Trials@uspto.gov
`571-272-7822
`
`Paper No. 51
`Entered: July 7, 2015
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`
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`RECORD OF ORAL HEARING
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`- - - - - -
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`- - - - - -
`
`APPLE INC.
`Petitioner
`
`vs.
`
`SMARTFLASH LLC
`Patent Owner
`
`- - - - - -
`
`Cases
`
`CBM2014-00102 (Patent 8,118,221 B2)
`CBM2014-00106 (Patent 8,033,458 B2)
`CBM2014-00108 (Patent 8,061,598 B2)
`CBM2014-00112 (Patent 7,942,317 B2)
`
`- - - - - -
`
`Oral Hearing Held: June 9, 2015
`
`
`
`Before: JENNIFER BISK, RAMA ELLURU, JEREMY PLENZLER
`(via video), and MATTHEW CLEMENTS (via video), Administrative
`Patent Judges
`
`
`The above-entitled matter came on for hearing on Tuesday, June 9,
`2015 at the U.S. Patent and Trademark Office, 600 Dulany Street,
`Alexandria, Virginia in Courtroom B, at 9:00 a.m.
`
`
`571-272-7822
`
`Paper No. 51
`Entered: July 7, 2015
`
`
`
`RECORD OF ORAL HEARING
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`- - - - - -
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`- - - - - -
`
`APPLE INC.
`Petitioner
`
`vs.
`
`SMARTFLASH LLC
`Patent Owner
`
`- - - - - -
`
`Cases
`
`CBM2014-00102 (Patent 8,118,221 B2)
`CBM2014-00106 (Patent 8,033,458 B2)
`CBM2014-00108 (Patent 8,061,598 B2)
`CBM2014-00112 (Patent 7,942,317 B2)
`
`- - - - - -
`
`Oral Hearing Held: June 9, 2015
`
`
`
`Before: JENNIFER BISK, RAMA ELLURU, JEREMY PLENZLER
`(via video), and MATTHEW CLEMENTS (via video), Administrative
`Patent Judges
`
`
`The above-entitled matter came on for hearing on Tuesday, June 9,
`2015 at the U.S. Patent and Trademark Office, 600 Dulany Street,
`Alexandria, Virginia in Courtroom B, at 9:00 a.m.
`
`
`
`APPEARANCES:
`
`ON BEHALF OF THE PETITIONER:
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`
`
`
`
`
`
`
`
`J. STEVEN BAUGHMAN, ESQ.
`MEGAN F. RAYMOND, ESQ.
`Ropes & Gray LLP
`700 12th Street, N.W.
`One Metro Center
`Washington, D.C. 20005-3948
`202-508-4600
`
`
`
`
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`CHING-LEE FUKUDA, ESQ.
`Ropes & Gray LLP
`1211 Avenue of the Americas
`New York, New York 10036-8704
`212-596-9000
`
`
`
`
`
`
`ON BEHALF OF THE PATENT OWNER:
`
`
`
`
`
`
`
`MICHAEL R. CASEY, ESQ.
`Davidson Berquist Jackson & Gowdey LLP
`8300 Greensboro Drive, Suite 500
`McLean, Virginia 22102
`571-765-7700
`
`
`
`
`
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`
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`CBM2014-00102 (Patent 8,118,221 B2)
`CBM2014-00106 (Patent 8,033,458 B2)
`CBM2014-00108 (Patent 8,061,598 B2)
`CBM2014-00112 (Patent 7,942,317 B2)
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`P R O C E E D I N G S
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`(9:00 a. m. )
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`JUDGE ELLUR U: Good mo rnin g, ever yone . We
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`have this mo rning our final he arings in CBM2014 -00102,
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`CBM2014 -00106, CBM2014 -00108, and CBM2014 -00112,
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`Apple Inc . versus S ma rtflash, LLC .
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`I a m Judge Elluru . And to my right is Judge Bisk.
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`And re motel y are Judge s Cle ments and Plenzler . Let 's get the
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`parties' appear anc es, please . Ple ase approach the mi crophone
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`when speaking. Who do we have f ro m Petitioner to da y?
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`MR. BAUGHMAN: Steve Baughman , Ching -Lee
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`Fukuda, and Meg an Ra ymond fro m Ropes & Gra y. We also
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`have a representa tive of Ap ple her e with us this mo rning.
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`JUDGE ELLUR U: Thank you . Go od morning,
`
`counsel. How ab out Patent Owner ?
`
`MR. CASEY: Go od morning, Your Honor, Michael
`
`Case y on behalf of S ma rtflash LLC . And I a m joine d toda y b y
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`the inventor, Patr ick Racz , who is t he c hief t echnical officer
`
`of S ma rtflash LLC.
`
`JUDGE ELLUR U: Thank you . We set forth the
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`procedure for toda y's hearing in ou r trial o rder, but t o just
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`re mind ever yone the wa y this will work, each part y will have
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`two hours of total ti me to p resent a rgu ments for all f our cases.
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`CBM2014-00102 (Patent 8,118,221 B2)
`CBM2014-00106 (Patent 8,033,458 B2)
`CBM2014-00108 (Patent 8,061,598 B2)
`CBM2014-00112 (Patent 7,942,317 B2)
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`Each pa rt y ma y al locate allotted time to e ach c ase a s it
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`chooses.
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`Please keep in mi nd that whatever is projected on
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`the screen will no t be available to J udges Plenzler an d
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`Cle ments. Thus, when you re fer to an exhibit on the screen ,
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`please state the e xhibit and page nu mber or for
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`de monstratives, t he slide nu mbe r, to which you ar e refer ring.
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`This is also i mpo rtant for the clari t y of the
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`transcript. At all ti mes the parties must mak e cle ar which case
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`the y a re discussing, so that we c an have a clear trans cript. So,
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`for exa mple , whe n a part y t ransitions its argu ments f ro m one
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`case to the next, please identif y the case b y the nu mber.
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`Petitioner has the burden on the ori ginal clai ms
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`and will go fi rst a nd ma y rese rve ti me for rebuttal o n the
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`original clai ms . Patent Owner will then have the opportunity
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`to present its resp onse to the original clai ms. I will use a
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`clock on the wall to ti me you , and I will give you a warning
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`when you ar e r ea ching the end of your a rgu ment.
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`Is that oka y wi th ever yone , starting with M r.
`
`Baugh man?
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`MR. BAUGHMAN: Yes, Your Ho nor, thank you .
`
`JUDGE ELLUR U: And Mr . Case y?
`
`MR. CASEY: Ye s, Your Honor.
`
` 4
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`
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`CBM2014-00102 (Patent 8,118,221 B2)
`CBM2014-00106 (Patent 8,033,458 B2)
`CBM2014-00108 (Patent 8,061,598 B2)
`CBM2014-00112 (Patent 7,942,317 B2)
`
`JUDGE ELLUR U: Oka y. M r. Bau gh man, you ma y
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`begin when you a re r ead y. Will yo u reserve an y ti me for
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`rebutt al?
`
`MR. BAUGHMAN: Yes, Your Ho nor, if it please
`
`the Board, if we c an reserve one ho ur of our ti me for rebuttal.
`
`Thank you .
`
`Judges Cle ments and Plenzler , c an you hear and
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`see me?
`
`JUDGE P LENZLER: Yes.
`
`MR. BAUGHMAN: Thank you.
`
`Ma y it please the B oard, Petitioners provided our
`
`positions in evidence in our brie fing in these trials, and we
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`rel y on that mat er ial to support our argu ments, but to assist
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`the Board in considering the record , we plan to addre ss in our
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`opening discussion two gener al topics, along with an y
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`questions the Board ma y have .
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`A lot of these top ics cross over acr oss the four
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`trials that the y ha ve instituted, but our de monstrative s indicate
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`which clai ms they pe rtain to. And I will tr y to indicate that as
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`well on the recor d, Your Ho nor.
`
`JUDGE ELLUR U: Thank you .
`
`MR. BAUGHMAN: So after so me brief opening
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`co mments , I will first address the grab bag of argu ments that
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`Patent Owner has made to tr y to avoid the clear obviousness
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`CBM2014-00102 (Patent 8,118,221 B2)
`CBM2014-00106 (Patent 8,033,458 B2)
`CBM2014-00108 (Patent 8,061,598 B2)
`CBM2014-00112 (Patent 7,942,317 B2)
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`showing we have made for ever y o ne of the clai ms i nstitut ed
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`for revie w he re.
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`To make the fe w argu ments that do re main , Patent
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`Owne r ignores th e explicit teachin gs of the r efer enc es, P atent
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`Owne r ignores th e explicit ad missions of its own expert, Dr .
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`Katz , who in man y cases agr ees wi th the position that the
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`Pet itioner has tak en here , and in other cases si mpl y i gnores the
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`express teachings either of the pate nts at issue or of the prior
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`art.
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`And Patent Owne r urges the Board to treat a person
`
`of ordinar y skill as lacking ordinary co mmon sense, a
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`violation of ever ything that the Supre me Court has ta ught us in
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`KSR about obviousness.
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`Second, my colle ague, Ms . Fukuda, will address
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`issues of credibilit y and expert test i mon y. And, in particular,
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`the mini mal weight of an y that can be a fforded to Pa tent
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`Owne r's expert, Dr . Katz , who wa s repeatedl y unab le to testif y
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`on the ver y opinions he stated in h is declaration. And, in
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`particular, what a person of ordinar y skill would have
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`understood as of the earliest clai me d priorit y date in October
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`1999.
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`It can't be disputed t hat he was not, hi msel f,
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`qualified as an expert at that date, and his testi mon y reveals
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`that whatever qua lifications he ma y have now, 16 years late r,
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`CBM2014-00102 (Patent 8,118,221 B2)
`CBM2014-00106 (Patent 8,033,458 B2)
`CBM2014-00108 (Patent 8,061,598 B2)
`CBM2014-00112 (Patent 7,942,317 B2)
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`he is not qualifie d to opine about what a person of ordinar y
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`skill would have understood in 1999. And thi s matte rs
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`because Patent Owner's case here l acks evidence to rebut
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`Petitioner's showi ng of obviousness.
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`But what we repe atedl y have here i s attorne y
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`argu ment and an expert sa ying " I' m not sure." And to begin,
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`there is a fai rl y n arrow list of issu es that actuall y r e mains in
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`dispute before the Board in these fo ur trials. There i s onl y
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`one clai m constru ction dispute re maining about payment data.
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`Patent Owner has waived an y other clai m construction
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`argu ment because it offe red no oth er position in its Paten t
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`Owne r r esponses, and the Board's s cheduling order here; that
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`is, paper 9 in C B M2014 -00102 at 3 states that the P atent
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`Owne r was cautioned that an y argu ments for patenta bility not
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`raised in the response are de e med waived.
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`There are also no issues here a bout motivations to
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`co mbine. The question of co mbini ng Stefik '980 wit h Stefik
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`'235 and then wit h the Poggio refe rence has not bee n disputed
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`b y the Patent Owner.
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`There are just a handful of ra mshac kle co mplaints
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`re maining that ap ply to a handful o f the cl ai ms . For exa mple ,
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`clai m 26 of the '5 98 patent has only a single argu me nt about
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`the prior art 's disclosure of the SI M portion.
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`CBM2014-00102 (Patent 8,118,221 B2)
`CBM2014-00106 (Patent 8,033,458 B2)
`CBM2014-00108 (Patent 8,061,598 B2)
`CBM2014-00112 (Patent 7,942,317 B2)
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`JUDGE B IS K: C ould I ask you a question about
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`that?
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`MR. BAUGHMAN: Yes, Your Ho nor.
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`JUDGE B IS K: S o I notice in the b riefi ng that you
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`often sa y that P atent Owner has not rebutted the obviousness
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`case. And I a m j ust interested in your take on what exactl y is
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`the burden at this point? Because we have a preli mi nar y
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`decision, but I a m just interested in hearing your ta ke on wha t
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`the burdens are now.
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`MR. BAUGHMAN: Certainl y, Your Honor, thank
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`you for the question.
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`The position of P etitioner is that we do bear the
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`burden in this trial, in these four trials of showing i nvalidity
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`b y a preponderan ce of the evidenc e.
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`It is our p osition that the preli mina r y case that the
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`Board assessed at institution, based on our petition evidence
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`and argu ments me t that burden, and that the question now is
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`whether that showing re mains intact or whether the Patent
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`Owne r has shaken it.
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`It is prob abl y a s e mantic wa y of parsing the
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`question, but we do bear the burden, we recognize t hat. We
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`think we have me t it quite a mpl y with the evidence we have
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`put before the Board.
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` 8
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`
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`CBM2014-00102 (Patent 8,118,221 B2)
`CBM2014-00106 (Patent 8,033,458 B2)
`CBM2014-00108 (Patent 8,061,598 B2)
`CBM2014-00112 (Patent 7,942,317 B2)
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`And perhaps befo re addressing that point -by-point
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`on so me of the issues that P atent Owne r has raised, I will
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`briefl y su mma riz e the four prior ar t refe rences that are at issue
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`this morning.
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`First, we have the Stefik '980 patent. That is
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`Exhibit 1014 in the 00102 matte r. That s yste m provides a wa y
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`of guarding against unauthorized use and ac cess of c ontent and
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`assuring fees that will be paid for distribution; for e xa mple , at
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`colu mn 6, lines 5 1 to 56.
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`Stefik '980 talks about repositories that have both
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`requester and sup plier functions. The y together cre ate a chain
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`of distribution and work through a four -step process where the
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`requesting repositor y se eks acc ess t o work stored in t he
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`supplying repositor y, checks the usage rights attache d to the
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`requested work to see i f it ma y be granted. So me of those
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`checks include fe e conditions.
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`And if the ac cess is granted, the supplying
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`repository provides the work to the requesting repositor y and
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`transaction billing infor mation is r eported to a credi t server .
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`We se e sever al e mbodi ments in St efik '980 of a cre dit server.
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`One of the m store s t ransactions and periodicall y reco nciles
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`the m with a cle ar inghouse, but in a nother e mbodi me nt the
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`credit server can "act as a debit car d where transacti ons occur
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` 9
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`
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`CBM2014-00102 (Patent 8,118,221 B2)
`CBM2014-00106 (Patent 8,033,458 B2)
`CBM2014-00108 (Patent 8,061,598 B2)
`CBM2014-00112 (Patent 7,942,317 B2)
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`in realti me against a user ac count." That's at colu mn 17, lines
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`23 to 33.
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`The se cond refe re n ce I a m going to talk about this
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`morning is St efik '235, the '235 St efik, which is Ex hibit 1013
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`in the 00102 matt er. That is a lat e r -filed patent that actuall y
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`describes an e mb odi ment of the re pository, a specif ic
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`i mple mentation o f the re movable c ard that is disclosed alread y
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`in the '980 patent .
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`The '980 patent d escribes an environ ment in which
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`repositories co mmunicate . Stefik '235 describes a branded
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`DocuCard or doc u ment card that a cts as the re mova ble card in
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`Stefik '980. It tal ks about a proces s for operating th at specific
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`i mple mentation, l ogging into the c ard, assigning fees
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`associated with t he transaction, se lecting the desire d content,
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`and then confir mi ng the transaction.
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`A third prior art r eference we t alked about in our
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`papers, and we will tal k about this morning, is Poggio. That is
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`Exhibit 1016 in the 00102 case. That provides a vir tual
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`vending machine that includes a supply of vendor pr oducts and
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`infor mation and a database r ecordi ng all of the sold products.
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`Together the vendor and the vi rtua l vending
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`ma chine provide a mechanis m to market, distribute, and
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`receive pa yment f or the vendor's electronic data and to
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`co mmunicate wit h users. That is c olu mn 3, lines 32 to 36.
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`CBM2014-00102 (Patent 8,118,221 B2)
`CBM2014-00106 (Patent 8,033,458 B2)
`CBM2014-00108 (Patent 8,061,598 B2)
`CBM2014-00112 (Patent 7,942,317 B2)
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`That me chanis m s upplies content to users. I f we
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`could actuall y tak e a look at figure 1 of Exhibit 1016, that is
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`page 11.
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`This shows the vi rtual vending ma c hine. And you
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`will see here a lib rar y of vendor pr oducts, 112; an index of
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`product infor mati on, 108; a vending infor mation database,
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`110. These act to gether to suppl y digital content to a user.
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`And the virtual v ending machine f orwards pa yment
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`infor mation r ecei ved fro m the user to an electronic banking
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`network. And tha t is 118 on the rig ht there for confi r mation.
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`The el ectronic ba nking network ret urns an indication
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`signifying succes sful co mpletion o f the tr ansaction.
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`JUDGE B IS K: I' m sorr y, can I int errupt you just
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`for a second?
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`MR. BAUGHMAN: Sure .
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`JUDGE B IS K: S o Poggio is only at issue for
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`clai ms 2, 13, and 14?
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`MR. BAUGHMAN: That 's right, Your Honor.
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`JUDGE B IS K: Oka y.
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`MR. BAUGHMAN: The clai ms that talk about
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`forwarding the pa yment validation data, that validati on data
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`actuall y co mes ba ck fro m 118 throu gh 116 to 114 and is
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`written to vending infor mation database 110, onl y if the
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`transaction is validated.
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`CBM2014-00102 (Patent 8,118,221 B2)
`CBM2014-00106 (Patent 8,033,458 B2)
`CBM2014-00108 (Patent 8,061,598 B2)
`CBM2014-00112 (Patent 7,942,317 B2)
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`The fourth refe re nce we will talk a bout today is
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`Ginter. That is Exhibit 1015 in the 00102 matte r. And it
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`provides a virtual distribution environ ment that wor ks with the
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`infor mation highwa y to distribute content but also to confir m
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`sufficient credit a nd p a yment is given to the o wner. Sufficient
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`credit is a prer equisite before giving access to data . It talks
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`about a flexible r ange of pa yments that can be mad e , including
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`prepa yments, cr e dits, realti me ele ctronic debits, an d so forth.
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`Together, these p iec es of prior art la y out a state of
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`the art in which c onditioning access to content on pa yment is
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`quite well -known . These pieces of art show both pr e -purchase
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`and post -purchase validation of pa yments, as well as the
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`i mportance of confir ming and advising th e supplier of
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`successful pa yme nt for digital pro ducts.
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`Also, as part of t he background of the state of the
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`art here , because it is i mportant we 're t alking obviousness, is
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`the set of ad missions that are contained in the specif ications of
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`all of the challe nged patents. We talk about the '22 1 as an
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`exa mple .
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`Wh at was al read y known and co mm onplace and
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`ad mitted b y the p atent includes the data c arrie r, the pa yment
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`validation syste ms, the idea of providing access in e xchange
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`for pa yment, and data suppliers. A nd you can see this cited in
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`pages 16 to 18 of our first petition. We abbreviate t hat as P -1.
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`CBM2014-00102 (Patent 8,118,221 B2)
`CBM2014-00106 (Patent 8,033,458 B2)
`CBM2014-00108 (Patent 8,061,598 B2)
`CBM2014-00112 (Patent 7,942,317 B2)
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`I should sa y, a ta ble of abbreviatio ns we use here fo r citations
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`is on our second slide. That is pa ges 16 to 18 of P etition 1 in
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`the 00102 matter .
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`Now, turni ng to s lide 5, we have tr ied to capture
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`here the issues th at re main in dispute. Those at the top
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`address prior art . The last one Ms. Fukuda is going to address
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`for Dr. Katz . An d, again, we have indicated which clai ms
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`were raised for ea ch of the issues w e will be addressi ng.
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`Turning to slide 6, I would like to t alk briefl y
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`about the one clai m construction issue that's squarel y raised,
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`and that is the co nstruction of pa yment data.
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`If you take a look at slide 7 , we ha ve provided a
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`proposed construction th at covers both of the exa mp les that
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`are given in the s pecification. Yo u see the quote in the middle
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`of the slide her e on slide 7. And Exhibit 1001 is the exa mple ,
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`colu mn 6, lines 6 0 to 63.
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`The spec talks ab out a pa yment eit her being --
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`pa yment data bei ng actual pa ymen t made or r ecord of pa yment
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`made to an e -pa yment s yste m. Their own expert concedes this
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`covers concurrent or past pa yments .
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`Our construction uses the sa me phrase that is
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`featured t wice there in the specific ation, "pa yment made ," and
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`covers both exa mples.
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` 13
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`
`
`CBM2014-00102 (Patent 8,118,221 B2)
`CBM2014-00106 (Patent 8,033,458 B2)
`CBM2014-00108 (Patent 8,061,598 B2)
`CBM2014-00112 (Patent 7,942,317 B2)
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`The Patent Owne r 's expert, Dr . Kat z, ad mits that.
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`We have deposition cites to pages 52, 53, and 57 of his
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`transcript on slide 7 and 8 . He also ad mits , if we tu rn to slide
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`9, that the proposed construction fr o m the owne r is n arrowe r
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`than what is in the specification. He sa ys the speci fication is
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`broader than the s a me use of the ter m in clai m 1.
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`Wh at is the differ ence? If you take a look at the
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`bottom question and answer there , t he use of the phra se in the
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`spec, Dr . Katz sa ys, enco mp asses uses in addition to what
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`clai m 1 does. Wh at does it exclude in clai m 1? The record of
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`a pa yment mad e t o an e -pa yment s yste m. One of th e two
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`exa mples provided b y the specifica tion.
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`JUDGE ELLUR U: Mr . Baugh man, can you point
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`us to the disclosures in Ste fik that you ar e r el ying o n as
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`teaching pa yment data?
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`MR. BAUGHMAN: Yes, Your Ho nor. We cite a
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`nu mber of the m h ere on this slide. And I c an provide a more
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`fulso me cite f ro m our petition if th at would be useful. But the
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`pa yment data that we 're r e ferring t o is described her e in the
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`specification.
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`JUDGE ELLUR U: As well as the disclosure in
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`Ginter that you ar e re ferring to as t eaching pa yment data.
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` 14
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`
`
`CBM2014-00102 (Patent 8,118,221 B2)
`CBM2014-00106 (Patent 8,033,458 B2)
`CBM2014-00108 (Patent 8,061,598 B2)
`CBM2014-00112 (Patent 7,942,317 B2)
`
`MR. BAUGHMAN: Is Your Honor asking about
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`the places in the specification or what we 're re ferrin g to as
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`pa yment data?
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`JUDGE ELLUR U: Wh at you ar e r eferring to.
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`MR. BAUGHMAN: Thanks, Your Honor. So for
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`pa yment data in S tefik, we' re t alking about a nu mber of
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`different pieces of infor mation. And we will address a nu mber
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`of those during the presenta tion this mo rning, but I c an
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`su mmariz e the m quickly now.
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`We pointed to bil ling and credit infor mation, for
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`exa mple , petition 1 at 29; bank and credit account infor mation,
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`petition 1 at 30; transaction identifiers, identifiers f or
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`repositories involved in the transac tion, and lists of charges
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`for the tr ansaction, petition 1 at 30 again; transactio n reports,
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`again petition 1 at 30; and a descri ption tree data in dicating
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`fee infor mation a nd conditions, such as bank a ccount
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`infor mation, for e xa mple , petition 4 at 60.
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`Your Honor, we t alk about audit infor mation in
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`Ginter, credit or debit card infor mation, prepa yment s, cr edits,
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`realti me el ectronic debits fro m b ank accounts, a che ck of
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`user's cr edit, fina ncial records, business agree ments, and/or
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`audit historie s. And I can provide citations for those. I don't
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`have those on this piece of paper , but I can get those for Your
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`Honor this morning.
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`CBM2014-00102 (Patent 8,118,221 B2)
`CBM2014-00106 (Patent 8,033,458 B2)
`CBM2014-00108 (Patent 8,061,598 B2)
`CBM2014-00112 (Patent 7,942,317 B2)
`
`JUDGE ELLUR U: That's fine. An d with r espect
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`to Ginter, Pat ent Owne r r esponds that Ginter is talking about
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`pa yment for past usage. And your rebuttal to that is?
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`MR. BAUGHMAN: If we c an turn to slide 21,
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`please. Actuall y slide, excuse me , slide 24.
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`So Ginter discloses, Your Honor, the use of
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`realti me tr ansactions. And actuall y turning -- I ' m s orr y,
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`Tho mas - - turnin g back to slide 23 , the middle quote here , also
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`talks about prepayments along with real -ti me elect r onic debits
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`fro m bank a ccounts.
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`Wh at we have sai d is that it would have been
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`obvious to a pers on of skill to take those disclosures and
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`understand -- not o bvious. A pe rson of ordinar y skill would
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`have understood these disclosures to be indications of pa yment
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`before the t ransac tion occurs, including prepa yments . And we
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`have said also tha t Ginter discloses --
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`JUDGE ELLUR U: And the basis f or that
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`understand ing?
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`MR. BAUGHMAN: Well , Your Honor, phrases
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`like prepa yments and realti me elect ronic debits. If you take a
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`look at the top of slide 24, we hav e Mr . Wechselber ger
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`testif ying about this.
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`Ginter discloses pa ying for content using realti me
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`debits fro m b ank accounts. A pers on of skill would at
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`CBM2014-00102 (Patent 8,118,221 B2)
`CBM2014-00106 (Patent 8,033,458 B2)
`CBM2014-00108 (Patent 8,061,598 B2)
`CBM2014-00112 (Patent 7,942,317 B2)
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`mini mu m have fo und it obvious to apply this teachin g of using
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`audit infor mation as pa yment data to a re alti me tr ansaction in
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`order to r eflect pa yment for a cu rr ently r equested or current
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`VDE object being purchased.
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`And we also can address, Your Honor -- I don't
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`know if this is th e appropriate ti me -- the idea of doing that in
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`response to pa yment data because Ginter discloses i n a lot of
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`detail the i mporta nce of having as a prer equisite to allowing
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`access to an obj e ct, confir ming sufficient credit. An d I c an
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`turn to that now.
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`Slide 38, please , or 37, sorr y.
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`JUDGE ELLUR U: Just so the reco rd is clea r, these
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`argu ments are ap plicable to which cases?
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`MR. BAUGHMAN: So, Your Honor, r etrieving
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`pa yment in response t o pa yment da ta we su mma rized the
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`clai ms to which t hat applies on slide 32. So that would be the
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`'221 patent, clai ms 1, 2 , and 11. And in the '317 pat ent,
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`clai ms 1, 6 to 8 , 12, 13, and 16.
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`And now turning to Ginter's disclosure of
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`retrieving data in res ponse to pa yment validation on 37, this is
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`the quote I was mentioning that the passage of Ginte r at
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`colu mn 20 talks a bout ensuring that prerequisites ne cessar y for
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`a given transactio n are met. So req uire ments in adva nce.
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` 17
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`
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`CBM2014-00102 (Patent 8,118,221 B2)
`CBM2014-00106 (Patent 8,033,458 B2)
`CBM2014-00108 (Patent 8,061,598 B2)
`CBM2014-00112 (Patent 7,942,317 B2)
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`And that includes confir ming tha t s ufficient credit
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`fro m an authorize d source is confir med as available. And then
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`it talks a little wh ile later about pre pa yments and rea lti me
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`electronic debits. And together th at certainl y indic ates
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`retrieving data in response to pa yment validation.
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`Turning to page 3 8 -- slide 38, we have Mr .
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`Wechselberger 's t esti mon y about that. A person of s kill would
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`have understood that appl ying this teaching of requir ing
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`sufficient credit i n advance being c onfir med as avail able
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`before a transacti on occurs, when y ou appl y to it th e re alti me
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`debit s yste m also disclosed in Ginter, at a mini mu m renders
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`obvious retrieving data responsive to Ginter 's ad min istrative
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`response, confir ming that the trans mitted audit information
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`had been validate d.
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`Now, the y t r y to argue i n the bottom of the slide, i f
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`you take a look at the quote fro m P atent Owner's res ponse, it
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`could be used for other things as well. Well , that ma y be true ,
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`but this is what it is disclosed as b eing for. It ce rtai nly would
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`have been understood this wa y. An d it is not modif ying the
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`teachings of Gint er. These are the teachings of Ginter.
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`It ma y be more i mportant to re me mber Dr . Katz
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`ad mitted that this was obvious, this conditioning in advance,
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`that using pa yme nt validation as a condition for providing
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` 18
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`
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`CBM2014-00102 (Patent 8,118,221 B2)
`CBM2014-00106 (Patent 8,033,458 B2)
`CBM2014-00108 (Patent 8,061,598 B2)
`CBM2014-00112 (Patent 7,942,317 B2)
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`content would have been known to a pe rson of ordin ar y skill.
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`That's in his deposition at page 27.
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`So, Your Honor, just to make sure t hat I concluded
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`on clai m construc tion, again, we ha ve a construction that
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`includes both the exa mples fro m the specificatio n. Our
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`understanding is that Patent Owner is expressing excluding
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`one of the exa mpl es without explaining wh y that is not the
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`broadest reasonable interpretation c onsistent with the spec.
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`Again, both Ste fi k and Ginter desc ribe pa yment
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`data. The y disclose it. I f you take a look at slide 10 , this
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`indicates the clai ms to which pa yment data a re rele vant. It is
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`all the patents but the '598.
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`Taking a look at slide 11, here is s o me of the
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`disclosure in Stef ik '980 of pa ymen t data, including the
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`repositories generating billing information fo r a ccess , which is
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`trans mitted to a c redit server in ste p 108, which is il lustrated
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`on the left of slide 11 in figure 1. That's box 108.
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`On slide 12 we include so me of the additional
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`details about wha t is sent as pa yme nt data in this rep ort fro m
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`the repositor y. And you have ident ifications of the
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`transaction, of th e repositories, thi s is the quote in t he upper
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`right fro m slide 1 2, a list of charge s. And the report also can
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`be used to pass o n infor mation about charges r e garding debit
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` 19
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`
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`CBM2014-00102 (Patent 8,118,221 B2)
`CBM2014-00106 (Patent 8,033,458 B2)
`CBM2014-00108 (Patent 8,061,598 B2)
`CBM2014-00112 (Patent 7,942,317 B2)
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`and credit c ards i n the lowe r quote to update balanc e
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`infor mation and c redit li mits .
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`And then on slide 13 we bring in Stefik '235,
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`which elaborates , again, on the det ail of the docu me nt card,
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`the re movable c ar d to be used as a repository in Ste f ik '980.
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`And that step 302 in the text at the bottom right talks about
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`logging into the DocuCard, a step where you use, fo r exa mple ,
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`a personal identif ication nu mber . And the specific a tion sa ys
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`this logging -in process ma y a ctivate cr edit accounts. That is
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`the 1013 exhibit at colu mn 6.
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`So you are logging in and activating credit c ard
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`accounts. The ne xt step, step 303, the green highlighted box
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`is a step in which the interfa ce assigns pa yment of fe es
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`associated with a transaction. It is right afte r you ac tivate
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`credit accounts, you assign the fees . And then the di sclosure
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`in the middle on t he right is that th e DocuC ard ma y also have
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`contained within it a c redit server for reporting those usage
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`fees.
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`Turning to slide 14, we have , again, the
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`back -to-back disclosures activating credit cards and then now
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`assigning fees. The word "now" in the original disclosure.
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`Patent Owner 's ex pert, Dr . Katz , agreed there was
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`no other reasonab le reading of this sentence, that the user is
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`making available credit accounts fo r the pa yment of f ees
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`CBM2014-00102 (Patent 8,118,221 B2)
`CBM2014-00106 (Patent 8,033,458 B2)
`CBM2014-00108 (Patent 8,061,598 B2)
`CBM2014-00112 (Patent 7,942,317 B2)
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`associated with t his transaction in figure 3 . He did n't know
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`an ything to rebut the suggestion that this was pa yme nt data.
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`And Mr . Wechsel berger testified a s mu ch in his Exhibit 1021
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`at pages 82 to 83.
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`Now, taking a look at slide 15, the idea of pa yment
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`data being disclosed in Stefik und er either part y's c lai m
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`construction was so mething that Pa tent Owner's expe rt also
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`could not rebut. So we have testimon y f ro m our expert, M r.
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`Wechselberger , at the top of slide 15 that th e f ees pr ocessed
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`are proc essed b y a cr edit server , a nd that in this diagra m we' re
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`talking about assigning fees against credit and bank account
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`infor mation f ro m logging into the c redit account. Th at is
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`Wechselberger 1 at pages 82 to 83.
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`Patent Owner 's ex pert agreed that t he fees that ar e
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`assigned in step 303 have to be pai d at so me point. That fi rst
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`and fourth quotes on the right ther e fro m hi m talk a bout that at
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`pages 66 and 64. But he wasn't sur e if the fe es assigned could
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`be assigned to the credit ac count that was activated just in the
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`prior step.
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`Now, respectfull y, the disclosure is this is
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`expressly activate d. An y pe rson of ordinar y skill wo uld
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`understand that those activated cre dit accounts could be used
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`to pa y the fe es, a s Mr. Wechselber ger tes tified. An d to sa y
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`otherwise is just not credible.
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`CBM2014-00102 (Patent 8,118,221 B2)
`CBM2014-00106 (Patent 8,033,458 B2)
`CBM2014-00108 (Patent 8,061,598 B2)
`CBM2014-00112 (Patent 7,942,317 B2)
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`Now, taking a look at slide 21, we t alked about
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`pa yment data disc losure -- I just wa
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