U.S. PATENT NO. 9,016,566
`Petition for Inter Partes Review
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________________________________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________________________________________
`
`Square, Inc.
`Petitioner
` v.
`4361423 Canada, Inc.
`Patent Owner
`
`Case IPR2019-01649
`
`PETITION FOR INTER PARTES REVIEW
`U.S. PATENT NO. 9,016,566
`
`Claims 1-4
`
`
`
`
`
`

`

`U.S. PATENT NO. 9,016,566
`Petition for Inter Partes Review
`TABLE OF CONTENTS
`I.
`INTRODUCTION ............................................................................... 1
`II.
`MANDATORY NOTICES .................................................................. 1
`A. Real Party-in-Interest ........................................................................... 1
`B. Related Matters .................................................................................... 1
`C. Notice of Counsel and Service Information ........................................ 2
`D. Fee for Inter Partes Review ................................................................. 3
`III.
`CERTIFICATION OF GROUNDS FOR STANDING ...................... 3
`IV.
`OVERVIEW OF CHALLENGE AND RELIEF REQUESTED ........ 3
`A. Prior Art ............................................................................................... 4
`B. Grounds of Challenge .......................................................................... 4
`V.
`OVERVIEW OF THE ’566 PATENT ................................................ 5
`A. The ’566 Patent .................................................................................... 5
`B. File History of the ’566 Patent ............................................................. 8
`VI.
`OVERVIEW OF THE PRIOR ART ................................................. 11
`A. Proctor ................................................................................................ 11
`B. Colnot ................................................................................................. 12
`C. Eisner ................................................................................................. 14
`VII.
`PERSON HAVING ORDINARY SKILL IN THE ART .................. 16
`VIII. CLAIM CONSTRUCTION ............................................................... 16
`SPECIFIC GROUNDS FOR PETITION .......................................... 17
`IX.
`A. Ground I: Claims 1-4 are rendered obvious by Proctor in view of
`Vrotsos under 35 U.S.C. § 103(a) ........................................................................ 17
`1. Claim 1 ............................................................................................ 17
`2. Claim 2 ............................................................................................ 36
`3. Claim 3 ............................................................................................ 36
`4. Claim 4 ............................................................................................ 40
`ii
`
`
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
`B. Ground II: Claims 1-4 are rendered obvious by Colnot in view of
`Vrotsos under 35 U.S.C. § 103(a) ........................................................................ 40
`1. Claim 1 ............................................................................................ 40
`2. Claim 2 ............................................................................................ 54
`3. Claim 3 ............................................................................................ 55
`4. Claim 4 ............................................................................................ 57
`C. Ground III: Claims 1-4 are rendered obvious by Eisner in view of
`Vrotsos and Proctor under 35 U.S.C. § 103(a) .................................................... 58
`1. Claim 1 ............................................................................................ 58
`2. Claim 2 ............................................................................................ 69
`3. Claim 3 ............................................................................................ 69
`4. Claim 4 ............................................................................................ 71
`D. Ground IV: Claims 1-4 are rendered obvious by Proctor in view of
`Vrotsos and Morley under 35 U.S.C. § 103(a) .................................................... 71
`1. The Priority Date of the ’566 Patent Cannot Be Earlier Than
`February 9, 2010 .............................................................................................. 71
`2. Claim 1 ............................................................................................ 78
`3. Claim 2 ............................................................................................ 82
`4. Claim 3 ............................................................................................ 82
`5. Claim 4 ............................................................................................ 83
`CONCLUSION .................................................................................. 83
`X.
`
`
`iii
`
`
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
`TABLE OF AUTHORITIES
`
`Page(s)
`CASES
`Anascape, Ltd. v. Nintendo of Am., Inc., 601 F.3d 1333 (Fed. Cir.
`2010) ................................................................................................................... 74
`Ariad Pharms., Inc. v. Eli Lilly & Co., 598 F.3d 1336 (Fed. Cir. 2010) ..... 73, 74, 76
`Dynamic Drinkware, LLC, v. Nat’l Graphics, Inc., 800 F.3d 1375
`(Fed. Circ. 2015) ................................................................................................. 73
`DyStar Textilfarben GmbH & Co. Deutschland KG v. C.H. Patrick
`Co., 464 F.3d 1356 (Fed. Cir. 2006) ................................................................... 23
`Lockwood v. Am. Airlines, 107 F.3d 1565 (Fed. Cir. 1997) .............................. 73, 76
`New Railhead Mfg., L.L.C. v. Vermeer Mfg. Co., 298 F.3d 1290 (Fed.
`Cir. 2002) ............................................................................................................ 73
`Phillips v. AWH Corp, 415 F.3d 1303 (Fed. Cir. 2005) .......................................... 16
`Quake v. Lo, 928 F.3d 1365 (Fed. Cir. 2019) .......................................................... 73
`Tech. Licensing Corp. v. Videotek, Inc., 545 F.3d 1316,1331 (Fed.
`Circ. 2008) .......................................................................................................... 73
`Univ. of Rochester v. G.D. Searle & Co., 358 F.3d 916 (Fed. Cir.
`2004) ................................................................................................................... 73
`STATUTES AND RULES
`35 U.S.C. § 102(b) ..................................................................................................... 4
`35 U.S.C. § 103(a) ............................................................................................passim
`35 U.S.C. § 112 ........................................................................................................ 72
`35 U.S.C. §§ 311-319 ................................................................................................ 1
`iv
`
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
`MISCELLANEOUS
`37 C.F.R. §§ 42.1-.80, 42.100-.123 ........................................................................... 1
`37 C.F.R. § 42.8(b)(1) ................................................................................................ 1
`37 C.F.R. § 42.8(b)(4) ................................................................................................ 3
`37 C.F.R. § 42.10(b) .................................................................................................. 3
`37 C.F.R. § 42.15(a) ................................................................................................... 3
`37 C.F.R. §§ 42.24(d) and 42.24(a)(1) .................................................................... 84
`37 C.F.R. § 42.100(b) (effective Nov. 13, 2018) ..................................................... 16
`Rule 42.104(a) ............................................................................................................ 3
`Rule 42.104(b)(4)–(5) .............................................................................................. 17
`Rules 42.22(a)(1) and 42.104(b)(1)-(2) ..................................................................... 3
`
`
`v
`
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
`
`Table of Exhibits for U.S. Patent 9,015,566 Petition for Inter Partes Review
`Description
`Exhibit
`U.S. Patent No. 9,016,566 to Tang et al.
`1001
`1002
`Claim Listing
`Declaration of Professor Bruce McNair (“McNair Decl.”)
`1003
`Prosecution History File of Application No. 13/957,530, which
`1004
`matured into U.S. Patent No. 9,016,566
`U.S. Provisional Application No. 61/151,459
`(“’459
`1005
`provisional”)
`PCT Application No. IB2010/001367 ( “’367 PCT”)
`1006
`U.S. Patent Application Publication No. 2002/0091633
`1007
`(“Proctor”)
`U.S. Patent No. 6,144,336 (“Preston”)
`1008
`U.S. Patent Application Publication No. 2005/0236480
`1009
`(“Vrotsos”)
`U.S. Patent No. 7,810,729 (“Morley”)
`1010
`U.S. Patent Application Publication No. 2007/0067833
`1011
`(“Colnot”)
`U.S. Patent No. 5,838,773 (“Eisner”)
`1012
`1013
`[RESERVED]
`Bobilin and Lindenlaub, “Distortion Analysis of Binary FSK,”
`1014
`IEEE Transactions on Communications Technology, vol. 19,
`no. 4, pp. 478-486, August 1971
`Bennett and Davey, Data Transmission, McGraw Hill, 1965, p.
`1015
`164
`vi
`
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
`Affidavit of Rachel Watters - Lucky, Salz, and Weldon, Jr,
`Principles of Data Communications, McGraw Hill, 1968, p. 227
`(“Lucky book”)
`Bingham, The Theory and Practice of Modem Design, John
`Wiley & Sons, 1988, pp. 2-4
`vii
`
`1016
`1017
`
`
`
`
`
`

`

`U.S. PATENT NO. 9,016,566
`Petition for Inter Partes Review
`INTRODUCTION
`Pursuant to 35 U.S.C. §§ 311-319 and 37 C.F.R. §§ 42.1-.80, 42.100-.123,
`Petitioner Square, Inc. (“Square” or “Petitioner”) hereby petitions for inter partes
`review (“IPR”) of claims 1-4 (“Challenged Claims”) of U.S. Patent No. 9,016,566
`(the “’566 patent”) and requests cancellation of those claims as unpatentable.
`II. MANDATORY NOTICES
`A. Real Party-in-Interest
`Under 37 C.F.R. § 42.8(b)(1), Petitioner certifies that Square is the real party-
`in-interest, and further certifies that no other party exercised control or could have
`exercised control over Square’s participation in this proceeding, the filing of this
`petition, or the conduct of any ensuing trial.
`B. Related Matters
`According to assignment records, the ’566 patent is currently assigned to
`4361423 Canada INC d/b/a AnywhereCommerce (“AnywhereCommerce”).
`As of the filing date of this Petition, and to the best of the Petitioner’s
`knowledge, the ’566 patent is involved in a single suit, 4361423 Canada Inc. v.
`Square, Inc. N.D.Cal. , 4:19-cv-04311-JSW, in which Petitioner is the Defendant.
`1
` I.
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
` Petitioner has filed, or will file, concurrent with the present Petition, petitions
`for IPR of U.S. Patent Nos. 8,286,875; 8,281,998; 9,269,084; 9,311,637; 9,443,239;
`9,613,351; and 9,818,107, which are in the same family as the ’566 patent.
`Petitioner suggests the Board consider assignment to a common panel in the
`interest of efficiency: U.S. Patent No.
`PTAB Case No.
`IPR2019-01625
`8,286,875
`IPR2019-01626
`8,286,875
`IPR2019-01627
`8,281,998
`IPR2019-01628
`8,281,998
`IPR2019-01629
`9,269,084
`IPR2019-01630
`9,269,084
`IPR2019-01649
`9,016,566
`IPR2019-01650
`9,311,637
`IPR2019-01651
`9,443,239
`IPR2019-01652
`9,613,351
`IPR2019-01653
`9,818,107
`IPR2019-01654
`9,818,107
` C. Notice of Counsel and Service Information
`Petitioner’s counsel are:
`Back-Up Counsel
`Lead Counsel
`Grace I. Wang
`David M. Tennant
`Registration No. 69,892
`Registration No. 48,362
`WHITE & CASE LLP
`WHITE & CASE LLP
`1221 Ave of the Americas
`701 Thirteenth Street, NW
`grace.wang@whitecase.com
`Washington, DC 20005-3807
`New York, NY 10020-1095
`dtennant@whitecase.com
`212-819-8574 (phone)
`202-626-3600 (phone)
`2
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
`202-639-9355 (fax)
` Anne-Raphaelle Aubry
`Registration No. (pending)
`White & Case LLP
`75 State Street
`Boston, MA 02109-1814
`anne-raphaelle.aubry@whitecase.com
`617-979-9344 (phone)
`
`A Power of Attorney is being filed concurrently with this Petition in
`accordance with 37 C.F.R. § 42.10(b). Petitioner consents to electronic service.
`Pursuant to 37 C.F.R. § 42.8(b)(4), all services and communication to the above
`addresses
`above
`and
`email
`their
`attorneys
`can
`be
`sent
`to
`WCSquareAnywhereCommerceTeam@whitecase.com.
`D.
`Fee for Inter Partes Review
`The Director is authorized to charge the fee specified by 37 C.F.R. § 42.15(a),
`and any other required fees, to Deposit Account No. 50-3672.
`III. CERTIFICATION OF GROUNDS FOR STANDING
`Petitioner certifies pursuant to Rule 42.104(a) that the ’566 patent is available
`for IPR and that Petitioner is not barred or estopped from requesting this IPR.
`IV. OVERVIEW OF CHALLENGE AND RELIEF REQUESTED
`Pursuant to Rules 42.22(a)(1) and 42.104(b)(1)-(2), Petitioner challenges
`claims 1-4 of the ’566 patent.
`3
`
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
`Prior Art
` A.
`Petitioner relies on the following prior art under 35 U.S.C. § 102(b):
`● U.S. Patent Publication No. 2002/0091633 (“Proctor”), filed January 10,
`2001, published July 11, 2002. Ex. 1007.
`● U.S. Patent Publication No. 2005/0236480 (“Vrotsos”), filed April 23,
`2004, published October 27, 2005. Ex. 1009.
`● U.S. Patent No. 7,810,729 (“Morley”), filed June 10, 2009, issued October
`12, 2010. Ex. 1010.
`● U.S. Patent Publication No. 2007/0067833 (“Colnot”), filed September 19,
`2006, published March 22, 2007. Ex. 1011.
`● U.S. Patent No. 5,838,773 (“Eisner”), filed June 9, 1997, published
`November 17, 1998. Ex. 1012.
`B. Grounds of Challenge
`1. Ground 1: Claims 1-4 are rendered obvious by Proctor in view of Vrotsos under
`35 U.S.C. § 103(a).
`2. Ground 2: Claims 1-4 are rendered obvious by Colnot in view of Vrotsos under
`35 U.S.C. § 103(a).
`3. Ground 3: Claims 1-4 are rendered obvious by Eisner in view of Vrotsos and
`Proctor under 35 U.S.C. § 103(a).
`4
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
`4. Ground 4: Claims 1-4 are rendered obvious by Proctor in view of Vrotsos and
`Morley under 35 U.S.C. § 103(a).
`V. OVERVIEW OF THE ’566 PATENT
`A. The ’566 Patent
`The ’566 patent describes an apparatus for performing credit card transactions
`using a transaction device (e.g., a credit card reader) coupled to a jack of a mobile
`phone. Ex. 1001, Abstract. Such an apparatus was well-known at the time of filing
`of the ’566 patent. Indeed, the ’566 patent makes several admissions regarding what
`was known in the art regarding portable card readers that send card data to mobile
`phones, which transmit that data to remote servers for validating a transaction. Ex.
`1003, ¶¶26-28. For example, the ’566 patent admits at least the following concepts
`were generally known:
`● Point of sale (POS) device is combined with a wireless communication
`device such as a cell phone. Ex. 1001, 1:30-33.
`● POS device has a smartcard reader to receive and process information from
`smartcard’s integrated circuit. Id. 1:34-43.
`● POS device sends transaction card information to the cell phone. Id. 1:43-
`47.
`5
`
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
` ● Cell phone transmits the information over a communication network to a
`remote computer. Id. 1:47-51.
`● Remote computer facilitates validation of a transaction and sends
`information back to the POS device via the cell phone. Id. 1:57-64.
`Consistent with the admitted prior art, Fig. 1, reproduced below, illustrates a
`flow diagram of a transaction network of the purported invention. Id. 5:20-23.
`
`A POS device 12 (blue, similar to the POS device of the applicant admitted
`prior art (“AAPA”)) reads and captures credit card information and transmits it in
`an analog audio format to a communication device 14 such as a mobile phone (red,
`similar to the wireless communication device of the AAPA). Id. 7:21-42. The phone
`6
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
`transmits that data over the communication network 26, such as the internet (id. 7:6-
`7) to a remote transaction server 18 (purple, similar to the remote computer of the
`AAPA), which transmits the data to a remote processor/issuer 20. Id. 7:8-12; Ex.
`1003, ¶¶29-30.
`Further consistent with the admitted prior art, Fig. 2, reproduced below,
`depicts a front view of a “transaction/communication assembly” (id. 5:24-26)
`including the transaction device 12 (blue) and the mobile phone 14 (red) connected
`over a cable 30 with two end connectors 32. See id. 7:21-42; Ex. 1003, ¶31.
`
`The transaction device 12 captures card data at the input device 38 (id. 8:55-
`59) from a transaction card, which can include “other electronic methods of
`payment” (id. 5:58-60). The captured data is then transferred to a controller 50 in
`the transaction device (id. 8:59-60), which encrypts the transaction data so that it can
`7
`
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
`be transmitted first to the mobile phone 14 (in an analog audio format over a jack or
`hands-free interface) (id. 10:1-10) and later to the remote transaction server 18
`depicted in Fig. 1 above. Id. 8:59-9:02. The remote transaction server decodes the
`data to recover the card data and payment information (id. 10:11-19), and then
`communicates this data with a remote processor/issuer to verify and complete the
`transaction (id. 10:19-22). See Ex. 1003, ¶32.
`File History of the ’566 Patent
`B.
`The applicant filed U.S. Application No. 13/957,350 (“the ’350 application”),
`which eventually issued as the ’566 patent, on April 28, 2015. The ’566 patent
`purportedly claims priority to the ’459 provisional, filed on February 10, 2009.
`However, as discussed infra in Section IX.D.1, the ’566 patent cannot properly claim
`priority to that date.
`With the filing of the ’350 application, applicant preliminarily amended the
`claims by cancelling all claims and adding new independent claims 21 (issued claim
`1) and 22 (issued claim 3). Ex. 1004, pp. 162-163. In a non-final Office Action on
`September 27, 2013, the Office rejected both claims as being obvious in view of
`U.S. Patent Publication No. 2005/0247787 (“Von Mueller I”), an article titled
`“Turning your mobile phone into a magnetic card reader” (“Padilla”), and U.S.
`Patent No. 7,309,012 (“Von Mueller II”). Id. pp. 144-146. In a response filed on
`8
`
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
` March 21, 2014, rather than amending the claims, Applicant unsuccessfully
`attempted to argue over the prior art. Id. p. 118.
`After March 21, 2014, but before the Examiner mailed the next Office Action,
`a third party filed a “Third-Party Submission” on May 26, 2014. That Third-Party
`Submission pointed out the relevancy of the ’459 provisional, stating “it will allow
`the Examiner to determine whether the Tang provisional application discloses a
`portable card reader device having an output jack adapted to be inserted into a jack
`associated with the mobile communication device.” Id. p. 81. The Third-Party
`Submission also provided several previously unconsidered prior art references,
`including Morley, among others. Id. pp. 82-87.
`In a subsequent non-final Office Action issued on July 9, 2014, and consistent
`with the Third-Party Submission, the Office denied applicant’s claim of priority to
`the filing date of the ’459 provisional. Id. pp. 44-45. Further, the Office rejected (i)
`claim 21 under 103(a) as being obvious in view of Von Mueller I and Von Mueller
`II and (ii) claim 22 under 102(e) as being anticipated by U.S. Patent Publication No.
`(“Morley publication”), corresponding
`to
`the pre-issuance
`2010/0108762
`publication of Morley. Id. pp. 45-47.
`Without challenging the Office’s determination that the language of the
`rejected claims were not entitled to priority of the ’459 provisional filing date, the
`9
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
`applicant acquiesced and amended the claims on September 25, 2014, to remove all
`references to “hands-free” for the mobile phone’s jack and replaced references to
`magnetically recorded information on a magnetic stripe with recorded information
`on an integrated circuit1 incorporated into a smart card.2 Id. pp. 34-35. Patent Owner
`never challenged Examiner’s assertion that the previously rejected claims lacked
`support in the ‘459 provisional. Applicant further added two new claims listing
`various examples of smart cards, such as chip cards.
`The Office issued a Notice of Allowance on January 13, 2015, stating as
`reasons for allowance that “Applicant’s amendments and remarks on pages 4-5
`[corresponding to Ex. 1004, pp. 36-37, summarized infra in Section IX.D.1.e] of the
`response filed 9/25/14 have overcome the previous prior art rejections.” The ’566
`patent issued on April 28, 2015.
`
`1 The ’459 provisional discusses a smart card reader 7 (Ex. 1005, pp. 3-4), but as
`discussed in Section V.C, does not disclose recorded information stored on an
`integrated circuit in the smart card, nor does it disclose producing an analog
`signal from that recorded information.
`2 Applicant’s statements regarding this amendment are summarized infra in Section
`IX.D.1.e.
`10
`
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
`VI. OVERVIEW OF THE PRIOR ART3
`A.
`Proctor
`Proctor discloses a system and method for verification of credit card purchases
`using wireless communications and a card reader attachment that plugs into a hands-
`free jack of a mobile device. Ex. 1007, ¶1. Annotated Fig. 1, below, illustrates an
`exemplary system 10, which includes credit card 48 (green), credit card verification
`terminal 36 and converter 30 (blue), cellular telephone 22 (red), and verification
`facility 20 (purple). Ex. 1003, ¶¶52-55, 75.
`
`
`3 This Section summarizes only the primary references relied on in the Grounds.
`Secondary references will be introduced in Section IX.
`11
`
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
` Credit card 48 includes information (identifying the card (e.g., account
`number), user balance and available credit) stored on a memory chip on the card.
`Ex. 1007, ¶10. Such a credit card is commonly called a “smart card.” Ex. 1003,
`¶53. Terminal 36 includes a modem that “converts the scanned …data [from the
`smart card] … from a digital form to a modulated tonal pattern transmissible via
`conventional telephone lines,” i.e., a modulated audio signal. Ex. 1007, ¶11.
`Terminal 36 outputs an audible stream of tones to converter 30, which
`converts the audible stream of tones into an encoded format readily transmitted via
`digital cellular networks. Id. ¶16. Then, phone 22 sends the encoded stream over a
`cellular network 12 to a remote verification facility 20, which processes the
`transaction and generates a reply message to approve or deny the transaction. Id.
`¶¶16-17; Ex. 1003, ¶¶54-55.
`B. Colnot
`Colnot discloses a system and method for performing secure transactions via
`a portable hardware device that plugs into a mobile phone connected to a remote
`server over a wireless telephone network. Ex. 1011, Abstract, ¶¶3, 44. Colnot uses
`“tokens” for secure user authentication of a transaction. One example of that token
`is a sound pass token, which is “any hardware device capable of playing a sound”
`(id. ¶51) and can include a tip/ring/sleeve (TRS) that plugs into a microphone input
`12
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
`on a phone (id. ¶¶53, 55, 57, 60). The token can be a “smart card used in conjunction
`with a card reader.” Id. ¶51; Ex. 1003, ¶59.
`In Colnot, smart card 601 together with a card reader 602 forms a portable
`smart card reader. Ex. 1003, ¶60.
`
`The portable smart card reader reads a sound pass file (which stores an ID
`number and session key) stored in the EEPROM 407 (green). Ex. 1011, ¶¶38, 53.
`The remaining components of Fig. 6 (blue) include circuitry to read data from the
`EEPROM 407. Ex. 1003, ¶¶60,62.
`That circuitry generates a modulated analog signal suitable for transmission
`through a tip/ring that plugs into the headset connector jack of a mobile phone (red).
`Ex. 1011, ¶53. Colnot uses frequency-shift keying to modulate the sound pass
`13
`
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
`signal into a modulated analog signal for transmission, and upon receipt, the mobile
`phone demodulates the signal and communicates with a server to authenticate the
`transaction. Id. ¶¶50, 58, see also id. ¶38, 42 and Fig. 14; Ex. 1003, ¶61..
`C. Eisner
`Eisner discloses a system and method for performing electronic financial
`transactions with a card reader and dual-tone multi-frequency (DTMF) tones sent
`over a telephone line. (Ex. 1012, Abstract.) Figure 1 shows, for example, electronic
`financial transaction system 10, including a personal reader capture transfer
`technology unit (PRCTT) 14 (blue) connected to a phone 12 (red) and a
`communications network 16, merchants 20 and 24, and clearing house 26 that
`approves or denies credit authorization. Id., 3:20-31; Ex. 1003, ¶68.
`
`14
`
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
` An example of the card reader device (PRCTT 14) is shown in Figure 2.
` PRCTT 14 includes a magnetic stripe reader 30, which reads information from
`a magnetic stripe card such as a credit card (Ex. 1012, 4:28-37), though Eisner
`contemplates the card reader could be modified to read information from an
`integrated circuit on a smart card (id. 7:55-60). Computer 34 encodes the information
`and outputs it to encryptor 48 for added security and then to DTMF generator 38,
`which converts the data to analog tones conforming to the DTMF standard (or
`similar standard). Id. 5:3-49. The DTMF signal can then be sent, over
`15
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
`communications network 16, to a merchant for further processing, including
`decoding the DTMF signal. Id. Abstract, 7:18-21; Ex. 1003, ¶¶69-70
`VII. PERSON HAVING ORDINARY SKILL IN THE ART
`The level of a person of ordinary skill in the art (“POSITA”) needed to have
`the capability of understanding the scientific and engineering principles applicable
`to the ’566 patent is a Bachelor of Science in Electrical Engineering or Computer
`Engineering, or the equivalent and have at least one to two years of relevant
`experience in the fields of embedded systems and mobile communication device
`interfaces, or otherwise equivalent industry experience in the relevant field. Less
`work experience may be compensated by a higher level of education, such as a
`Master’s Degree, and vice versa. Ex. 1003, ¶¶13-17.
`VIII. CLAIM CONSTRUCTION
`Claim terms of a patent in IPR are given their “ordinary and customary
`meaning . . . as understood by [a POSITA] and the prosecution history pertaining to
`the patent.” See 37 C.F.R. § 42.100(b) (effective Nov. 13, 2018); Phillips v. AWH
`Corp, 415 F.3d 1303, 1312-13 (Fed. Cir. 2005). The ordinary meaning may be
`readily apparent to a POSITA and involves little more than application of the
`accepted meaning, and in these cases general-purpose dictionaries may be used. Id.
`at 1314.
`16
`
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
` Here, a POSITA would apply the ordinary and customary meanings to all the
`claim elements in the challenged claims of the ’566 patent, such that no specific
`claim construction is necessary. Ex. 1003, ¶¶50-51.
`IX. SPECIFIC GROUNDS FOR PETITION4
`Pursuant to Rule 42.104(b)(4)–(5), the sections below demonstrate in detail
`how the prior art discloses each and every limitation of the Challenged Claims, and
`how those claims are rendered obvious by the prior art, or would have been
`combined by a POSITA. The declaration by Professor Bruce McNair, who qualifies
`as a POSITA, reinforces these analyses and supports these conclusions.
`A. Ground I: Claims 1-4 are rendered obvious by Proctor in view of
`Vrotsos under 35 U.S.C. § 103(a)
`1.
`Claim 1
`[Preamble]: “A portable smart card reader device for
`(a)
`reading a smart card having recorded information stored
`on an integrated circuit incorporated into the card, the
`device comprising:
`
`4 Petitioner provides the claim language for Ground I, separated into the enumerated
`elements. Grounds II-IV refer to the same elements as in Ground I. Ex. 1002 is
`a claim listing that enumerates each claim element.
`17
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
` To the extent it is deemed limiting, Proctor and Vrotsos disclose the preamble.
`Referencing Proctor’s Figure 1, partially reproduced below, Proctor discloses a
`smart card reader device for reading (shown in blue5) a smart card (shown in
`green) having a “memory chip that records information.” Ex. 1007, ¶10; Ex. 1003,
`¶¶53, 75-77.
`
`While Figure 1 shows converter 30 and terminal 36 as separate units, Proctor
`discloses that the converter 30 could be integrated within the terminal 36, as part of
`the same unit. Ex. 1007, ¶18, stating components of merchant system 14 (including
`phone 22, converter 30, and terminal 36) may be “combined or integrated”, and “the
`
`5 Including the terminal 36, the converter 30 and its connector 34, and the cables
`40 and 32.
`18
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
`terminal may incorporate the decoder circuitry,” which is the converter 30.6
`Whether the converter 30 and the terminal 36 are separate units or integrated within
`a single unit, the combination of the converter 30, the terminal 36, and the cables 40
`and 32 forms the claimed smart card reader device.7 See Ex. 1003, ¶¶76-84.
`The credit card verification terminal 36 “reads unique data” on the credit card
`48, which includes “a memory chip that records information beyond identifying the
`card, including balance and available credit.” Ex. 1007, ¶10. Accordingly, Proctor
`
`6 Here Proctor refers to “decoder circuitry,” which corresponds to circuitry in
`converter 30. Ex. 1003, ¶81.
`7 In addition to the first implementation as shown in Fig. 1 and a second
`implementation in which the converter 30 is combined with the terminal 36, Proctor
`discloses two more configurations of the components of merchant system 14.
`Specifically, in a third implementation, converter 30 is integrated with the phone 22,
`and in a fourth implementation, all three components of the phone 22, converter 30,
`and terminal 36 could be combined or integrated together. Ex. 1003, ¶¶78-84. For
`purposes of clarity, Petitioner primarily relies on the first implementation, but the
`positions set forth herein are also applicable to any of the other three
`implementations. Id.
`19
`
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
`discloses a smart card having recorded information stored on an integrated circuit.
`Ex. 1003, ¶¶76-84.
`To the extent Proctor does not expressly disclose the smart card reader device
`as portable, a POSITA would have found it obvious consider other prior art, such as
`Vrotsos, for a portable implementation. Id. 85-86.
`(i) Vrotsos
`Like the smart card reader in the ’566 patent and Proctor, Vrotsos discloses a
`smart card reader device that communicates with a mobile phone over a physical
`connection. Ex. 1009, ¶41; see also Ex. 1003, ¶¶86-87. Figure 1E, reproduced
`below, shows the card reader in blue, the smart card in green, and the integrated
`circuit in gold.
`
`20
`
`
`

`

`U.S. Patent No. 9,016,566
`Petition for Inter Partes Review
` When “[a] card 51 having a . . . smartchip 53 [is] inserted into the slot 22” (Ex. 1009,
`¶41), a smartcard read/write head within the slot 22 can read information from