United States Patent and Trademark Office
`______________________________
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________________________________________
`SQUARE, INC.
`Petitioner
`v.
`4361423 CANADA INC.
`Patent Owner
`IPR2019-01651 – U.S. Patent No. 9,443,239
`IPR2019-01652 – U.S. Patent No. 9,613,351
`IPR2019-01653 – U.S. Patent No. 9,818,107
`IPR2019-01654 – U.S. Patent No. 9,818,1071
`
`February 10, 2021
`
`1The board has consolidated these cases for the purposes of oral argument
`
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`Square Exhibit 1030
`Square v. 4361423 Canada Inc. IPR2019-01652
`Page 1 of 52
`
`
`______________________________
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________________________________________
`SQUARE, INC.
`Petitioner
`v.
`4361423 CANADA INC.
`Patent Owner
`IPR2019-01651 – U.S. Patent No. 9,443,239
`IPR2019-01652 – U.S. Patent No. 9,613,351
`IPR2019-01653 – U.S. Patent No. 9,818,107
`IPR2019-01654 – U.S. Patent No. 9,818,1071
`
`February 10, 2021
`
`1The board has consolidated these cases for the purposes of oral argument
`
`DEMONSTRATIVE EXHIBIT – NOT EVIDENCE
`
`Square Exhibit 1030
`Square v. 4361423 Canada Inc. IPR2019-01652
`Page 1 of 52
`
`
`
`Overview of Tang Family Proceedings
`
`Notable Features
`“hands-free jack” on the phone
`
`“jack” on the phone, “smart card,”
`“converting said analog signal”
`
`“communication link” to the phone
`
`IPR
`’1625
`’1627
`’1629
`’1649
`’1650
`’1651
`’1652
`’1653
`’1654
`
`Pat.
`’875
`’998
`’084
`’566
`’637
`’239
`’351
`’107
`’107
`
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`2
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`Page 2 of 52
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`Overview of Patents in ’1651-54
`
`IPR
`’1651
`
`Pat.
`’239
`
`’1652
`
`’351
`
`Ind. Claims
`Device: 1
`Method: 4
`Apparatus: 1
`Method: 6
`
`’1653*
`
`’107
`
`Apparatus: 1
`Method: 22
`
`’1654
`
`’107
`
`Apparatus: 8, 15
`Method: 29, 36
`
`Common Terms
`1.
`“sensor” for reading
`recorded information
`
`2.
`
`“controller coupled to said
`sensor” that performs two
`functions:
`•
`“converting” the
`recorded information
`“transmit[ting]” to a
`communication device
`
`•
`
`3.
`
`“communication link” to
`the communication device
`
`Card type
`“smart card”
`
`“payment device”
`with an
`“integrated
`circuit”
`
`“transaction card”
`
`“Smart card” or
`“payment device”
`with “integrated
`circuit”
`
`Convert to
`“encrypted
`signal”
`“format
`suitable”
`
`“Encrypted”
`All claims
`
`Dep. cl. 4, 9
`
`“format
`suitable”
`
`“format
`suitable”
`
`Dep. cl. 3, 24
`
`Dep. cl. 10, 17,
`31, 38
`
`*The challenged claims in the ’1653 proceeding require the sensor to include “circuitry for reading an analog signal.”
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`3
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`Page 3 of 52
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`Overview of Main Grounds in ’1651-54
`Grounds
`’1651 ’1652 ’1653 ’1654
`Valliani + Vrotsos
`X
`X
`X
`X
`Bear + Vrotsos
`X
`Bear + Lahteenmaki
`Bear + Lahteenmaki + Vrotsos
`Vrotsos (single reference
`obviousness)
`Proctor + Vrotsos
`
`X
`(MagStripe)
`No additional dispute for Petitioner’s grounds relying on Bryant. See Pet. Replies (’1653 Paper 23 at 20, 28; ’1654
`Paper 23 at 18, 26, 31)
`
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`4
`
`X
`X
`X
`
`X
`
`X
`X
`X
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`
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`Valliani + Vrotsos Smart Card Grounds
`
`Valliani
`
`Vrotsos
`
`+
`
`Petition (’1651 Paper 2 at 8, 16, 21, 46, 47)
`
`5
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`Valliani + Vrotsos Smart Card Grounds – Disputes
`
`Disputed Issues
`Smart card (slides 7-9)
`Sensor (slides 10-11)
`Controller (slides 12-14)
`Processing and effecting commercial transaction (slides 15-16)
`Motivation to Combine (slide 17)
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`6
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`Valliani + Vrotsos Smart Card Grounds
`Valliani and Vrotsos each discloses smart card
`’239 claim 1: “A portable smart card reader device for reading a smart card having recorded
`information stored on an integrated circuit incorporated into the card…”
`
`Valliani: “[C]ard 230 is a smartcard
`storing data in memory 225.”
`
`Vrotsos: “card 51 having a ...
`smartchip 53”
`
`Valliani (Ex. 1005) at 4:45-46, FIG. 1
`
`Vrotsos (Ex. 1006) at ¶41, FIG. 1E
`
`See also Petition (’1651 Paper 2 at 14, 18)
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`7
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`Valliani + Vrotsos Smart Card Grounds
`PO improperly limits smart card to EMV and NFC cards
`’239 claim 1: “A portable smart card reader device for reading a smart card having recorded
`information stored on an integrated circuit incorporated into the card…”
`
` PO: “The term smart card is used within the payment card industry to identify specific
`types of transaction cards that contain ICs conforming to standards in the payment
`card industry… At the time of the invention, there were two different types of smart
`cards: an EMV card which used an industry-defined type of sensor for accessing the
`contacts on a card’s IC chip, and an NFC or contactless card which used a read/write
`head as defined by another industry standard… These standards defined the methods
`for reading IC chips embedded in these types of smart cards.”
`
`See also Pet. Reply (’1651 Paper 25 at 1-3)
`
`POR (’1651 Paper 22 at 12-13)
`
`8
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`Valliani + Vrotsos Smart Card Grounds
`PO improperly limits smart card to EMV and NFC cards
`’239 claim 1: “A portable smart card reader device for reading a smart card having recorded
`information stored on an integrated circuit incorporated into the card…”
`
` PO’s interpretation is inconsistent with dependent claims
`“2 [5]. The portable smart card reader device from claim 1 [4], in which the smart card is selected
`from a group consisting of a chip card, EMV card, proximity detector or NFC card, contactless
`card, or any combination thereof.”
`
`–
`
`’239 patent (’1651 Ex. 1001) at cls. 2, 5
`See also ’351 patent at cls. 2, 7 and ’107 patent cls. 9, 16, 30, 37
`
` PO’s interpretation is inconsistent with the POSITA’s understanding
`“[T]he payment card industry uses “smart card” in a broader sense than alleged by Mr.
`Zatkovich, to include chip cards that are not EMV or NFC and do not conform to these two ISO
`Second Shamos Decl. (’1651 IPR Ex. 1017) at ¶4
`standards.”
`
`–
`
`See also Pet. Replies (’1651 Paper 25 at 1-3; ’1654 Paper 23 at 1-2)
`
`9
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`Valliani + Vrotsos Smart Card Grounds
`Valliani discloses a sensor
`’239 claims 1 & 4: “[a] sensor for reading said / the recorded information stored on said / the integrated
`circuit [incorporated into said card]”
`
` Module 200 has “smartcard reader/writer unit 260
`[that] can both read and write to [smartcard]
`memory 225”
`Valliani (Ex. 1005) at 4:45-49
`
`
`
`
`
`“Valliani’s module 200 (the claimed portable smart
`card reader device) includes a smart card
`read/write head 260 (the claimed sensor) for
`reading card data.”
`First Shamos Decl. (’1651 Ex. 1003) at ¶C12
`“The term ‘smart card reader’ would necessarily
`contain sensors.”
`Second Zatkovich Tr. (Ex. 1018) at 98:17-18
`
`See also Pet. (’1651 Paper 2 at 14, 16-17); Pet. Reply (’1651 Paper 25 at 4-6)
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`10
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`Valliani + Vrotsos Smart Card Grounds
`Vrotsos also discloses sensor
`’239 claims 1 & 4: “[a] sensor for reading said / the recorded information stored on said / the integrated
`circuit [incorporated into said card]”
` “A smartcard read/write head may be positioned
`within a surface of the deeper channel portion 55 of
`the slot 22 so that information may be read from or
`written to the smartchip 53 when the card is
`positioned within the deeper channel portion 55.”
`
`Vrotsos (Ex. 1006) at ¶41
`
` “The smartcard reader of Vrotsos includes a
`smartcard read/write head for reading recorded
`information stored on a smartchip on a card (the
`claimed sensor).”
`
`First Shamos Decl. (’1651 Ex. 1003) at ¶C19
`
`See also Petition (’1651 Paper 2 at 17-18)
`
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`11
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`Valliani + Vrotsos Smart Card Grounds (Controller)
`Patent admits processor in card reader was known
`’239 claims 1 & 4: “a controller coupled to said sensor for converting the recorded information [stored
`on said integrated circuit] into an encrypted signal indicative of the recorded information”
`
` “These POS devices include a processor as well as an input
`device to receive and process information from a transaction
`card such as a debit card, a credit card, a cash card, a stored
`value card, an ATM card or combinations thereof and the like.”
`
`’239 patent (Ex. 1001) at 1:41-45 (quoting Background of the Invention)
`
`See also Pet. Reply (’1651 Paper 25 at 7)
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`12
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`Valliani + Vrotsos Smart Card Grounds (Controller)
`Valliani’s controller performs encryption
`’239 claims 1 & 4: “a controller coupled to said sensor for converting the recorded information [stored
`on said integrated circuit] into an encrypted signal indicative of the recorded information”
`
`
`
`
`
`
`
`“To promote security, electronics 210 [controller] provides any
`card 230-provided PIN information [stored in card memory 225]
`to [mobile] device 10 in encrypted form only using internally
`stored encryption keys.”
`Valliani (Ex. 1005) at 5:32-35
`
`“It is understood that [smartcard reader/writer] unit 255 could of
`course be provided in any of the embodiments of FIGS. 2-6 in
`addition to or in lieu of magnetic card stripe reader unit 210.”
`Id. at 7:51-54
`“Valliani discloses the electronics as performing a conversion of
`the card data into an encrypted form. Ex. 1003, ¶¶C25-30.”
`Pet. (’1651 Paper 2 at 20)
`
`Pet. (’1651 Paper 2 at 21)
`
`See also Pet. (’1651 Paper 2 at 20-22, 29-30); Pet. Reply (’1651 Paper 25 at 8-9); First Shamos Decl.
`(’1651 Ex. 1003 at ¶¶C25-C31)
`
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`13
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`Valliani + Vrotsos Smart Card Grounds (Controller)
`Vrotsos discloses a controller
`’239 claims 1 & 4: “a controller coupled to said sensor for converting the recorded information [stored
`on said integrated circuit] into an encrypted signal indicative of the recorded information”
`
` “[P]rocessor 303 of the
`attachment 21 may encrypt
`input information received from
`the attachment’s input device
`308.”
`
`Vrotsos (Ex. 1006) at ¶78, FIG. 10
`
`See also Pet. (’1651 Paper 2 at 23-24)
`
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`14
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`Valliani + Vrotsos Smart Card Grounds
`Valliani process[es] and effect[s] commercial transactions
`’239 claims 1 & 4: “said mobile communication device transmits the encrypted signal indicative of the
`recorded information to a remote transaction server for processing a commercial transaction.”
`
`’107 claims 8, 15, 29, 36: “An apparatus for effecting commercial transactions between an input
`device and a remote transaction server using a communication device, said apparatus comprising”
`
` “The resultant point of sale transaction
`terminal may communicate with a remote
`host system... to process further a
`transaction for which a card is being used.”
`Valliani (Ex. 1005) at 2:56-3:10
`
` “Unit 245 prints a hardcopy 310 with relevant
`data as the transaction completes.”
`Id. at 6:58-65
`
`See also Petition (’1654 Paper 2 at 17-18); Pet. Replies (’1651 Paper 25 at 13, ’1654 Paper 23 at 5-6)
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`Id. at Fig. 1
`15
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`Valliani + Vrotsos Smart Card Grounds
`PO improperly limits effecting commercial transactions
`’107 claims 8, 15, 29, 36: “An apparatus for effecting commercial transactions between an input
`device and a remote transaction server using a communication device, said apparatus comprising”
`
`PO: “As for the commercial transaction itself, Valliani provides no indication
`as to how the final commercial transaction would be conducted. Ex. 2004,
`¶35. Even when Valliani discusses using its reader/writer unit 260 to update
`the stored balance on a payment card (Ex. 1005, 8:2-6), Valliani never
`discloses what information would be passed, or in what format, to determine
`the nature of any update to be made to the card. Id., ¶35. Valliani does not
`indicate the format, or the data required, of any final transaction. Id., ¶33.”
`
`POR (’1654 Paper 18 at 13)
`See also Pet. Reply (’1654 Paper 23 at 6)
`
`16
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`Valliani + Vrotsos Smart Card Grounds
`Motivation to combine
`
` The reasons to combine Valliani and Vrotsos are clear.
`Pet. (’1651 Paper 2 at 18-19, 24-25, 29, 31-32, 35-36, 37-39, 42-43)
` Board stated “Petitioner has made a sufficient showing that a
`[POSITA] would have had reason to combine the teachings of
`Valliani and Vrotsos in the manner described by the Petition.”
`ID (’1654 Paper 9 at 33)
`
` PO’s arguments are faulty because they:
`– Rely on bodily incorporation
`– Focus on perceived problems with individual references
`Pet. Reply (’1651 Paper 25 at 17)
`
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`17
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`Valliani + Vrotsos MagStripe Ground
`(Ground 1 in ’1653)
`Valliani
`
`Vrotsos
`
`+
`
`Pet. (’1653 Paper 2 at 10, 19, 28-29)
`
`18
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`Valliani + Vrotsos MagStripe Ground – Disputes
`
`Disputed Issues
`Controller (slides 20-23)
`Processing and effecting commercial transaction (slides 15-16)
`Encrypted information (slide 24)
`Motivation to Combine (slide 25)
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`19
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`Valliani + Vrotsos MagStripe Ground (Controller)
`Patent admits processor in card reader was known
`’107 claims 1 & 22: “a controller coupled to said sensor for converting the recorded information stored
`on said transaction card into a format suitable for transmission to a communication device;”
`
` “These POS devices include a processor as well as an input
`device to receive and process information from a transaction
`card such as a debit card, a credit card, a cash card, a stored
`value card, an ATM card or combinations thereof and the like.”
`
`’107 patent (Ex. 1001) at 1:45-49 (quoting Background of the Invention)
`
`See also Pet. Reply (’1653 Paper 23 at 6-7)
`
`20
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`Page 20 of 52
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`Valliani + Vrotsos MagStripe Ground (Controller)
`Valliani discloses controller
`’107 claims 1 & 22: “a controller coupled to said sensor for converting the recorded information stored
`on said transaction card into a format suitable for transmission to a communication device;”
`
`
`
`
`
`“In FIG. 2, unit 210 is understood to include hardware and
`software necessary to implement the magnetic stripe
`reader unit.”
`
`Valliani (Ex. 1005) at 5:2-4
`
`“Electrical and mechanical components associated with
`magnetic card reader 210 are known and need not be
`described in detail. . . . Associated read head electronics
`in unit 210 can process the magnetically sensed
`information to learn what was embedded in stripe 220.”
`Valliani (Ex. 1005) at 5:17-26
`
`Pet. (’1653 Paper 2 at 19)
`
`See also Pet. (’1653 Paper 2 at 22, 24-25); Pet. Reply (’1653 Paper 23 at 9)
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`21
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`Page 21 of 52
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`Valliani + Vrotsos MagStripe Ground (Controller)
`PO rewrites the controller functions
`’107 claims 1 & 22: “a controller coupled to said sensor for converting the recorded information stored
`on said transaction card into a format suitable for transmission to a communication device;”
`
` PO: “The ‘107 patent claims require that the controller control the flow of operations from
`the transaction apparatus and transmit it to the wireless communication device. Ex.
`2004, ¶32. This includes receiving information from the sensor that reads information
`from the transaction card. Id. The controller then needs to interpret and process that
`information as digital payment information, then convert that to a format suitable for
`transmission to the mobile communication device. Id. The controller also provides for
`any encryption. . . A POSITA would understand that the controller would have to receive
`and validate that information from the transaction card before passing on the information
`to a communication device.”
`
`POR (’1653 Paper 18 at 14)
`See also Pet. Reply (’1653 Paper 23 at 7-8)
`22
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`Page 22 of 52
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`Valliani + Vrotsos MagStripe Ground (Controller)
`PO rewrites recorded information
`’107 claims 1 & 22: “a controller coupled to said sensor for converting the recorded information stored
`on said transaction card into a format suitable for transmission to a communication device;”
`
` PO: “A POSITA would understand that the controller would have to receive and validate
`that information from the transaction card before passing on the information to a
`communication device. Ex. 2004, ¶33. For example, the data fields that would need
`validation include the Primary account number format (which is different for different card
`types), a check digit to identify data transmission errors, as well as a valid country code
`and service code.”
`
`POR (’1653 Paper 18 at 14-15)
`See also Pet. Reply (’1653 Paper 23 at 8)
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`23
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`Valliani + Vrotsos MagStripe Ground
`Valliani and Vrotsos each transmits encrypted information
`’107 claims 3 & 24: “An apparatus according to claim 1 [22], wherein said recorded information
`transmitted via the communication link to said communication device is encrypted.”
`
` Valliani: “Additional software [on the card reader module] can also provide
`data encryption and decoding, signature capture, and associated other
`transaction processing and security promoting functions.”
`
`Valliani (Ex. 1005 at 3:7-10)
`
` Vrotsos: “The attachment 21 may encrypt the transaction data captured by
`the reader 23. The attachment 21 may transmit the encrypted transaction data
`to the wireless communication device 1 over the localized communications
`network 555 using a local or localized wireless protocol.”
`
`Vrotsos (Ex. 1006 at ¶52)
`
`See also Pet. Reply (’1653 Paper 23 at 13-14); Pet. (’1653 Paper 2 at 41-42)
`
`24
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`Valliani + Vrotsos MagStripe Ground
`Motivation to combine
`
` The reasons to combine Valliani and Vrotsos are clear.
`Petition (’1653 Paper 2 at 31-32, 39-40, 42-43, 45-46)
` Board stated “Petitioner has made a sufficient showing that a [POSITA]
`would have had reason to combine the teachings of Valliani and Vrotsos
`in the manner described by the Petition.”
`ID (’1653 Paper 9 at 31)
`
` PO’s arguments are faulty because:
`– There are benefits in combining the references
`– PO relies on bodily incorporation
`– PO focuses on perceived problems with individual references
`– Vrotsos provides explicit motivation to combine
`
`Pet. Reply (’1653 Paper 23 at 16-20)
`
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`25
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`Page 25 of 52
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`Bear + Vrotsos Smart Card Grounds
`
`Bear
`
`Vrotsos
`
`+
`
`Petitions (’1651 Paper 2 at 10, 46, 47)
`
`26
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`Page 26 of 52
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`Bear + Vrotsos Smart Card Grounds – Disputes
`
`Disputed Issues
`Sensor (slide 28)
`Controller (slides 29-33)
`Encrypted (slides 29-30)
`Further processing in the mobile communication device (slides 34-35)
`Motivation to Combine (slide 36)
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`Bear + Vrotsos Smart Card Grounds
`Bear’s card reader 64 is the sensor
`’239 claims 1 & 4: “[a] sensor for reading said / the recorded information stored on said / the integrated
`circuit [incorporated into said card]”
`
` “[D]ata is read from the smart card 60 by smart card
`reader 64… the device 100 transmits and receives the data
`read by smart card reader 64… ”
`
`Bear (Ex. 1007) at ¶¶37, 41
`
` “In order to read the smart card data, the smart card reader
`64 has a sensor incorporated therein for reading the data.”
`First Shamos Decl. (’1651 Ex. 1003) at ¶D26
` “The term ‘smart card reader’ would necessarily contain
`sensors.”
`Second Zatkovich Tr. (Ex. 1018) at 98:17-18
`
` Vrotsos also discloses sensor (see slide 11)
`
`See also Petition (’1651 Paper 2 at 44, 49); Pet. Reply (’1651 Paper 25 at 18)
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`28
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`Bear + Vrotsos Smart Card Grounds (Controller)
`Bear communicates an encrypted signal
`’239 claims 1 & 4: “a controller coupled to said sensor for converting the recorded information [stored
`on said integrated circuit] into an encrypted signal indicative of the recorded information”
`
` “[A]ll the communicated data may be encrypted”
`Bear (Ex. 1007) at ¶71
` “In order to transmit the information in an encrypted
`form to the cellular device 104, Bear’s smart card
`reader device would need to encrypt any unencrypted
`transaction information before sending…. A POSITA
`would have further understood to use controller 52,
`which is directly coupled to the smart card reader 64
`(the claimed sensor), to perform encryption of card
`data stored on the smart card 60.”
`First Shamos Decl. (’1651 Ex. 1003) at ¶¶D52-54
`
`See also Pet. (‘1651 Paper 2 at 10, 51-56), Pet. Reply (’1651 Paper 25 at 19),
`Pet. Req. Rehearing (’1651 Paper 11 at 4)
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`29
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`Bear + Vrotsos Smart Card Grounds (Controller)
`Bear’s controller performs encryption
`’239 claims 1 & 4: “a controller coupled to said sensor for converting the recorded information [stored
`on said integrated circuit] into an encrypted signal indicative of the recorded information”
`
` “Controller 52 processes [smart card] data by
`encrypting it ([Ex. 1007] ¶48) and converting it
`into a proper format for transmission to the
`cellular device 104.”
`Pet. (’1651 Paper 2 at 10)
`See also Pet. Req. Rehearing (’1651 Paper 11 at 6)
`
` “[A] POSITA would have understood Bear’s Fig.
`3 controller 52 to encrypt smart card information
`before transmitting it to phone 104.”
`Second Shamos Decl. (’1651 Ex. 1017) at ¶26
`See also Pet. Reply (’1651 Paper 25 at 20)
`
`Pet. (’1651 Paper 2 at 44, 52); Pet. Req. Rehearing (’1651 Paper 11 at 5)
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`30
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`Bear + Vrotsos Smart Card Grounds (Controller)
`PO Rewrites the controller functions
`’239 claims 1 & 4: “a controller coupled to said sensor for converting the recorded information [stored
`on said integrated circuit] into an encrypted signal indicative of the recorded information”
`
` PO: “The claims of the ‘239 patent require the controller to control the flow of
`operations. This includes receiving information from the smart card’s integrated
`circuit via the sensor. The controller then needs to interpret and process that
`information as digital credit card information, then converts it to an encrypted
`signal for transmission to a mobile communication device…. A POSITA would
`also understand that in order to convert the card information retrieved from the
`integrated circuit, the data would have to be received and validated before
`being converted into an encrypted signal for transmission to a mobile
`communication device.”
`
`POR (’1651 Paper 22 at 34)
`See also Pet. Reply (’1651 Paper 25 at 22)
`
`31
`
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`
`Page 31 of 52
`
`
`
`Bear + Vrotsos Smart Card Grounds (Controller)
`Bear transmits encrypted signal to complete a transaction
`’239 claims 1 & 4: “controller … transmits said encrypted signal [indicative of the recorded
`information on the smart card] via said communication link to said mobile communication device”
`
` “The invention supports two key functions (remote authentication and
`remote secure transaction).”
`Bear (Ex. 1007) Abstract
`
` “The merchant … completes the sale.”
`
`Id. at ¶67
` “[T]he transaction completion includes the delivery of the goods.”
`Id. at ¶73
`
`See also Pet. (’1651 Paper 2 at 50-51), Pet. Reply (’1651 Paper 25 at 25)
`
`32
`
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`
`Page 32 of 52
`
`
`
`Bear + Vrotsos Smart Card Grounds (Controller)
`Petitioner also relies on Bear + Vrotsos for the controller
`’239 claims 1 & 4: “controller converts the recorded information … into said encrypted signal and
`transmits said encrypted signal via said communication link to said mobile communication device”
`
` “[P]rocessor 303 of the
`attachment 21 may encrypt
`input information received from
`the attachment’s input device
`308.”
`
`Vrotsos (Ex. 1006) at ¶78, FIG. 10
`
`See also Pet. (’1651 Paper 2 at 23-24, 56-57); Pet. Req. Rehearing (’1651 Paper 11 at 9-14)
`DEMONSTRATIVE EXHIBIT – NOT EVIDENCE
`
`33
`
`Page 33 of 52
`
`
`
`Bear + Vrotsos Smart Card Grounds
`Bear and Vrotsos’s phone performs further processing
`’239 claim 4: “providing said encrypted signal indicative of the recorded information stored on the
`integrated circuit to said mobile communication device for further processing by circuitry contained in
`said mobile communication device”
` Bear and Vrotsos disclose at least four ways of performing further
`processing in the phone:
`1.
`“IR receiver 104 may cause the cellular
`phone to transmit authentication data
`read from the smart card 60 to remote
`server 106, using any of the cellular
`phone channels.”
`Bear (Ex. 1007) at ¶41
`“[A]n A/D converter to convert audio
`input received at the microphone 8 to
`digital data.”
`Vrotsos (Ex. 1006) at ¶74
`
`“[A] filter to improve the quality
`of the digital data, and the like.”
`Vrotsos (Ex. 1006) at ¶74
`
`“[P]ackage the encrypted
`transaction data.”
`Vrotsos (Ex. 1006) at ¶53
`
`2.
`
`3.
`
`4.
`
`See also Pet. (’1651 Paper 2 at 41-42, 69-70)
`DEMONSTRATIVE EXHIBIT – NOT EVIDENCE
`
`34
`
`Page 34 of 52
`
`
`
`Bear + Vrotsos Smart Card Grounds
`PO improperly limits the mobile device’s further processing
`’239 claim 4: “providing said encrypted signal indicative of the recorded information stored on the
`integrated circuit to said mobile communication device for further processing by circuitry contained in
`said mobile communication device”
`
` This Board stated that further processing involves “‘the cell phone
`transmit[ting] the signal or information on to a server to conduct a financial
`transaction’.”
`IPR2019-01649 ID (’1651 Ex. 1024 at 18-19) (citation omitted)
`
` PO now interprets further processing to require “[m]inimally the information on
`the card must be extracted” and excludes “reformatting, repackaging or
`relaying the encrypted signal to the transaction server.”
`POR (’1651 Paper 25 at 37)
`
`See also Pet. Reply (’1651 Paper 25 at 23-24)
`DEMONSTRATIVE EXHIBIT – NOT EVIDENCE
`
`35
`
`Page 35 of 52
`
`
`
`Bear + Vrotsos Smart Card Grounds
`Motivation to combine
`
` Reasons to combine Bear with Vrotsos are clear
`
`Pet. (’1651 Paper 2 at 47-56, 59-62, 65-66)
`
` PO’s arguments are faulty because they:
`– Rely on bodily incorporation
`– Allege that Vrotsos’s “smartcard read/write head” could not read a
`smart card
`
`Pet. Reply (’1651 Paper 25 at 28)
`
`DEMONSTRATIVE EXHIBIT – NOT EVIDENCE
`
`36
`
`Page 36 of 52
`
`
`
`Bear + Lahteenmaki Smart Card Grounds
`
`Bear
`
`Lahteenmaki
`
`+
`
`’351 patent claims 1-6, ’107 patent claims 8, 9, 11, 13, 15, 16, 18, 20, 29, 30, 32, 34, 36, 37, 39, 41
`Pet. (’1652 Paper 2 at 12, 48, ’1654 Paper 2 at 12, 53)
`
`37
`
`DEMONSTRATIVE EXHIBIT – NOT EVIDENCE
`
`Page 37 of 52
`
`
`
`Bear + Lahteenmaki + Vrotsos Smart Card Grounds
`
`Bear
`
`Lahteenmaki
`
`+
`
`+
`
`Vrotsos
`
`’351 patent claims 4-10, ’107 patent claims 10, 12, 17, 19, 31, 33, 38, 40
`Pet. (’1652 Paper 2 at 12, 48)
`
`DEMONSTRATIVE EXHIBIT – NOT EVIDENCE
`
`38
`
`Page 38 of 52
`
`
`
`Bear + Lahteenmaki Smart Card Grounds – Disputes
`
`Disputed Issues
`Portable (slide 40)
`Bear’s controller (slides 29-33)
`Bear’s controller convert[s] to format suitable (slides 41-42)
`Bear transmits encrypted card information (slide 29)
`Mobile device further processing (slides 34-35)
`Bear + Lahteenmaki process[] a commercial transaction (slide 43)
`Bear’s remote transaction server transmits transaction validation information (slide 43)
`Motivation to Combine (slide 44)
`
`DEMONSTRATIVE EXHIBIT – NOT EVIDENCE
`
`39
`
`Page 39 of 52
`
`
`
`Bear + Lahteenmaki Smart Card Grounds
`Bear and Lahteenmaki each discloses portable
`’351 claim 1: “A portable reader apparatus…”
`
` Bear is portable:
`“The [smart card reader] device
`–
`may be integrated into a
`telephone.”
`
`–
`
`Bear (Ex. 1007) at ¶6
`“[T]he [smart card] device may
`contain a battery…”
`
`Id. at ¶36
`
` Lahteenmaki is portable:
`“[T]he smart card reader 31 can be located in a
`–
`wallet or another suitable device.”
`Lahteenmaki (Ex. 1009) at ¶57
`“The power supply block 36 is responsible for
`supplying power to the smart card reader 31. It
`comprises a power source that can be, for
`example, a 3 V battery or an adjustable power
`Id. at ¶54
`source.”
`
`–
`
`See also Pet. (’1652 Paper 2 at 47-49), Pet. Reply (’1652 Paper 23 at 16-17)
`
`40
`
`DEMONSTRATIVE EXHIBIT – NOT EVIDENCE
`
`Page 40 of 52
`
`
`
`Bear + Lahteenmaki Smart Card Grounds (Controller)
`Bear converts to a format suitable
`‘351 claims 1 & 6: “a controller … for converting said information [stored on an integrated circuit of a
`payment device] to a format suitable for transmission to a mobile communication device”
`
` “[A] smart card reader and a
`communications interface, and a
`controller that transfers data between
`these two interfaces.”
`Bear (Ex. 1007) at ¶8
` “The controller 52 may comprise
`minimal processing capabilities, such
`as transferring and correctly packaging
`one communications protocol to
`another in order to control any of the
`embodied devices.”
`Id. at ¶33
`
`See also Pet. Reply (’1652 Paper 23 at 17-19)
`DEMONSTRATIVE EXHIBIT – NOT EVIDENCE
`
`41
`
`Page 41 of 52
`
`
`
`Bear + Lahteenmaki Smart Card Grounds (Controller)
`PO’s expert admits converting to a format suitable is standard
`‘351 claims 1 & 6: “a controller … for converting said information [stored on an integrated circuit of a
`payment device] to a format suitable for transmission to a mobile communication device”
`
` “[The format suitable for transmission] would be a format that a
`standard mobile communication device would be able to accept.”
`Second Zatkovich Tr. (Ex. 1019) at 194:21-24
`
` “In the '351, we're transmitting -- any standard method of transmitting
`to a mobile communication device”
`
`Id. at 200:8-12
`
`See also Pet. Reply (’1652 Paper 23 at 18)
`DEMONSTRATIVE EXHIBIT – NOT EVIDENCE
`
`42
`
`Page 42 of 52
`
`
`
`Bear + Lahteenmaki Smart Card Grounds
`Bear process[es] a commercial transaction and receives transaction validation information
`
`‘351 claims 1 & 6: “said mobile communication device transmits said information to a remote
`transaction server for processing a commercial transaction.”
`
`‘351 claims 5 & 10: “said mobile communication device receives transaction validation information from
`said remote transaction server.”
`
` “The remotely located server may further
`comprise means for transferring e-goods or
`e-money.”
`Bear (Ex. 1007) at ¶9
` “[T]here is provided a method for remotely
`purchasing goods or services…”
`Id. at ¶17
` “[H]aving the customer sign a piece of paper
`where the transaction data is recorded…”
`Id. at ¶49
`
`See also Pet. Reply (’1652 Paper 23 at 21, 24)
`DEMONSTRATIVE EXHIBIT – NOT EVIDENCE
`
`43
`
`Page 43 of 52
`
`
`
`Bear + Lahteenmaki Smart Card Grounds
`Motivation to combine
`
` Reasons to combine Bear with Lahteenmaki are clear
`Pet. (’1652 Paper 2 at 49-50, 52-53, 55-60, 67)
`
` PO’s arguments are faulty because they:
`– Allege that Petitioner’s references to Lahteenmaki are evidence that
`Bear is limited
`– Allege “neither the ’351 patent nor Bear nor Lahteenmaki purports to
`invent a smart card.”
`– Rely on bodily incorporation
`– Contrive problems with Bear in isolation, not the combination
`Pet. Reply (’1652 Paper 23 at 25-27)
`
`DEMONSTRATIVE EXHIBIT – NOT EVIDENCE
`
`44
`
`Page 44 of 52
`
`
`
`Vrotsos Smart Card Grounds
`
`Vrotsos
`
`First Shamos Decl. (’1651 Ex. 1003 at ¶¶E6, E9)
`See also Pet. (’1651 Paper 2 at 71-72)
`
`DEMONSTRATIVE EXHIBIT – NOT EVIDENCE
`
`45
`
`Page 45 of 52
`
`
`
`Vrotsos Smart Card Grounds – Disputes
`
`Disputed Issues
`Sensor (slide 11)
`Controller (slides 14, 20)
`Encrypted information (slides 14, 33)
`Further processing (slide 35)
`Obviousness Law (slide 47)
`Motivation to Combine (slide 48)
`
`DEMONSTRATIVE EXHIBIT – NOT EVIDENCE
`
`46
`
`Page 46 of 52
`
`
`
`Vrotsos Smart Card Grounds
`PO mischaracterizes obviousness law
`
` PO: “[T]here must be an explicit showing of the ‘suggestion or motivation
`to modify the teachings of that reference.’”
`POR (’1651 Paper 22 at 51) (citation omitted, emphasis in original)
` Fed. Cir.: “KSR directs that an explicit teaching, suggestion, or
`motivation in the references is not necessary to support a conclusion of
`obviousness.” In re Ethicon, Inc., 844 F.3d 1344, 1350 (Fed. Cir. 2017).
`Pet. Reply (’1651 Paper 25 at 29)
`
`DEMONSTRATIVE EXHIBIT – NOT EVIDENCE
`
`47
`
`Page 47 of 52
`
`
`
`Vrotsos Smart Card Grounds
`Motivation to combine embodiments
`
` Reasons to combine the embodiments in Vrotsos are clear
`Pet. (’1651 Paper 2 at 71-74)
`
` PO’s arguments are faulty because they:
`– Baselessly allege Vrotsos viewed swipe card readers differently from
`smart card readers
`– Defeat Vrotsos’s entire purpose in describing a hybrid card reader,
`smart card readers communicating with the phone, and using the smart
`card to make a transaction
`Pet. Reply (’1652 Paper 23 at 25-27)
`
`DEMONSTRATIVE EXHIBIT – NOT EVIDENCE
`
`48
`
`Page 48 of 52
`
`
`
`Proctor + Vrotsos MagStripe Ground
`
`Proctor
`
`Vrotsos
`
`+
`
`Petition (’1653 Paper 2 at 14, 28, 29)
`
`49
`
`DEMONSTRATIVE EXHIBIT – NOT EVIDENCE
`
`Page 49 of 52
`
`
`
`Proctor + Vrotsos MagStripe Ground – Disputes
`
`Disputed Issues
`
`Controller (slide 51)
`
`Motivation to Combine (slide 52)
`
`DEMONSTRATIVE EXHIBIT – NOT EVIDENCE
`
`50
`
`Page 50 of 52
`
`
`
`Proctor + Vrotsos MagStripe Ground (Controller)
`Proctor discloses controller
`’107 claims 1 & 22: “a controller coupled to said sensor for converting the recorded information stored
`on said transaction card into a format suitable for transmis
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