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`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`____________________
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`Playtika Ltd. and Playtika Holding Corp.,
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`Petitioners,
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`v.
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`NEXRF Corp.,
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`Patent Owner.
`
`U.S. Patent No. 8,506,406
`Filing Date: Dec. 30, 2010
`Issue Date: Aug. 13, 2013
`
`____________________
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`Case No. IPR2021-00952
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`
`DECLARATION OF STACY A. FRIEDMAN
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`Declaration of Stacy Friedman
`U.S. Patent No. 8,506,406
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`TABLE OF CONTENTS
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`Introduction ...................................................................................................... 1
`I.
`Background and Qualifications ....................................................................... 1
`II.
`III. Summary of Opinions ...................................................................................... 6
`IV. Background and Technology of the ’406 Patent ............................................. 7
`V.
`Challenged Claims ......................................................................................... 12
`VI. Legal Standards ............................................................................................. 15
`VII. Level of Person of Ordinary Skill in the Art ................................................. 19
`VIII. Claim Construction ........................................................................................ 21
`IX. The Challenged Claims are Unpatentable Over the Prior Art ....................... 22
`X. Grounds 1-16: The Joshi Grounds Render Obvious Claims 1-3, 6, 7,
`and 17-19 ....................................................................................................... 23
`A. Overview of Prior Art ......................................................................... 25
`1.
`Joshi........................................................................................... 25
`2. Muir ........................................................................................... 29
`3. Walker ....................................................................................... 31
`4.
`Agasse ....................................................................................... 32
`5.
`Nguyen ...................................................................................... 34
`B. A person of ordinary skill in the art Would Have Combined
`Muir, Walker, Agasse, and Nguyen with Joshi ................................... 36
`1. Motivation to Combine with Muir ............................................ 36
`2. Motivation to Combine with Walker ........................................ 40
`3. Motivation to Combine with Agasse ........................................ 41
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`ii
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`C.
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`2.
`3.
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`4.
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`5.
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`6.
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`7.
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`4. Motivation to Combine with Nguyen ....................................... 43
`Independent Claim 1 ........................................................................... 44
`1.
`[1p] “A system to run a gaming application on a network
`access device, comprising:” ...................................................... 44
`[1a] “the network access device; and” ...................................... 46
`[1b] “a remote gaming system including a verification
`system;” ..................................................................................... 47
`[1c] “the network access device configured to transmit
`user identification information and security information
`to the verification system;” ....................................................... 49
`[1d] “the network access device configured to receive an
`acknowledgement from the verification system indicating
`that the user identification information and security
`information are valid;” .............................................................. 54
`[1e] “the network access device configured to receive a
`game input from a user of the network access device and
`transmit the game input to the remote gaming system;” .......... 58
`[1f] “the remote gaming system configured to receive the
`game input and generate a random game output, the
`remote gaming system further configured to associate an
`image ID with the random game output and select one or
`more images associated with the image ID for encoding
`and broadcasting to the network access device;” ..................... 60
`a.
`“the remote gaming system configured to receive
`the game input and generate a random game
`output” ............................................................................ 60
`“the remote gaming system further configured to
`associate an image ID with the random game
`output and select one or more images associated
`with the image ID”.......................................................... 61
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`b.
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`D.
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`E.
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`F.
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`c.
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`8.
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`2.
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`3.
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`“for encoding and broadcasting to the network
`access device” ................................................................. 64
`[1g] “the network access device configured to receive a
`plurality of broadcast images generated by the remote
`gaming system.” ........................................................................ 69
`Independent Claim 17 ......................................................................... 70
`1.
`[17p] “A method for running a gaming application on a
`network access device, comprising:” ........................................ 70
`[17a] “transmitting user identification information and
`security information to a verification system;” ........................ 70
`[17b] “receiving an acknowledgement from the
`verification system indicating that the user identification
`information and the security information are valid;” ............... 70
`[17c] “receiving a game input from a user of the network
`access device;” .......................................................................... 70
`[17d] “transmitting the game input to a remote gaming
`system, the remote gaming system generating a random
`game output and associating an image ID with the
`random game output; and” ........................................................ 70
`[17e] “receiving a plurality of broadcast images
`generated by the remote gaming system, the remote
`gaming system selecting one or more images associated
`with the image ID, the remote gaming system encoding
`the one or more images into the plurality of broadcast
`images and broadcasting the plurality of broadcast
`images to the network access device.” ...................................... 71
`[Claim 2] “The system of claim 1, wherein the plurality of
`broadcast images received by the network access device is
`displayed on a web browser.” ............................................................. 71
`[Claim 3] “The system of claim 1, wherein the plurality of
`broadcast images is encrypted.” .......................................................... 72
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`4.
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`5.
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`6.
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`[Claim 6] “The system of claim 1, wherein the network access
`device is a wireless device.” ................................................................ 73
`[Claim 7] “The system of claim 1, wherein the network access
`device is a display that is operatively coupled to an interactive
`set-top box.” ........................................................................................ 73
`[Claim 18] “The method of claim 17, further comprising
`displaying the plurality of broadcast images on a web browser.” ...... 75
`Dependent Claim 19 ............................................................................ 76
`1.
`[19p] “The method of claim 17, wherein receiving a
`plurality of broadcast images includes:” ................................... 76
`[19a] “receiving a plurality of encrypted broadcast
`images from the remote gaming system;” ................................ 76
`[19b] “decrypting the plurality of encrypted broadcast
`images, resulting in a plurality of decrypted images; and” ...... 76
`[19c] “displaying the plurality of decrypted images.” .............. 76
`4.
`XI. Grounds 17-32: The Joshi Menashe Grounds Render Obvious Claims
`1-4, 6, 7, and 17-19 ........................................................................................ 77
`A. Overview of Prior Art ......................................................................... 77
`1. Menashe .................................................................................... 77
`2. Muir ........................................................................................... 79
`B. Motivation to Combine ....................................................................... 79
`1. Menashe .................................................................................... 79
`2. Muir ........................................................................................... 81
`Independent Claim 1 ........................................................................... 82
`1.
`[1p] “A system to run a gaming application on a network
`access device, comprising:” ...................................................... 82
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`2.
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`3.
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`I.
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`J.
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`C.
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`D.
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`[1a]-[1g] .................................................................................... 84
`2.
`[Claim 3] “The system of claim 1, wherein the plurality of
`broadcast images is encrypted.” .......................................................... 84
`[Claim 4] “The system of claim 1, wherein the network access
`device is a gaming terminal.” .............................................................. 85
`Independent Claim 17 ......................................................................... 86
`1.
`[17p] “A method for running a gaming application on a
`network access device, comprising:” ........................................ 86
`[17a]-[17e] ................................................................................ 86
`2.
`Independent Claim 19 ......................................................................... 86
`1.
`[19p] “The method of claim 17, wherein receiving a
`plurality of broadcast images includes:” ................................... 86
`[19a]-[19c] ................................................................................ 86
`2.
`XII. Grounds 33-64: The Joshi Dobner Grounds Render Obvious Claim 3......... 87
`XIII. Grounds 65-96: The Joshi Bezick Grounds Render Obvious Claim 8 ......... 90
`XIV. Conclusion ..................................................................................................... 93
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`G.
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`I.
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`Introduction
`I, Stacy A. Friedman, submit this declaration to state my opinions on
`1.
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`Declaration of Stacy Friedman
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`the matters described below.
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`2.
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`I have been retained by Playtika Ltd. and Playtika Holding Corp., as
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`an independent expert in this proceeding before the United States Patent and
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`Trademark Office.
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`3.
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`I understand that this proceeding involves U.S. Patent No. 8,506,406
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`(“the ’406 patent”), and that I have been asked to provide my opinions as to the
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`patentability or unpatentability of certain claims of the ’406 patent.
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`4.
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`This declaration sets forth my opinions, which I have formed in this
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`proceeding based on my education, training, research, knowledge, and personal
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`and professional experience; my understanding as an expert in the field; and my
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`study of the evidence.
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`5.
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`I am being compensated for my time at the rate of $600 per hour. This
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`compensation is not contingent upon the nature of my findings, the presentation of
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`my findings in testimony, or the outcome of this proceeding.
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`II. Background and Qualifications
`I am a professional game designer and casino gaming mathematician, and
`6.
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`I am intimately familiar with the issues and technology relating to both digital and
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`physical games. As shown below, I have personally designed, implemented, tested,
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`and analyzed many games, including dozens of single- and multi-player games for both
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`Internet and land-based gaming operators.
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`7.
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`I am the President of Olympian Gaming, LLC in Lake Oswego, Oregon,
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`a position that I have held since 2001. In that capacity, I have advised clients regarding,
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`among other things, game design and development, casino slot machine and table
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`game mathematics, game software development, network gaming system architecture,
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`and gaming patent infringement and validity. I have over twenty years of professional
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`experience in developing regulated casino games, gaming mathematics, and
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`professional software design expertise. Although I discuss my expert qualifications in
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`more detail below, a recent curriculum vitae which details my educational and
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`professional background is attached as Exhibit 1004.
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`8.
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`I have been a game player for most of my life, long before my
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`professional entry into the gaming industry, and that continues to this day. I was an
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`avid game player growing up: gin rummy with my father; panguingue, casino, and
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`Rummikub with my grandmother; chess with my grandfather; and various home poker
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`games in high school and college. My earliest recollection of computer games was
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`playing “The Oregon Trail” in grade school on an Apple II computer. During the 1980s
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`I frequented coin-operated video game arcades, and in the mid-to-late 1980s first
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`became familiar with multiplayer online gaming via dial-up modems and text-based
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`adventure games. During middle school and high school, I taught myself software
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`programming on a Commodore VIC-20 and an Apple IIgs, the majority of which was
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`for game programs.
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`9.
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`In 1996, I earned my Bachelor of Arts degree in Computer Science,
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`magna cum laude, from Harvard College, Harvard University, Cambridge,
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`Massachusetts. During college I became familiar with a wider variety of game genres,
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`including RTS or “real time strategy” computer games (specifically Warcraft: Orcs vs.
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`Humans), CCG or “collectible card games” (specifically Magic: The Gathering), and
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`expanded my knowledge of wagering card games to blackjack, baccarat, and casino
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`poker. After college, I became interested in the mathematics of casino games. I taught
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`myself probability theory—the origins of which are based in wagering games—and
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`began a self-directed study of gaming mathematics, including “advantage play”
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`techniques such as blackjack card counting.
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`10. My professional experience in the casino gaming industry started in 1998,
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`when I joined Silicon Gaming in Palo Alto, California as a game model engineer before
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`it was acquired by International Game Technology (“IGT”). Silicon Gaming designed
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`and developed interactive video slot machines. As a game model engineer
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`(mathematician), I worked on the designs of video slot games, video keno games, and
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`video card games including video poker and blackjack; helped produce dozens of
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`innovative new games for the Odyssey™ platform; and engaged regulatory agencies
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`to achieve regulatory approval for the mathematics used in the games. In addition, I
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`designed and developed game flow and storyboards for new games and game features
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`(behaviors) and developed and shipped over 50 mathematical game models. I also
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`served as a liaison to state regulatory agencies and corrected prior errors in gaming lab
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`submissions, which led to savings of over $50,000 in regulatory fees. I was also
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`responsible for managing the statistical verification and mathematical gameplay
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`testing for Silicon Gaming’s products. In 1999 I invented and analyzed a novel card
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`game for Silicon Gaming’s digital card game portfolio. This game is described in U.S.
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`Patent 6,457,715 and can best be described as “acey-deucy with a discard/draw
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`option.”
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`11.
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`In 2001, I started an independent casino game design and analysis
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`consultancy, Olympian Gaming LLC. Based on my experience designing, developing,
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`and placing dozens of games in Las Vegas, Reno, and Atlantic City casinos, I advise
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`Internet casino software vendors, new game inventors, and casino game manufacturers
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`in the fields of wagering gameplay design, mathematical analysis, and statistical
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`verification. Most of my earliest clients were online gaming software providers,
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`including WagerWorks, a company that spun out of Silicon Gaming to develop a real-
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`money remote gambling system called WagerWare. WagerWorks was acquired by
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`IGT in 2005. In 2011, I was engaged by DoubleDown Interactive, a social gaming
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`website offering free-to-play slot machine games on its Facebook app, DoubleDown
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`Casino. I designed the mathematics, payouts, and game features for all of
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`DoubleDown's virtual slot machine games. In 2012, IGT bought DoubleDown for
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`$500,000,000. Social gaming applications such as DoubleDown Casino do not earn
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`revenue from wagering. Instead, they follow monetization practices such as
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`microtransactions, in-app purchasing, ad-impression revenue, and subscription-based
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`payments. In the past few years I have been engaged as a game design consultant by
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`several video game studios using similar business models. I have also served as a
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`subject matter expert in many matters related to gaming machines or gaming
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`technology, including over 20 cases involving gaming-related intellectual property.
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`Many of these cases have involved distributed software systems running on networked
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`computers, and in several of these cases I have performed source code reviews. Some
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`of these cases have involved technology related to networked gaming systems,
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`including International Gamco v MGAM (networked lottery systems), Lottotron v
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`Allgames Casinos (remote wagering systems), and Agincourt v. Zynga (social
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`gaming).
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`12. Also through Olympian Gaming, I have invented and applied for patents
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`on over two dozen gaming methods and systems and, together with my patent attorney
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`and frequent co-inventor, control a patent portfolio of approximately forty issued
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`and/or pending patents across several categories of the gaming industry. These
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`innovations include novel table games, electronic wagering games such as slot
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`machine and video poker games, and networked casino management or promotional
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`U.S. Patent No. 8,506,406
`systems. Several of these patents describe novel card or tile games in both physical and
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`electronic embodiments, including U.S. Patents 7,651,096 and 8,074,992 (“Bad Beat
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`Blackjack”), 7,335,099 (“Method for playing wagering games”), 7,708,208 (“Poker
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`game with variable payouts based on probabilities of winning”), and 8,403,737 and
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`8,998,693 (“Royal re-draw video poker side bet”). I performed the game design and
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`mathematical analysis on the games described therein. Olympian Gaming has received
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`regulatory approval for operation of Bad Beat Blackjack in Nevada, Mississippi, and
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`Washington State.
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`13. Based on my experience, training and qualifications, I consider myself to
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`be an expert in the gaming field, with particular expertise in the areas of networked
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`gaming systems as well as in the analysis and implementation of game features in both
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`physical and electronic/computerized embodiments.
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`III. Summary of Opinions
`I have been asked to provide my opinion on whether certain claims of
`14.
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`the ’406 patent are unpatentable over certain prior art references. It is my opinion
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`that claims 1-4, 6-8, and 17-19 of the ’406 patent are unpatentable because they
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`would have been obvious to a person of ordinary skill in the art in view of the prior
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`art.
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`IV. Background and Technology of the ’406 Patent
`15. The ’406 patent is directed to a remote gaming system for running a
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`gaming application (e.g., slot machine games) on a network access device, such
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`as a computer (FIG. 1a), set-top box (FIG. 1b), PDA or a mobile phone (FIG. 1c),
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`or slot machine (FIG. 1d), as shown in annotated FIG. 2 below. Ex-1001, Claim 1,
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`5:64-6:10.
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`Ex-1001, FIGS 1a-1d.
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`Ex-1001, FIG. 2 (annotated).
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`16. As shown in FIG. 2 above, the gaming system includes a verification
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`system with a verification server and a registration database. The verification
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`system receives user identification information and security information from a
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`network access device to “verif[y] that a user desiring to play the game is a
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`registered player.” Ex-1001, 7:5-10. The user identification information includes
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`“player name, address, user name, password, credit card information, and the date
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`and time of the registration.” Ex-1001, 8:25-28. The security information includes
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`“the MAC ID for biometric input module, the IP address for the server
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`communicating with the registration terminal, and the cryptographic keys
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`associated with the registration terminal.” Ex-1001, 11:44-48. The ’406 patent
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`specification also discloses that the user identification information may be “housed
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`in a smart card (not shown) that is in communication with the verification system
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`34.” Ex-1001, 7:22-24. The user identification information and security
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`information from a network access device are compared with the information
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`stored in the registration database for verification. Ex-1001, 7:15-19.
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`Ex-1001, FIG. 9 (annotated).
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`17. Then, the remote gaming system generates a random game output and
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`sends it to the network access device. Ex-1001, 3:39-42. It also generates an image
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`ID associated with the random game output and uses the image ID to select
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`images, which are then encoded and broadcasted to a network access device. Ex-
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`1001, 14:29-33.
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`18. The dependent claims recite encrypting the images and displaying
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`them on a web browser. See Ex-1001, Claims 2-3. Other dependent claims further
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`limit the type of the network access device as a wireless device, a device
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`operatively coupled to an interactive set-top box, or having a network interface
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`card. See Ex-1001, Claims 6-8.
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`19. As stated in the “Description of Related Art” section of the
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`specification, most, if not all, of these elements were well known in the art at the
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`time of the invention. For example, it states that “[n]etworked interactive gaming
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`in an open networked environment such as the Internet is well-known” and that
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`“[n]etworked interactive gaming using LANs and WANs for progressive slot
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`machines having large jackpots are also well-known.” Ex-1001, 2:36-37, 51-53.
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`The specification also acknowledges that an outcome of a game may be displayed
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`“on a large variety of display devices, such as mechanical spinning reels or video
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`screens.” Ex-1001, 1:40-42.
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`20.
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`It also admits that “[t]o prevent underage gambling[,] prior art
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`systems and methods use passwords, user IDs, credit cards and ‘click-through’
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`agreements that ask the player to agree to being of legal gambling age by clicking
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`on a button.” Ex-1001, 1:64-67. Furthermore, the specification states, “[w]ith
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`respect to ensuring that on-line gaming is secure and reliable, prior art systems and
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`methods use various cryptographic techniques such as RSA encryption, digital
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`certificates, or other similar well-known cryptographic methods.” Ex-1001, 2:2-5.
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`V. Challenged Claims
`21. The following claims of the ’406 patent are addressed in this petition.
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`Element numbers have been added:
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`
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`Claim 1:
`[1p] A system to run a gaming application on a network
`access device, comprising:
`[1a] the network access device; and
`[1b] a remote gaming system including a verification
`system;
`[1c] the network access device configured to transmit
`user identification information and security information
`to the verification system;
`[1d] the network access device configured to receive an
`acknowledgement from the verification system indicating
`that the user identification information and security
`information are valid;
`[1e] the network access device configured to receive a
`game input from a user of the network access device and
`transmit the game input to the remote gaming system;
`[1f] the remote gaming system configured to receive the
`game input and generate a random game output, the
`remote gaming system further configured to associate an
`image ID with the random game output and select one or
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`more images associated with the image ID for encoding
`and broadcasting to the network access device;
`[1g] the network access device configured to receive a
`plurality of broadcast images generated by the remote
`gaming system.
`Claim 2:
`[2] The system of claim 1, wherein the plurality of
`broadcast images received by the network access device
`is displayed on a web browser.
`Claim 3:
`[3] The system of claim 1, wherein the plurality of
`broadcast images is encrypted.
`Claim 4:
`[4] The system of claim 1, wherein the network access
`device is a gaming terminal.
`Claim 6:
`[6] The system of claim 1, wherein the network access
`device is a wireless device.
`Claim 7:
`[7] The system of claim 1, wherein the network access
`device is a display that is operatively coupled to an
`interactive set-top box.
`Claim 8:
`[8] The system of claim 1, wherein the network access
`device is a personal computer having a network interface
`card.
`Claim 17:
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`[17p] A method for running a gaming application on a
`network access device, comprising:
`[17a] transmitting user identification information and
`security information to a verification system;
`[17b] receiving an acknowledgement from the
`verification system indicating that the user identification
`information and the security information are valid;
`[17c] receiving a game input from a user of the network
`access device;
`[17d] transmitting the game input to a remote gaming
`system, the remote gaming system generating a random
`game output and associating an image ID with the
`random game output; and
`[17e] receiving a plurality of broadcast images generated
`by the remote gaming system, the remote gaming system
`selecting one or more images associated with the image
`ID, the remote gaming system encoding the one or more
`images into the plurality of broadcast images and
`broadcasting the plurality of broadcast images to the
`network access device.
`Claim 18:
`[18] The method of claim 17, further comprising
`displaying the plurality of broadcast images on a web
`browser.
`Claim 19:
`[19p] The method of claim 17, wherein receiving a
`plurality of broadcast images includes:
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`[19a] receiving a plurality of encrypted broadcast images
`from the remote gaming system;
`[19b] decrypting the plurality of encrypted broadcast
`images, resulting in a plurality of decrypted images; and
`[19c] displaying the plurality of decrypted images.
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`VI. Legal Standards
`22. For purposes of this declaration, I have been asked to opine on
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`whether one of ordinary skill in the art would have believed that the subject matter
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`of 1-4, 6-8, and 17-19 of ’406 patent are disclosed or anticipated by several prior
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`art references under 35 U.S.C. § 102 or rendered obvious by those references under
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`35 U.S.C. §103. I have been informed of the following legal standards, which I
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`have applied in forming my opinions.
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`23.
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`I have been asked to provide my opinions as to whether the cited prior
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`art anticipates or renders obvious claims 1-4, 6-8, and 17-19 of the ’406 patent
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`from the perspective of a person of ordinary skill in the art at the ’406 patent’s
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`priority date, as described in more detail below.
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`24. For purposes of this declaration, I have been informed and understand
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`certain aspects of the law as it relates to my opinions.
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`25.
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`I have been advised and understand that there are two ways in which
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`prior art may render a patent claim unpatentable. First, I have been advised that the
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`prior art can “anticipate” a claim. Second, I have been advised that the prior art can
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`Declaration of Stacy Friedman
`U.S. Patent No. 8,506,406
`make a claim “obvious” to a person of ordinary skill in the art. I understand that for
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`an invention claimed in a patent to be patentable, it must not be anticipated and
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`must not be obvious based on what was known before the invention was made.
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`26.
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`I have been advised and understand the information used to evaluate
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`whether an invention was new and not obvious when made is generally referred to
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`as “prior art.” I understand that prior art includes patents and printed publications
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`that existed before the earliest priority date of the patent (which I have been
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`informed is called the “effective filing date”). I have been informed and understand
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`that a patent or published patent application is prior art if it was filed before the
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`effective filing date of the claimed invention and that a printed publication is prior
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`art if it was publicly available before the effective filing date.
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`27.
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`I have been advised and understand that a dependent claim is a patent
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`claim that refers back to another patent claim. I have been informed and
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`understand that a dependent claim includes all of the limitations of the claim to
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`which it refers.
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`28.
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`I have been advised and understand that a patent claim may be invalid
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`as anticipated under 35 U.S.C. § 102 if all of the subject matter of the claim is
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`disclosed in a single prior art reference.
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`29.
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`I have been advised and understand that a patent claim may be invalid
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`as obvious under 35 U.S.C. § 103 if the differences between the subject matter
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`Declaration of Stacy Friedman
`U.S. Patent No. 8,506,406
`claimed and the prior art are such that the claimed subject matter as a whole would
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`have been obvious to a person of ordinary skill in the art at the time the invention
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`was made. I have also been advised that several factual inquiries underlie a
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`determination of obviousness. These inquiries include (1) the scope and content of
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`the prior art, (2) the level of ordinary skill in the field of the invention, (3) the
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`differences between the claimed invention and the prior art, and (4) any objective
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`evidence of non-obviousness (which I have been informed may also be called
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`“secondary considerations”).
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`30.
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`I have also been advised and understand that, where a party alleges
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`obviousness based on a combination of references, that party must explain why a
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`person skilled in the art would have been motivated to combine the asserted
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`references in the manner recited in the claims and to explain why one skilled in the
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`art would have had a reasonable expectation of success in making such
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`combinations.
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`31.
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`I have been advised and understand that the law permits the
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`application of “common sense” in examining whether a claimed invention would
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`have been obvious to a person skilled in the art. For example, I understand that the
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`following rationales may support a conclusion of obviousness (1) combining prior
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`art elements according to known methods to yield predictable results; (2) simple
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`substitution of one known element for another to obtain predictable results; (3)
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`Declaration of Stacy Friedman
`U.S. Patent No. 8,506,406
`applying a known technique to a known device (method, or product) ready for
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`improvement to yield predictable results; (4) “obvious to try,” i.e., choosing from a
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`finite number of identified, predictable solutions, with a reasonable expectation of
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`success; (5) known work in one field of endeavor may prompt variations of it for
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`use in either the same field or a different one based on design incentives or other
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`market forces if the variations are predictable to one of ordinary skill in the art; and
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`(6) some teaching, suggestion, or motivation in the prior art that would have led
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`one of ordinary skill to modify the prior art reference or to combine prior art
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`reference teachings to arr