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Smartflash v. Apple

Representative Claim

3. A data access terminal for retrieving data from a data supplier and providing the retrieved data to a data carrier, the terminal comprising:

a first interface for communicating with the data supplier;
a data carrier interface for interfacing with the data carrier;
a program store storing code; and
a processor coupled to the first interface, the data carrier interface, and the program store for implementing the stored code, the code comprising:

code to read payment data from the data carrier and to forward the payment data to a payment validation system;
code to receive payment validation data from the payment validation system;
code responsive to the payment validation data to retrieve data from the data supplier and to write the retrieved data into the data carrier; and
code responsive to the payment validation data to receive at least one access rule from the data supplier and to write the at least one access rule into the data carrier, the at least one access rule specifying at least one condition for accessing the retrieved data written into the data carrier, the at least one condition being dependent upon the amount of payment associated with the payment data forwarded to the payment validation system.

13. A data access terminal according to claim 3 integrated with a mobile communication device, a personal computer, an audio/video player, and/or a cable or satellite television interface device.

Posture:

Appeal from the United States District Court for the Eastern District of Texas (Case No.: 6:13-cv-00447)

Abstract Idea: Yes

At step one of the Alice/Mayo framework, the Federal Circuit agreed with the district court’s determination that the claims on appeal are directed to the abstract idea of “conditioning and controlling access to data based on payment.”  Following the analysis of Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1335-36 (Fed. Cir. 2016), the Federal Circuit determined that the claims do not represent “an improvement of computer functionality,” but rather “invoke computers merely as tools to execute fundamental economic practices.”

Something More: No

In its analysis under step two of the Alice/Mayo framework, the Federal Circuit diverged from the district court’s determination “that the claims are patent-eligible because they purportedly recite specific ways of managing access to digital content data based on payment validation through storage and retrieval of use status data and use rules in distinct memory types to the text of the note and evaluating the use data according to the use rules.”  Here, the Federal Circuit characterized the “computer activities” recited in the claims as “routine,” and therefore “insufficient for conferring patent eligibility.”

The Federal Circuit went on to analogize the claims on appeal to those at issue in Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 716 (Fed. Cir. 2014), stating: “Smart-flash’s asserted claims recite reading, receiving, and responding to payment validation data and, based upon the amount of payment, and access rules, allowing access to multimedia content. This is precisely the type of Internet activity that we found ineligible in Ultramercial.”

Arguments by the appellee/patent owner that the claims “reflect specific technical choices that provide distinct advantages over alternatives” were dismissed as immaterial, as the Federal Circuit distinguished the test for eligibility from considerations based on the prior art.  On this point, the Federal Circuit said:

“’[P]rovid[ing] a distinct advantage over alternatives’ is not the test for eligibility. Instead, the test is whether the claims recite an ‘inventive concept sufficient to ‘transform’ the nature of the claim’ into an eligible application. Alice, 134 S. Ct. at 2355 (quoting Mayo, 132 S. Ct. at 1298, 1297).”