Trials@uspto.gov
`571-272-7822
`
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`Paper No. 11
`Entered: February 20, 2015
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`JP MORGAN CHASE & CO., and
`JP MORGAN CHASE BANK, N.A.,
`Petitioner,
`
`v.
`
`MAXIM INTEGRATED PRODUCTS, INC.,
`Patent Owner.
`____________
`
`Case CBM2014-00179
`Patent 5,940,510
`____________
`
`
`
`Before TREVOR M. JEFFERSON, MITCHELL G. WEATHERLY, and
`KERRY BEGLEY, Administrative Patent Judges.
`
`BEGLEY, Administrative Patent Judge.
`
`
`
`
`DECISION
`Institution of Covered Business Method Patent Review
`37 C.F.R. § 42.208
`
`
`
`
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`COMPASS EXH. 1012 - Page 1 of 37
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`571-272-7822
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`
`Paper No. 11
`Entered: February 20, 2015
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`JP MORGAN CHASE & CO., and
`JP MORGAN CHASE BANK, N.A.,
`Petitioner,
`
`v.
`
`MAXIM INTEGRATED PRODUCTS, INC.,
`Patent Owner.
`____________
`
`Case CBM2014-00179
`Patent 5,940,510
`____________
`
`
`
`Before TREVOR M. JEFFERSON, MITCHELL G. WEATHERLY, and
`KERRY BEGLEY, Administrative Patent Judges.
`
`BEGLEY, Administrative Patent Judge.
`
`
`
`
`DECISION
`Institution of Covered Business Method Patent Review
`37 C.F.R. § 42.208
`
`
`
`
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`COMPASS EXH. 1012 - Page 1 of 37
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`CBM2014-00179
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`JP Morgan Chase & Co. and JP Morgan Chase Bank, N.A.
`
`(collectively, “Petitioner”) filed a Petition requesting covered business
`
`method patent review (“CBM review”) of claims 1–3, 5, and 6 of
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`U.S. Patent No. 5,904,510 (Ex. 1001, “the ’510 patent”). Paper 1 (“Pet.”).
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`Maxim Integrated Products, Inc. (“Patent Owner”) filed a Preliminary
`
`Response. Paper 7 (“Prelim. Resp.”).
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`Pursuant to 35 U.S.C. § 324(a), CBM review may not be instituted
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`unless “the information presented in the petition . . . , if such information is
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`not rebutted, would demonstrate that it is more likely than not that at least 1
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`of the claims challenged in the petition is unpatentable.” For the reasons
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`that follow, we determine that the Petition, taking into account the
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`Preliminary Response, demonstrates that it is more likely than not that the
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`challenged claims of the ’510 patent are unpatentable. We institute review
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`of the challenged claims on certain asserted grounds of unpatentability.
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`I. BACKGROUND
`
`A. RELATED PROCEEDINGS
`
`
`
`Patent Owner has asserted the ’510 patent against Petitioner in the
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`U.S. District Court for the Western District of Pennsylvania, Maxim
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`Integrated Products, Inc. v. JP Morgan Chase & Co., No. 2:12-cv-01641-
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`JFC (“the District Court Case”). Pet. 4–6; Paper 6, 2. This case was
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`consolidated, with many other cases involving the ’510 patent filed in
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`various district courts, into a multidistrict litigation proceeding in the
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`Western District of Pennsylvania, In re: Maxim Integrated Products, Inc.,
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`MDL No. 2354, Misc. No. 12-244-JFC (W.D. Pa.) (“the MDL Proceeding”).
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`Pet. 4–6; Paper 6, 2–4.
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`In addition, the ’510 patent is the subject of a pending ex parte
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`reexamination proceeding, Control No. 90/013,063 (“the Reexamination
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`Proceeding”). Pet. 6–7; Paper 6, 1. The ’510 patent also was previously the
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`subject of a petition for CBM review filed by Petitioner and PNC Bank,
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`N.A. (“PNC”) in CBM2014-00038, in which review was not instituted, as
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`further detailed in Section II.A.1 below.
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`B. THE ’510 PATENT
`
`
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`The ’510 patent is directed to a “system, apparatus, and method for
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`communicating valuable data,” more specifically, a “cash equivalent,” to
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`and from a “portable module.” Ex. 1001, [57], 1:59–61. A consumer can
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`carry the portable module, fill it with a cash equivalent at an “add-money
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`station,” and spend the stored cash equivalent “when buying products and
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`services in the market place.” Id. at [57], 1:61–2:2. For example, a
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`consumer can “take cash out of an ATM” and “put the cash value into the
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`portable module,” and can use monetary value on the portable module to
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`“pay for a train fare.” Id. at 7:13–35, 8:30–37.
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`
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`In a preferred embodiment, portable module 102 communicates to
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`microprocessor based device 104, which is connected to secure
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`microprocessor based module 108. Id. at 1:64–66, 2:32–34, 2:59–61.
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`Portable module 102 is a “rugged read/write data carrier,” comprising
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`memory 202, memory controller 204, counter 206 “for keeping track of the
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`number of transactions the module has performed,” timer 208 “to time stamp
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`transactions performed by the module,” unique identification number 210,
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`and input/output control circuit 212. Id. at 3:39–4:24. Microprocessor
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`based device 104, in turn, “can be any of an unlimited number of devices,”
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`for example, “a personal computer, an add-a-fare machine at a train or bus
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`station (similar to those in today’s District of Columbia metro stations), a
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`turn style, a toll booth, a bank’s terminal, . . . a washing machine at a
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`Laundromat, . . . or any device that controls access, or meters a monetary
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`equivalent.” Id. at 2:36–45. Finally, secure microprocessor based
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`module 108 comprises “microprocessor 12, a real time clock 14, control
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`circuitry 16, a math coprocessor 18, memory circuitry 20, input/output
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`circuitry 26, and an energy circuit 34.” Id. at 4:24–32. In particular, math
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`coprocessor 18 “handle[s] the complex mathematics of [Rivest-Shamir-
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`Adleman (“RSA”)] encryption and decryption or other types of math
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`intensive encryption or decryption techniques.” Id. at 4:60–65.
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`C. ILLUSTRATIVE CLAIM
`
`Claim 1, the sole independent claim of the ’510 patent, is illustrative
`
`of the claimed subject matter:
`
`1. A system for communicating data securely, comprising:
`a first portable module comprising:
`a nonvolatile memory for storing a first data;
`a first real time clock circuit for time stamping data
`transactions;
`a counter for counting a transaction count;
`an input/output circuit;
`a substantially unique electronically readable
`identification number readable by said input/output
`circuit; and
`a memory control circuit in electrical communication
`with said nonvolatile memory, said real time clock,
`said counter, and said input/output circuit;
`a portable module reader that can be placed in
`communication with said first portable module, said
`portable module reader can be connected to a plurality of
`other devices;
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`
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`a secure microcontroller based module in electronic
`communication with said portable module reader, said
`secure microcontroller comprising:
`a microcontroller core;
`a math coprocessor, in communication with said
`microcontroller core, for processing encryption
`calculations;
`an energy circuit for storing energy;
`a memory circuit connected to said microcontroller core;
`a memory circuit in communication with said
`microcontroller core; and
`a second real time clock circuit in communication with
`said microcontroller,
`said combination of said portable module reader and said secure
`microcontroller performing secure data transfers with said
`first portable module.
`
`Ex. 1001, 24:1–36 (line breaks added).
`
`D. ASSERTED GROUNDS
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`Petitioner challenges the ’510 patent claims on the following grounds.
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`Challenged Claims Basis
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`Reference[s]
`
`1–3
`5, 6
`1–3, 5, 6
`
`§ 103 Cremin and Hawkes
`§ 103 Cremin, Hawkes, and Rivest
`§ 101
`
`
`These asserted grounds rely upon the following § 102(b) prior art references
`
`(Pet. 23–25):
`
`International Patent Application Publication No. WO 83/03018
`(published Sept. 1, 1983) (Ex. 1003, “Cremin”).
`
`INTEGRATED CIRCUIT CARDS, TAGS AND TOKENS ix–xv, 1–38, 81–91,
`136–164 (P.L. Hawkes et al., eds. 1990) (Ex. 1004, “Hawkes”).
`
`R. L. Rivest et al., A Method for Obtaining Digital Signatures and
`Public-Key Cryptosystems, 21 COMM. OF THE ACM 2, 120
`(1978) (Ex. 1005, “Rivest”).
`
`
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`II. ANALYSIS
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`A. REAL PARTY IN INTEREST — ALLEGED § 325(A)(1) BAR
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`Petitioner and Patent Owner dispute whether PNC—who previously
`
`
`
`
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`filed an action challenging the validity of claims of the ’510 patent—is a real
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`party in interest in this proceeding, such that institution of review is barred
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`under 35 U.S.C. § 325(a)(1). Pet. 1–3; Prelim. Resp. 1–27.
`
`1. Relevant Facts
`
`
`
`On January 25, 2012, PNC filed PNC Financial Services Group, Inc.
`
`v. Maxim Integrated Products, Inc., No. 2:12-cv-00089-JFC (W.D. Pa.)
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`(“the PNC Case”), asserting that claims of the ’510 patent were invalid.
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`CBM2014-00038, slip op. at 2–3 (PTAB June 2, 2014) (Paper 19)
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`(“CBM2014-00038 Dec. Inst.”). This case and the District Court Case in
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`which Patent Owner asserted the ’510 patent against Petitioner were
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`consolidated into the MDL Proceeding. See Pet. 4; Paper 6, 2.
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`
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`On November 22, 2013, Petitioner and PNC jointly filed a petition for
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`review of the ’510 patent in CBM2014-00038 (“CBM2014-00038 Petition”).
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`CBM2014-00038, Paper 3. On April 1, 2014, Petitioner and PNC filed a
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`motion for adverse judgment against PNC. CBM2014-00038, Paper 11.
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`
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`On May 21, 2014, PNC and Patent Owner stipulated to dismiss with
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`prejudice all claims and counterclaims in the PNC Case. Ex. 1009. On the
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`same day, PNC withdrew from the joint defense and common interest
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`agreement in the MDL Proceeding, of which Petitioner is a signatory. Ex.
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`1012; see Pet. 2–3.
`
`
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`On June 3, 2014, the Board denied the CBM2014-00038 Petition and
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`dismissed as moot the motion for adverse judgment. CBM2014-00038 Dec.
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`Inst. 3–4. The Board concluded that § 325(a)(1) precluded institution of
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`CBM review, because PNC, a petitioner and real party in interest, had filed a
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`civil action challenging claims of the ’510 patent. Id. at 3. The Board,
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`however, “express[ed] no opinion regarding the likelihood that any party
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`other than PNC would prevail in establishing that any of the challenged
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`claims are unpatentable for the reasons set forth in the Petition.” Id.
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`
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`Petitioner retained new counsel to prepare the current Petition
`
`challenging the ’510 patent, which it filed on August 21, 2014. Pet. 2.
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`2. Discussion
`
`Petitioner argues that PNC is not a real party in interest in this
`
`proceeding, because “PNC has had no participation or control in the filing of
`
`this Petition” and “has no interest in the outcome of this proceeding.” Id.
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`at 2–3. Petitioner emphasizes that PNC settled the PNC Case in May 2014
`
`and therefore, PNC and Petitioner have not been co-signatories to any joint
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`defense agreement since that time; Petitioner and PNC are “entirely separate
`
`and unrelated corporate entities with no common ownership . . . and no
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`common control”; and counsel that prepared this Petition differs from the
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`counsel that prepared the CBM2014-00038 Petition. Id.
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`Patent Owner, however, contends that PNC is a real party in interest
`
`because, under the clear language of § 325(a)(1) and the Board’s decision
`
`denying institution in CBM2014-00038, PNC’s status as a real party in
`
`interest cannot be altered by ceasing further participation in challenging the
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`’510 patent or settling its dispute with Patent Owner. Prelim. Resp. 2–3, 8–
`
`9, 13–15. In addition, Patent Owner argues that even if new facts could alter
`
`PNC’s status as a real party in interest, PNC remains a real party in interest
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`in this proceeding under the facts of this case. Id. at 3, 9, 15–27.
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`Specifically, according to Patent Owner, the Petition is substantially similar
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`to the CBM2014-00038 Petition that challenged the same patent, and is
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`supported by a declaration from the same declarant. Id. at 3–4, 7–9, 15–22.
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`Patent Owner, thus, argues that PNC’s prior “funding, control, and other
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`contributions” to the CBM2014-00038 Petition remain in this Petition. Id.
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`Patent Owner also asserts that Petitioner and PNC jointly planned and
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`announced to the Board in CBM2014-00038 that Petitioner would re-file a
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`petition, and suggests this shows PNC has an ongoing understanding with
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`Petitioner and a continued interest in the ’510 patent. Id. at 3, 9, 12, 22–25.
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`As an initial matter, we are not persuaded by Patent Owner’s
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`argument that, regardless of any factual changes since the preparation and
`
`filing of the CBM2014-00038 Petition, PNC must be a real party in interest
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`in this proceeding, under the language of § 325(a)(1) and the Board’s prior
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`decision in CBM2014-00038. As the Office Patent Trial Practice Guide
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`explains, “[w]hether a party who is not a named participant in a given
`
`proceeding nonetheless constitutes a ‘real [party in interest]’ . . . to that
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`proceeding is a highly fact-dependent question,” which must be addressed
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`on a “case-by-case basis.” Office Patent Trial Practice Guide, 77 Fed. Reg.
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`48,756, 48,759 (Aug. 14, 2012) (“Trial Practice Guide”) (citing Taylor v.
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`Sturgell, 553 U.S. 880, 893–95 & n.6 (2008)). Here, the facts relevant to
`
`whether PNC is a real party in interest, including PNC’s participation in and
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`interest in this proceeding, are significantly different than the facts presented
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`in CBM2014-00038. Therefore, we address the issue of whether PNC is a
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`real party in interest under the facts of this proceeding.
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`In general terms, a real party in interest is a “party that desires review
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`of the patent” or “at whose behest the petition has been filed.” Id.
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`(explaining these considerations apply to “IPR and PGR proceedings” and
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`“similar considerations” apply to CBM review). Courts, which traditionally
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`have invoked the term real party in interest to describe a relationship
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`sufficient to justify applying conventional principles of estoppel and
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`preclusion to non-parties, have identified multiple relevant factors, which
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`inform our analysis. Id. at 48,759–60. Relevant factors include the non-
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`party’s “relationship with the petitioner” and “relationship to the petition
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`itself, including the nature and/or degree of involvement in the filing; and
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`the nature of the entity filing the petition.” Id.
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`In Taylor v. Sturgell, the Supreme Court identified six categories of
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`exceptions to the general rule that a non-party is not estopped, precluded, or
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`otherwise bound by previous litigation, namely where: (1) the non-party
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`“agrees to be bound by the determination of issues” in the proceeding; (2) a
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`“pre-existing substantive legal relationship[]” with the named party justifies
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`binding the non-party (e.g., “assignee and assignor”); (3) the non-party, “in
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`certain limited circumstances,” is “adequately represented” by a party with
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`the same interests (e.g., class actions); (4) the non-party “assume[d] control”
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`over the proceeding; (5) the non-party is bound by a prior decision and is
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`attempting to rehear the matter through a proxy; and (6) a “special statutory
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`scheme . . . expressly foreclos[es] successive” hearing by non-parties. 553
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`U.S. at 892–98 (citations and quotations omitted).
`
`A common focus of inquiry is the fourth category, namely whether the
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`non-party exercised or could have exercised control over a party’s
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`participation in the proceeding. Trial Practice Guide, at 48,759 (citing
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`Taylor, 553 U.S. at 895). The concept of control generally means that “the
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`non[-]party has the actual measure of control or opportunity to control that
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`might reasonably be expected between two formal coparties.” Id. (citation
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`omitted). In other words, the non-party “had the opportunity to present
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`proofs and argument,” Taylor, 553 U.S. at 895 (citation omitted), or “to
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`direct or control the content” of the filing, In re Guan Inter Partes
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`Reexamination Proceeding, Control No. 95/001,045, Decision Vacating
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`Filing Date, at 8 (Aug. 25, 2008). “The non[-]party’s participation may be
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`overt or covert, and the evidence may be direct or circumstantial—so long as
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`the evidence as a whole shows that the non[-]party possessed effective
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`control over a party’s conduct of the [proceeding] as measured from a
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`practical, as opposed to a purely theoretical standpoint.” Gonzalez v. Banco
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`Central Corp., 27 F.3d 751, 759 (1st Cir. 1994).
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`“[T]here is no bright-line test,” however, “for determining the
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`necessary quantity or degree of participation to qualify as a ‘real [party in
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`interest]’ . . . based on the control concept.” Trial Practice Guide, at 48,759
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`(citing Gonzalez, 27 F.3d at 759). “[A] party that funds and directs and
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`controls” a petition or proceeding constitutes a real party in interest, “[b]ut
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`whether something less than complete funding and control” is sufficient
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`depends on the facts. Id. at 48,760.
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`Here, on the present record, we are persuaded that PNC is not a real
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`party in interest in this proceeding—the Petition was not filed at PNC’s
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`“behest,” PNC no longer “desires review” of the ’510 patent, and the other
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`factors and categories identified in the Office Patent Trial Practice Guide
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`and Taylor do not warrant naming PNC as a real party in interest.
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`Patent Owner’s speculation regarding an ongoing common interest and
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`understanding between PNC and Petitioner lacks any factual basis on the
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`record before us. See Prelim. Resp. 3, 9, 12, 17, 22–25.
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`Rather, the evidence before us shows Petitioner and PNC are entirely
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`separate corporate entities, with no identifiable ongoing relationship.
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`Petitioner and PNC were once co-defendants and co-members of a joint
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`defense agreement, and previously collaborated in filing the CBM2014-
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`00038 Petition challenging the ’510 Patent in November 2013. PNC,
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`however, “expressly abandon[ed]” the CBM2014-00038 Petition in
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`April 2014, and withdrew from the joint defense agreement it had co-signed
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`with Petitioner in May 2014. CBM2014-00038, Paper 11, at 3; see Pet. 2–3,
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`Ex. 1012. Further, Petitioner hired new counsel, different from the counsel
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`that previously co-represented PNC and Petitioner in CBM2014-00038, to
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`prepare and file this Petition. Therefore, based on the evidence before us,
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`we determine that Petitioner and PNC have had no continuing relationship
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`since at least the conclusion of CBM2014-00038 in June 2014.
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`PNC also has no identifiable ongoing interest in a review of the
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`’510 patent. All claims and counterclaims in the PNC Case, including those
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`involving the ’510 patent, were dismissed with prejudice in May 2014, Ex.
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`1009, and there is no evidence before us to suggest that PNC has had any
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`interest in review of the ’510 patent after this dismissal.
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`In addition, on the record before us, we are persuaded that PNC has
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`not participated in or controlled the present Petition, as Petitioner expressly
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`represents in the Petition. Pet. 2–3. Although Patent Owner contends that
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`overlap in some of the prior art and arguments in the CBM2014-00038
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`Petition and the current Petition demonstrates PNC’s control and
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`contributions in this proceeding, Prelim. Resp. 3–4, 7–9, 15–22, such
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`overlap is not sufficient to show that PNC had any opportunity to direct or
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`control the arguments and evidence presented in the present Petition. The
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`similarity is understandable because the ’510 patent as well as the relevant
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`prior art and potential unpatentability arguments have not changed.
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`Nevertheless, the current Petition indisputably has differences from the
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`CBM2014-00038 Petition, including, but not limited to, relying on different
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`prior art references in the asserted § 103 ground, proposing different claim
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`terms for construction, and challenging an additional claim. Compare Pet.,
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`with CBM2014-00038, Paper 3. No evidence is before us to suggest that
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`PNC had any involvement in directing such changes or the arguments and
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`evidence presented in the Petition, which was prepared by new counsel
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`retained by Petitioner alone.
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`Yet, because Petitioner supports the Petition with a declaration from
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`Stephen D. Bristow, the same declarant as in CBM2014-00038, we agree
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`with Patent Owner that the Petition “enjoys at least part of the benefit of”
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`any payments PNC made to Mr. Bristow to prepare his declaration in
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`CBM2014-00038, even though the declaration filed in this case is not the
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`same as the one filed in CBM2014-00038. Prelim. Resp. 19–20; see
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`generally Ex. 1017 (Decl. of Stephen Bristow); CBM2014-00038, Ex. 1002
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`(Decl. of Stephen D. Bristow). Nevertheless, even if we were to
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`characterize these payments by PNC to Mr. Bristow as partial funding of the
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`Petition, we are not persuaded that PNC had sufficient involvement in or
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`direction of the Petition to be a real party in interest, in light of the other
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`facts outlined above that strongly weigh against a finding of control.
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`Therefore, on this record, we are not persuaded that Petitioner had the
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`opportunity to control this proceeding. Similarly, none of the other five
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`categories of exceptions outlined by the Supreme Court in Taylor is
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`applicable to the facts of this case. See 553 U.S. at 892–98.
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`Finally, we note that a petitioner and a non-party’s status as co-
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`defendants and co-members of a joint defense group is not alone sufficient
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`to render the non-party a real party in interest. Trial Practice Guide, at
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`48,760; see, e.g., Petroleum Geo-Servs. Inc. v. WesternGeco LLC, Case
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`IPR2014-00687, slip op. at 16 (PTAB Dec. 15, 2014) (Paper 33) (holding
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`petitioner and non-party’s shared interest in invalidating patent at issue,
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`“collaborat[ion] together, and invo[cation of the] common interest privilege
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`with respect to sharing potentially invalidating prior art references” was
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`insufficient to render non-party a real party in interest). In our view, based
`
`on the facts before us, PNC and Petitioner’s terminated collaboration in
`
`preparing the CBM2014-00038 Petition, while co-defendants and co-
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`signatories of a joint defense agreement in the MDL Proceeding, is similar to
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`such a situation. PNC’s lack of involvement or control in the subsequent
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`preparation and funding of this Petition, prepared by different counsel and
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`presenting different prior art and arguments, persuades us that PNC is not a
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`real party in interest in this case.
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`Accordingly, based on the evidence before us at this stage of the
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`proceeding, PNC is not a real party in interest in this case, and § 325(a)(1)
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`does not bar institution of review.
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`B. SECTION 325(D) – DISCRETION TO DECLINE TO INSTITUTE
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`Patent Owner also urges us to exercise our discretion, under 35 U.S.C.
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`
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`
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`§ 325(d), to decline to institute the Petition because the “same or
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`substantially the same prior art or arguments” were presented in CBM2014-
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`00038 and the pending Reexamination Proceeding. Prelim. Resp. 27–30.
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`Section 325(d) provides: “[i]n determining whether to institute or order a
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`proceeding . . . , the Director may take into account whether, and reject the
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`petition or request because, the same or substantially the same prior art or
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`arguments previously were presented to the Office.” 35 U.S.C. § 325(d).
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`
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`For reasons that follow, we determine that the Reexamination
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`Proceeding does not present the “same or substantially the same prior art or
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`arguments” as this Petition and therefore, does not meet the requirement for
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`exercise of discretion under § 325(d). The Reexamination Proceeding was
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`requested, and granted, on the ground that U.S. Patent No. 5,982,891
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`(“Ginter”) anticipates under 35 U.S.C. § 102 certain claims of the
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`’510 patent. See Control No. 90/013,063, Office Action (June 3, 2014), at 2,
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`12. Ginter is not before us in this proceeding. Instead, the Petition relies on
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`entirely distinct prior art references, Cremin, Hawkes, and Rivest. In
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`addition, in contrast to the anticipation ground presented in the
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`Reexamination Proceeding, the Petition asserts unpatentability based on
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`obviousness and patent-ineligible subject matter. Therefore, we are not
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`persuaded there is any overlap between the prior art and arguments
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`presented in the Reexamination Proceeding and this proceeding. Filing
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`notices of this Petition and the CBM2014-00038 Petition in the
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`Reexamination Proceeding, along with copies of the relevant prior art, does
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`14
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`COMPASS EXH. 1012 - Page 14 of 37
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`CBM2014-00179
`Patent 5,940,510
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`not make the arguments and art raised in these proceedings part of the
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`Reexamination Proceeding, as Patent Owner seems to suggest. See Control
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`No. 90/013,063, Information Disclosure Statement (filed Sept. 30, 2014);
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`Control No. 90/013,063, Notice of Prior & Concurrent Proceedings Under
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`37 C.F.R. § 1.565(a) (filed Sept. 30, 2014).
`
`
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`Moreover, we need not address whether the earlier CBM2014-00038
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`Petition involved the same or substantially the same prior art or arguments
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`as this Petition. Even if this requirement of § 325(d) were met, we would
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`not exercise our discretion to deny the Petition, given that the Board did not
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`reach the merits of the unpatentability arguments in CBM2014-00038. See
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`CBM2014-00038 Dec. Inst.
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`
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`Relatedly, Patent Owner repeatedly asks that we “disregard[]” “all
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`arguments not found in” the previous CBM2014-00038 Petition, asserting
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`that these arguments are “[w]aived” and unfairly bolster the Petition.
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`Prelim. Resp. 30–31; see e.g., id. at 32–34, 37–38. Petitioner has not waived
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`arguments absent from the previous petition it filed with PNC, the merits of
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`which were never addressed by the Board. We consider and address all the
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`arguments presented in the Petition presently before us.
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`C. PETITIONER’S STANDING
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`
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`To have standing, Petitioner must show that: (1) “the patent for which
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`review is sought is a covered business method patent,” and (2) Petitioner
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`“meets the eligibility requirements of § 42.302.” 37 C.F.R. § 42.304(a).
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`1. Requirements of 37 C.F.R. § 42.302
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`
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`Petitioner satisfies both requirements of 37 C.F.R. § 42.302. First, as
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`explained above in Section I.A, Petitioner represents in the Petition that
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`15
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`COMPASS EXH. 1012 - Page 15 of 37
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`Patent Owner has asserted the ’510 patent against Petitioner in the District
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`Court Case. See Pet. 4; Paper 6, at 2. Thus, Petitioner “has been sued for
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`infringement” of the ’510 patent. Leahy-Smith American Invents Act
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`(“AIA”), Pub. L. No. 112-29, § 18(a)(1)(B), 125 Stat. 284, 330 (2011); 37
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`C.F.R. § 42.302. Second, we agree with Petitioner’s representation, which is
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`not contested by Patent Owner, that Petitioner is not estopped from pursuing
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`CBM review under 35 U.S.C. § 325(e)(1) because Petitioner’s previous
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`challenge to the ’510 patent in CBM2014-00038 did not result in a final
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`written decision. 37 C.F.R. § 42.302(b); Pet. 8–9.
`
`2. Covered Business Method Patent
`
`
`
`A “covered business method patent,” as defined in the AIA, is “a
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`patent that claims a method or corresponding apparatus for performing data
`
`processing or other operations used in the practice, administration, or
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`management of a financial product or service, except that the term does not
`
`include patents for technological inventions.” AIA, § 18(d)(1); accord 37
`
`C.F.R. § 42.301(a). In determining whether a patent is eligible for CBM
`
`review, the focus is on the claims. See 37 C.F.R. § 42.301; Transitional
`
`Program for Covered Business Method Patents—Definitions of Covered
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`Business Method Patent and Technological Invention; Final Rule, 77 Fed.
`
`Reg. 48,734, 48,736 (Aug. 14, 2012) (“CBM Final Rules”). One claim
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`directed to a covered business method is sufficient to render the patent
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`eligible for review. Id.
`
`a. Financial Product or Service
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`The legislative history of the AIA indicates that “‘financial product or
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`service’ should be interpreted broadly.” CBM Final Rules, at 48,735
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`
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`16
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`COMPASS EXH. 1012 - Page 16 of 37
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`(response to comment 1). Specifically, the legislative history “explains that
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`the definition of covered business method patent was drafted to encompass
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`patents ‘claiming activities that are financial in nature, incidental to a
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`financial activity or complementary to a financial activity.’” Id. (quoting
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`157 Cong. Rec. S5432 (daily ed. Sept. 8, 2011) (statement of Sen.
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`Schumer)).
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`Petitioner argues that claim 2 of the ’510 patent is directed to a
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`financial product or service, as confirmed by the specification of the
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`’510 patent as well as the litigation behavior of Patent Owner. See Pet. 12–
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`16. Patent Owner does not dispute claim 2 is directed to a financial product
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`or service. See Prelim. Resp. 34–38. Instead, Patent Owner contends that
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`the ’510 patent claims challenged in CBM2014-00038 are not directed to a
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`financial product or service, and we should not consider claim 2 because
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`CBM2014-00038 did not challenge claim 2 or rely on claim 2 for standing.
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`Id. at 35–38. As explained above, we consider and address all arguments
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`Petitioner makes in this Petition. See supra Section II.B.
`
`
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`Claim 2 depends from claim 1, which recites a “system for
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`communicating data securely” in which a “portable module reader . . . can
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`be placed in communication with [a] first portable module” and “can be
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`connected to a plurality of other devices.” Ex. 1001, 24:16–19. In claim 2,
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`the “plurality of other devices includes at least one of a credit card reader, a
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`cash machine, an automatic teller machine, and a phone line.” Id. at 24:37–
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`40 (emphasis added). Based on the language of the claim, the recited system
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`is, at a minimum, incidental or complementary to financial activities and
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`services performed by credit card readers, cash machines, and automatic
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`
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`17
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`COMPASS EXH. 1012 - Page 17 of 37
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`CBM2014-00179
`Patent 5,940,510
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`teller machines (“ATMs”), such as electronic payments and debits, or cash
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`transfers and withdrawals. See David W. Gillman v. Stoneeagle Servs., Inc.,
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`Case CBM2013-00047, slip op. at 7–8 (PTAB Feb. 18, 2014) (Paper 11)
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`(holding that processing payment is an “inherently financial activit[y]”);
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`Apple Inc. v. Sightsound Techs., LLC, Case CBM2013-00020, slip op. at 11–
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`12 (PTAB Oct. 8, 2013) (Paper 14) (“The electronic transfer of money is a
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`financial activity, and allowing such a transfer amounts to providing a
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`financial service.”).
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`
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`The specification confirms that claim 2 involves financial activities.
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`The specification states that a consumer can fill the portable module with a
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`“cash equivalent” (Ex. 1001, at [57], 1:59), “electronic money” (id. at 1:67),
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`or a “currency equivalent” (id. at 2:36). For example, a consumer can “take
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`cash out of an ATM,” or “add-money station,” and “put the cash value into
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`the portable module.” Id. at 1:65–2:5, 8:34–37. The consumer then can use
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`the monetary value stored on the portable module “when buying products or
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`services in the market place” (id. at 1:60–63; see id. at 1:64–2:5), for
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`example, “to pay for a train fare” (id. at 7:13–35, 8:30–37). In such
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`transactions, the “credit card reader” can be used “to read a user’s credit card
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`and then, when authorized, either communicate . . . that units of exchange
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`need to be added to the portable module or that units of exchange need to be
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`extracted from the portable module to pay for a good, service, or credit card
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`bill.” Id. at 3:15–22. Accordingly, the specification provides further
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`evidence that the system recited in claim 2 facilitates electronic financial
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`activities and transactions, including transferring and withdrawing monetary
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`value, and paying for goods and services.
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`
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`18
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`COMPASS EXH. 1012 - Page 18 of 37
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`CBM2014-00179
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`Accordingly, on this record, we determine that the system recited in
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`
`
`
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`claim 2 is directed to an “apparatus for performing data processing or other
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`operations used in the practice, administration, or management of a financial
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`product or service.” AIA, § 18(d)(1); 37 C.F.R. § 42.301(a); see Regions
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`Fin. Corp. v. Retirement Capital Access Mgmt. Co., Case CBM 2014-00012,
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`slip op. at 7–8 (PTAB Mar. 25, 2014) (Paper 16) (holding relevant system
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`claims met AIA definition of covered business method patent).
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`b. Technological Invention Exception
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`The technological invention exception in the definition of a covered
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