IPR2014—00715
`
`US. Pat. No. 6,934,945
`Docket No.: 6601-0101L
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`FIRST DATA CORPORATION
`
`Petitioner
`
`V.
`
`CARDSOFT INTERNATIONAL PTY LIMITED
`
`Patent Owner
`
`Case IPR2014-00715
`
`Patent 6,934,945
`
`PATENT OWNER’S CARDSOFT (ASSIGNMENT FOR THE BENEFIT OF
`CREDITORS), LLC
`PRELIMINARY RESPONSE
`
`PURSUANT TO 37 C.F.R. § 42.107
`
`

`

`IPR2014—00715
`
`US. Pat. NO. 6,934,945
`
`TABLE OF CONTENTS
`
`I.
`
`11.
`
`INTRODUCTION ........................................................................................... 1
`
`TIME BARRED — FIRST DATA FAILED TO PROPERLY SERVE
`
`PETITION .................................................................................................................. 2
`
`A. FACTS ............................................................................................................... 2
`
`B. ARGUMENTS ................................................. ‘. ................................................... 3
`
`111.
`
`TIME BARRED — VERIFONE IS REAL PARTY IN INTEREST ............... 7
`
`A. VERIFONE’ S INVOLVEMENT WITH FIRST DATA ................................................. 8
`
`B. LEGAL STANDARDS ........................................................................................ 10
`
`C. VERIFONE IS AN RPI UNDER THE GUIDELINES ................................................ 1 1
`
`D. FIRST DATA CITATIONS ARE NOT CONTRARY TO RPI .................................... 15
`
`IV. NO REASONABLE LIKELIHOOD THAT PETITIONER WILL PREVAIL
`
`18
`
`A. THE ‘945 PATENT ............................................................................................ 19
`
`B. ERRORS IN CLAIM CONSTRUCTION ................................................................. 21
`
`C. GROUND 1 — EMV ‘96 DOES NOT ANTICIPATE .............................................. 23
`
`D. GROUND 2 — OMNI 300 DOES NOT CURE EMV ‘96 DEFICIENCIES ................ 28
`
`E. GROUND 3 — MORE REFERENCES BUT STILL UNOBVIOUS .............................. 29
`
`V.
`
`RELIEF REQUESTED — DENIAL OF TRIAL ............................................ 32
`
`ii
`
`

`

`IPR2014-00715
`
`US. Pat. No. 6,934,945
`
`TABLE OF AUTHORITIES
`
`Cases
`Gonzalez 12. Banco Central Corp, 27 F.3d 751, 758 (1St Cir. 1994) ...................... 10
`In re Arkley, 455 F.2d 586, 587 (CCPA 1972) ....................................................... 27
`In re Suitco Surface, Inc., 603 F.3d 1255, 1260 (Fed. Cir. 2010) .......................... 22
`
`Statutes
`
`35 U.S.C. § 102 ....................................................................................................... 27
`
`35 U.S.C. § 312 ................................................................................................. 15,18
`35 U.S.C. § 313 ......................................................................................................... 1
`35 U.S.C. § 315 ................................................................................................ passim
`
`Rules
`
`37 C.F.R. § 42.105 ........................................................................................ 3, 4, 6, 7
`37 C.F.R. § 42.106 ........................................................................................... passim
`37 C.F.R. § 42.107 ................................................................................................. i, 1
`37 C.F.R. § 42.6(e)(4)(iii) ......................................................................................... 4
`
`Other Authorities
`
`77 Fed. Reg. 48680, at 48688 ................................................................................... 6
`Hewlett-Packard Co. v. MCM Portfolio, LLC, IPR2013—00217, paper 10 ............ 17
`In re Schlecht et al. Inter Partes Reexamination Proceeding, Control No.
`95/001,206 ........................................................................................................... 16
`Office Patent Trial Practice Guide, 77 Fed. Reg. at 48,759 ....................... 10, 15, 16
`Syntroleum Corp. v Neste Oil Oyj, IPR2013—00178, paper 16 .............................. 16
`ZOLL Lifecor Corp. v. Philips Electronics North America Corp, IPR2013—00606,
`paper 13 ............................................................................................................ 5,10
`
`iii
`
`

`

`IPR2014-00715
`
`US. Pat. No. 6,934,945
`
`EXHIBIT LIST
`
`The Exhibits referenced in Cardsofi
`
`(Assignment
`
`for
`
`the Benefit of
`
`Creditors), LLC’s Preliminary Response are listed in the Exhibit List being filed
`
`concurrently herewith.
`
`iV
`
`

`

`IPR2014-007l5
`
`US. Pat. No. 6,934,945
`
`I.
`
`INTRODUCTION
`
`Patent Owner, Cardsoft (Assignment for the Benefit of Creditors), LLC’s
`
`(hereinafter “Cardsoft (ABC)”), respectfully submits this Preliminary Response to
`
`the corrected petition for inter partes review dated May 20, 2014 (“Pet”) of US.
`
`Patent No. 6,934,945 (Petitioner's EX. 1001, hereinafter “the '945 patent”) filed by
`
`First Data Corp. (“First Data” or “Petitioner”). This Preliminary Response is
`
`timely under 35 U.S.C. § 313 and 37 C.F.R. § 42.107(b) as it is being filed within
`
`three months of the Notice of Filing Date mailed May 07, 2014 (“Notice”).
`
`Cardsoft (ABC) believes that the Board should deny institution of this inter
`
`partes review for any one of three reasons. First, the petition was not timely filed
`
`due to a failure to properly serve the patent owner’s address of record. The date of
`
`complete filing including proper service falls outside the one year time period of
`
`35 U.S.C. § 315(b). Second, the petition was not timely filed because a real party
`
`in interest was not named.
`
`Including the real party in interest also makes the
`
`petition untimely under 35 U.S.C. § 315(b). Third, the grounds advanced by
`
`Petitioner do not have a reasonable likelihood of prevailing because, inter alia, the
`
`applied art fails to teach or suggest the claimed Virtual message processor. This
`
`Virtual processor is part of a claimed architecture for a Virtual machine residing on
`
`a communication device. As properly construed, even Petitioner does not allege
`
`that the claimed Virtual message processor is taught or suggested. As explained
`
`

`

`IPR2014—00715
`
`US. Pat. No. 6,934,945
`
`more fully below, denial of this petition is believed to be required for any one of
`
`these reasons and is respectfully requested.
`
`II.
`
`TIME BARRED — FIRST DATA FAILED TO PROPERLY SERVE
`
`PETITION
`
`First Data failed to serve its original petition on the correspondence address
`
`of record before the expiration of the one year period described in 35 U.S.C. §
`315(b). Because proper service is required to obtain a filing date (37 C.F.R. §
`
`42.106(2)),
`
`the petition was not “filed” on the date alleged by Petitioner.
`
`Thereafter, Petitioner filed the corrected petition, but not until after the one year
`
`period had run. Accordingly,
`
`the corrected petition should be dismissed as
`
`untimely; z'.e., time barred under 35 U.S.C. § 315 (b).
`
`A.
`
`Facts
`
`On April 30, 2014, First Data attempted to file the original petition. The
`
`certificate of service attached to that petition (page 52) recites Cardsoft (ABC) and
`
`their corporate address as the single recipient. That is, First Data certified that the
`
`petition was served “upon the following:”
`
`Cardsoft (Assignment for the Benefit of Creditors), LLC
`
`1100 La Avenida Street, Bldg. A
`
`Mountain view, CA 94043
`
`But this is not the correspondence address of record for the ‘945 patent. The
`
`correspondence address as shown in the records of the USPTO via PAIR is
`
`

`

`IPR2014-00715
`
`US. Pat. No. 6,934,945
`
`KED & Associates, LLP
`
`PO. Box 8638
`
`Reston VA 20195
`
`(See EX 2001).
`
`Subsequently, the corrected petition was filed and served on May 20, 2014.
`
`This corrected petition, which addressed unrelated format issues, had an improved
`
`certificate of service. First Data now certified that in addition to the Cardsoft
`
`(ABC) corporate office, the KED & Associates law firm was also served.
`
`(Pet. at
`
`52). Because the KED & Associates address is the correspondence address of
`
`record, the corrected petition was properly served under rule 42.106(a)(2), but not
`
`until May 20, 2014; z'.e., the filing date of the corrected petition.
`
`First Data admits that the one year period under 35 U.S.C. § 315(b) started
`
`on May 2, 2013.
`
`(Pet. at 7; EX. 1006). Accordingly, the one year period expired
`
`on May 2, 2014.
`
`B.
`
`Arguments
`
`Under rule 42.101(b), a person is ineligible to seek an IPR proceeding if
`
`“[t]he petition requesting the proceeding is filed more than one year after the date
`
`on which the petitioner is served with a complaint alleging infringement of the
`
`paten .” (Emphasis added). A petition’s filing date is defined in rule 42.106. To
`
`obtain a filing date, the petition must, inter alia, “[e]ffect service of the petition on
`
`the correspondence address of record as provided in § 42.105(a).” 37 CPR. §
`
`

`

`IPR2014-007 l 5
`
`US. Pat. No. 6,934,945
`
`42.106(a)(2). Importantly, a petition “will not be accorded a filing date until the
`
`petition satisfies all
`
`[of the listed]
`
`requirements,” including service on the
`
`correspondence address of record. 37 C.F.R. § 42.106(a).
`
`In short, to be “filed,”
`
`the petition must be complete.
`
`First Data did not submit a complete petition before expiration of the one
`
`year period of 35 U.S.C. § 315(b) and rule 42.lOl(b). The original First Data
`
`petition of April 30, 2014, did not serve the petition on the correspondence address
`
`of record for the patent (KED & Associates) as required under rules 42.106(a)(2)
`
`and 42.105(a).
`
`Instead, the certificate of service indicates that the petition was
`
`served on Cardsoft (ABC) at their corporate address, only. Given that “the
`
`certificate of service must state [] the name and address of every person served”
`
`(rule 42.6(e)(4)(iii)), the First Data certificate of service is strong evidence that the
`
`wrong address was served. The effect of this failure to serve the patent owner at
`
`the required address is explicitly set forth in the rules: without service “on the
`
`correspondence address of record,” the petition “will not be accorded a filing
`
`date.” 37 C.F.R. §42.106(a)(2)(emphasis added). The service of the petition on
`
`the Cardsoft (ABC) corporate office, instead of the correspondence address of
`
`record, means that the original petition was ineligible for a filing date on April 30,
`
`2014. The one year period for filing expired two days later on May 2, 2014, and
`
`thereafter, First Data became ineligible to file an IPR petition.
`
`

`

`IPR2014-00715
`
`US. Pat. No. 6,934,945
`
`The corrected petition filed on May 20, 2014 does not save First Data.
`
`Though properly served, this complete petition was filed more than 1 year after the
`
`complaint and thus is in violation of 35 U.S.C. § 315(b) and rule 42.101(b). That
`
`is, the filing date of the corrected petition is May 20, 2014, which comes too late to
`
`meet the one year filing deadline of May 2, 2014. Moreover, the corrected petition
`
`does not retroactively perfect the original April filing date. Under the rules, a
`
`petition is “not accorded a filing date until the petition satisfies” each of (a)(1) —
`
`(a)(3) of 37 CPR. § 42.106 (emphasis added).
`
`In this case, requirement (a)(2)
`
`was not met “until” May 20, 2014, which means that May 20, 2014 is the earliest
`
`filing date for the petition. See ZOLL Lifecor Corp. v. Philips Electronics North
`
`America Corp, IPR2013-00606, Decision denying institution of IPR at 7 (March
`
`20, 2014)(“curing the omission of ZOLL Medical as a real party—in-interest would
`
`be futile because, even if corrected, the earliest filing date that could be accorded
`
`to the petition would not fall within the one-year period specified by 35 U.S.C. §
`
`315 (b)”). Therefore, First Data did not “file” their petition before the expiration
`
`of the one-year period (before May 2, 2014) and should be time barred.
`
`While the service provisions may seem picayune, and the resulting denial of
`
`the petition harsh, holding Petitioner to the rules of the game represents an
`
`important public policy. Uniform application of the rules is fundamental to the
`
`fairness of the proceedings. Also, the USPTO gave considerable thought to the
`
`

`

`IPR2014-00715
`
`US. Pat. No. 6,934,945
`
`service requirement, and its effect,
`
`in promulgating the rules.
`
`The USPTO
`
`recognized that the patentee’s correspondence address is often outdated and that
`
`petitioners may know a better, more accurate address. (See 77 Fed. Reg. 48680, at
`
`48688, noting that communication often suffers post grant, leading to failure to pay
`
`maintenance fees). But the USPTO chose to nonetheless require service at the
`
`correspondence address of record for the patent and merely permit the inclusion of
`
`service on other and/or more accurate addresses. 37 C.F.R. § 42.105.
`
`Indeed, the
`
`emphasis on serving the correspondence address of record is seen in the repetition
`
`of the requirement
`
`in both rules §42.105 (service) and §42.106 (filing date
`
`requirements). Therefore, the need to serve the patent owner at the correspondence
`
`address-of record was a conscious, well thought out policy decision of the USPTO
`
`and waiver of such a requirement should not be entertained, absent extraordinary
`
`circumstances.
`
`In this case, First Data has no extraordinary circumstance. They
`
`could have easily complied with the rules by checking at the USPTO PAIR
`
`website.
`
`Instead they used the corporate address of Cardsoft (ABC), which is
`
`found in the litigation papers (see Ex. 1007, Complaint at paragraph 1), but not in
`
`the USPTO correspondence records.
`
`Indeed, without prompting, First Data
`
`realized that they had improperly served the original petition and, on their own,
`
`properly served the corrected petition. No reason exists for First Data’s failure to
`
`follow the rules the first time around.
`
`

`

`IPR2014-00715
`
`US. Pat. No. 6,934,945
`
`In summary, a petition for IPR “filed more than one year after” a complaint
`
`was served on the Petitioner is barred under 35 U.S.C. § 315(b). A petition is
`
`“filed,” i.e., receives a filing date, when each of the requirements of 37 C.F.R. §
`
`42.106(a) are met. The First Data petition submitted on April 30, 2014 failed to
`
`serve the petition “on the correspondence address of record” for the patent as
`
`required by 37 CPR. §§ 42.106(a)(2) and 42.105(a).
`
`The April 30, 2014
`
`submission was therefore not entitled to a filing date. The subsequent submission
`
`by First Data of a corrected petition, which included proper service, would
`
`establish a filing date of May 20, 2014. But that date is after the admitted one—year
`
`bar date of May 2, 2014. Accordingly, First Data has not filed a petition for IPR
`
`within the one-year time frame and the petition for IPR should be denied under 35
`
`U.S.C. § 315 (b).
`
`III. TIME BARRED -— VERIFONE IS REAL PARTY IN INTEREST
`
`First Data acknowledges a role for VeriFone but asserts that VeriFone is not
`
`a real party in interest (“RPI”). This assertion, though incorrect, is understandable.
`
`Confessing that VeriFone is an RPI would bar the present petition under 35 U.S.C.
`
`§ 315(b), given the 2008 lawsuit between Cardsoft (ABC) and VeriFone (see Pet.
`
`at 5 reciting the Cardsoft,
`
`Inc. and Cardsoft (Assignment for the Benefit of
`
`Creditors), LLC v. VeriFone Holdings Inc., et 611., Civil Action No. 2:08-cv-00098
`
`(Eastern District of Texas, Marshall Division)). But VeriFone’s involvement shows
`
`

`

`IPR2014-00715
`
`U.S. Pat. No. 6,934,945
`
`sufficient interest and control over First Data and the petition to render them an
`
`RPI. The involvement, which is driven by an active indemnification agreement,
`
`includes VeriFone paying for this petition; VeriFone consulting on the content of
`
`this petition; VeriFone installing the same litigation counsel to defend the First
`
`Data litigation; and VeriFone’s contractual ability to control this petition until two
`
`days prior to the initial submission of the petition. For these and other reasons,
`
`VeriFone is an RPI and the petition should be dismissed as time barred.
`
`A.
`
`VeriFone’s Involvement with First Data
`
`The Petitioner admits that VeriFone is funding (paying for) this petition.
`
`Pet. at l. The Petitioner also admits that VeriFone consulted on the content of the
`
`petition and provided suggested prior art. Pet. at 2. VeriFone has an indemnity
`
`agreement with First Data and is indemnifying First Data with respect to the
`
`Cardsoft (ABC) patent infringement lawsuit as well as this petition. Pet. at 1; EX.
`
`1011. In the lawsuit, First Data is using the same litigation counsel as VeriFone.
`
`The choice of litigation counsel is quite revealing.
`
`Initially First Data was
`
`represented by VeriFone’s counsel, namely Jones Day. See EX. 2002 (appearance
`
`of Robert Kantner, Jones Day in VeriFone litigation, dated May 4, 2012); and EX.
`
`2003 (Answer for First Data signed by Robert Kantner, Jones Day). After
`
`VeriFone lost at trial to Cardsoft (ABC), however, Orrick Herrington & Sutcliffe
`
`was brought in to help handle the VeriFone appeal to the Court of Appeals for the
`
`

`

`IPR2014-00715
`
`U.S. Pat. No. 6,934,945
`
`Federal Circuit.
`
`EX. 2004 (Notice of Appearance in CAFC of E. Joshua
`
`Rosenkranz of Orrick Herrington & Sutcliffe, for VeriFone). Apparently pleased
`
`with Orrick Herrington & Sutcliffe’s work, VeriFone and First Data replaced their
`
`trial counsel (Jones Day) with Orrick Herrington & Sutcliffe. EX. 2005 and EX ~
`
`2006, respectively. The motions to substitute counsel were filed within three
`
`weeks of each other. Id. Thus, First Data’s litigation counsel is the same as, and in
`
`look step with, the litigation counsel selected by VeriFone.
`
`In the present IPR, a disclaimer agreement was reached between First Data
`
`and VeriFone regarding control. EX. 1011. The disclaimer agreement recognized
`
`that VeriFone had already agreed to indemnify First Data for the costs of an IPR.
`
`Id. But, to the extent that VeriFone had the right to exercise control over the IPR
`
`as the indemnitor, VeriFone disclaimed that right, including the right to choose the
`
`“counsel for preparing any IPR.” Id. Two days after the disclaimer agreement was
`
`dated and signed, First Data submitted the original 50+ page petition.
`
`Though First Data claims to have control over the IPR proceedings as shown
`
`by the recent disclaimer agreement (Ex. 1011), First Data fails to assert that the
`
`IPR filing was its idea. The petition does not affirmatively state that First Data
`
`initiated the IPR strategy, nor does it deny that VeriFone or the shared litigation
`
`counsel conceived of this alternative pathway to review the Cardsoft (ABC) patent.
`
`

`

`lPR2014—00715
`
`US. Pat. No. 6,934,945
`
`B.
`
`Legal Standards
`
`In the context of an IPR proceeding, “the ‘real party-in—interest’ is the party
`
`that desires review of the patent,” that is, the party “at whose behest the petition
`
`has been filed.” Office Patent Trial Practice Guide, 77 Fed. Reg. at 48,759. Many
`
`factors can be considered in determining whether a non-party should be an RPI.
`
`Id. Relevant factors include (i) the non-party’s relationship with the Petitioner; (ii)
`
`the non-party’s relationship to the petition itself, including the nature and/or degree
`
`of involvement in the filing; and (iii) the nature of the entity filing the petition.
`
`Office Patent Trial Practice Guide, 77 Fed. Reg. at 48,760. Another factor “is
`
`whether the non—party exercised or could have exercised control over alparty’s
`
`participation.’
`
`Id. Control by a party means “the availability of a significant
`
`9
`
`degree of effective control in the prosecution or defense of the case [].”Gonzalez v.
`
`Banco Central Corp, 27 F.3d 751, 758 (1St Cir. 1994). Put simply, a non-party has
`
`control when it has “the power — whether exercised or not —- to call the shots.” Id.
`
`The analysis is based on the totality of the circumstances and not on isolated facts.
`
`ZOLL Lifecor Corp. v. Philips Electronics North America Corp, IPR2013—00606,
`
`Decision denying institution of IPR at 6 (March 20, 2014), citing Gonzalez. “The
`
`non-party’s participation may be overt or covert, and the evidence may be direct or
`
`circumstantial [].” Id.
`
`10
`
`

`

`IPR2014-00715
`
`US Pat. No. 6,934,945
`
`C.
`
`VeriFone is an RPI under the Guidelines
`
`Under the various factors, VeriFone is an RPI for this proceeding. The first
`
`factor, relationship of VeriFone to First Data, shows VeriFone’s interest. VeriFone
`
`is the active indemnitor of First Data. As such, VeriFone is paying for the lawsuit
`
`against First Data. And VeriFone is liable for most of the damages when First
`
`Data loses. In short, VeriFone is on the hook for this matter. Because the expense
`
`and loss fall primarily on VeriFone, not First Data, VeriFone has asserted its right
`
`of control over the litigation. VeriFone used its counsel to defend First Data and
`
`when VeriFone decided to switch counsel, First Data was likewise switched to the
`
`new VeriFone counsel. Thus VeriF one is paying for and controlling the First Data
`
`litigation.
`
`The active and ongoing indemnification by VeriFone means that
`
`VeriFone has a significant and controlling relationship over First Data with respect
`
`to this patent matter.
`
`The second factor, relationship of VeriFone to the petition, also shows
`
`VeriFone’s interest and control. VeriFone is indemnifying First Data for the cost
`
`of the petition. Like the litigation, VeriFone, and not First Data, is paying for this
`
`proceeding. VeriFone and its litigation counsel were involved in framing the
`
`petition. VeriFone even provided art and suggested invalidity theories. While
`
`First Data’s IPR counsel attests that he had final authority to select the art and
`
`theories, that misses the point. VeriFone’s involvement with this IPR including
`
`11
`
`

`

`IPR2014—00715
`
`US. Pat. No. 6,934,945
`
`fimding and discussion of the prior art, shows VeriFone’s interest and control over
`
`this petition.
`
`Indeed, First Data tries to nullify VeriFone’s control over the IPR by
`
`securing the disclaimer agreement (EX. 1011). But that document merely confirms
`
`that VeriFone had the power to control the IPR and that they needed to agree to let
`
`First Data handle it. The control, whether exercised or not, was with VeriFone and
`
`First Data sought and received VeriFone’s permission. Moreover, the drafting and
`
`executing of the disclaimer agreement two days before the original petition was
`
`submitted renders the disclaimer of control meaningless. By the time of the
`
`disclaimer agreement, much must have already been done. Before this agreement,
`
`IPR counsel must have been involved, the discussions with VeriFone’s litigation
`
`counsel must have occurred, the agreement that VeriFone would pay for the IPR
`
`proceeding was obtained (see EX. 1011), review and analysis of the art had already
`
`taken place, experts had been found and their declarations prepared, and certainly a
`
`draft of the 50+ petition was underway. All these events must have taken place
`
`before VeriF one disclaimed their control because First Data could not have carried
`
`out such activities in two days. By the time of the disclaimer agreement, the
`
`decision had already been made to file the petition, that VeriFone would pay for it,
`
`and the current IPR counsel for First Data had already been selected and had been
`
`12
`
`

`

`IPR2014—007l 5
`
`US. Pat. No. 6,934,945
`
`in consultation with VeriFone.
`
`In other words, the disclaimer comes too late to
`
`nullify VeriFone’s control and interest in the petition.
`
`Beyond paying for the petition and discussing its contents, the circumstantial
`
`evidence shows that VeriFone conceived of the IPR strategy and that VeriFone is
`
`the entity that desires review of this patent. VeriFone has incentives to seek the
`
`addition of an IPR to its litigation strategy, while First Data has virtually no
`
`incentive to seek IPR. For VeriFone, IPR provides a different forum to contest the
`
`patent; the opportunity to avoid the same judge/court that has already ruled against
`
`them and will likely rule against their indemnitee, First Data.
`
`Indeed, the First
`
`Data lawsuit appears to be heading towards the same result as in the older
`
`VeriFone case; e.g., same claim construction (Ex. 2007).
`
`IPR may also provide
`
`cost savings over litigation. In contrast, First Data has little risk or cost in the
`
`litigation given their indemnification by VeriFone. First Data has no reason to
`
`look for another option to invalidate the patent as VeriFone will bear the brunt of
`
`the costs and the loss. Also, what First Data “does not state affirmatively is also
`
`9,
`telling. Zoll Lz’fecor Corp, at 5. First Data, as Petitioner, does not claim that it
`
`had the idea or the desire to challenge the patent via IPR. Instead, First Data only
`
`makes assertions about control of the content of the petition — not at whose behest
`
`the petition was filed. Similarly, if First Data had desired to review the patent,
`
`why would they have first sought indemnification from VeriFone? The more
`
`13
`
`

`

`IPR2014-00715
`
`US. Pat. No. 6,934,945
`
`logical explanation is that VeriFone desired First Data to seek IPR and induced
`
`their cooperation by expanding the indemnification to pay for it.
`
`In short, this petition was filed on VeriFone’s behest, paid for by VeriFone,
`
`and drafted with consultation from VeriFone and their litigation attorneys. On the
`
`second factor, VeriFone bears a close relationship with, and strong interest in, the
`
`instant petition.
`
`The third factor, the nature of the Petitioner, also points toward VeriFone as
`
`an RPI. With respect to the present patent, First Data has become the proxy of
`
`VeriFone. VeriF one has removed from First Data the economic burden of the
`
`litigation and the risk of loss. Correspondingly, VeriFone has assumed control of
`
`the litigation as demonstrated by use of the same counsel; even deciding when to
`
`change counsel. And now First Data submits a petition for inter partes review but
`
`only after VeriFone has agreed to finance it. First Data is “along for the ride” ~
`
`VeriFone is the interested party.
`
`Combining the factors and evidence the totality of the circumstances shows
`
`that VeriFone is an RPI. Each of the three factors points to VeriFone being a
`
`proper RPI. Underlying the whole story is the control exerted by VeriFone.
`
`VeriFone is calling the shots.
`
`Indeed, part of the policy reason for naming RPI’s
`
`and prohibiting their bringing of an IPR more than a year after their own litigation
`
`was “to prevent parties from having a ‘second bite at the apple,’ and to protect the
`
`14
`
`

`

`IPR2014-00715
`
`US. Pat. No. 6,934,945
`
`integrity of both the USPTO and the Federal Courts by assuring that all issues are
`
`promptly raised and vetted.” Office Patent Trial Practice Guide, 77 Fed. Reg. at
`
`48,759. Yet permitting this petition would give VeriFone a second bite after
`
`having lost in its own litigation. Because VeriFone is the real beneficiary of a
`
`successful petition and correspondingly is paying for this petition to be filed,
`
`VeriFone is an RPI under the PTO guidance. The petition should be denied under
`
`35 U.S.C. §§ 312 (a) and 315 (b).
`
`D.
`
`First Data Citations Are Not Contrary to RP]
`
`First Data cites four decisions in support of VeriFone not being an RPI. But
`
`one decision confirms that VeriFone is an RPI, while the others do not involve a
`
`non-party that is paying for the petition and are thus not particularly relevant.
`
`The first decision, In re Guan er al. Inter Partes Reexamination Proceeding,
`
`Control No. 95/001,045, “Decision Vacating File Date,” (Aug. 25, 2008), supports
`
`VeriFone’s status as an RPI.
`
`In Guan, a company (Troll Busters) was paid to file
`
`an inter partes reexamination. The entity paying for the reexamination was not
`
`named as an RPI. The Board found this troubling. A requester “may not receive a
`
`suggestion from another party that a particular patent should be the subject of a
`
`request for inter partes reexamination and be compensated by that party for the
`
`filing of the request
`
`.
`
`.
`
`. without naming the party” as an RPI. Guan, at 7. The
`
`15
`
`

`

`IPR2014-00715
`
`US Pat. No. 6,934,945
`
`suggestion and the payment are both present here. The logic of Guan supports the
`
`conclusion that VeriFone is an RPI.
`
`First Data does not distinguish Guan.
`
`Instead, First Data asserts that the
`
`USPTO “has declined to adopt In re Guan as controlling.” Pet. at 3. No citation
`
`of authority for such a rejection of Guan is provided. And the assertion is hard to
`
`believe given that the Trial Practice Guide twice refers approvingly to the Guan
`
`decision. Office Patent Trial Practice Guide, 77 Fed. Reg. at 78,759 and 78,760.
`
`Therefore, Guan remains useful guidance on the topic of RPI’s and, in this case,
`
`confirms that VeriFone is an RPI.
`
`The decision in In re Schlecht et al. Inter Partes Reexamination Proceeding,
`
`Control No. 95/001,206 (Jun. 22, 2010), is off point. The patent owner argued that
`
`a joint defense agreement in the ongoing litigation meant that each co-defendant
`
`was an RPI in the reexamination filed by one of the co-defendants. But the co-
`
`defendants were not paying for the reexamination, nor was there any evidence of
`
`their involvement to seek, assist, or pursue reexamination. Accordingly, the PTO
`
`found that the co-defendants were not RPI’s. As VeriFone is paying for the
`
`petition and was involved in seeking and drafting the petition, the decision in
`
`Schlecht is easily distinguished and not controlling or relevant here
`
`The decision in Syntroleum Corp. v. Neste Oil Oyj, IPR2013—00178 (PTAB
`
`2013) is also off point. The patent owner asserted that the joint venture companies,
`
`16
`
`

`

`IPR2014-00715
`
`US. Pat. No. 6,934,945
`
`who were also co-defendants with the Petitioner in a litigation, should be RPI’s.
`
`The joint venture agreement provided for indemnification obligations and thus
`
`apparent control, according to the patent owner. But no evidence of the contractual
`
`obligations was introduced. The Board found that “without any evidence of the
`
`contractual obligations of the parties” control of over the actions of another had not
`
`been established. Again this differs from the present case. VeriFone is paying for
`
`the litigation and the petition on behalf of First Data. Syntroleum had no allegation
`
`of an unnamed party paying for the petition, helping to draft the petition, paying
`
`the other defendants’
`
`litigation costs, or controlling the litigation including
`
`selecting and changing counsel. The indemnity agreement in the present petition is
`
`active; meaning that VeriFone is paying for and controlling the litigation and is
`
`paying for this petition. The facts in Synlroleum, which fail to show control or
`
`connection to the petition, are easily distinguishable from the present petition.
`
`In Hewlett—Packard Co. v. MCM Portfolio, LLC, IPR2013—00217 (PTAB
`
`2013),
`
`the Board found that an assertion of privity based on a distribution
`
`agreement was
`
`insufficient.
`
`The facts are irrelevant here as an active
`
`indemnification agreement, not a mere distribution agreement,
`
`shows that
`
`VeriFone is in financial and directional control of First Data with respect to this
`
`patent.
`
`l7
`
`

`

`IPR2014-00715
`
`US. Pat. No. 6,934,945
`
`Accordingly,
`
`the Guam decision, which First Data does not attempt to
`
`distinguish, supports the conclusion that VeriFone is an RPI. The remaining
`
`decisions cited by First Data are off point and factually distinguishable. Most
`
`notably, none of the other decisions involve another party paying for the petition
`
`and assisting in the drafting of the petition as in the present case.
`
`Because VeriFone is an unnamed RPI this petition must be denied. The
`
`statue requires a petition to name all the RPI’s. 35 U.S.C. § 312 (a). Amending
`
`the petition now to recite VeriFone would cause the petition to be filed more than
`
`one year after the litigation complaint was served. 35 U.S.C. § 315(b).
`
`Indeed,
`
`both the First Data lawsuit and the VeriFone lawsuit were started more than one
`
`year ago. Therefore, no remedy is available and the petition should be denied.
`
`IV. NO REASONABLE LIKELIHOOD THAT PETITIONER WILL
`
`PREVAIL
`
`The asserted grounds for cancellation share a common and fatal flaw. The
`
`applied art does not teach or suggest the claimed virtual message processor. The
`
`claimed communication device employs a virtual machine having a virtual
`
`function processor and a virtual message processor. The applied art does not teach
`
`or suggest virtual machine architecture having a virtual function processor and also
`
`a dedicated virtual message processor. Petitioner tries to overcome this defect by
`
`taking an improperly broad claim construction and by reliance on erroneous facts
`
`18
`
`

`

`IPR2014-00715
`
`US. Pat. No. 6,934,945
`
`in order to effectively omit this claim limitation. Because the virtual message
`
`processor is neither taught nor suggested by the applied art, the claims are novel
`
`and unobvious. Therefore, the Peti