UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`FIRST DATA CORPORATION
`
`Petitioner
`
`V.
`
`CARDSOFT INTERNATIONAL PTY LIMITED
`
`Patent Owner
`
`U.S. Patent No. 7,302,683
`
`Filing Date: August 22, 2005
`
`Issue Date: November 27, 2007
`
`Title: METHOD AND APPARATUS FOR
`
`CONTROLLING COMMUNICATIONS
`
`Inter Partes Review No. Unassigned
`
`PETITION FOR INTER PAR TES REVIEW
`
`UNDER 35 U.S.C. §§ 311-319 AND 37 C.F.R. § 42.100 ETSEQ.
`
`

`
`TABLE OF CONTENTS
`
`Introduction ............................................................................................... ..- l -
`
`Mandatory Notices .................................................................................... ..- l —
`
`A.
`
`Real Party in Interest ...................................................................... ..-
`
`-
`
`B.
`
`Related Matters ............................................................................... ..- 5 —
`
`C.
`
`D.
`
`E.
`
`F.
`
`G.
`
`Payment of Fees ............................................................................. ..- 5 —
`
`Designation of Lead Counsel and Request for Authorization ....... ..- 6 —
`
`Service Information ........................................................................ ..- 6 —
`
`Power of Attorney .......................................................................... ..- 6 —
`
`Standing .......................................................................................... ..- 6 —
`
`III.
`
`IV.
`
`Statement of Precise Relief Requested ..................................................... ..- 7 -
`
`Full Statement of Reasons for the Relief Requested ................................ ..~ 7 —
`
`A.
`
`The Cardsoft ‘683 Patent ................................................................ ..- 7 —
`
`B
`
`The Cardsoft ‘683 Patent Prosecution History ............................... ..- 9 —
`
`C.
`
`The Prior Art ................................................................................... ..- 9 -
`
`D
`
`E
`
`Person of Ordinary Skill in the Art .............................................. ..- ll —
`
`Broadest Reasonable Construction ............................................... ..~ 11 -
`
`1.
`
`Means Plus Function Claims .............................................. ..~ 16 -
`
`Ground 1: Claims 1- 5 are anticipated by EMV ‘96 .................... ..- l7 —
`
`G.
`
`Ground 2: Claims 1-5 are obvious over EMV ’96 in View of
`
`OMNI 300 ..................................................................................... ..- 19 -
`
`H.
`
`Ground 3: Claims 1-5 are obvious over EMV ’96 in View of
`
`OTA, OMNI 300 and First Data ‘879 Patent.. .............................. ..- 20 —
`
`VI.
`
`CONCLUSION ....................................................................................... ..- 50 —
`
`i
`
`

`
`EXHIBIT LIST
`
`
`
`(the “Cardsoft ‘683 Patent,”)
`
`
`Ogilvy U.S.i
`
`1001
`
`1002
`
`EMV ’96, Integrated Circuit Card Terminal Specification for
`
`Payment Systems, Version 3.0, June 30, 1996 (EMV ’96) l02(b)
`
`prior art
`
`1003
`
`EUROPAY, MASTERCARD AND VISA COMPLETE FINAL
`
`PHASE OF GLOBAL CHIP CARD SPECIFICATIONS — EMV
`
`'96 Ready for release — Waterloo/New York/San Francisco, 16
`
`July, 1996
`
`1004
`
`OMNI 300 Series Terminal, Programmer’s Manual, Volume 1
`
`and Volume 2 (“OMNI 300”), 102(b) prior art)
`
`1005
`
`Custy US Pat. No. 5,774,879, assigned to First Data (“First Data
`
`‘879 Patent”) 102(e) prior art
`
`1006
`
`Cardsoft (Assignment for the Benefit of Creditors) V. First Data
`
`Corporation Proof of Service
`
`1007
`
`1008
`
`Complaint for Patent Infringement Against First Data Corporation
`
`Claim Construction Order in Cardsoft, Inc., et al. V. VeriFone
`
`Holdings, Inc., et al., case no. 2:08—CV—98—CE
`
`

`
`1009
`
`1010
`
`lOll
`
`1012
`
`1013
`
`Declaration of Stephen Gray.
`
`Europay Open Terminal Architecture — A Forth—based Token
`
`System for Payment Terminals (“OTA”) l02(b) prior art
`
`Agreement between VeriFone and First Data re Indemnity.
`
`Articles re sales of OMNI 300 series terminals.
`
`Declaration of Lawrence Forsley re public availability of OTA.
`
`iii
`
`

`
`I.
`
`Introduction
`
`Through counsel, real party in interest First Data Corporation (“Petitioner”) hereby
`
`petitions for initiation of inter partes review of U.S. Patent No. 7,302,683, entitled
`
`“Method and Apparatus for Controlling Communications” (the “Cardsoft ‘683
`
`Patent”). Ex. 1001. The Cardsoft ‘683 Patent issued on November 27, 2007 more
`
`than nine months prior to the filing of this petition. The Cardsoft ‘683 Patent is
`
`currently asserted in a co—pending litigation, and this petition is being filed within
`
`one year of Petitioner being served with complaint for patent infringement. See
`
`Exs. 1006 & 1007 (Complaint and Certificate of Service). Thus, the Cardsoft ‘683
`
`Patent is eligible for inter partes review.
`
`II. Mandatory Notices
`
`A.
`
`Real Party in Interest
`
`The real party in interest is First Data Corporation, which is a limited liability
`company duly organized and existing under the laws ofthe state ofDelaware with
`
`a principal place of business at 5565 Glenridge Connector, N.E., Suite 2000,
`
`Atlanta, Georgia 30342. We believe that VeriFone is NOT a real party in interest.
`
`VeriFone, per an indemnity with First Data, is providing the funding for this
`
`petition. However, the sole and exclusive control over this petition rests entirely
`
`with First Data. To the extent that the VeriFone indemnity agreement provided
`
`any ability to assume control of any litigation, VeriFone has disclaimed any right
`
`

`
`to such control (see Ex. 1011). First Data determined which counsel to use, and is
`
`using its normal patent counsel for this petition, not counsel for VeriFone. The
`
`prior art used in this petition was discovered from the Cardsoft V. VeriFone
`
`litigation records, but First Data decided which references to use. Copies of some
`
`prior art were obtained from VeriFone, and VeriF one counsel indicated certain
`
`references which it believed rendered the subject patent invalid, but First Data
`
`counsel exercised independent judgment in determining which prior art to use and
`
`in fact selected different prior art references than those which Verifone believed
`
`were the strongest.
`
`It should be noted that First Data was sued after Cardsoft obtained a jury verdict
`
`victory against VeriFone. Instead of suing VeriFone for willful infringement for
`
`post—verdict sales, Cardsoft elected to sue First Data, likely with knowledge of the
`
`indemnity which provides indemnification for some although not all of the accused
`
`devices. It would be contrary to the reasons for establishing Inter Partes Reviews
`
`to deny First Data the opportunity for an IPR challenge in such a situation.
`
`In re Guan listed 4 factors for determining whether an entity is the real
`
`.
`.
`.
`.
`.
`party-in-interest in inter partes review.
`
`1
`
`.
`In re Guan involved a company named
`
`I See In re Guan Inter Partes Reexamination Proceeding, Control No.
`95/001,045, “Decision Vacating File Date,” (Aug. 25, 2008)
`
`-2-
`
`

`
`“Troll Busters” that advertised itself as a strawman for Patent Office challenges.
`
`The Patent Office has declined to adopt In re Guarz as controlling. The USPTO
`
`has stated that the degree of control exercised by a non-party over a party’s
`
`participation in the proceeding is a “common consideration.” 2 Chief Judge
`
`James Donald Smith of the BPAI explained that the Proposed Rules from
`
`February of 2012 deliberately declined to promulgate particular factors as the
`
`future Patent Trial and Appeal Board (PTAB) intends to consider each case on
`
`its specific facts. 3
`
`In the In re Schlecht Inter Partes Reexamination Proceeding, Control No.
`
`95/001,206, also cited by the USPTO’s Proposed Rules, the Patent Owner cited
`
`the 1“ and 3” factors of In re Guan. The 3rd factor is quoted above, and the 1“
`
`factor is: “I. Accept payment from another group, pay the requester to file the
`
`request for inter partes reexamination and have itself named solely as the real
`
`party in interest.” The Patent Owner argued that “if a joint defense group
`
`allocates fee payments, work load, etc., between defendants, especially by using a
`
`single law firm, then it runs afoul of the first test. If a joint defense group
`
`2 Practice Guide for Proposed Trial Rules, 77 Fed. Reg. 6868, 6870
`(February 9, 2012) (citing Taylor V. Sturgell, 553 U.S. 880, 895 (2008))
`3 Explanation of Real Party in Interest Requirement provided by Chief Judge
`James Donald Smith, Board of Patent and Appeals and interferences (“BPAI”).
`Available at http://www.uspto.gov/aia_imp1ementation/smith—blog—
`extravaganzajsp#heading—2
`
`

`
`prepares a common pool of prior art, but then provides that information to
`
`another entity .
`
`.
`
`. this violates the third test.” 4 The USPTO rejected the
`
`argument, and declined to expand the test to anything broader than the
`
`circumstances of In re Guan.
`
`In Syntroleum Corp. V. Neste Oil Oyj (IPR2013—00178), the Board held that two
`
`other corporations, who were named as co-defendants in concurrent litigation
`
`brought by Patent Owner, were not real parties~in—interest, despite the fact that two
`
`of those corporations formed the third as a joint venture, shared counsel, and an
`
`indemnification agreement among the parties existed. “Whether a party that is not
`
`named in an inter partes review proceeding is a ‘real party—in-interest’ or ‘privy’ is
`
`a ‘highly fact-dependent question,’ taking into account various factors such as
`
`whether the non—party ‘exercised or could have exercised control over a party’s
`
`participation in a proceeding’ and the degree to which a non—pa1ty funds, directs,
`
`and controls the proceeding”), Order at 6, citing, Office Patent Trial Practice
`
`Guide, 77 Fed. Reg. 48756, 48759-60.
`
`In Atlanta Gas Light Company v. Bennett Regulator Guards Inc., (IPR20l3—O0453)
`
`the PTAB held the existence of a contract/indemnification clause does not create
`
`4 In re Schlecht Inter Partes Reexamination Proceeding, Control No.
`95/001,206, Petition at 6-7, (June 10, 2010).
`
`_4_
`
`

`
`privity. In essence, the PTAB held that the indemnity obligation did not arise until
`
`the petitioner was served, which was within the 1 year period.
`
`In Hewlett—Packard Co. v. MCM Portfolio, LLC, IPR2013-00217, the PTAB held
`
`that a distribution agreement was not enough to establish control, and thus privity.
`
`B.
`
`Related Matters
`
`The Cardsoft ‘683 Patent is the subject of the following civil actions:
`
`Cardsofi (Assignmentfor the Benefit of Creditors) LLC V. First Data Corporation,
`
`First Data Merchant Services Corporation, and Tasq Technology, Inc. Civil
`
`Action No. 2: 13—cv—290 (Eastern District of Texas, Marshall Division)
`
`Cardsoft, Inc. and Cardsoft (Assignmentfor the Benefit of Creditors) LLC v.
`
`VeriFone Systems, Inc. ; VeriFone Inc. ; Hypercom Corporation; Ignenico S.A.;
`
`Ingenico Corp. ; Ingenico Inc. ; Way Systems, Inc. ; Shera International Ltd. ; and
`
`Blue Bamboo (USA), Inc, Civil Action No. 2:08—cV—00098 (Eastern District of
`
`Texas, Marshall Division).
`
`C.
`
`Payment of Fees
`
`This petition for inter partes review is accompanied by a payment of $23,000 and
`
`requests review of claims 1-5 of the Cardsoft ‘683 Patent. 37 C.F.R. § 42.15.
`
`Thus, this petition meets the fee requirements under 35 U.S.C. § 3 12(a)( 1).
`
`

`
`D.
`
`Designation of Lead Counsel and Request for Authorization
`
`Lead Counsel
`Paul C. Haughey
`Reg. No. 31,836
`phaughey@,kilpatricktownsend.com
`Kilpatrick Townsend & Stockton LLP
`Two Embarcadero Center, Suite 8000
`San Francisco, CA 941 ll
`(415) 576-0200
`
`Backup Lead Counsel
`Darin J. Gibby
`Registration No. 38,464
`dgibby@kilpatricktownsend.com
`Kilpatrick Townsend & Stockton LLP
`1400 Wewatta Street, Suite 600
`Denver , CO 80202
`(303) 571-4000
`
`E.
`
`Service Information
`
`As identified in the attached Certificate of Service, a copy of the present petition,
`
`in its entirety, is being served to the address of the attorney or agent of record in
`
`the Patent Office as well as counsel of record for the Patent Owner in the above-
`
`referenced litigations. Petitioners may be served at their counsel, Kilpatrick
`
`Townsend & Stockton LLP.
`
`F.
`
`Power of Attorney
`
`A power of attorney is being filed with the designation of counsel in accordance
`
`with 37 C.F.R. § 42.10(b).
`
`G.
`
`Standing
`
`The Petitioners certify that the Cardsoft ‘683 Patent is available for inter partes
`
`review and that the Petitioners are not barred or estopped from requesting an inter
`
`partes review challenging the patent claims on the grounds identified in this
`
`

`
`petition. The Cardsoft ‘683 Patent has not been subject to a previous estoppel
`
`based proceeding of the AIA and the complaints served on Petitioners were served
`
`within the last twelve months, on May 2, 2013 (See Ex. 1006).
`
`III.
`
`Statement of Precise Relief Requested
`
`Pursuant to 35 U.S.C. § 311, this petition requests cancellation of claims 1-17 of
`
`the Cardsoft ‘683 Patent in accordance with one or more of the following grounds,
`
`as indicated in the discussion below.
`
`Ground 1. Claims 1-5 are anticipated by EMV ‘96
`
`Ground 2. Claims 1-5 are obvious over EMV ’96 in view of OMNI 300.
`
`Ground 3. Claims 1-5 are obvious over EMV ’96 in view of OTA, OMNI 300
`
`and the First Data ‘879 Patent.
`
`IV.
`
`Full Statement of Reasons for the Relief Requested
`
`A.
`
`The Cardsoft ‘683 Patent
`
`The Cardsoft ‘683 Patent is directed to “preparing and processing information to
`
`be communicated via a network” using a “virtual machine” (see Abstract). The
`
`main embodiment discussed is a POS device for payment transactions using credit
`
`cards. The patent describes the “virtual machine” as containing 2 separate virtual
`
`processors, (1) a “virtual function processor” for controlling operation of the
`
`-7-
`
`

`
`device, including calling (2) a “virtual message processor” to carry out “message
`
`handling tasks.” The message handling tasks include such things as receiving the
`
`input card number, PIN, etc. and transmitting them to a remote financial institution
`
`for authorization. However, these message handling tasks themselves were done in
`
`prior art terminals, which admittedly handled the same messages.
`
`However, the dual virtual processor language is simply colorful language for a
`
`common technique in computer operating systems of having different modules or
`
`subroutines for different tasks. There are many examples of this in the prior art,
`
`but because only a few grounds are possible in an IPR, only a few examples are
`
`given.
`
`The Cardsoft ‘683 Patent also describes the “virtual machine” as being emulatable
`
`on different hardware platforms. However, this is admitted prior art, unless done
`
`in “native code,” which is not required in the independent claims as discussed
`
`under claim construction below. “The technique of creating a virtual processor (or
`
`in this case microprocessor) is well known and referred to as an interpreter”
`
`(Cardsoft ‘683 Patent, col. 3, 11. 48-50). Since “emulatable” logically simply
`
`means the code can be rewritten to run on a different machine, any code would
`
`satisfy this. “A virtual machine is computer programmed to emulate a hypothetical
`
`computer. Different incompatible computers may be programmed to emulate the
`
`same hypothetical computer” (Cardsoft ‘683 Patent, col. 3, ll. 55-58).
`
`_g_
`
`

`
`The claims are directed to various combinations of different modules being in
`
`native code (e.g., claim 3, protocol processor in native code; 5- message processor
`
`in native code; 6 — function processor in native code). These are all shown by prior
`
`art where all modules are in native code.
`
`B.
`
`The Cardsoft ‘683 Patent Prosecution History
`
`The parent of the Cardsoft ‘683 Patent with similar claims was allowed after
`
`arguments and amendments distinguishing a Sun Microsystems patent, Stern Pat.
`
`5,935,249, which was directed to “. . .a method and apparatus for securely
`
`controlling a local network device from a network, and providing network services
`
`to a host computer without requiring a network connection” (Summary, lst
`
`sentence). “In one particular embodiment of the present invention, the secure
`
`lan ua e
`g
`8 P
`
`rocessor is im lemented withinaJavaTMlan ua einte reter ...”
`P
`g
`g
`113
`
`(Summary, 2” 1]).
`
`The continuation Cardsoft ‘683 Patent was allowed after a terminal
`
`disclaimer was filed, with no other substantive rejection.
`
`C.
`
`The Prior Art
`
`1. EMV ’96, Integrated Circuit Card Terminal Specification for Payment
`
`Systems, Version 3.0, June 30, 1996 {EMV ’961 l02(b) prior art, EX. 1002. This
`
`

`
`is a specification by EMV (Europay, MasterCard & Visa) for terminals that accept
`
`integrated circuit cards (smart cards with chips, as opposed to mag stripe cards). It
`
`describes a virtual machine instruction set to allow terminals to emulate a virtual
`
`machine. It was a publication, and publicly available, as evidenced by Ex. 1003.
`
`2. OMNI 300 Series Terminal, Programmer’s Manual, Volume 1 and
`
`Volume 2 (“OMNI 300” 1, l02(b) prior art, Ex. 1004. This manual was provided
`
`with the 300 series terminals and includes description of the message assembling,
`
`disassembling and comparison functions. It was a publication, and publicly
`
`available, since it was shipped with the 300 series of terminals, as indicted on p. 2
`
`of EX. 1004 , which indicates “included in software package.” The sales of such
`
`terminals, which included the manuals, is evidenced by the articles of Ex. l0l2.
`
`3. Custy US Pat. No. 5,774,879, assigned to First Data (“First Data ‘879
`
`Patent”) l02(e) prior art, EX. 1001. This is a patent of the petitioner that describes
`
`dividing the software for a terminal into a virtual execution control processor (the
`
`claimed function processor) and a virtual communication processor (the claimed
`
`message processor).
`
`4. Europay Open Terminal Architecture — A Forth-based Token System for
`
`Payment Terminals (“OT/X”) l02(b) prior art, Ex. 1010. This 1996 paper was
`
`presented at the June 19-22, 1996 Rochester Forth Conference — Open Systems, in
`
`_1()_
`
`

`
`Toronto Canada. It describes prototypes exhibited and used for 4060 transactions
`
`at a Europay Members meeting in Seville, Spain June 5-7, 1996 (see Ex. 1010, p.
`
`1
`
`29). The paper describes a “virtual machine” with a “kernel” having functions that
`
`“can be run on any [POS] terminal” in “native code.” The functions include
`
`“message management” (the claimed virtual message processor). The Declaration
`
`of Lawrence Forsley (Ex. 1013) is proof of the publication of this paper.
`
`D.
`
`Person of Ordinary Skill in the Art
`
`One of ordinary skill in the art at time of the effective filing date of the patent ()
`
`would possess a degree in Management Information Systems, Computer Science,
`
`or Electrical Engineering, or equivalent professional system development
`
`experience, plus two years of work experience with payment systems and
`
`computer networking. See Gray Declaration, Ex. 1009, pars. 22-27.
`
`E.
`
`Broadest Reasonable Construction
`
`Pursuant to 37 C.F.R. § 42.l00(b), the claim terms subject to inter partes review
`
`shall receive the “broadest reasonable construction in light of the specification of
`
`the patent in which [they] appear[]” See also In re Swanson, No. 07-1534 (Fed.
`
`Cir. 2008); Inre Trans Texas Holding Corp, 498 F.3d 1290, 1298 (Fed. Cir. 2007
`
`(citing In re Yamamoto, 740 F.2d 1569, 1571 (Fed. Cir. 1984)). In compliance
`
`with 37 C.F.R. § 1.42.104(b)(4), Petitioners state that in general the “claim terms
`
`-11-
`
`

`
`are presumed to take on their ordinary and customary meaning.” See Changes to
`
`Implement Inter Partes Review Proceedings, Post—Grant Review Proceedings, and
`
`Transitional Program for Covered Business Method Patents, 77 Fed. Reg. 48699
`
`(2012), Response to Comment 35.
`
`Because the standards of claim interpretation used by the Courts in patent litigation
`
`are different, Petitioner expressly reserves the right to present other interpretations
`
`at a later time in the district court litigation.
`
`All claim terms not specifically addressed below have been accorded their broadest
`
`reasonable interpretation in light of the patent specification including their plain
`
`and ordinary meaning to the extent such a meaning could be determined by a
`
`skilled artisan.
`
`Attached as Ex. 1008 is the claim construction order from Cardsoft v. VeriFone.
`
`Except as noted below, we propose to adopt those constructions.
`
`“virtual function processor,” per the court order, means “software which controls
`
`and/or selects general operations ofa communication device.”
`
`“function processor instructions,” per the court order, means “a set of
`
`instructions that control operation of the communications device.”
`
`_12_
`
`

`
`“virtual message processor,” was construed by the court to mean “software
`
`implemented in the native code of the communications device that processes
`
`messages, including assembling, disassembling and/or comparing messages, for
`
`communication to and/orfirom a communications device.” We propose that the
`
`words “implementation in the native code of the communication device” be
`
`eliminated from this construction. The tenn “native code” does not appear in
`
`claim 1 with this language, but does appear in dependent claim 5, which recites the
`
`native code of the processor. There would be no difference between the native
`
`code of the processor and native code of the device. The doctrine of claim
`
`differentiation would thus suggest that the claim 1 language is broader under the
`
`IPR standard of “broadest reasonable interpretation.”
`
`“emulatable in different computers having incompatible hardware or
`
`operating systems,” was construed by the court tomean “capable of executing
`
`programs on diflerent computers having incompatible hardware or operating
`
`systems. ” See ‘683 Patent at 3:43-46 (“Any computer programmed to emulate the
`
`hypothetical computer will thus be capable ofexecuting programs for the virtual
`
`computer. ”) We believe the term “emulatable” simply means that the code can be
`
`rewritten to run on otherwise incompatible hardware, and thus would cover any
`
`code under a broadest reasonable construction. The patent says the code is C in the
`
`-13-
`
`

`
`preferred embodiment, which is simply a popular code that multiple application
`
`pI’OgI'8.I1’lS C2111 R111 011.
`
`Dependent claim terms
`
`A number of terms were added in the dependent claims in this continuation without
`
`explanation in the file history, and without appearing elsewhere in the application.
`
`“an application associated with said device.” Claim 2 further requires that the
`
`Virtual message processor be used for communication with “an application
`
`associated with the device.” The Cardsoft ‘683 Patent states one description of an
`
`application by saying that “Application 104 controls the Virtual machine 101, 102,
`
`103 which in turn controls operation of the hardware 100” (The Cardsoft ‘683
`
`Patent, col. 10, 11. 50-52 ) and that “the ‘application’ will therefore comprise
`
`instructions for the message, protocol and function processor means.” Id., at col. 5,
`
`l. 65 — col. 6, l. 2. However, there is also reference to applications that can be
`
`added to the machine, “CardScript programs” of Appendix A (Id., at col. 18, ll. 35~
`
`67). These appear to be applications which run on the Virtual machine, such as a
`
`hotkeys application (Id., at col. 21, ll. 5-18). Under a broadest reasonable
`
`construction, we propose to construe this term to mean any application which runs
`
`on the device.
`
`-14-
`
`

`
`“implementing cryptograph series.” Claim 3 of The Cardsoft ‘683 Patent
`
`requires that the communication means that implements the virtual message
`
`processor also implements “cryptographic series.” The term “cryptographic
`
`series” and “cryptographic” only appears in claim 3, and is not described in the file
`
`history. The only mention of “encrypt” is 3 mentions in the background:
`
`“At least some and perhaps all of the transmitted data may be encryptedfor
`
`security purposes and the payment terminal is therefore, in such a case, required
`
`to have means (3) providing encryption.
`
`....Again, this transmitted information
`
`may be encrypted and, so, will require translation (5) in the payment terminal.”
`
`Id., at col. 1, 1. 64- col. 2, l. 10, emphasis added. Accordingly, this element is
`
`construed to simply mean data transmitted to or from the terminal is encrypted.
`
`“personal mobile device.” Claim 4 of The Cardsoft ‘683 Patent requires that the
`
`device be both personal and mobile. The only place the term “mobile” appears is
`
`in this claim, added in the continuation without discussion. Also, “personal” only
`
`appears in reference to a “Personal Identification Number (PlN)” in the
`
`background (col. 1, l. 54). Thus, “personal mobile” is construed under the
`
`ordinary meaning of the words to simply mean that the device can be moved by a
`
`person.
`
`-15-
`
`

`
`“implements secure communication services.” Claim 5 of The Cardsoft ‘683
`
`Patent requires that the Virtual message processor “implement secure
`
`communication serVices.” Again, “secure communication” only appears in this
`
`3
`claim and was added in the continuation without discussion. The word “secure”
`
`only appears in the appendix, where it is used to describe “secure memory,”
`
`“secure rom ts ” and “secure dis la .” None of these a
`P
`P 9
`P Y
`PP
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`ear to be the intent.
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`Accordingly, it is assumed that “secure communications services” would be
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`construed under the ordinary meaning of the words to simply mean to the data
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`transmitted to or from the terminal is encrypted.
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`1. Means Plus Function Claims
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`“virtual machine means,” was not construed by the court. It is in the
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`preamble, and does not refer to a function, and thus we do not construe it as means
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`plus function language.
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`“message instruction means,” was construed by the court as follows: (1)
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`the function is “providing directions for operation of the Virtual message
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`processor;” and (2) the structure is “13:29—l4:2; 15:23-34; Figure 11 and Figure 8,
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`and equivalents thereof.” This definition simply refers to message instructions.
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`F.
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`Ground 1: Claims 1- 5 are anticipated by EMV ‘96
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`The Cardsoft ‘683 Patent claim 1 sets forth a communications device with
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`(1) virtual function processor, (2) message instruction means, (3) virtual message
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`processor, (4) emulatable, (5) is a payment terminal with peripheral units. Element
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`(2) is really part of (3) — the patent describes both the function and message
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`processors having instructions that govern their operation, which is the case with
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`any software: “The protocol instructions 106 govern operation of the protocol
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`processor 106. The message instructions 109 provide directions for operation of
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`the message processor 105” (The Cardsoft ‘683 Patent, col. 11, ll. 25-28).
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`Claim 1 adds a last element not in claim 1 of the parent patent, which
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`requires: first, the device be a payment terminal device; and second, that the virtual
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`message processor communicate with a peripheral units associated with said
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`device. EMV ’96 is also directed to payment terminals, and as such includes at
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`least a card reader as a peripheral device. As examples of peripheral units, the
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`Cardsoft ‘683 Patent mentions the examples of a “card reader, display, printer,
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`communications interface, etc.” The Cardsoft ‘683 Patent, col. 3, 11. 9-11.
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`As described in more detail in the discussion around the claim charts below,
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`EMV ’96 has all these elements. EMV ’96 describes a “virtual machine” with a
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`“theoretical microprocessor” (virtual function processor). EMV ’96 describes
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`message handling (message instruction means) and providing software “modules”
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`or “subroutines” (virtual message processor). Finally, it describes “Virtual
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`machine emulation” and is directed to payment terminals with card readers
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`(peripheral units).
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`Again, it should be noted that the Cardsoft ‘945 Patent describes handling
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`the same messages as prior art POS machines, which would necessarily require
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`message assembly, disassembly and comparison with the required formats (for
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`error detection, etc.). EMV ’96 and other prior art use different language for such
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`message handling steps, but it is clear that all such machines at the time of the
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`alleged invention would do this.
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`The dependent claims also do not add anything new. Claim 2 simply
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`describes an “application” associated with the device, which is clearly done in the
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`prior art. Claims 3 and 5 are directed to using a “cryptographic series” and using
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`“secure” communication services. As described above under claim construction,
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`these terms are not used in the Cardsoft ‘945 Patent, having been added to the
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`claims in the continuation, and are presumed to simply mean common encryption,
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`which is shown in the references below. Claim 4 says the device is a “personal
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`mobile device,” which is also not described and was added to the claims in the
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`continuation, and is inherent in the prior art EMV ’96.
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`See also Gray Declaration, Ex. 1009.
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`

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`G.
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`Ground 2: Claims 1-5 are obvious over EMV ’96 in View of
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`OMNI 300.
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`OMNI 300 describes software for mag stripe POS terminals using
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`VeriFone’s TXO operating system with source code in the standard C language.
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`EMV ’96 provides standards for terminals reading integrated circuit cards (ICCS).
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`EMV ’96 basically describes desired upgrades for mag stripe terminals, such as the
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`OMNI 300 series, to support ICC cards. EMV ’96 states “This specification
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`provides the requirements necessary to support the implementation of ICCS. These
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`requirements are in addition to those already defined by individual payment
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`systems and acquirers for terminals that accept magnetic stripe cards.” (p. vii).
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`Both EMV ‘96 and OMNI 300 are directed to POS devices and one of skill in the
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`art looking at updating the OMNI 300 in 1996 would want to make sure it
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`complied with EMV ’96, the de facto industry standard. See Gray Declaration,
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`Ex. 1009, par. 53.
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`As described in Ground 1, EMV ’96 shows all the elements of claim 1.
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`OMNI 300 shows details of message assembly, disassembly and comparison,
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`providing further detail on those elements of the virtual message processor. The
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`combination would provide the EMV ’96 virtual, emulatable machine with the
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`details of the OMNI 300 for showing the message instruction means and virtual
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`message processor elements. The elements of the dependent and other
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`independent claims are similarly shown by these two references as described in the
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`claim charts and accompanying discussion below.
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`Ground 3: Claims 1-5 are obvious over EMV ’96 in view of OTA,
`H.
`OMNI 300 and First Data ‘879 Patent.
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`It would be obvious to combine these references because all relate to POS
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`terminals. In 1996, it would have been obvious to a person looking to improve
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`EMV ’96 to incorporate aspects of OTA because both documents are directed to
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`point of service (POS) terminals, both relate to ICC readers, and both relate to
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`Europay terminals. The OTA title refers to Europay, the E in EMV ‘96.
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`The First Data ‘879 Patent describes a Virtual processor with virtual
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`processor modules for a POS terminal, and thus would be obvious to combine with
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`the virtual machines of EMV ’96 and OTA. Both deal with Virtual processors for
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`such devices. EMV ‘96 and the First Data ‘879 Patent disclose financial
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`processing systems that are intended to be portable among various software and
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`hardware platforms (see The First Data ‘8 79 Patent, col. 2, 11. 43-45), and thus are
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`not just related POS subject matter, but are both directed to the same emulatable
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`concept. The First Data ‘879 Patent would show one of skill in the art the division
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`of the virtual machine into different modules, to provide a robust implementation
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`of the EMV and OTA systems.
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`The OMNI 300 would need to comply with the EMV and OTA industry
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`standards as described under ground 2 above. OMNI 300 would provide one of
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`skill in the art with the details of message processing that would need to be
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`accomplished by a virtual machine as described in EMV and OTA, and to
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`implement a virtual communication processor as described in the First Data ‘879
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`Patent. See Gray Declaration, Ex. 1009, par. 54.
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`The First Data ‘879 Patent describes dividing the software for a terminal into
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`a virtual execution control processor (the claimed function processor) and a virtual
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`communication processor (the claimed message processor), thus providing more
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`explicit detail on these elements in a combination.
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`OTA shows the combination and interaction of elements of the above
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`references in a concise manner, and thus enhances the description of the virtual,
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`emulatable machine in EMV ‘96. OTA shows a communications device, a POS
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`just like the embodiment in the Cardsoft ‘683 Patent. A “virtual machine” is
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`described. It has 3 instruction sets, or modules. The first is a “theoretical
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`processor” which corresponds to the claimed “function processor” that “provides
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`the instructions necessary for the efficient execution of programs. The second has
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`“operating