UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`APPLE INC.,
`Petitioner,
`v.
`UNIVERSAL SECURE REGISTRY, LLC,
`Patent Owner.
`_________________________________________
`Case IPR2018-00812
`U.S. Patent No. 8,856,539
`________________________________________
`
`PETITIONER APPLE INC.’S SUR-REPLY TO PATENT OWNER’S
`REPLY TO THE OPPOSITION TO THE CONDITIONAL MOTION TO
`AMEND
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`U.S. Patent No. 8,856,539
`Petitioner’s Sur-Reply to PO’s Reply to Opposition to CMTA
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`
`
`
`Contents
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`INTRODUCTION .................................................................................................................. 1 
`I. 
`II.  ARGUMENT .......................................................................................................................... 1 
`Reber And Franklin Render Obvious A “Transaction Request” Received “From The
`A. 
`Provider” (Substitute Claims 39[b], 44[a], 47[b]). ..................................................................... 1 
`Reber And Franklin Render Obvious “Extracting” A “Time Value” (Substitute Claims
`B. 
`39[c] And 46[b]). ........................................................................................................................ 4 
`Reber And Franklin Render Obvious Validating An Identity Of The Provider And
`C. 
`Executing A Restriction Mechanism (Substitute Claims 39[e]-[f] And 44[d]-[e]). ................... 6 
`Reber, Franklin, And Schutzer Render Obvious Using A “Public ID Code” (Substitute
`D. 
`Claims 47[f]-[g]). ........................................................................................................................ 7 
`PO Fails To Overcome Petitioner’s Showing That Substitute Limitations 39[h], 44[b],
`E. 
`And 47[c] Do Not Satisfy § 112. ................................................................................................ 9 
`F.  PO Fails To Overcome Petitioner’s Showing That The Substitute Claims Are Patent
`Ineligible Under § 101. ............................................................................................................. 10 
`G. 
`Patent Owner Has Not Satisfied Its Duty Of Candor. .................................................... 10 
`H. 
`PO Fails To Rebut Petitioner’s Showing Of Estoppel. .................................................. 11 
`III.  CONCLUSION .................................................................................................................. 12 
`CERTIFICATE OF SERVICE ................................................................................................. 13 
`
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`
`ii
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`

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`U.S. Patent No. 8,856,539
`Petitioner’s Sur-Reply to PO’s Reply to Opposition to CMTA
`
`INTRODUCTION
`Patent Owner’s (“PO”) Reply fails to rebut Petitioner’s showing that the
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`I.
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`substitute claims are obvious over the prior art of record, are not drawn to patent
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`eligible subject matter, and are indefinite. Nor does PO plausibly explain its lack
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`of candor in offering amendments that reintroduce financial elements that PO
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`previously disclaimed to avoid CBM Review. The Board should deny PO’s
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`CMTA.
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`II. ARGUMENT
`A. Reber And Franklin Render Obvious A “Transaction Request”
`Received “From The Provider” (Substitute Claims 39[b], 44[a], 47[b]).
`In its reply brief, PO concedes that Reber transmits a transaction request
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`from computer 20 [provider] to computer 64 [secure registry]. CMTA Reply at 5
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`(discussing “Reber’s first message transmitted from computer 20 to computer
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`64…” (emphasis added)); see also Ex-1131, Reber, 5:17-19, 5:45-59. Reber
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`teaches that the transaction data includes a first data element comprising
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`information about the merchant/provider [indication of the provider] and a
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`second data element containing a time-varying code [time-varying
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`multicharacter code] that can be used to authenticate the entity’s identity before
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`directing a third party to transfer funds. Ex-1131, Reber, 5:48-55, 6:25-29.
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`Accordingly, there is no dispute that PO’s proposed amendment — requiring the
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`“transaction request” be sent “from the provider” — is expressly taught by Reber.
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`
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`1
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`

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`U.S. Patent No. 8,856,539
`Petitioner’s Sur-Reply to PO’s Reply to Opposition to CMTA
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`Unable to deny that Reber contains this disclosure, PO instead repeats its
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`argument that Reber does not disclose a single embodiment in which the
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`transaction request includes an indication of the provider and a time-varying code.
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`CMTA Reply at 5-6; see also POPR at 40-42; POR at 61-62. But the Board
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`already considered and rejected that argument in the Institution Decision in finding
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`that Reber disclosed two alternative versions of the same transaction method that
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`did not need to be explicitly “combined.” DI at 12-13; see also Ex-1131, Reber,
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`5:45-48. Petitioner, too, has addressed this argument in its Petition and Reply to
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`the POR, and cited to those portions of the record in its CMTA Opposition.1
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`1 PO’s contention that the citations in Petitioner’s CMTA Opposition are
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`“incorporations by reference” (CMTA Reply at 3-4) is incorrect. Petitioner’s
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`CMTA Opposition, although focused on the specific limitations at issue, explained
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`that a POSITA would have been motivated to combine the cited portions of Reber
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`to arrive at the ’539 claims and referenced other portions of the record where the
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`issue is treated in more detail. CMTA Opp. at 4-6. Merely citing to other
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`documents does not violate 37 C.F.R. §42.6(a)(3). Unlike Cisco Systems and
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`DeSilva cited by PO, in which the parties cited dozens of pages of declarations and
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`charts in place of substantive argument, Apple merely cited to pages of its Petition
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`and Reply brief describing the motivation to combine Reber and Franklin, on
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`2
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`

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`U.S. Patent No. 8,856,539
`Petitioner’s Sur-Reply to PO’s Reply to Opposition to CMTA
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`Specifically, Petitioner has explained that a POSITA would have found it obvious
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`to combine Reber’s “alternative” transaction methods in view of (1) Franklin’s
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`express disclosure of merchant validation prior to a transaction (Ex-1132, Franklin,
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`11:33-49), and (2) Reber’s own teachings about preventing unauthorized
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`interception of data (e.g., by an unauthorized merchant). Ex-1131, Reber, 2:29-31,
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`6:17-28; see also Ex-1135, Shoup-Decl., ¶47; POR Reply at 21-24.
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`PO’s remaining argument – that it would not have been obvious to conduct
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`merchant validation at the secure registry (CMTA Reply at 5-6) – is premised on
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`the unrealistic notion that a POSITA would only have thought to perform merchant
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`validation at the acquiring bank, not at the secure registry. But Franklin’s
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`teachings about the importance of working with a valid merchant (Ex-1132,
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`Franklin, 11:33-49), as well as its broad view of what entities can perform the
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`functions of the “bank” (id. at 4:3-9, 4:19-21), would have motivated a POSITA to
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`conduct merchant validation at the secure registry before involving a bank. See
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`Ex-1102, Shoup-Decl., ¶¶113-114; Ex-1135, Shoup-Decl., ¶¶21, 23. Indeed,
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`because the secure registry and the banks all have a common interest in preventing
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`fraud, it would have been obvious for any of or all those parties to take steps to
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`which the Board will rule in its Final Written Decision. Cisco Systems, Inc. v. C-
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`Cation Techs., LLC, IPR2014-00454, Paper 12 at 8-9 (PTAB, Aug. 29, 2014).
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`3
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`

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`U.S. Patent No. 8,856,539
`Petitioner’s Sur-Reply to PO’s Reply to Opposition to CMTA
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`ensure that the transacting merchant was trustworthy. Ex-1102, Shoup-Decl.,
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`¶¶163-165; Ex-1135, Shoup-Decl., ¶¶21, 23. And regardless of what entity
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`performs the merchant validation, the transaction request would still need to
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`include an indication of the provider so that the merchant could be verified (which
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`is all that the substitute claim language requires). Ex-1102, Shoup-Decl., ¶¶106,
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`113-114. Accordingly, substitute claims 39[b], 44[a], and 47[b] would have been
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`obvious.
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`B. Reber And Franklin Render Obvious “Extracting” A “Time
`Value” (Substitute Claims 39[c] And 46[b]).
`Reber alone or in view of Franklin discloses that a time value can be
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`“extracted” from the received transaction request. For instance, a POSITA would
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`have understood that the “data representative of … the time of the transaction”
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`included in Reber’s “transaction records” could have been generated based on time
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`data that was extracted from a transaction request. Ex-1136, Shoup-Decl., ¶24; see
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`also Ex-1131, Reber, 5:33-38. Indeed, Reber’s transaction record includes other
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`data (i.e., transacting party and item information) that is extracted from the
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`transaction request for use in generating the record. Ex-1136, Shoup-Decl., ¶24;
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`Ex-1131, Reber, 5:33-38. PO does not challenge Dr. Shoup’s testimony that this
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`implementation would have been obvious (Ex-1136, Shoup-Decl., ¶24), but rather
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`only argues that a different implementation was also possible. CMTA Reply at 7.
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`Accordingly, Reber alone renders this limitation obvious.
`4
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`

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`U.S. Patent No. 8,856,539
`Petitioner’s Sur-Reply to PO’s Reply to Opposition to CMTA
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`But even if the claimed “extraction” would not have been obvious over
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`Reber alone, PO admits that Franklin teaches receiving “the transaction date and
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`time as part of transaction-specific data that the merchant provides to it along with
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`the transaction number having the embedded MAC value.” CMTA Reply at 9; see
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`also id. at 10 (“‘The authorization request contains [1] the transaction number and
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`[2] the transaction-specific data,’ where the latter includes the time data.”).2 This
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`received time value must be “representative of when the time-varying
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`multicharacter code was generated” because it is subsequently used to generate a
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`test MAC that is compared to a received MAC as part of the verification process.
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`Ex-1132, Franklin, 12:11-26; Ex-1136, Shoup-Decl., ¶¶23, 25. For a POSITA
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`designing a system in view of Reber and Franklin, the need to generate an identical
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`MAC value for comparison and validation (as described in Franklin) and a
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`transaction record with time information (as disclosed in Reber) would have
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`supplied the necessary motivation (and expectation of success) to include a time
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`value in the transaction request for extraction. Ex-1136, Shoup-Decl., ¶¶25-26.
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`2 PO’s arguments that it would have been impossible to extract the transaction date
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`and time from the received MAC (CMTA Reply at 9-10) are irrelevant, since PO
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`admits that Franklin teaches a separate time information value, included in the
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`transaction request, that can be extracted and used to generate a test MAC.
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`5
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`

`

`U.S. Patent No. 8,856,539
`Petitioner’s Sur-Reply to PO’s Reply to Opposition to CMTA
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`Accordingly, substitute claims 39[c] and 46[b] would have been obvious.
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`C. Reber And Franklin Render Obvious Validating An Identity Of
`The Provider And Executing A Restriction Mechanism (Substitute
`Claims 39[e]-[f] And 44[d]-[e]).
`Reber and Franklin teach transaction methods wherein a merchant is first
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`validated and then is granted access to data subject to any existing restrictions. In
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`particular, and as discussed above, Reber and Franklin teach that the transaction
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`request should contain information sufficient to identify and validate the merchant
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`involved in a transaction in order to prevent fraud. Ex-1131, Reber, 1:46-49, 2:29-
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`32; Ex-1132, Franklin, 1:48-54, 11:38-47; Ex-1136, Shoup-Decl., ¶29.
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`In addition to ensuring that the merchant is trustworthy, both references also
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`teach that the secure registry should ensure that a specific merchant is entitled to
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`access the sensitive data that is being requested. Ex-1136, Shoup-Decl., ¶29. This
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`determination of “compliance with access restrictions” is performed using the
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`time-varying multicharacter code in view of the merchant validation. For instance,
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`Reber explains that computer 64 [secure registry] compares the received second
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`data element [time-varying multicharacter code] to “entries in a database
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`associated with the computer 64 and either accepts or rejects” the request for
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`authorization and transmits an acceptance to the computer 20 [provider]. Ex-
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`1131, Reber, 5:18-22. In so doing, Reber discloses not only validating the
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`merchant, but also determining that the merchant is entitled to access the data
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`6
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`

`

`U.S. Patent No. 8,856,539
`Petitioner’s Sur-Reply to PO’s Reply to Opposition to CMTA
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`needed to authorize the transaction [determining compliance with any access
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`restrictions]. Ex-1136, Shoup-Decl., ¶29. Franklin likewise discloses that once a
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`merchant is validated, the secure registry also compares the received MAC to a
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`generated test MAC to ensure that the transacting parties are entitled to access the
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`data needed to complete the transaction. Id. at ¶25; Ex-1132, Franklin, 12:17-27.
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`Although neither reference uses the specific term “access restrictions,” it is
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`clear that if any such “restrictions” were present, the transaction could not go
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`forward. Ex-1136, Shoup-Decl., ¶29. Reber and Franklin perform both claimed
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`steps in the same way as embodiments of the ’539 patent, which authorize
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`financial transactions after determining that a received code is valid without any
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`separate reference to access restrictions. See, e.g., Ex-1101, ’539 patent, 11:51-65
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`(discussing Fig. 7), 12:24-34 (discussing Fig. 8), 13:3-14 (discussing Fig. 9),
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`13:35-57 (discussing Fig. 10). Accordingly, substitute claims 39[e]-[f] and 44[d]-
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`[e] would have been obvious.
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`D. Reber, Franklin, And Schutzer Render Obvious Using A “Public
`ID Code” (Substitute Claims 47[f]-[g]).
`Reber and Franklin each describe transmitting a user’s account number from
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`the secure registry to a third party that can complete a transaction.3 Ex-1131,
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`3 Petitioner has not “propose[d] modifying Reber in view of Schutzer ... to
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`introduce a third party” as PO suggests. CMTA Reply at 17. Rather, Reber and
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`7
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`

`

`U.S. Patent No. 8,856,539
`Petitioner’s Sur-Reply to PO’s Reply to Opposition to CMTA
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`Reber, 6:25-29; Ex-1132, Franklin, 3:65-4:9, 4:16-21; Ex-1135, Shoup-Decl.,
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`¶¶37-39; Ex-1137, Jakobsson-Dep., 432:11-15. To satisfy this claim limitation, a
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`POSITA would only have needed to look to Schutzer’s teachings concerning
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`public ID codes. Specifically, Schutzer teaches that where an account number is
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`transmitted over a network, it should be replaced by an “alternate card number”
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`[Public ID Code] to prevent unauthorized use. Ex-1130, Schutzer, ¶¶3, 11, 27.
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`Contrary to PO’s assertion (CMTA Reply at 18-19), Schutzer’s teaching is not
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`limited to transmissions over public networks or merely a “byproduct” of
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`preventing the merchant from having access to the real account number. Rather,
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`Schutzer warns generally about a card number being intercepted during
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`transmission and of the “degree of risk” associated with transmitting sensitive data
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`over an encrypted link or even storing it in a database (like the secure registry).
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`Ex-1130, Schutzer, ¶¶3, 4, 59. Accordingly, Schutzer explains that a public ID
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`code should be used as a substitute for account numbers even where data is stored
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`in a database or transmitted over an encrypted link between two banks. Id. at ¶27
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`(“At S6, the merchant (acquiring) bank’s server 18 … sends the request with the
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`alternate card number over the card association network 20 to the card issuer’s
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`Franklin each disclose the claimed “third party” apart from any teachings of
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`Schutzer. See POR Reply at 14-19.
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`8
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`

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`U.S. Patent No. 8,856,539
`Petitioner’s Sur-Reply to PO’s Reply to Opposition to CMTA
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`server 14.”); see also id. at ¶19 (“The merchant’s bank sends the anonymous card
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`number over the card association network …”). As such, a POSITA would have
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`been motivated to apply Schutzer’s teaching to protect the account number when it
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`is sent to the third party. Ex-1136, Shoup-Decl., ¶44.
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`E.
`PO Fails To Overcome Petitioner’s Showing That Substitute
`Limitations 39[h], 44[b], And 47[c] Do Not Satisfy § 112.
`Each of substitute limitations 39[h], 44[b], and 47[c] refers to “a biometric”
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`that is used to verify “the identity of the entity.” The substitute limitations are
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`indefinite because they fail to inform those skilled in the art about where and how
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`this validation is to be performed with reasonable certainty. Although PO contends
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`that the claim does not limit where or how verification is to be performed (CMTA
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`Reply at 24), that boundless interpretation is unsupported by the written
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`description since the specification does not identify the “other” verification
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`methods that PO claims are within the scope of the substitute claims. Under PO’s
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`interpretation, a potential infringer would have no basis to understand what types
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`of prior biometric verification—much less by whom or what, or at what time—
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`would satisfy the amended limitations. Put differently, the written description
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`would not enable a person of ordinary skill in the art to make and use the claimed
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`invention as required by § 112, ¶ 1. Therefore, PO’s proposed scope is
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`unreasonable, and substitute limitations 39[h], 44[b], and 47[c] are indefinite.
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`9
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`

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`U.S. Patent No. 8,856,539
`Petitioner’s Sur-Reply to PO’s Reply to Opposition to CMTA
`
`F.
`PO Fails To Overcome Petitioner’s Showing That The Substitute
`Claims Are Patent Ineligible Under § 101.
`The substitute claims are ineligible under § 101 because they are directed to
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`the abstract idea of verifying an account holder’s identity based on codes and/or
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`the account holder’s information before enabling a transaction without adding an
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`inventive concept. CMTA Opp. at 18-25; Ex-1136, Shoup-Decl., ¶¶47-56.
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`PO’s asserted “technological improvements,” such as a “secure registry,” a
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`“time-varying multicharacter code,” “biometric information,” a “restriction
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`mechanism,” and “account identifying information” are all abstract concepts that
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`one could implement using a pen and paper or perform in their mind. CMTA
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`Reply at 21-22. That the claims implement these abstract concepts with a generic
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`“database” or “processor” or in a particular order does not render them any less
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`abstract. See, e.g., CMTA Opp. at 22-23. PO’s CMTA Reply fails to identify a
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`single case in which analogous claims were found patent eligible. Therefore, PO
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`fails to rebut Petitioner’s showing that the substitute claims are patent ineligible.
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`G.
`Patent Owner Has Not Satisfied Its Duty Of Candor.
`PO’s inconsistent positions warrant denial of its CMTA. Specifically,
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`during a co-pending CBM proceeding relating to the ’539 patent (CBM2018-
`
`00023), PO argued against institution because the ’539 patent “includes no ...
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`claim” that “require[s] … finance-related activities.” Apple Inc. v. Universal
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`Secure Registry, LLC, Case CBM2018-00023 (Paper 9) at 2. PO’s argument was
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`
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`10
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`

`

`U.S. Patent No. 8,856,539
`Petitioner’s Sur-Reply to PO’s Reply to Opposition to CMTA
`
`based on its disclaimer of dependent claims 5-8, 17-20, and 26-30, which
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`contained limitations directed to financial activity. Id. at 2 n.1. The -0023 CBM
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`was denied because the board found that the remaining claims did not include a
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`“financial activity element.” Apple Inc., CBM2018-00023 (Paper 10) at 13.
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`PO’s CMTA now offers amendments that re-incorporate the disclaimed
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`financial subject matter and are therefore inconsistent with PO’s prior
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`representation that the ’539 patent claims did not “require finance-related
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`activities.” Although PO argues that the specific limitation of its proposed
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`amendment (“a public ID code that identifies a financial account”) was not part of
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`any disclaimed claim (CMTA Reply at 1-2), that argument misses the point, since
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`PO’s violation stems from its reintroduction of CBM-eligible financial subject
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`matter, not any specific claim language. CMTA Opp. at 3-4. As such, PO’s
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`failure to identify its inconsistent statement is a violation of its duty of candor.
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`H.
`PO Fails To Rebut Petitioner’s Showing Of Estoppel.
`Relatedly, PO is estopped from submitting at least substitute claim 47 in
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`view of its disclaimer, on which the Board and Petitioner relied. CMTA Opp. at 3-
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`4. In its response, PO argues that has not taken any “inconsistent position” or
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`derived any “unfair advantage.” CMTA Reply at 2-3. But PO cannot reconcile
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`that it first argued that the ’539 patent was CBM-ineligible, but has now plainly
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`reintroduced financial subject matter that would render it CBM-eligible.
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`
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`11
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`

`

`U.S. Patent No. 8,856,539
`Petitioner’s Sur-Reply to PO’s Reply to Opposition to CMTA
`
`Moreover, PO’s argument that Petitioner was not prejudiced overlooks two
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`key facts. First, the CMTA Reply ignores the dismissal of the -023 CBM, which
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`was found to be CBM-ineligible due to PO’s disclaimer, thereby prejudicing
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`Petitioner by preventing institution of its CBM as to all ’539 claims (not just those
`
`that were disclaimed). Second, Petitioner’s opportunity to “raise … arguments …
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`in its Opposition” is not a “full, fair, and timely consideration” of those arguments.
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`CMTA Reply at 3. Instead, Petitioner has deprived the Board of an opportunity to
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`consider Apple’s § 101 challenge (as to all claims) on a full CBM record, rather
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`than exclusively through the MTA briefing process. PO should therefore be
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`estopped from pursuing claims it previously abandoned, to Petitioner’s detriment.
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`III. CONCLUSION
`Because PO fails to rebut Petitioner’s showing that the substitute claims are
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`unpatentable, Petitioner respectfully requests that the Board deny PO’s CMTA.
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`July 19, 2019
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`Respectfully Submitted,
`
`
`
`/Monica Grewal/
`
`Monica Grewal
`Registration No. 40,056
`
`
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`12
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`

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`U.S. Patent No. 8,856,539
`Petitioner’s Sur-Reply to PO’s Reply to Opposition to CMTA
`
`CERTIFICATE OF SERVICE
`
`I hereby certify that on July 19, 2019, I caused a true and correct copy of
`
`
`
`the foregoing materials:
`
` Petitioner Apple Inc.’s Sur-Reply to Patent Owner’s Reply to the Opposition
`to the Conditional Motion to Amend
`
`
`to be served via electronic mail on the following correspondents of record as listed
`
`in Patent Owner’s Mandatory Notices:
`
`For PATENT OWNER:
`James M. Glass (jimglass@quinnemanuel.com)
`Tigran Guledjian (tigranguledjian@quinnemanuel.com)
`Christopher A. Mathews (chrismathews@quinnemanuel.com)
`Nima Hefazi (nimahefazi@quinnemanuel.com)
`Richard Lowry (richardlowry@quinnemanuel.com)
`Razmig Messerian (razmesserian@quinnemanuel.com)
`Jordan B. Kaericher (jordankaericher@quinnemanuel.com)
`Harold A. Barza (halbarza@quinnemanuel.com)
`Quinn Emanuel USR IPR (qe-usr-ipr@quinnemanuel.com)
`QUINN, EMANUEL, URQUHART & SULLIVAN, LLP
`
`
`
`Date: July 19, 2019
`
`Respectfully Submitted,
`
`
`/Monica Grewal/
`Monica Grewal
`Registration No. 40,056
`
`
`
`13
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