UNITED STATES PATENT AND TRADEMARK OFFICE
`
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`PAYPAL, INC.
`
`Petitioner
`
`v.
`
`IOENGINE, LLC
`
`Patent Owner
`
`____________
`
`U.S. Patent No. 8,539,047
`____________
`
`
`DECLARATION OF DR. CLIFFORD NEUMAN
`
`PayPal Ex. 1004, p. 1
`PayPal v. IOENGINE
`
`Case No.: IPR2019-00884
`Case No.: IPR2019-00885
`Case No.: IPR2019-00886
`Case No.: IPR2019-00887
`
`

`

`Decl. of Dr. Clifford Neuman
`
`
`
`
`
`TABLE OF CONTENTS
`
`TABLE OF CONTENTS ............................................................................ II
`
`I.
`
`INTRODUCTION .............................................................................. 6
`
`II. QUALIFICATIONS ........................................................................... 6
`
`III. COMPENSATION ............................................................................. 9
`
`IV. MATERIALS CONSIDERED .......................................................... 9
`
`V. UNDERSTANDING OF THE LAW .............................................. 14
`
`A.
`
`Legal Standards ........................................................................ 14
`
`B.
`
`C.
`
`Priority Date ............................................................................. 19
`
`Level of Skill in the Art ............................................................ 19
`
`VI. SUMMARY OF OPINIONS............................................................ 21
`
`VII. TECHNOLOGY BACKGROUND AND STATE OF THE ART 22
`
`A.
`
`Portable Devices ....................................................................... 22
`
`1.
`
`2.
`
`Card Readers .................................................................. 28
`
`USB and Bluetooth Devices .......................................... 29
`
`B.
`
`C.
`
`Program Code ........................................................................... 31
`
`Java ........................................................................................... 32
`
`D.
`
`Running Code from Memory ................................................... 33
`
`E.
`
`F.
`
`Running Code from Portable Devices ...................................... 35
`
`Internet/Networking ................................................................. 37
`
`VIII. THE CHALLENGED PATENT ..................................................... 40
`
`IX. THE MAJOR PRIOR ART REFERENCES ................................. 43
`
`A. Abbott ....................................................................................... 43
`
`B.
`
`C.
`
`Shmueli ..................................................................................... 48
`
`DiGiorgio .................................................................................. 53
`
`ii
`
`PayPal Ex. 1004, p. 2
`PayPal v. IOENGINE
`
`

`

`Decl. of Dr. Clifford Neuman
`
`
`
`
`
`D.
`
`Burger ....................................................................................... 57
`
`X. MOTIVATION TO COMBINE ...................................................... 63
`
`A. Abbott and Shmueli .................................................................. 63
`
`B.
`
`DiGiorgio and Burger, as well as Shmueli............................... 72
`
`XI. CLAIM TERMS ............................................................................... 79
`
`A.
`
`“[first/second/third] program code” ......................................... 79
`
`XII. CLAIM ANALYSIS ......................................................................... 81
`
`A. Abbott and Shmueli .................................................................. 81
`
`1.
`
`2.
`
`3.
`
`4.
`
`5.
`
`6.
`
`7.
`
`8.
`
`9.
`
`Claim 1 ........................................................................... 81
`
`Claim 2 ......................................................................... 117
`
`Claim 3 ......................................................................... 118
`
`Claim 4 ......................................................................... 119
`
`Claim 5 ......................................................................... 120
`
`Claim 6 ......................................................................... 121
`
`Claim 7 ......................................................................... 121
`
`Claim 8 ......................................................................... 122
`
`Claim 9 ......................................................................... 123
`
`10. Claim 10 ....................................................................... 126
`
`11. Claim 11 ....................................................................... 129
`
`12. Claim 12 ....................................................................... 131
`
`13. Claim 13 ....................................................................... 133
`
`14. Claim 14 ....................................................................... 134
`
`15. Claim 15 ....................................................................... 135
`
`16. Claim 16 ....................................................................... 135
`
`17. Claim 17 ....................................................................... 135
`
`18. Claim 18 ....................................................................... 136
`
`19. Claim 19 ....................................................................... 136
`
`20. Claim 20 ....................................................................... 138
`
`iii
`
`PayPal Ex. 1004, p. 3
`PayPal v. IOENGINE
`
`

`

`Decl. of Dr. Clifford Neuman
`
`
`
`
`
`21. Claim 21 ....................................................................... 138
`
`22. Claim 22 ....................................................................... 140
`
`23. Claim 23 ....................................................................... 140
`
`24. Claim 24 ....................................................................... 141
`
`25. Claim 25 ....................................................................... 143
`
`26. Claim 26 ....................................................................... 144
`
`27. Claim 27 ....................................................................... 150
`
`28. Claim 28 ....................................................................... 152
`
`29. Claim 29 ....................................................................... 152
`
`30. Claim 30 ....................................................................... 152
`
`31. Claim 31 ....................................................................... 156
`
`B.
`
`DiGiorgio and Burger ............................................................. 156
`
`1.
`
`2.
`
`3.
`
`4.
`
`5.
`
`6.
`
`7.
`
`8.
`
`9.
`
`Claim 1 ......................................................................... 157
`
`Claim 2 ......................................................................... 209
`
`Claim 3 ......................................................................... 210
`
`Claim 4 ......................................................................... 211
`
`Claim 5 ......................................................................... 212
`
`Claim 6 ......................................................................... 214
`
`Claim 7 ......................................................................... 214
`
`Claim 8 ......................................................................... 215
`
`Claim 9 ......................................................................... 216
`
`10. Claim 10 ....................................................................... 218
`
`11. Claim 11 ....................................................................... 221
`
`12. Claim 12 ....................................................................... 223
`
`13. Claim 13 ....................................................................... 226
`
`14. Claim 14 ....................................................................... 227
`
`15. Claim 15 ....................................................................... 227
`
`16. Claim 16 ....................................................................... 227
`
`17. Claim 17 ....................................................................... 227
`
`iv
`
`PayPal Ex. 1004, p. 4
`PayPal v. IOENGINE
`
`

`

`Decl. of Dr. Clifford Neuman
`
`
`
`
`
`18. Claim 18 ....................................................................... 228
`
`19. Claim 19 ....................................................................... 228
`
`20. Claim 20 ....................................................................... 230
`
`21. Claim 21 ....................................................................... 230
`
`22. Claim 22 ....................................................................... 230
`
`23. Claim 23 ....................................................................... 235
`
`24. Claim 24 ....................................................................... 235
`
`25. Claim 25 ....................................................................... 238
`
`26. Claim 26 ....................................................................... 238
`
`27. Claim 27 ....................................................................... 242
`
`28. Claim 28 ....................................................................... 244
`
`29. Claim 29 ....................................................................... 245
`
`30. Claim 30 ....................................................................... 245
`
`31. Claim 31 ....................................................................... 249
`
`XIII. SECONDARY CONSIDERATIONS ........................................... 249
`
`v
`
`PayPal Ex. 1004, p. 5
`PayPal v. IOENGINE
`
`

`

`Decl. of Dr. Clifford Neuman
`
`
`
`
`
`I. INTRODUCTION
`
`I, B. Clifford Neuman, Ph.D., declare as follows:
`
`1.
`
`I have been retained by counsel for PayPal, Inc. (“PayPal”) in the
`
`above-captioned matters as an independent consultant to offer opinions regarding
`
`the validity of the claims in U.S. Patent No. 8,539,047 (the “challenged patent”).
`
`2.
`
`If requested, I am prepared to explain in a deposition or at a trial
`
`before the Patent Trial and Appeal Board (the “Board”) the technology disclosed in
`
`the challenged patents including the state of the art in the relevant timeframe.
`
`Similarly, I am prepared to explain the technology disclosed in the Abbott,
`
`Shmueli, DiGiorgio, and Burger references and other prior art references cited
`
`herein. This may include, among other things, background information on card
`
`readers and USB devices.
`
`II. QUALIFICATIONS
`
`3.
`
`I received a Ph.D. in Computer Science in 1992 and an M.S. in
`
`Computer Science in 1988 from the University of Washington, and an S.B.
`
`(Bachelor’s) in Computer Science and Engineering in 1985 from the
`
`Massachusetts Institute of Technology.
`
`4.
`
`Since receiving my doctorate, I have devoted my professional career
`
`to the research, design, development, study, and teaching of numerous aspects of
`
`6
`
`PayPal Ex. 1004, p. 6
`PayPal v. IOENGINE
`
`

`

`Decl. of Dr. Clifford Neuman
`
`
`
`
`
`computer systems. I have studied, taught, practiced, and researched in the field of
`
`computer science for over thirty years.
`
`5.
`
`I am currently an Associate Professor of Computer Science Practice in
`
`the Department of Computer Science at the University of Southern California
`
`(USC), where I have taught since 1992. I am also the Director of the Center for
`
`Computer Systems Security and Associate Director of the Informatics Program at
`
`USC and a Research Scientist at USC’s Information Sciences Institute.
`
`6.
`
`I teach and have taught numerous courses at USC, including advanced
`
`courses in computer science for upper-level undergraduates and graduate students,
`
`on topics such as distributed systems and computer and network security.
`
`7.
`
`As part of my research at USC, I have worked in a number of areas,
`
`including research in distributed computer systems with emphasis on scalability
`
`and computer security, especially in the areas of authentication, authorization,
`
`policy, electronic commerce, and protection of cyber-physical systems and critical
`
`infrastructure such as the power grid. I have worked on the design and
`
`development of scalable information, security, and computing infrastructure for the
`
`Internet. I am also the principal designer of the Kerberos system, an encryption-
`
`based authentication system used among other things as the primary authentication
`
`method for most versions of Microsoft’s Windows, as well as many other systems.
`
`7
`
`PayPal Ex. 1004, p. 7
`PayPal v. IOENGINE
`
`

`

`Decl. of Dr. Clifford Neuman
`
`
`
`
`
`I developed systems which used Kerberos as a base for more comprehensive
`
`computer security services supporting authorization, accounting, and audit.
`
`8.
`
`In addition to my academic experience, I have many years of practical
`
`experience designing computer security systems. For example, from 1985-1986, I
`
`worked on Project Athena at MIT, to produce a campus-wide distributed
`
`computing environment. I also served as Chief Scientist at CyberSafe Corporation
`
`from 1992-2001. I have designed systems for network payment which build upon
`
`security infrastructure to provide a secure means to pay for services provided over
`
`the Internet. For example, I designed the NetCheque and NetCash systems, which
`
`are suitable for micropayments (payments on the order of pennies where the cost of
`
`clearing a credit card payment would be prohibitive). I am also the principal
`
`designer of the Prospero system which is used to organize and retrieve information
`
`distributed on the Internet. At one time the Prospero system was embedded in
`
`several commercial products, including early internet services provided by
`
`America Online.
`
`9.
`
`As part of my research on computer security and electronic payment
`
`systems I was involved with the integration of portable electronic devices such as
`
`smart cards and PCMCIA cryptographic processors with other computer devices
`
`such as card readers and personal computers.
`
`8
`
`PayPal Ex. 1004, p. 8
`PayPal v. IOENGINE
`
`

`

`Decl. of Dr. Clifford Neuman
`
`
`
`
`
`10.
`
`I have authored or co-authored over 50 academic publications in the
`
`fields of computer science and engineering. In addition, I have been a referee or
`
`editor for the following academic journals: ACM Transaction on Information and
`
`Systems Security and International Journal of Electronic Commerce. My
`
`curriculum vitae includes a list of publications on which I am a named author.
`
`11.
`
`I am also a member of IEEE, Association for Computer Machinery
`
`(ACM), and the Internet Society (ISOC), among others. I have also served as
`
`program and/or general chair of the following conferences: Internet Society
`
`Symposium on Network and Distributed System Security and the ACM
`
`Conference on Computer and Communications Security.
`
`12. A copy of my curriculum vitae is attached as Appendix A, which
`
`contains further details regarding my experience, education, publications, and other
`
`qualifications to render an expert opinion in connection with this proceeding.
`
`III. COMPENSATION
`
`13. My compensation is not contingent upon the opinions I render or the
`
`outcome of this proceeding.
`
`IV. MATERIALS CONSIDERED
`
`14.
`
`In preparing this declaration, I reviewed and considered the following
`
`materials, and any others referenced in the body of my declaration:
`
`9
`
`PayPal Ex. 1004, p. 9
`PayPal v. IOENGINE
`
`

`

`Decl. of Dr. Clifford Neuman
`
`
`
`
`
`Exhibit
`
`Description
`
`PAYPAL 1001
`
`
`
` U.S. Pat. No. 8,539,047 (the “’047 patent”)
`
`PAYPAL 1002
`
` Intentionally Omitted
`
`PAYPAL 1003
`
` Intentionally Omitted
`
`PAYPAL 1004
`
`Declaration of Dr. Clifford Neuman regarding U.S. Pat. No.
`
`
`8,539,047 (“Neuman Decl.”)
`
`PAYPAL 1005
`
` Intentionally Omitted
`
`PAYPAL 1006
`
` Intentionally Omitted
`
`PAYPAL 1007
`
`
`
` Curriculum Vitae of B. Clifford Neuman
`
`PAYPAL 1008
`
`
`
` U.S. Pat. No. 7,272,723 (“Abbott”)
`
`PAYPAL 1009
`
`
`
` U.S. Pat. Pub. No. 2002/0147912 (“Shmueli”)
`
`PAYPAL 1010
`
`
`
` U.S. Pat. No. 6,385,729 (“DiGiorgio”)
`
`PAYPAL 1011
`
`
`
` U.S. Pat. Pub. No. 2002/0099665 (“Burger”)
`
`PAYPAL 1012
`
`Markman ruling for U.S. Pat. No. 8,539,047, Dkt. No. 102,
`
` dated Mar. 21, 2016 (IOENGINE, LLC v. Imation Corp., Case
`No. 14-1572-GMS (D. Del. Mar. 21, 2016)
`
`PAYPAL 1013
`
`
`
` U.S. Pat. Pub. No. 2002/0004912 (“Fung”)
`
`PAYPAL 1014
`
` Intentionally Omitted
`
`PAYPAL 1015
`
`Trial Transcripts, Days 1-5, Dkt. Nos. 270-274, dated Feb. 13,
`
`
` 2017 through Feb. 17, 2017 (IOENGINE, LLC v. Imation
`Corp., Case No. 14-1572-GMS (D. Del.)
`
`PAYPAL 1016
`
`Patent Prosecution History for U.S. Pat. No. 8,539,047 (Appl.
`
`No. 12/950,321)
`
`PAYPAL 1017
`
` Intentionally Omitted
`
`PAYPAL 1018
`
` Intentionally Omitted
`
`10
`
`PayPal Ex. 1004, p. 10
`PayPal v. IOENGINE
`
`

`

`Decl. of Dr. Clifford Neuman
`
`
`
`
`
`Exhibit
`
`Description
`
`PAYPAL 1019
`
`Weiser, “The Computer for the 21st Century,” Reprinted from
`Scientific American, Vol. 265, No. 3, Sept. 1991 (available at
`
`https://www.ics.uci.edu/~djp3/classes/2012_09_INF241/paper
`s/Weiser-Computer21Century-SciAm.pdf) (“Weiser”)
`
`PAYPAL 1020
`
`Patterson et al., “A Case for Redundant Arrays of Inexpensive
`Disks (RAID),” ACM SIGMOD, Vol. 17, No. 3, June 1988
`
` (available at
`https://www.cs.cmu.edu/~garth/RAIDpaper/Patterson88.pdf)
`(“Patterson”)
`
`PAYPAL 1021
`
`Jury Verdict Form, dated Feb. 17, 2017 (IOENGINE, LLC v.
`
`Imation Corp., Case No. 14-1572-GMS (D. Del.)
`
`PAYPAL 1022
`
`Final Joint Claim Chart, Dkt. No. 49, dated Nov. 4, 2015
`
` (IOENGINE, LLC v. Imation Corp., Case No. 14-1572-GMS
`(D. Del.)
`
`PAYPAL 1023
`
`Plaintiff IOENGINE, LLC’s Opening Claim Construction
`
` Brief, Dkt. No. 68, dated Dec. 11, 2015 (IOENGINE, LLC v.
`Imation Corp., Case No. 14-1572-GMS (D. Del.)
`
`PAYPAL 1024
`
`Plaintiff IOENGINE, LLC’s Answering Claim Construction
`
` Brief, Dkt. No. 80, dated Jan. 8, 2016 (IOENGINE, LLC v.
`Imation Corp., Case No. 14-1572-GMS (D. Del.)
`
`PAYPAL 1025
`
`Plaintiff IOENGINE, LLC’s Opposition to Imation Corp.’s
`Renewed Motion for Judgment as a Matter of Law or, in the
`
` Alternative, for a New Trial, Dkt. No. 227, dated May 5, 2017
`(IOENGINE, LLC v. Imation Corp., Case No. 14-1572-GMS
`(D. Del.)
`
`PAYPAL 1026
`
`Jury Verdict Form, dated Jan. 13, 2017 (IOENGINE, LLC v.
`
` Interactive Media Corp. D/B/A Kanguru Solutions, Case No.
`14-1571-GMS (D. Del.)
`
`PAYPAL 1027
`
`Infringement Contentions for US. Patent No. 8,539,047
`
`(excerpts)
`
`11
`
`PayPal Ex. 1004, p. 11
`PayPal v. IOENGINE
`
`

`

`Decl. of Dr. Clifford Neuman
`
`
`
`
`
`Exhibit
`
`Description
`
`PAYPAL 1028
`
` Intentionally Omitted
`
`PAYPAL 1029
`
` Intentionally Omitted
`
`PAYPAL 1030
`
`Plaintiff IOENGINE, LLC’s Opposition to Imation Corp.’s
`Renewed Motion for Judgment as a Matter of Law or, in the
`
` Alternative, for a New Trial, Dkt. No. 178, dated Mar. 15,
`2017 (IOENGINE, LLC v. Interactive Media Corp. D/B/A
`Kanguru Solutions, Case No. 14-1571-GMS (D. Del.)
`
`PAYPAL 1031
`
`Jurgensen and Guthery, “Smart Cards: The Developer’s
`
`Toolkit,” Prentice Hall, 2002 (“Jurgensen”) (excerpt)
`
`PAYPAL 1032
`
`U.S. Copyright Office, Catalog Record for Jurgensen and
`
` Guthery, “Smart Cards: The Developer’s Toolkit,” Prentice
`Hall, 2002
`
`PAYPAL 1033
`
`Declaration of Martin L. Knott regarding Jurgensen and
`
` Guthery, “Smart Cards: The Developer’s Toolkit,” Prentice
`Hall, 2002
`
`PAYPAL 1034
`
`Savage, “RSA SecurID Gets Smart,” CRN, Jan. 11, 2002
`(available at
`
`https://www.crn.com/news/security/18837256/rsa-securid-
`gets-smart.htm)
`
`PAYPAL 1035
`
` “Reviews: Apple iMac,” Maximum PC, Nov. 1998, p. 100
`
`PAYPAL 1036
`
`Oh, “M-Systems DiskOnKey,” SystemLogic.net, Aug. 17,
`2001 (available at
`
`http://www.slcentral.com/reviews/hardware/storage/msystems
`/diskonkey)
`
`PAYPAL 1037
`
`“Specification of the Bluetooth System,” Bluetooth,
`Specification Vol. 2, Version 1.0B (Dec. 1, 1999) (available at
`
`http://grouper.ieee.org/groups/802/15/Bluetooth/profile_10_b.
`pdf) (excerpt)
`
`12
`
`PayPal Ex. 1004, p. 12
`PayPal v. IOENGINE
`
`

`

`Decl. of Dr. Clifford Neuman
`
`Exhibit
`
`Description
`
`PAYPAL 1038
`
`Plaintiff IOENGINE, LLC’s Initial Infringement Contentions,
`dated October 29, 2018 (IOENGINE, LLC v. PayPal
`Holdings, Inc.., Case No. 18-452-WCB (D. Del.)
`
`PAYPAL 1039 U.S. Pat. No. 6,487,657 (“Brockmann”)
`
`PAYPAL 1040 U.S. Pat. No. 6,681,259 (“Lemiläinen”)
`
`PAYPAL 1041 U.S. Pat. No. 6,097,390 (“Marks”)
`
`PAYPAL 1042 U.S. Pat. No. 6,927,770 (“Ording”)
`
`PAYPAL 1043 Challenged Claim Listing for U.S. Pat. No. 8,539,047
`
`PAYPAL 1044
`
`Intentionally Omitted
`
`PAYPAL 1045
`
`Intentionally Omitted
`
`PAYPAL 1046
`
`ISO-7816-2 Standard
`
`PAYPAL 1047
`
`Intentionally Omitted
`PAYPAL 1048 U.S. Pat. No. 6,362,894 (“Shima”)
`PAYPAL 1049 U.S. Pat. Pub. No. 2001/0010689 (“Awater”)
`PAYPAL 1050
`
`Intentionally Omitted
`
`PAYPAL 1051
`
`Intentionally Omitted
`PAYPAL 1052 U.S. Pat. No. 6,917,962 (“Cannata”)
`PAYPAL 1053
`
`ISO-7816-2 Copyright Registration
`PAYPAL 1054 Affidavit of Christopher Butler with two exhibits:
`1) “Smart cards: A primer Develop on the Java platform
`of the future” by Rinaldo Di Giorgio, JavaWorld,
`Dec. 1997
`2) “Smart cards and the OpenCard Framework” by
`Rinaldo Di Giorgio, JavaWorld, Jan. 1998
`
`13
`
`PayPal Ex. 1004, p. 13
`PayPal v. IOENGINE
`
`

`

`Decl. of Dr. Clifford Neuman
`
`
`
`
`
`15.
`
`I may use these documents and information, or other information
`
`obtained during the course of this proceeding, as well as representative charts,
`
`graphs, schematics and diagrams, animations, and models based on those
`
`documents and information, to support and to explain my testimony.
`
`16. My opinions are based in part on a review and analysis of the above-
`
`mentioned documents and materials. I have also drawn on my education,
`
`experience, and knowledge of basic engineering, computer, and security principles
`
`in forming my opinions.
`
`V. UNDERSTANDING OF THE LAW
`
`A. Legal Standards
`
`17.
`
`I am not an attorney, but I have been informed of several legal
`
`principles concerning patent validity, which I have employed in forming my
`
`opinions in this declaration. I have been informed and understand that each patent
`
`claim is considered separately for purposes of validity and that a dependent claim
`
`that depends from another claim includes all of the limitations of the claim it
`
`depends from.
`
`18. Claim Construction. I have been informed and understand that the
`
`claims of the challenged patents in this proceeding are to be construed using the
`
`same claim construction standard applied in district court. I have been informed
`
`and understand the claim construction analysis begins with the ordinary meaning
`
`14
`
`PayPal Ex. 1004, p. 14
`PayPal v. IOENGINE
`
`

`

`Decl. of Dr. Clifford Neuman
`
`
`
`
`
`of a claim term, and there is a presumption that the term carries its plain and
`
`ordinary meaning to persons of ordinary skill in the art as of the effective filing
`
`date of the patent. I have also been informed and understand that the most
`
`important sources for determining the meaning of a claim term are the claims, the
`
`specification, and the prosecution history of the patent at issue, which collectively
`
`is called “intrinsic evidence.” I have been further informed and understand that the
`
`meaning of a claim term may also be guided by “extrinsic evidence,” such as
`
`contemporaneous dictionaries and treatises.
`
`19. Burden of Proof. I have been informed and understand that the
`
`petitioner in an inter partes review bears the burden of establishing invalidity by “a
`
`preponderance of the evidence.” I have been further informed and understand that,
`
`to prove an assertion by “a preponderance of the evidence,” the party with the
`
`burden of proof must demonstrate that it is more likely than not that the assertion is
`
`true.
`
`20. Anticipation. I have been informed and understand that a patent
`
`claim is invalid if it is “anticipated” by prior art. I have been informed and
`
`understand that a reference anticipates a claim if the reference discloses each
`
`limitation of the claim at issue, either expressly or inherently. I have been
`
`informed and understand that a prior art reference may anticipate without
`
`disclosing a feature of the claimed invention if that missing characteristic is
`
`15
`
`PayPal Ex. 1004, p. 15
`PayPal v. IOENGINE
`
`

`

`Decl. of Dr. Clifford Neuman
`
`
`
`
`
`necessarily present, or inherent, in the single anticipating reference as would have
`
`been understood by one of ordinary skill in the art.
`
`21.
`
`I have been informed and understand that material not explicitly
`
`contained in a single prior art document may still be considered for purposes of
`
`anticipation if that material is incorporated by reference into the document.
`
`22. Obviousness. I have been informed and understand that a patent
`
`claim is invalid if it would have been obvious to a person of ordinary skill in the art
`
`(“POSITA”) at the time of the claimed invention. I have been further informed
`
`and understand that a claimed invention is not patentable if differences between it
`
`and the prior art are such that the subject matter as a whole would have been
`
`obvious at the time the invention was made to a person having ordinary skill in the
`
`pertinent art. I have been informed and understand that factors relevant to the
`
`determination of obviousness include the scope and content of the prior art, the
`
`level of ordinary skill in the art at the time of the invention, differences between
`
`the claimed invention and the prior art, and “secondary considerations” or
`
`objective indicia of non-obviousness.
`
`23.
`
`I have been informed and understand that a single reference alone can
`
`render a patent claim obvious, if any differences between the reference and the
`
`claim would have been known or obvious to a POSITA at the time of the
`
`invention. That is, if the POSITA could have adapted the reference to meet the
`
`16
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`PayPal Ex. 1004, p. 16
`PayPal v. IOENGINE
`
`

`

`Decl. of Dr. Clifford Neuman
`
`
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`
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`claims of the patent by applying known concepts to achieve expected results, then
`
`the patent claims are rendered obvious by that reference.
`
`24.
`
`I have been informed and understand that the combination of familiar
`
`elements according to known methods is likely to be obvious when it does no more
`
`than yield predictable results. I have been further informed and understand that
`
`when a patent claim simply arranges old elements with each performing the same
`
`function it had been known to perform, and yields no more than one of ordinary
`
`skill would expect from such an arrangement, the combination is obvious.
`
`25.
`
`I have been informed and understand that a patent claim composed of
`
`several limitations is not obvious merely because each limitation was
`
`independently known in the prior art. Hindsight reasoning is not an appropriate
`
`basis for combining references to form an obviousness combination. I have been
`
`further informed and understand that it can be important to identify a reason that
`
`would have prompted a person of ordinary skill in the relevant field to combine
`
`multiple prior art references.
`
`26.
`
`I have been informed that various “secondary considerations”
`
`(sometimes referred to as objective indicia of non-obviousness) may support a
`
`determination of non-obviousness and that such secondary considerations must be
`
`considered as part of an obviousness analysis. I have been informed that even
`
`strong evidence of secondary considerations may not be sufficient to rebut a strong
`
`17
`
`PayPal Ex. 1004, p. 17
`PayPal v. IOENGINE
`
`

`

`Decl. of Dr. Clifford Neuman
`
`
`
`
`
`showing of obviousness. I have been informed that the patentee bears the burden
`
`of showing the existence and effect of secondary considerations of non-
`
`obviousness, after which the burden of coming forward with rebuttal evidence
`
`shifts to the party arguing obviousness. I have been informed that the following
`
`secondary considerations may indicate non-obviousness:
`
`• Copying: evidence that others, including the accused infringer, copied the
`patented invention.
`
`• Long-standing problem or need: evidence of a persistent problem or need in
`the art that was resolved by the patented invention.
`
`• Prior failure: evidence that others have tried and failed to solve the problem
`or failed to provide the need resolved by the claimed invention.
`
`• Commercial acquiescence of competitors: the willingness of industry to
`license the patent at issue.
`
`• Skepticism: evidence that those of ordinary skill in the art were skeptical as
`to the merits of the invention, or even taught away.
`
`• Praise: evidence of praise directed to an invention by others in the field.
`
`• Unexpected results: evidence that those of ordinary skill in the art were
`surprised by the capabilities of the claimed invention.
`
`27.
`
`I have also been informed that the near-simultaneous invention by
`
`others can be evidence that a claimed invention is obvious. I have further been
`
`informed and understand that the patentee bears the burden of showing a “nexus”
`
`between the claimed invention and the evidence proffered on secondary
`
`considerations (e.g., proof of commercial success of a product that practices the
`
`claimed invention is not enough; there must be evidence that the commercial
`
`success resulted, at least in part, from the claimed invention).
`
`18
`
`PayPal Ex. 1004, p. 18
`PayPal v. IOENGINE
`
`

`

`Decl. of Dr. Clifford Neuman
`
`
`
`
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`B. Priority Date
`
`28.
`
`I have been informed and understand that a U.S. patent may claim
`
`“priority” to the filing date of one or more earlier filed applications. I have been
`
`informed that the priority date, also called the “effective filing date,” is the earliest
`
`filing date to which a claim is entitled and that such date is relevant for
`
`determining what qualifies as prior art. I understand that a claim must have written
`
`description support in the application(s) to which it claims priority to be entitled to
`
`an earlier effective filing date. I have been informed that the priority date
`
`determination is done on a claim-by-claim basis and that claims in the same patent
`
`may have different priority dates. I have been instructed to use March 23, 2004 as
`
`the priority date for all of the challenged claims in the challenged patents.
`
`C. Level of Skill in the Art
`
`29.
`
`I have been informed and understand that the level of ordinary skill in
`
`the relevant art at the time of the invention is relevant to inquiries such as the
`
`meaning of claim terms, the meaning of disclosures found in the prior art, and the
`
`reasons one of ordinary skill in the art may have for combining references.
`
`30.
`
`I have been informed and understand that factors that may be
`
`considered in determining the level of ordinary skill include: (1) the type of
`
`problems encountered in the art; (2) prior art solutions to those problems; (3)
`
`rapidity with which innovations are made; (4) sophistication of the technology; and
`
`19
`
`PayPal Ex. 1004, p. 19
`PayPal v. IOENGINE
`
`

`

`Decl. of Dr. Clifford Neuman
`
`
`
`
`
`(5) education level of active workers in the relevant field. I have been further
`
`informed and understand that a POSITA is also a person of ordinary creativity.
`
`31. The challenged patents pertain generally to the field of computer
`
`peripherals, data security, and network architectures. A POSITA at the time of the
`
`invention would have had at least a four-year degree in electrical engineering,
`
`computer engineering, computer science, or a related field and four years of
`
`relevant experience in developing, implementing, or deploying portable devices on
`
`systems connected to computer networks. A Master’s or Ph.D. degree in a relevant
`
`field may substitute for some work experience. Through their training and
`
`experience, a POSITA would also have a working understanding of computer
`
`hardware, peripheral and portable devices (including the protocols used to
`
`communicate with such devices through parallel or serial ports or other
`
`technologies, e.g. RS-232, USB, Bluetooth), operating systems such as Windows,
`
`computer programming, firmware, data encryption/decryption, security
`
`technologies, and network architectures and protocols (e.g., HTTPS, VPN, etc.). I
`
`was at all relevant times at least a POSITA in the art relevant to the challenged
`
`patents.
`
`20
`
`PayPal Ex. 1004, p. 20
`PayPal v. IOENGINE
`
`

`

`Decl. of Dr. Clifford Neuman
`
`
`
`
`
`VI. SUMMARY OF OPINIONS
`
`32.
`
`I have been asked to compare the references cited herein to claims 1-
`
`31 of the ’047 patent (the “challenged claims”). In my opinion, the challenged
`
`claims are invalid as follows.
`
`33. Claims 1-9, 13-16, 18-19, 21-31 of the ’047 patent are obvious based
`
`on the combination