`Trials@uspto.gov
`571-272-7822 Entered: June 13, 2017
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`
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`PAYPAL, INC.,
`Petitioner,
`
`v.
`
`MONEYCAT LTD.,
`Patent Owner.
`____________
`
`Case IPR2017-00542
`Patent 8,712,918 B2
`____________
`
`
`
`Before SALLY C. MEDLEY, WILLIAM V. SAINDON, and
`BRYAN F. MOORE, Administrative Patent Judges.
`
`MEDLEY, Administrative Patent Judge.
`
`DECISION
`Granting Institution of Inter Partes Review
`37 C.F.R. § 42.108
`
`
`
`
`
`I. INTRODUCTION
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`PayPal, Inc. (“Petitioner”) filed a Petition for inter partes review of
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`claims 1–23 of U.S. Patent No. 8,712,918 B2 (Ex. 1001, “the ’918 patent”).
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`Patent 8,712,918 B2
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`Paper 1 (“Pet.”). MoneyCat Ltd. (“Patent Owner”) did not file a Preliminary
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`Response. Institution of an inter partes review is authorized by statute when
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`“the information presented in the petition . . . and any response . . . shows
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`that there is a reasonable likelihood that the petitioner would prevail with
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`respect to at least 1 of the claims challenged in the petition.” 35 U.S.C.
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`§ 314(a); see 37 C.F.R. § 42.108. Upon consideration of the Petition, we
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`conclude the information presented shows there is a reasonable likelihood
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`that Petitioner would prevail in establishing the unpatentability of claims 1–
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`23 of the ’918 patent.
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`A. Related Matters
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`The parties identify several matters related to this proceeding. Pet. 5;
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`Paper 4 (Patent Owner’s Mandatory Notices), 1–2.
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`B. The ’918 Patent
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`The ʼ918 patent is directed to a method and system for electronic
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`currency transactions. Ex. 1001, Abstract. The ’918 patent relates to
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`electronic currency transactions that utilizes a server to mediate transactions
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`between a buyer and seller over a network. See id. at Abstract, 15:63–16:40,
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`Figure 7. The claimed invention purports to “eliminat[e] the problem of
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`electronic theft of electronic currency, in systems employing an isolation
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`server to effect currency transactions.” Id. at 6:1–4. Figures 6 and 7 of the
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`’918 patent are reproduced below.
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`Figure 6 illustrates a sum of electronic money, and Figure 7 represents
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`an electronic currency transaction. Id. at 12:63–67.
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`As shown in Figure 6, each data packet P1, P2, . . . Pi corresponds to
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`an amount of electronic money. Id. at 14:36–42. Each packet Pi contains
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`three components: a unique identifier UINi, which identifies packet Pi
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`among all such data packets issued by a Currency Issuing Authority
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`(“CIA”); the monetary value associated with packet Pi; and authentication
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`data ADi to confirm that packet Pi was generated by the CIA. Id. at 13:20–
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`25, 14:52–57, Fig. 6.
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`As shown in Figure 7, user 1 interacts with provide 2 via the Internet
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`(broken arrows) to effect a payment of electronic currency to provider 2. Id.
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`at 15:63–16:4. User 1 has data packets Pi stored in an active data packet
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`area of a data storage area accessible by a CIA server (“CIAS”). Id. at
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`14:59–15:29. When user 1 and provider 2 decide upon a transaction, user 1
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`instructs the CIAS to effect payment to provide 2 of the required sum on
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`behalf of user 1. Id. at 15:65–16:4. In response, the CIAS accesses the
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`active data packet area of user 1 to copy to local memory of the CIA one or
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`more data packets Pi corresponding to the indicated sum, and delete or
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`deactivate the packets Pi from the active data packet area. Id. at 16:13–18.
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`The CIAS verifies the authentication data ADi of the packets Pi, and checks
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`the identifiers UINi of the packets Pi against a database of previous
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`transactions, to verify the packets Pi have not previously been used to effect
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`payment. Id. at 16:26–31. If the CIAS verification is successful, the CIAS
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`invalidates the packets Pi provided by user 1, and issues a new set of packets
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`Pi for the same value to provider 2. Id. at 16:31–40.
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`C. Illustrative Claim
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`Petitioner challenges claims 1–23 of the ’918 patent. Claims 1 and 9
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`are independent claims. Claim 1, reproduced below, is illustrative of the
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`claimed subject matter:
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`1. A method for effecting currency transactions between a
`first user and a second user over a network, the method
`comprising the following steps:
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`A) a Currency Issuing Authority trusted server (CIAS)
`receives payment instructions from said first user to transfer a
`first monetary sum to said second user, wherein the CIAS is
`programmed to receive payment instructions from said first user
`only over a network connection between said first user and a
`Currency Issuing Authority (CIA);
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`B) the CIAS accesses electronic currency in a first active
`electronic currency area located in a first data storage area, said
`electronic currency having been provided by said CIA;
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`C) the CIAS manipulates the electronic currency located
`in said first active electronic currency area to withdraw a second
`monetary sum therefrom by
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`(i) deleting electronic currency that equals the
`second monetary sum and/or
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`(ii) generating a record containing information on
`the amount withdrawn that equals the second monetary
`sum and/or
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`(iii) generating a record containing information on
`the amount of electronic currency remaining in said first
`active electronic currency area after withdrawing the
`second monetary sum; and
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`the CIAS creates new electronic currency
`D)
`corresponding to a third monetary sum.
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`Id. at 22:58–23:18.
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`D. Asserted Grounds of Unpatentability
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`Petitioner asserts that claims 1–23 are unpatentable based on the
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`following grounds (Pet. 6–8):
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`References
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`Basis
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`Challenged Claim(s)
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`Teramura1 and Peirce2
`Teramura, Peirce, and
`Haynes3
`Teramura, Peirce, and
`Popolo4
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`§ 103(a)
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`1–3, 7–11, 15–17, and 19–23
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`§ 103(a)
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`4 and 12
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`§ 102(e)
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`5, 6, 13, 14, and 18
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`II. DISCUSSION
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`A. Prior Board Decision of Related Patent
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`The application that matured into the ’918 patent claims, under 35
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`U.S.C. § 120, the benefit of application 12/539,141, which matured into U.S.
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`
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`1 CA 2,221,399, issued June 11, 2002 (Ex. 1005) (“Teramura”).
`2 Michael Peirce and Donal O’Mahony, Scalable, Secure Cash Payment for
`WWW Resources with the PayMe Protocol Set, WORLD WIDE WEB JOURNAL
`at 587–601 (Nov. 1995) (Ex. 1005) (“Peirce”).
`3 PCT W0 97/19414, published May 29, 1997 (Ex. 1006) (“Haynes”).
`4 U.S. Patent No. 5,715,402, issued Feb. 3, 1998 (Ex. 1007) (“Popolo”).
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`Patent No. 8,195,578 B2 (Ex. 1002, “the ’578 patent”). The ’578 patent was
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`the subject of CBM2014-00093 (“CBM93”). In CBM93, the Board
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`determined that (1) claims 1–3, 7–11, 15–17, and 19–22 of the ’578 patent
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`are unpatentable under 35 U.S.C. § 103(a) as obvious over Teramura and the
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`Admitted Prior Art NetCash System, and (2) claims 5 and 13 are
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`unpatentable under 35 U.S.C. § 103(a) as obvious over Teramura, the
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`Admitted Prior Art NetCash System, and Popolo. CBM93, Paper 51, 71.
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`Petitioner contends that the claims involved in the ’918 patent “do no more
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`than restate substantially the same limitations as those of the 578 patent.”
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`Pet. 1 (citing Ex. 1004 ¶ 13). Petitioner further contends that Peirce
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`describes the same features relied upon by the Board in the APA NetCash
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`System. See, e.g., Pet. 15–16. On February 24, 2017, the Court of Appeals
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`for the Federal Circuit issued a mandate affirming the Board’s
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`determinations that claims 1–3, 5–11, and 13–23 of the ’578 patent are
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`unpatentable as obvious under 35 U.S.C. § 103. Paper 6, 2.
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`B. Claim Construction
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`In an inter partes review, we construe claim terms in an unexpired
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`patent according to their broadest reasonable construction in light of the
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`specification of the patent in which they appear. 37 C.F.R. § 42.100(b).
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`Consistent with the broadest reasonable construction, claim terms are
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`presumed to have their ordinary and customary meaning as understood by a
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`person of ordinary skill in the art in the context of the entire patent
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`disclosure. In re Translogic Tech., Inc., 504 F.3d 1249, 1257 (Fed. Cir.
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`2007).
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` “Currency Issuing Authority trusted server (CIAS)”
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`Petitioner argues that in CBM93, “Currency Issuing Authority trusted
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`server (CIAS)” was interpreted to mean “a server that is trusted by the
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`Currency Issuing Authority (‘CIA’).” Pet. 11. Petitioner submits that the
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`same meaning for the phrase should be given in this proceeding. We agree.
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`For purposes of this proceeding, “Currency Issuing Authority trusted server
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`(CIAS)” is interpreted to mean “a server that is trusted by the Currency
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`Issuing Authority (‘CIA’).”
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`At this juncture of the proceeding, we determine that it is not
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`necessary to provide an express interpretation of any other term of the
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`claims.
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`B. Asserted Obviousness over Teramura and Peirce
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`Petitioner contends claims 1–3, 7–11, 15–17, and 19–23 are
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`unpatentable under 35 U.S.C. § 103(a) as obvious over Teramura and Peirce.
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`Pet. 18–61. In support of its showing, Petitioner relies upon the declaration
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`of Dr. Clifford Neuman. Id. (citing Ex. 1004).
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`1. Teramura
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`Teramura describes a method and system for electronic trading that
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`employs a broker server to send electronic money in two steps, including
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`“sending of electronic money from the terminal of the consumer to the
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`broker server and sending of electronic money from the broker server to the
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`server of the merchant.” Ex. 1005, Abstract. Figure 1 of Teramura is
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`reproduced below.
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`Figure 1 of Teramura is a schematic diagram illustrating an electronic
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`
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`trading system.
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`Figure 1 depicts a system including consumer terminal 10, merchant
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`server 20, and broker server 30, which are connected over a communication
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`network. Id. at 8:3–10. According to Teramura, “unjust transactions,” such
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`as theft and fraud may be a particular problem with electronic currency. Id.
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`at Abstract, 3:2–18. To address this problem, Teramura describes a
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`transaction approach in which broker server 30 temporarily stores electronic
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`money received from consumer terminal 10, and sends the electronic money
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`to merchant server 20 when a predetermined settlement condition is brought
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`into existence. Id. at Abstract.
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`Figure 4 of Teramura is shown below.
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`Figure 4 of Teramura depicts a flow of a transaction.
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`When the buyer is ready to purchase an item, the buyer transmits an
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`ordering message 4101 to broker server 30 through the communication
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`network. Id. at 15:24–27, Fig. 4 (step 5001). The ordering message
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`includes the details of the transaction and the electronic money with which
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`the buyer intends to pay the merchant. Id. at 11:1–6, Figs. 2A and 2B.
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`Upon receipt of the ordering message, broker server 30 generates data items
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`representing the transaction in its memory—the broker information and
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`trading and ordering information. Id. at 10:24–26, 11:6–11, 17:15–18.
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`These data items are depicted in Figures 2A and 2B. Id. at 9:25–26, 10:27–
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`28. The broker server then transmits an ordering notification to the
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`merchant. Id. at 17:18–21, Fig. 5 (step 6003). The merchant confirms the
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`ordering notification (id. at 21:2–12, Fig. 7 (step 8002)) and attempts to
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`transmit the goods to the buyer (id. at 21:19–22, Fig. 7 (step 8003)). After
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`transmitting the ordered goods, the merchant waits for the buyer to
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`acknowledge receipt of the goods. Id. at 22:10–14, Fig. 7 (step 8004). If
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`the buyer acknowledges receipt, the receipt is transferred to the broker and
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`the broker releases the funds to the merchant. Id. at 22:15–17, 22:23–23:13.
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`2. Peirce
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`Peirce describes a system known as NetCash. Ex. 1013, 12. The
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`NetCash system consists of buyers, merchants, and a currency server. Id.
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`The currency server mints electronic coins. Id. Each coin includes the
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`server name, server network address, the expiry date of the coin, serial
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`number, and the coin value. Id. at 13. The currency server keeps track of
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`serial numbers of all outstanding coins. Id. At the time of purchase, a coin’s
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`serial number is verified by the currency server. Id. If the coin’s serial
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`number is in the database, the coin has not been spent and is valid. Id.
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`When the coin is verified, the serial number is removed from the database
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`and the coin is replaced with a new coin. Id.
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`3. Discussion
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`Petitioner asserts that the combination of Teramura and Peirce
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`describe all of the elements of claims 1–3, 7–11, 15–17, and 19–23. Pet. 28–
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`61. Claim 1 is similar to claim 9 and is representative. As set forth above,
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`claim 1 includes elements A), B), C), and D). Petitioner relies on Teramura
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`to essentially meet all of the recited claim elements, but relies on Peirce to
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`teach the claimed CIAS. In particular, Petitioner asserts that Teramura’s
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`intermediary (the Broker server) holds a buyer’s electronic currency in
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`escrow until a predetermined settlement condition is satisfied, and then
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`transfers the electronic currency to the seller. Pet. 15. Petitioner further
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`asserts that Peirce discloses a CIAS that issues electronic coins, keeps a
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`database of valid coins, and deletes electronic coins from the database when
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`the coins are redeemed. Id. Petitioner contends that when Teramura is
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`modified in view of the teachings of Peirce, “the resulting combination is an
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`integrated Broker-CIAS that receives electronic coins from a buyer,
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`exchanges the coins for new ones, holds the new coins in escrow until the
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`settlement condition is met, and, when the condition is met, transmits the
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`new coins to the seller to effect payment.” Id. The Petition sets forth in
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`detail how the combination of Teramura and Peirce describe all of the
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`limitations of claims 1 and 9 and provides a rationale for combining
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`Teramura and Peirce. Id. at 15–32, 39–47. For dependent claims 2, 3, 7, 8,
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`10, 11, 15–17, and 19–23, the Petition similarly sets forth in detail how the
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`combination of Teramura and Peirce describe all of the limitations of claims
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`2, 3, 7, 8, 10, 11, 15–17, and 19–23 and provides a rationale for combining
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`Teramura and Peirce. Id. at 33–39, 48–56.
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`We have reviewed Petitioner’s showing with respect to claims 1–3, 7–
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`11, 15–17, and 19–23 along with the supporting evidence and determine that
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`there is a reasonable likelihood that Petitioner would prevail in establishing
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`the unpatentability of claims 1–3, 7–11, 15–17, and 19–23. As discussed
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`above in the procedural posture section of this decision, the ’578 patent
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`claims are very similar to the challenged claims in this case. The showing of
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`unpatentability of claims 1–3, 7–11, 15–17, and 19–22 of the ‘578 patent in
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`the CBM93 case is very similar to the showing made before us. The
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`decision was appealed and the Federal Circuit affirmed the Board’s decision.
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`For these reasons, we determine that there is a sufficient basis for instituting
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`trial. We independently determine that the Petition on its own sets forth a
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`basis for instituting trial. Accordingly, based on the record before us, we
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`determine that there is a reasonable likelihood that Petitioner would prevail
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`in establishing that claims 1–3, 7–11, 15–17, and 19–23 would have been
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`obvious over Teramura and Peirce.
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`C. Asserted Obviousness over Teramura, Peirce, and Haynes
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`Petitioner contends claims 4 and 12 are unpatentable under 35 U.S.C.
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`§ 103(a) as obvious over Teramura, Peirce, and Haynes. Pet. 57–62.
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`Relying on the testimony of Dr. Neuman, Petitioner explains how the
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`combination of Teramura, Peirce, and Haynes teaches or suggests all of the
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`limitations of claims 4 and 12. Id. (citing Ex. 1004).
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`Petitioner has accounted sufficiently for the limitations of claims 4
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`and 12. For example, claim 4 depends directly from claim 1 and recites
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`“wherein the new electronic currency is used to calculate the balance in a
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`second data storage area associated with the second user.” Claim 12
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`depends directly from claim 9 and is similar. Petitioner contends that
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`Haynes teaches that payor and payee balances are recalculated based on the
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`amount of money transferred. Id. at 60 (citing Ex. 1006, 7:2–17, 8:4–18,
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`20:5–16). Petitioner argues that Teramura in view of Peirce and Haynes
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`discloses that
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`the new electronic currency (the NetCash coins generated by the
`integrated NetCash currency server/broker server in order to pay
`the merchant sever 20) is used to calculate the balance (the
`monetary balance held by the merchant server 20) in a second
`data storage area (the area where the merchant server 20 stores
`its received electronic currency, including, e.g., the merchant
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`server’s valuable data processing unit 1205 and memory unit
`1204) associated with the second user (the merchant, represented
`by merchant 20).
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`Id. at 60–61.
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`Petitioner contends that it would have been obvious to include balance
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`calculation as taught by Haynes. Id. at 57. Petitioner asserts that Haynes is
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`in the same field of endeavor as Teramura and Peirce and that a person
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`having ordinary skill in the art would have been motivated to include
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`balance calculation to provide consumers and merchants an accurate
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`measure of their currency. Id. at 58 (citing Ex. 1004 ¶¶ 67, 68). Petitioner’s
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`showing with respect to claim 12 is similar to its showing with respect to
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`claim 4. Id. at 61–62.
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`Based on the current record before us, we determine the information
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`presented shows a reasonable likelihood that Petitioner would prevail in
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`establishing that claims 4 and 12 would have been obvious over Teramura,
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`Peirce, and Haynes.
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`D. Asserted Obviousness over Teramura, Peirce, and Popolo
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`Petitioner contends claims 5, 6, 13, 14, and 18 are unpatentable under
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`35 U.S.C. § 103(a) as obvious over Teramura, Peirce, and Popolo. Pet. 62–
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`70. Relying on the testimony of Dr. Neuman, Petitioner explains how the
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`combination of Teramura, Peirce, and Popolo teaches or suggests all of the
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`limitations of claims 5, 6, 13, 14, and 18. Id. (citing Ex. 1004).
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`Claims 5, 6, 13, 14, and 18 depend from claims 1 or 9 and further
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`require that a commission is paid to the CIA, in various ways, as part of the
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`currency transaction recited in the parent independent claims. Popolo
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`discloses an interactive online system for matching buyers and sellers of spot
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`metals such as steel. Ex. 1007, Title, 1:4–11, 1:46–52. A seller posts an
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`“asking price” on the system for the sale of metal to potential buyers. Id. at
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`9:20–50, Fig. 7. The asking price may either reflect separate entries for
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`“asking total value” and “fee,” or roll the fee into a single asking price. Id.
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`at 9:29–50, Fig. 7. The fee is calculated “based on the seller[’]s current
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`month-to-date postings activity on the system.” Id. at 9:42–43.
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`According to Petitioner, in view of Popolo, it would have been
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`obvious to add a commission to the combined currency transaction system of
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`Teramura and Peirce to provide the middleman a revenue stream for its
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`services. See Pet. 63–64. Petitioner provides sufficient reasons for making
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`the combination. We note, that the Board determined that this similar
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`combination of prior art against similar claims in CBM93 were unpatentable
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`and that decision was affirmed by the Federal Circuit.
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`For the foregoing reasons, we determine the information presented
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`shows a reasonable likelihood that Petitioner would prevail in establishing
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`that claims 5, 6, 13, 14, and 18 would have been obvious over Teramura,
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`Peirce, and Popolo.
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`III. CONCLUSION
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`For the foregoing reasons, we determine that the information
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`presented establishes a reasonable likelihood that Petitioner would prevail in
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`showing that claims 1–23 of the ’918 patent are unpatentable.
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`IV. ORDER
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`Accordingly, it is:
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`ORDERED that pursuant to 35 U.S.C. § 314(a), an inter partes
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`review is hereby instituted as to claims 1–23 of the ’918 patent on the
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`following grounds of unpatentability:
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`References
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`Basis
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`Challenged Claims
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`Teramura and Peirce
`Teramura, Peirce, and
`Haynes
`Teramura, Peirce, and
`Popolo
`
`§ 103(a)
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`1–3, 7–11, 15–17, and 19–23
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`§ 103(a)
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`4 and 12
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`§ 103(a)
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`5, 6, 13, 14, and 18
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`FURTHER ORDERED that pursuant to 35 U.S.C. § 314(c) and
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`37 C.F.R. § 42.4, notice is hereby given of the institution of a trial, which
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`commences on the entry date of this decision; and
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`FURTHER ORDERED that the trial is limited to the grounds
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`identified immediately above, and no other ground is authorized.
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`FOR PETITIONER:
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`
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`Adrian Percer
`adrian.percer@weil.com
`
`Naveen Modi
`naveenmodi@paulhastings.com
`
`Brian Chang
`brian.chang@weil.com
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`
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`FOR PATENT OWNER:
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`
`
`Kevin McCarthy
`kdmccarthy@roachbrown.com
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`