UNITED STATES PATENT AND TRADEMARK OFFICE
`
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`Square, Inc.,
`
`Petitioner,
`
`v.
`
`REM Holdings 3, LLC
`
`Listed Patent Owner.
`
`____________
`
`IPR2014-00312
`
`Patent 8,584,946
`
`____________
`
`PETITION FOR INTER PARTES REVIEW
`
` 
`
` 
`
` 
`
`Square Exhibit 1025
`Square, Inc. v. 4361423 Canada Inc.
`IPR2019-01626
`Page 00001
`
`

`

`TABLE OF CONTENTS
`
`EXHIBIT LIST ........................................................................................................ iii
`
`I. MANDATORY NOTICES ............................................................................. 1
`A. Real Party-In-Interest....................................................................................... 1
`B. Related Matters ................................................................................................ 1
`1. Related Litigation ......................................................................................... 1
`2. Related Applications .................................................................................... 2
`C. Lead And Back-Up Counsel ............................................................................ 3
`D. Service Information ......................................................................................... 4
`E. Payment Of Fees .............................................................................................. 4
`
`II. GROUNDS FOR STANDING ........................................................................ 4
`A. Claims For Which Review Is Requested ......................................................... 5
`1. Statutory Grounds Of Challenge .................................................................. 5
`2. How the construed claims are unpatentable under the statutory grounds
`identified in 37 C.F.R. § 42.204(b)(2) and supporting evidence relied
`upon to support the challenge ................................................................... 8
`
`III. OVERVIEW OF THE ‘946 PATENT ............................................................ 9
`A. Summary of The ‘946 Patent ........................................................................... 9
`B. Prosecution History of The ‘946 Patent ........................................................ 11
`
`IV. DECLARATION EVIDENCE ...................................................................... 13
`A. The Level of Skill In The Art ........................................................................ 13
`
`V.
`
`CLAIM CONSTRUCTION .......................................................................... 15
`
`VI. GROUNDS OF UNPATENTABILITY SHOWING THAT PETITIONER
`HAS A REASONABLE LIKELIHOOD OF PREVAILING ....................... 16
`A. Claims 1-3, 6-8, 15, and 16 Are Rendered Obvious By Lekernel In View Of
`Padilla Under 35 U.S.C. § 103(a) .................................................................. 16
`B. Claims 4 And 9 Are Rendered Obvious By Lekernel In View Of Padilla And
`Further In View Of Odagiri Under 35 U.S.C. § 103(a) ................................. 27
`
`i
`
`IPR2019-01626 Page 00002
`
`

`

`C. Claims 5, 10-14, and 17 Are Rendered Obvious By Lekernel In View Of
`Padilla And Further In View Of Wallner Under 35 U.S.C. § 103(a) ............ 30
`D. Claims 1-3, 5-8, and 10-17 Are Rendered Obvious By Tang In View Of BPS
`Under 35 U.S.C. § 103(a) .............................................................................. 40
`E. Claims 4 and 9 Are Rendered Obvious By Tang In View Of BPS And
`Odagiri Under 35 U.S.C. § 103(a) ................................................................. 53
`
`VII. CONCLUSION .............................................................................................. 57
`
`
`
`
` 
`
`
`
`ii
`
`IPR2019-01626 Page 00003
`
`

`

`EXHIBIT LIST
`
`U.S. Patent No. 8,584,946 to Morley, Jr.
`Excerpts from the Prosecution History of Application No.
`13/065,931, which matured into U.S. Patent No. 8,584,946 (“the ‘946
`patent”)
`Excerpts from the Prosecution History of pending Application No.
`12/932,544 (“the ‘544 application”)
`Excerpts from the Prosecution History of pending Application No.
`13/585,979 (“the ‘979 application”)
`U.S. Patent No. 7,810,729 to Morley, Jr.
`U.S. Patent No. 8,281,998 to Tang et al. (“Tang”)
`U.S. Provisional Application No. 61/151,459 (“Tang Provisional”)
`JP 30008764 to BPS Corp. (“BPS”) and Machine Translation Thereof
`Publication entitled “Reading Magnetic Cards (Almost) for Free” to
`Sebastien Bourdeauducq (“Lekernel”)
`Publication entitled “Turning your mobile into a magnetic stripe
`reader” to L. Padilla (“Padilla”)
`U.S. Patent Publication No. 2010/0243732 to Wallner (“Wallner”)
`U.S. Provisional Application No. 61/163,296 (“Wallner Provisional”)
`JP H05-110718 to Casio (“Casio”) and Machine Translation Thereof
`U.S. Patent Publication No. 2004/0041911 to Odagiri et al.
`(“Odagiri”)
`Declaration of Steven McLaughlin
`“Magneto Switchboards” published by International Textbook
`Company (1906)
`June 1998 issue of “PC Magazine”
`November 1999 issue of “PC Magazine”
`September 2008 issue of “PC Magazine”
`Excerpts from the Prosecution History of Pending Reexamination
`Control No. 95/001,618 (U.S. Patent No. 7,810,729)
`
`iii
`
`1001
`1002
`
`1003
`
`1004
`
`1005
`1006
`1007
`1008
`1009
`
`1010
`
`1011
`1012
`1013
`1014
`
`1015
`1016
`
`1017
`1018
`1019
`1020
`
` 
`
`IPR2019-01626 Page 00004
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`

`

`1021
`
`1022
`
`
`Excerpts from the Prosecution History of Pending Reexamination
`Control No. 95/001,620 (U.S. Patent No. 7,896,248)
`Declaration of Jodi L. Gregory
`
` 
`
`iv
`
`IPR2019-01626 Page 00005
`
`

`

`I. MANDATORY NOTICES
`Petitioner Square, Inc. (“Square” or “Petitioner”) respectfully requests inter
`
`partes review for claims 1-17 of U.S. Patent No. 8,584,946 (“the ‘946 patent,”
`
`attached as Ex. 1001) in accordance with 35 U.S.C. §§ 311–319 and 37 C.F.R. §
`
`42.100 et seq. Pursuant to 37 C.F.R. § 42.8(a)(1), Square provides the following
`
`mandatory disclosures.
`
`A. Real Party-In-Interest
`Pursuant to 37 C.F.R. § 42.8(b)(1), Petitioner certifies that Square, Inc. is the
`
`real party-in-interest.
`
`B. Related Matters
`1. Related Litigation
`Pursuant to 37 C.F.R. § 42.8(b)(2), Petitioner identifies that the ‘946 patent
`
`claims priority to U.S. Patent No. 7,810,729 (“the ‘729 patent,” attached as Exhibit
`
`1005) which, along with U.S. Patent No. 7,896,248 (“the ‘248 patent,” a
`
`continuation-in-part of the ‘729 patent) is the subject of pending litigation styled
`
`Square, Inc. and James McKelvey v. REM HOLDINGS 3, LLC, Case No. 4:10-cv-
`
`02243-SNLF, filed December 1, 2010 in the Eastern District of Missouri.1 This
`
`litigation is currently stayed, and no decision concerning its merits has been
`                                                       
`1 A third patent, U.S. Patent No. 7,918,394, is also part of the litigation. See
`
`infra at § I(B)(2).
`
` 
`
`1
`
`IPR2019-01626 Page 00006
`
`

`

`rendered by the District Court. This IPR petition is directed to U.S. Patent No.
`
`8,584,946.
`
`2. Related Applications
`The ‘729 patent is the subject of inter partes reexamination Control No.
`
`95/001,618 (Exh. 1020), filed on May 10, 2011, which is currently on appeal. Oral
`
`argument in this appeal is scheduled for January 8, 2104. The ‘248 patent is the
`
`subject of inter partes reexamination Control No. 95/001,620 (Exh. 1021), filed on
`
`May 10, 2011, which is currently on appeal. Oral argument in this appeal is
`
`scheduled for January 8, 2014. The ‘946 patent claims priority to U.S. patent No.
`
`7,918,394 (“the ‘394 patent”), which was the subject of inter partes reexamination
`
`Control No. 95/001,619, filed on May 10, 2011. A Reexamination Certificate
`
`issued on January 17, 2012, cancelling all issued claims of the ‘394 patent.
`
`Further, the following applications remain pending that contain, or may be
`
`amended to contain, patentably indistinct claims:
`
` Continuation Application No. 14/084,315 (“the ‘315 application”) was filed
`on November 18, 2013 and claims the benefit of U.S. Patent Application No.
`13/065,931, from which the ‘946 patent matured.
`
` Continuation Application No. 12/932,544 (“the ‘544 application”) filed on
`February 26, 2011, which is pending and claims its earliest priority from the
`‘729 patent, to which the ‘946 patent also claims priority. See Exh. 1003.
`
` Continuation Application No. 13/585,979 (“the ‘979 application”) filed on
`August 15, 2012, which is pending and claims its earliest priority from the
`‘729 patent, to which the ‘946 patent also claims priority. See Exh. 1004.
`
` 
`
`2
`
`IPR2019-01626 Page 00007
`
`

`

`The ‘946 patent is shown in relation to the above-noted patents and
`
`applications in the illustration below.
`
`
`
`
`
`C. Lead and Back-Up Counsel
`
`Pursuant to 37 C.F.R. § 42.8(b)(3), Petitioner provides the following
`
`designation of counsel: Lead counsel is Scott A. McKeown (Reg. No. 42,866),
`
`and back-up counsel is Greg Gardella (Reg. No. 46,045).
`
` 
`
`3
`
`IPR2019-01626 Page 00008
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`

`

`Service Information
`
`D.
`Pursuant to 37 C.F.R. § 42.8(b)(4), papers concerning this matter should be
`
`served on the following:
`
`Address:
`
`Scott McKeown or Greg Gardella
`Oblon Spivak
`1940 Duke Street
`Alexandria, VA 22314
`cpdocketmckeown@oblon.com and
`cpdocketgardella@oblon.com
`Telephone: (703) 413-3000
`Fax:
`
`(703) 413-2220
`
`Email:
`
`E.
`
`Payment of Fees
`
`The undersigned authorizes the Office to charge the fee required by 37
`
`C.F.R. § 42.15(a) for this Petition for inter partes review to Deposit Account No.
`
`15-0030. Any additional fees that might be due are also authorized.
`
`II. GROUNDS FOR STANDING
`
`As set forth below and pursuant to 37 C.F.R. § 42.104, each requirement for
`
`inter partes review of the ‘946 patent is satisfied.
`
`Pursuant to 37 C.F.R. § 42.104(a), Petitioner hereby certifies that the ‘946
`
`patent is available for inter partes review and that the Petitioner is not barred or
`
`estopped from requesting inter partes review challenging the claims of the ‘946
`
`patent on the grounds identified herein. Pursuant to 37 C.F.R. §§ 42.101(a)-(c),
`
`Petitioner further certifies that the ‘946 patent has not been subject to a previous
`
`estoppel-based proceeding of the AIA, the Petitioner has not filed any civil action
`
` 
`
`4
`
`IPR2019-01626 Page 00009
`
`

`

`challenging the validity of a claim of the ‘946 patent, and none of the Petitioner,
`
`the Petitioner’s real party-in-interest, or the Petitioner’s privies has been served
`
`with a complaint alleging infringement of the ‘946 patent.
`
`A. Claims for Which Review is Requested
`
`Pursuant to 37 C.F.R. §§ 42.104(b) and (b)(1), Petitioner requests inter
`
`partes review of claims 1-17 of the ‘946 patent and requests that the Patent Trial
`
`and Appeal Board (“PTAB”) cancel those claims as unpatentable.
`
`1.
`
`Statutory Grounds of Challenge
`
`Pursuant to 37 C.F.R. § 42.204(b)(2), inter partes review of the ‘946 patent
`
`is requested in view of the following references, each of which is prior art to the
`
`‘946 patent under 35 U.S.C. § 102(a), (b), and/or (e):
`
`i. U.S. Patent No. 8,281,998 to Tang et al. (“Tang,” Exh. 1006) published as
`U.S. Patent Publication No. 2012/0061467 claims the benefit of provisional
`Application No. 61/151,459 (“Tang Provisional,” Exh. 1007) filed on Feburary10,
`2009. The features of this reference, applied herein to the claims of the ‘946
`patent, are fully supported by the provisional application. Therefore, Tang is prior
`art to the ‘946 patent under 35 U.S.C. § 102(e). Tang was not considered during
`the original prosecution of the ‘946 patent, nor is it cumulative of any prior art
`considered by the original patent examiner.
`
`ii.
`JP 30008764 to BPS Corp. (“BPS”) was published on March 20, 1995,
`which is prior to the earliest priority date claimed by the ‘946 patent. BPS is prior
`art against to the ‘946 patent under 35 U.S.C. § 102(b). BPS (Exh. 1008) was not
`
` 
`
`5
`
`IPR2019-01626 Page 00010
`
`

`

`considered during the original prosecution of the ‘946 patent, nor is it cumulative
`of any prior art considered by the original patent examiner.
`
`iii. The printed publication entitled “Reading Magnetic Cards (Almost) for
`Free” to Sebastien Bourdeauducq (“Lekernel”) was publically available by at least
`January 24, 2009, as evidenced by a cached version of Lekernel obtained via the
`Internet Archive Wayback Machine.2 The Gregory Declaration (Exh. 1022) attests
`to the public accessibility of Lekernel at least as early as January 24, 20093. See,
`e.g., Exh. 1022 at ¶¶ 6-10. This is prior to the earliest priority date claimed by the
`‘946 patent. Lekernel is therefore available as prior art against the ‘946 patent
`under 35 U.S.C. § 102(a). Lekernel (Exh. 1009) was cited but not applied in a
`rejection during the original prosecution of the ‘946 patent, and it is not cumulative
`of any prior art considered by the Examiner.4
`
`                                                       
`2 Cached version of Lekernel available at
`
`https://web.archive.org/web/20090124074859/http://lekernel.net/scrapbook/cardrea
`
`der.html.
`
`3 Petitioner notes that the Lekernel reference was first publically available in 2006.
`
`The earlier date will be authenticated for trial, if necessary. (IPR2013-00020 LKQ
`
`Corp v. Clearlamp LLC, Paper 17, March 5, 2013).
`
`4 Patentee presented arguments regarding Lekernel (Exh. 1009) in co-pending
`
`Reexamination No. 95/001,618 (Exh. 1021); these arguments are addressed infra at
`
`§ VI(A) of this petition and Exh. 1015 at ¶ 32.
`
` 
`
`6
`
`IPR2019-01626 Page 00011
`
`

`

`iv. The printed publication entitled “Turning your mobile into a magnetic stripe
`reader” to L. Padilla (“Padilla”) was publically available by at least September 27,
`2004, as evidenced by a cached version of Padilla obtained via the Internet Archive
`Wayback Machine.5 The Gregory Declaration (Exh. 1022) attests to the public
`accessibility of Padilla at least as early as September 27, 2004. See, e.g., Exh.
`1022 at ¶¶ 11-14. This is prior to the earliest priority date claimed by the ‘946
`patent. Padilla is therefore available as prior art against the ‘946 patent under 35
`U.S.C. § 102(b). Padilla (Exh. 1010) was applied in a rejection during the original
`prosecution of the ‘946 patent, but it is applied in combination with other, different
`prior art references in the instant petition. Thus, Padilla is not cumulative of any
`prior art considered by the Examiner.
`
`v. U.S. Patent Publication No. 2010/0243732 to Wallner (“Wallner,” Exh.
`1011) was published on September 30, 2010, and claims the benefit of provisional
`Patent Application No. 61/163,296 (“Wallner Provisional,” Exh. 1012), which was
`filed on March 25, 2009. The features of this reference, applied herein to the
`claims of the ‘946 patent, are fully supported by the provisional application.
`Therefore, Wallner is prior art to the ‘946 patent under 35 U.S.C. § 102(e).
`Wallner was not considered during the original prosecution of the ‘946 patent, nor
`is it cumulative of any prior art considered by the original patent examiner.
`
`vi. U.S. Patent Publication No. 2004/0041911 to Odagiri et al. (“Odagiri”) was
`published on March 4, 2004, which is prior to the earliest priority date claimed by
`                                                       
`5 Cached version of Padilla available at
`
`http://web.archive.org/web/20040927081729/http://www.gae.ucm.es/~padilla/extra
`
`work/mobilesoundtrack.html. 
`
` 
`
`7
`
`IPR2019-01626 Page 00012
`
`

`

`the ‘946 patent. Odagiri is therefore available as prior art against the ‘946 patent
`under 35 U.S.C. § 102(b). Odagiri (Exh. 1014) was not considered during the
`original prosecution of the ‘946 patent, nor is it cumulative of any prior art
`considered by the original patent examiner.
`
`The grounds of unpatentability presented in this petition are as follows:
`
`i. Claims 1-3, 6-8, 15, and 16 are rendered obvious by Lekernel in view of
`Padilla under 35 U.S.C. § 103(a);
`
`ii. Claims 4 and 9 are rendered obvious by Lekernel in view of Padilla and
`Odagiri under 35 U.S.C. § 103(a);
`
`iii. Claims 5, 10-14, and 17 are rendered obvious by Lekernel in view of Padilla
`and Wallner under 35 U.S.C. § 103(a);
`
`iv. Claims 1-3, 5-8, and 10-17 are rendered obvious by Tang in view of BPS
`under 35 U.S.C. § 103(a); and
`
`v. Claims 4 and 9 are rendered obvious by Tang in view of BPS and Odagiri
`under 35 U.S.C. § 103(a).
`
`2.
`
`How the Construed Claims are Unpatentable Under the
`Statutory Grounds Identified in 37 C.F.R. § 42.204(b)(2)
`and Supporting Evidence Relied Upon to Support the
`Challenge
`
`
`
`Pursuant to 37 C.F.R. § 42.204(b)(4), an explanation of how claims 1-17 of
`
`the ‘946 patent are unpatentable under the statutory grounds identified above,
`
`including the identification of where each element of the claim is found in the prior
`
`art, is provided in Section VI below, in the form of claims charts. Pursuant to 37
`
`C.F.R. § 42.204(b)(5), the appendix numbers of the supporting evidence relied
`
`upon to support the challenges and the relevance of the evidence to the challenges
`
`raised, including identifying specific portions of the evidence that support the
`8
`
` 
`
`IPR2019-01626 Page 00013
`
`

`

`challenges, are set forth infra.
`
`III. OVERVIEW OF THE ‘946 PATENT
`
`A. Summary of the ‘946 Patent
`
`The ‘946 patent describes the simple combination of well-known hardware
`
`elements, namely, magnetic card readers (see, e.g., Exh. 1001 at 1:30-38) and
`
`mobile phones (see id. at 2:9-13). The applicant for the ‘946 patent argued to the
`
`USPTO that, although they did not invent mobile phones or magnetic card readers,
`
`or even originate the idea of connecting a peripheral to a microphone input of an
`
`electronic device, that they had invented signal conditioning therebetween. That
`
`is, the applicant secured the ‘946 patent by arguing that inserting a voltage setting
`
`element—described in the ‘946 patent as an amplifier (Fig. 3) or resistor type
`
`component (Fig. 2)—to calibrate the output voltage signal of a card reader to a
`
`given input level of the mobile phone was an invention worthy of a patent. Of
`
`course, adjusting an output signal of one system so that it may be accepted/used by
`
`another, different system is as old as electrical engineering itself.
`
`The ‘946 patent describes communicating the electrical signal that is
`
`typically generated when a magnetic strip of, for example, a credit card is swiped
`
`along a magnetic read head of a magnet card reader. Id. at 1:30-35; see also id. at
`
`5:6-11. The ‘946 patent explains that this signal may be communicated to another
`
` 
`
`9
`
`IPR2019-01626 Page 00014
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`

`

`device via a direct coupling with a microphone input (i.e., via an output jack). See,
`
`e.g., id. at Fig. 1.
`
`As was well known at the time, and for ages prior, in order to communicate
`
`signals between interconnected electronic systems, it is typical that signals of one
`
`system (such as a peripheral) are conditioned for use by another, different system.
`
`Exh. 1015 at ¶¶ 14-17. Signal conditioning prevents the clipping or distorting of a
`
`signal by the receiving device, ensures that the output signal is in a form that is
`
`detectable/usable by the receiving device (i.e., in an acceptable processing range of
`
`signal amplitudes), and may even prevent damage to a device that might otherwise
`
`receive a signal that is too strong. Id. For these reasons, raising or lowering
`
`voltage levels, conversions from analog to digital domain, frequency conversion,
`
`and the like are the most fundamental of electrical engineering concepts.
`
`The ‘946 patent provides, in Figs. 2 and 3, the barest of illustrations for its
`
`signal conditioning between a magnetic card reader and a microphone input of a
`
`mobile phone. These figures show how the amplitude of the analog signal from
`
`the magnetic card reader may be set at a higher or lower level as appropriate. In
`
`Fig. 2 of the ‘946 patent (below), a resistor 26 drops the output voltage of the
`
`reader before the signal is provided to the mobile phone. The signal of the reader
`
`is then passed to the mobile device for amplification and further processing. Id. at
`
`5:12-13.
`
` 
`
`10
`
`IPR2019-01626 Page 00015
`
`

`

`
`
`
`
`In Fig. 3 of the ‘946 patent (above), the amplifier raises the voltage output from the
`
`reader before the signal is provided to the mobile phone. Id. at 5:46-50. 
`
`Each of the ‘946 patent claims recite “resistors ... to attenuate” as supported
`
`in Fig. 2. Other patents of the portfolio, such as those being reexamined by the
`
`USPTO, are directed to broader claims, written to cover both of Figs 2 and 3 (i.e.,
`
`“a setting unit”). 
`
`B. Prosecution History of the ‘946 Patent
`
`U.S. Patent Application No. 13/065,931 (“the ‘931 application”) was filed
`
`on April 1, 2011, with claims 1-20. The ‘931 application claimed priority to U.S.
`
`Patent Application No. 12/807,064 (now U.S. Patent No. 7,918,394), which in turn
`
`claimed priority to U.S. Patent Application No. 12/456,134 (now the ‘729 patent).
`
`See Exh. 1002.
`
`A non-final Office Action was issued on May 17, 2011, indicating the
`
`allowability of claim 8 and rejecting claims 1-20 over several double patenting
`
`rejections based on the ‘248, ‘394, and ‘729 patents. Id. at pp. 34-47. In a
`11
`
` 
`
`IPR2019-01626 Page 00016
`
`

`

`response filed on November 17, 2011, Patentee6 presented amendments to the
`
`pending claims, reciting, inter alia, “one or more resistors configured to attenuate
`
`the analog signal resulting in an attenuated analog signal indicative of said data
`
`stored on the magnetic stripe.” Id. at p. 133.
`
`A non-final Office Action was issued on March 1, 2012 rejecting claims 9,
`
`11, 13-16, and 19-21 under 35 U.S.C. § 103(a) as being unpatentable over Von
`
`Mueller et al. (U.S. Patent Publication No. 2005/0247787, hereinafter “Von
`
`Mueller I”) in view of non-patent literature entitled “Turning your mobile into a
`
`magnetic strip reader” to Padilla and rejecting claims 22-25 under 35 U.S.C. §
`
`103(a) as being unpatentable over Von Mueller I, Padilla, and Von Mueller et al.
`
`(U.S. Patent No. 7,309,012, hereinafter “Von Mueller II”). In a response filed
`
`August 16, 2012, Patentee filed Terminal Disclaimers in each of the ‘248 and ‘729
`
`patents.
`
`
`
`A final Office Action was issued on October 24, 2012, and presented
`
`substantially the same rejections as presented in the non-final Office Action of
`
`March 1, 2012.
`
`Responsive to the final Office Action, Patentee filed a Request for
`                                                       
`6 Note the term “patentee” is used herein to refer to the purported patentee of
`
`record, the proper inventorship and ownership of this patent family is subject to
`
`ongoing litigation between the parties as outlined infra.
`
` 
`
`12
`
`IPR2019-01626 Page 00017
`
`

`

`Continued Examination (RCE) and accompanying submission of claim
`
`amendments and arguments under 37 C.F.R. § 1.114. New claims 26-29 each
`
`limited the “one or more resistors” recited in the independent claims to a single
`
`resistor. Patentee also presented additional arguments allegedly distinguishing the
`
`resistors shown in Fig. 3 of Von Mueller I from the claimed resistors, asserting that
`
`Von Mueller’s resistors do not attenuate an analog signal because “the resistors
`
`shown are pull-up limiting resistors – limiting the amount of battery drain (current)
`
`from the Palm device to MSR 20 of Von Mueller” where “a primary purpose of
`
`Von Mueller is not only to receive power from the PDA, but to provide a
`
`‘Magnetic stripe reader with power management control for attachment to a PDA
`
`device.’” Id. at p. 245 (citations omitted).
`
`
`
`Responsive to the RCE, a Notice of Allowance was issued on September 27,
`
`2013 allowing claims 9, 11, 13-16, and 19-29, which subsequently issued as claims
`
`1-17 of the ‘946 patent.
`
`IV. DECLARATION EVIDENCE
`
`This Petition is supported by the Declaration testimony of Dr. Steven
`
`McLaughlin (“McLaughlin Declaration”), which describes the scope and content
`
`of the prior art at the time of the application of the ‘946 patent. See Exh. 1015.
`
`A. The Level of Skill in the Art
`
`The level of skill in the art is evidenced by prior art references. The ’946
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`patent alleges a novel device and method for providing analog signals read by a
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`magnetic card reader to a mobile phone. However, as demonstrated by the state of
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`the art and as shown by the discussion of relevant patents and publications below,
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`Patentee’s purported invention represents nothing more than a simple combination
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`of two well-known elements, a mobile phone and a magnetic card reader. This
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`combination of elements was well known prior to the application for the ‘946
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`patent to process magnetic stripe data from a card at a mobile phone instead of at a
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`stationary point-of-sale device (see, e.g., Exh. 1001 at 2:1-8).
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`The ‘946 patent also describes upwardly or downwardly adjusting the output
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`level of the card reader signal using a resistor or an amplifier. See id. at 5:12-13;
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`5:46-50; and Figs. 2-3. The ‘946 patent claims are limited to the downward
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`adjustment of the card reader voltage signal. As would have been understood by
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`one of skill in the art at the time of the ‘946 patent application, the use of a resistor
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`to drop a voltage is nothing more than the simple application of Ohm’s Law, which
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`is taught to most high school physics students. Exh. 1015 at ¶ 15.
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`Moreover, communicating signals to a mobile phone without a cable, i.e.,
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`via an output jack (see, e.g., Exh. 1001 at Figs. 1 and 2), was similarly well known.
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`Exh. 1015 ¶ 42.
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`V. CLAIM CONSTRUCTION
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`Pursuant to 37 C.F.R. § 42.204(b)(3), the claims subject to inter partes review
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`shall receive the “broadest reasonable construction in light of the specification of
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`the patent in which [they] appear[].” See also In re Swanson, No. 07-1534 (Fed.
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`Cir. 2008); In re Trans Texas Holding Corp., 498 F.3d 1290, 1298 (Fed. Cir. 2007)
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`(citing In re Yamamoto, 740 F.2d 1569, 1571 (Fed. Cir. 1984)). As the Federal
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`Circuit noted in Trans Texas, the Office has traditionally applied a broader
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`standard than a court does when interpreting claim scope. Moreover, the Office is
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`not bound by any district court claim construction. Trans Texas, 498 F.3d at 1297-
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`98, 1301.
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`In view of the above, claim interpretations submitted herein for the purpose
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`of demonstrating a Reasonable Likelihood of Prevailing are not binding upon
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`litigants in any litigation, nor do such claim interpretations correspond to the
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`construction of claims under the legal standards that are mandated to be used by the
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`courts in litigation. The interpretation of the claims presented either implicitly or
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`explicitly herein should not be viewed as constituting, in whole or in part,
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`Petitioner’s own interpretation and/or construction of such claims for the purposes
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`of any future litigation. Instead, such constructions in this proceeding should be
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`viewed only as constituting an interpretation of the claims under the “broadest
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`reasonable construction” standard.
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`All claim terms have been accorded their broadest reasonable interpretation
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`in light of the patent specification, including their plain and ordinary meaning, to
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`the extent such a meaning could be determined by a skilled artisan.
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`The terminology “output plug” is recited in the independent claims.
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`Dependent claims further limit this output plug to a “2.5mm” or “3.5mm” plug.
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`Thus, the terminology output plug has been interpreted to broadly define a class of
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`known output plugs such as the illustrative examples of the specification. (Ex.
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`1001 at 4:13-23).
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`VI. GROUNDS OF UNPATENTABILITY SHOWING THAT
`PETITIONER HAS A REASONABLE LIKELIHOOD OF
`PREVAILING
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`The references below each provide the teaching believed by the Examiner to
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`be missing from the prior art and render obvious the claimed subject matter.
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`A. Claims 1-3, 6-8, 15, and 16 are Rendered Obvious by Lekernel in
`View of Padilla Under 35 U.S.C. § 103(a)
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`Lekernel describes using a magnetic card reader that reads magnetic stripe
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`data on swiped cards to obtain analog signals7 and providing these signals to a
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`                                                       
`7 In the co-pending reexamination of related U.S. Patent No. 7,896,248 (Control
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`No. 95/001,620, Patent Owner’s Rebuttal Brief, May 13, 2013), Patentee has taken
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`the absurd position that “Lekernel outputs a digitized non-analog signal” and
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`correspondingly, that Lekernel’s Fig. 2 illustrates a digital circuit. Exh. 1021 at p.
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`microphone input of a sound card for decoding. See Exh. 1009 at ¶ 3. Thus,
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`Lekernel describes the “read head” recited in claims 1 and 7, as well as “an analog
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`signal indicative of data stored on a magnetic stripe of a card in response to the
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`magnetic stripe being passed by the read head,” as recited in claim 1 and as
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`generally set forth in claim 7.
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`Lekernel also teaches conditioning these analog signals prior to providing
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`the signals to the microphone input of the sound card. To accomplish this,
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`Lekernel uses a circuit (shown below in Fig. 2) that limits the amplitude (i.e.,
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`voltage) of the analog signal and thus manages voltage drops between the
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`microphone jack and the transistor circuit using a voltage divider. Exh. 1015 at ¶¶
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`                                                                                                                                                                               
`1238. This position, to the extent understood, seems to be based on the deliberate
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`mischaracterization of Lekernel’s statement that the “circuit is ‘dirty’ and has
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`unstable gain (which is not really a problem anyway, as you only read 0′s and
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`1′s).” Exh. 1009 at ¶ 6. Contrary to Patentee’s assertions, this aspect of Lekernel
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`simply explains that the crude amplifier is effective regardless of its varied gain
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`because a “dirty” presentation of the analog signal is not important to the design of
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`the magnetic card reader (i.e., the analog signal would likely be fed to an analog-
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`to-digital converter down the line). See e.g., Exh. 1015 at ¶ 32.
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`24, 25. This ensures that the analog signal can be provided to the sound card in an
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`acceptable processing range. Id.
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` In the co-pending reexamination of related U.S. Patent No. 7,896,248
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`(Control No. 95/001,620, Patent Owner’s Rebuttal Brief, May 13, 2013), Patentee
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`explained the very same voltage divider function, arguing “the signal setting
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`device is a resistance, and the way it sets the amplitude of the signal is that it is part
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`of a voltage divider operating in conjunction with the input impedance of the
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`‘headset jack’ claim limitation.” Exh. 1021 at p. 1237.
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`In other words, Patentee states that their resistance arrangement forms a
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`simple voltage divider with the headset jack. Similarly, Lekernel’s circuit also
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`forms a voltage divider with the microphone jack which produces “a reasonable
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`voltage drop on the microphone input (about -1V) when the circuit is connected.”
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`Exh. 1009 at ¶6; Exh. 1015 at ¶¶ 24, 25. Lekernel describes that, to obtain this
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`desired voltage drop, one would choose or set the value of 120k Ω resistor
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`accordingly. Exh. 1015 at ¶¶ 24, 25. The McLaughlin Declaration also describes
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`how the 120k Ω resistor provides attenuation at the base terminal of the transistor,
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`by limiting the current flowing into the transistor, which effectively controls the
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`amplitude of the amplifier output. Id. at ¶ 26.
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` 
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`The McLaughlin Declaration describes how, depending on the electrical
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`characteristics of a given magnetic card reader, amplification may be unnecessary.
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`Id. at ¶ 28. For example, when the analog signal obtained from the magnetic card
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`reader is of sufficient strength and instead requires attenuation, one of ordinary
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`skill in the art at the time of the earliest priority date of the ‘946 patent would
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`understand that Lekernel’s circuit teaches a voltage divider arrangement with
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`respect to the microphone jack, which is essentially what is claimed in the ‘946
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`patent. Id. at ¶ 29. Thus, Lekernel clearly teaches the “one or more resistors” that
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`are “configured to attenuate the analog signal resulting in an attenuated analog
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`sig