for a covered business method patent review (id. at 5). 8

9 Patent Owner additionally contends that the limitations of claim 1 provide a technical solution to a technical problem. Id. at 13. In particular, Patent Owner points to the steps of creating... a second instance of the digital asset for transfer to the user device, embedding in the at least one other portion of the second instance of the digital asset at least a customer identification associated with the user and the asset identifier, and detecting... a transfer of the second instance of the digital asset to the user based at least in part on the customer identification, recited in claim 1. Id. at 15. Patent Owner contends that, because these [computer-implemented] steps are interrelated, they provide a specific technical solution to a technical problem. Id. at We are persuaded that, contrary to Petitioner s contentions (Pet. 7 12), claim 1 recites specific steps for a particular way of tracking digital assets in a network. Indeed, claim 1 recites specific steps that are a combination of hardware and software. For example, claim 1 recites steps performed by a computing device, including: associating... an asset identifier with the digital asset to thereby generate a first instance of the digital asset, the asset identifier identifying the digital asset[,] creating... a second instance of the digital asset for transfer to the user device, the second instance of the digital asset including content and at least one other portion, and embedding in the at least one other portion of the second instance of the digital asset at least a customer identification associated with the user and the asset identifier, wherein other instances of the digital asset have customer identifications embedded therein and the customer identifications are used to track instances of the digital asset. Ex. 1001, 20:56 21:11. Claim 1 further recites that the computing device subsequently tracks the digital asset by detecting... a transfer of the 9

10 second instance of the digital asset to the user based at least in part on the customer identification. Id. at 21: Petitioner s analysis regarding whether the claimed subject matter of the 556 Patent, as a whole, recites a technological feature that is novel and unobvious over the prior art is conclusory and fails to address the abovenoted technical features. Pet Petitioner narrowly focuses on the one or more computing devices recited in claim 1 and does not address adequately the specific software steps performed by the claimed computing device(s). Id. at Petitioner s assertion that two of seven limitations recited in claim 1 are mentioned in the background section (id. at 11 12) also is inadequate because it doesn t account for the claim as a whole. In fact, other than concluding that [c]laim 1 thus does not claim subject matter as a whole [that] recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution, Petitioner does not even mention the claimed subject matter as a whole, but instead merely points to discrete pieces of the claim, each taken out of context and dissected separately. Id. at 12. We additionally note that Petitioner does not provide expert testimony in support of its contentions. Id. at Furthermore, Petitioner fails to address persuasively whether the 556 Patent solves a technical problem using a technical solution. Pet Petitioner points to Board guidance that certain claim drafting techniques do not render a patent a technological invention. Id. at 8 (citing SAP America, Case CBM , slip op. at (Paper 36); 77 Fed. Reg. 3 We note that claim 12 recites similar limitations. 10

11 157 (Aug. 14, 2012) at 48,763 48,764). However, we are not persuaded that the technical features in the claim reflect merely the application of claim drafting techniques. Petitioner has not shown the limitations in the challenged claims of the 556 Patent are simply generic functions that are capable of being performed by a general purpose computer. The solution depends on, or is integral to, having all the above-noted specific structures and functions. In our view, the challenged claims require more than generally monetizing or tracking distribution of copies of digital assets. Consequently, Petitioner has not demonstrated sufficiently that the claimed subject matter of the 556 Patent is not a technological invention. III. CONCLUSION For the foregoing reasons, we determine that Petitioner has not demonstrated that the 556 Patent is eligible for review as a covered business method patent under AIA 18(d)(1). IV. For the reasons given, it is ORDER ORDERED that the Petition is denied as to all challenged claims of the 556 Patent; and FURTHER ORDERED that no covered business method patent review is instituted. 11

12 PETITIONER: Jeffrey Kushan Michael Franzinger PATENT OWNER: Thomas Lebens Timothy Maloney Robert Cote 12