UNITED STATES PATENT AND TRADEMARK OFFICE
`
`———————
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`———————
`
`APPLE INC,
`Petitioner,
`
`v.
`
`MOZIDO, INC.,
`Patent Owner.
`———————
`
`U.S. Patent No. 9,189,785
`_____________________
`
`DECLARATION OF DR. HENRY HOUH,
`UNDER 37 C.F.R. § 1.68 IN SUPPORT OF PETITION FOR
`INTER PARTES REVIEW
`
`1
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`Ex. 1003
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`Inter Partes Review of U.S. 9,189,785
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`TABLE OF CONTENTS
`Introduction ...................................................................................................... 4
`I.
`Qualifications and Professional Experience .................................................... 5
`II.
`Level of Ordinary Skill in the Art ................................................................. 11
`III.
`IV. Relevant Legal Standards .............................................................................. 12
`V.
`Background .................................................................................................... 15
`VI. Overview of the ’785 Patent .......................................................................... 15
`VII. Claim Construction ........................................................................................ 19
`VIII. Identification of how the Claims are Unpatentable ....................................... 19
`A.
`Ground 1: Claims 1-21 are obvious under 35 U.S.C. § 103(a)
`over Easterly in view of Luz. .............................................................. 20
`1.
`Summary of Easterly ..................................................... 20
`Summary of Luz ............................................................ 23
`2.
`Reasons to Combine Easterly and Luz .......................... 26
`3.
`4.
`Claim 1 ........................................................................... 30
`5.
`Claim 2 ........................................................................... 73
`6.
`Claim 3 ........................................................................... 75
`7.
`Claim 4 ........................................................................... 76
`8.
`Claim 5 ........................................................................... 77
`9.
`Claim 6 ........................................................................... 80
`10.
`Claim 7 ........................................................................... 81
`11.
`Claim 8 ........................................................................... 82
`12.
`Claim 9 ........................................................................... 84
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`2
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`Claim 10 ......................................................................... 84 
`13. 
`Claim 11 ......................................................................... 85 
`14. 
`Claim 12 ......................................................................... 85 
`15. 
`Claim 13 ......................................................................... 85 
`16. 
`Claim 14 ......................................................................... 85 
`17. 
`Claim 15 ......................................................................... 85 
`18. 
`Claim 16 ......................................................................... 87 
`19. 
`Claim 17 ......................................................................... 87 
`20. 
`Claim 18 ......................................................................... 87 
`21. 
`Claim 19 ......................................................................... 87 
`22. 
`Claim 20 ......................................................................... 88 
`23. 
`Claim 21 ......................................................................... 88 
`24. 
`IX.  Conclusion ..................................................................................................... 89 
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`3
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`I, Henry Houh, do hereby declare as follows:
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`Inter Partes Review of U.S. 9,189,785
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`I.
`
`INTRODUCTION
`1.
`
`I am making this declaration at the request of Apple, Inc. in the matter
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`of the Inter Partes Review of U.S. Patent No. 9,189,785 (“the ’785 Patent”) to
`
`Liberty et al.
`
`2.
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`I am being compensated for my work in this matter at my standard
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`hourly rate. I am also being reimbursed for reasonable and customary expenses
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`associated with my work and testimony in this investigation. My compensation is
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`not contingent on the outcome of this matter or the specifics of my testimony.
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`3.
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`I have been asked to provide my opinions regarding whether claims 1-
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`21 (“the Challenged Claims”) of the ’785 Patent are unpatentable as they would
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`have been obvious to a person having ordinary skill in the art (“POSITA”) at the
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`time of the alleged invention, in light of the prior art. It is my opinion that all of the
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`limitations of the challenged claims would have been obvious to a POSITA.
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`In the preparation of this declaration, I have studied:
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`the ’785 Patent, Ex.1001;
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`the prosecution history of the ’785 Patent (“’785 File History”),
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`4.
`
`a.
`
`b.
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`Ex.1002;
`
`c.
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`U.S. Patent Publication No. 2011/0208659 to Easterly et al.
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`(“Easterly”), Ex.1005;
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`
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`4
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`d.
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`U.S. Patent Publication No. 2013/0346291 to Vellozo Luz et al.
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`(“Luz”), Ex.1006;
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`5.
`
`a.
`
`b.
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`In forming the opinions expressed below, I have considered:
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`the documents listed above;
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`the relevant legal standards, including the standard for obviousness,
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`and any additional authoritative documents as cited in the body of this declaration;
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`and
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`c.
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`my own knowledge and experience based upon my work in the field
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`of networking as described below, as well as the following materials.
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`U.S. Patent No. 9,317,850 to Keresman (“Keresman”), Ex.1007;
`
`U.S. Patent No. 8,380,177 to Laracey (“Laracey”), Ex.1008; and
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`U.S. Patent No. 7,536,352 to Lapsley (“Lapsley”), Ex.1009.
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`Unless otherwise noted, all emphasis in any quoted material has been
`
`d.
`
`e.
`
`f.
`
`6.
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`added.
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`II. QUALIFICATIONS AND PROFESSIONAL EXPERIENCE
`7. My complete qualifications and professional experience are described
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`in my Curriculum Vitae, a copy of which can be found in Exhibit 1004. The
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`following is a brief summary of my relevant qualifications and professional
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`experience.
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`8.
`
`I received a Ph.D. in Electrical Engineering and Computer Science
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`
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`5
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`from the Massachusetts Institute of Technology (“MIT”) in 1998. Beforehand, I
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`received a Master of Science degree in Electrical Engineering and Computer
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`Science in 1991, a Bachelor of Science degree in Electrical Engineering and
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`Computer Science in 1989, and a Bachelor of Science degree in Physics in 1990,
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`all from MIT.
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`9.
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`I am currently self-employed as an independent technical consultant. I
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`am also president of a company, Einstein’s Workshop, that provides supplemental
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`science, technology, engineering, and mathematics (“STEM”) education to
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`children of all ages.
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`10.
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`I first entered telecommunications in 1987 when I worked as a
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`summer intern at AT&T Bell Laboratories as part of a five-year dual degree
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`program at MIT. I continued to work at AT&T Bell Laboratories as part of this
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`MIT program. While at MIT, I was a teaching assistant (“TA”) in the Electrical
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`Engineering and Computer Science Department’s core Computer Architectures
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`course. I first was a TA as a senior for a role typically reserved for graduate
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`students. I later became head TA. The course covered various topics in computer
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`architectures. As a TA, I helped write homework assignments, lab assignments,
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`and exams. I also taught in the recitation sections.
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`11. Later, as part of my doctoral research at MIT from 1991-1998, I was a
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`research assistant in the Telemedia Network Systems (“TNS”) group at the
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`Laboratory for Computer Science. The TNS group built a high-speed gigabit
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`network and created applications that ran over the network. Example applications
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`included ones for remote video capture, processing, and display of video on
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`computer terminals. In addition to working on the design of core network
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`components, designing and building the high-speed links, and designing and
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`writing the device drivers for the interface cards, I also set up the group’s web
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`server. Also, I helped to maintain, install, and upgrade the networking devices used
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`within the group, along with other graduate students.
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`12.
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`I also helped to build the web pages that initiated the above-
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`mentioned video sessions via a web interface. Vice President Al Gore visited our
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`group in 1996 and received a demonstration of—and remotely drove—a radio-
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`controlled toy car with a wireless video camera mounted on it that was built by our
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`group. This toy car device received commands transmitted over a network from a
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`remote computer, and video data from the toy car was transmitted wirelessly then
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`over a computer network back to the user controller. On occasion, we allowed
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`users visiting our web site to drive the toy car from their remote computer while
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`they watched the video on their computer. The video stream was encoded by TNS-
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`designed hardware, streamed over the TNS-designed network, and displayed using
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`TNS-designed software.
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`13.
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`I defended and submitted my Ph.D. thesis, titled “Designing Networks
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`for Tomorrow’s Traffic,” in January 1998. As part of my thesis research, I
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`analyzed local area and wide area flows to show a more efficient method for
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`routing packets in a network, based on traffic patterns at the time. The traffic flow
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`data included Ethernet, IP, TCP or UDP, and RTP header information, which I
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`analyzed to come to the conclusions in my thesis.
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`14. From 1997 to 1999, I was a Senior Scientist and Engineer at NBX
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`Corporation, a start-up that made business telephone systems for streaming
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`packetized audio over data networks instead of using traditional telephone lines.
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`NBX was later acquired by 3Com Corporation and the phone system is still used
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`today by numerous businesses.
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`15. As part of my work at NBX, I designed the core audio reconstruction
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`algorithms for the telephones, as well as the packet transmission algorithms. I also
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`designed and validated the core packet transport protocol used by the phone
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`system. The protocol was used for all signaling in the phone system, including for
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`the setup of conference calls. The NBX system also featured a computer interface
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`for initiating phone calls, which could also initiate conference calls. The NBX
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`system also supported the Telephony Application Programming Interface (“TAPI”)
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`that allowed other computer programs to integrate with our system telephony
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`features. We obtained U.S. Patent No. 6,697,963, entitled “Telecommunication
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`method for ensuring on-time delivery of packets containing time-sensitive data,” as
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`8
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`part of this work. The first release of the phones had integrated Ethernet repeater
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`hubs embedded in them, and I worked with the documentation and field support
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`people to develop sets of guidelines so that customers would not build their
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`networks to violate the Ethernet specifications, typically by chaining too many hub
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`repeaters and NBX phones together. The first release of the phones also worked
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`using Ethernet-layer packets (without the use of IP). I also programmed the first
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`prototype of our phone which communicated using IP, and I demonstrated our IP
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`phones working over the Internet when we attended a trade show in California.
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`The phone connected over the Internet to our headquarters in Andover, MA.
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`16. From 1999-2004, I was employed by Empirix or its predecessor
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`company, Teradyne. Empirix was a leader in test tools for telecommunications
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`protocols and systems, providing functional testing tools as well as load testing
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`tools. From 2000-2001, I conceived and built a test platform for testing Voice-
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`over-IP (VoIP). The first application on this new test platform was a cloud
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`emulator for simulating the effects of transmitting VoIP over a busy network. The
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`test platform was based on a network processor chip, which could be programmed
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`to cut-through packets while processing packet data such as various protocol later
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`headers including addresses included therein and even packet data contents. I also
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`designed a protocol analyzer built on the same platform. The application captured
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`and performed protocol decoding at various layers in the protocol stacks of
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`captured packets, including detailed Ethernet header decoding, IP header decoding,
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`TCP header decoding, UDP header decoding, RTP header decoding, and many
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`other specified protocols. The application was also designed to reconstruct entire
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`conversations that spanned multiple packets.
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`17.
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`In 2006, as part of my role at BBN Technologies, I helped found
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`PodZinger Inc., now known as RAMP Inc. PodZinger utilized BBN’s speech
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`recognition algorithms to search through the spoken words in audio and video
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`segments. While I was Vice President of Operations and Technology, PodZinger
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`followed its initial prototype with a full streaming audio and video search solution.
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`I also created a social networking web site, which BBN sold to a venture-funded
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`startup company. In the process of creating the web site, I designed and specified
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`the authentication and authorization protocols.
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`18.
`
`I started a robotics league in 2009 that eventually grew into Einstein’s
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`Workshop when I found a facility in 2012. I evaluated and selected the point of
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`sale solution, and established merchant accounts with a credit card processor. I set
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`up and configured the point of sale solution, including entering all our initial stock
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`units and configuring a mobile solution so that we could process payments using a
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`mobile device when not at our physical point of sale station. I also set up online
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`purchasing and established a separate relationship with Paypal for our online
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`payments. In addition, I set up the accounting system, later bringing in a
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`bookkeeper and later a CPA. For my consulting business, I have maintained the
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`books to this day.
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`19.
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`I have been awarded several United States patents, including the
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`following examples:
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` U.S. Patent No. 7,975,296, “Automated security threat testing of
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`web pages”;
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` U.S. Patent No. 7,877,736, “Computer language interpretation and
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`optimization for server testing”;
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` U.S. Patent No. 7,801,910, “Method and apparatus for timed tagging
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`of media content”;
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` U.S. Patent 7,590,542, “Method of Generating Test Scripts Using a
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`Voice-Capable Markup Language”; and
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` U.S. Patent No. 6,967,963, “Telecommunication method for
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`ensuring on-time delivery of packets containing time-sensitive
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`data.”
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`III. LEVEL OF ORDINARY SKILL IN THE ART
`20.
`
`I understand there are multiple factors relevant to determining the
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`level of ordinary skill in the pertinent art, including (1) the levels of education and
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`experience of persons working in the field at the time of the invention; (2) the
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`sophistication of the technology; (3) the types of problems encountered in the field;
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`and (4) the prior art solutions to those problems.
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`21. A person of ordinary skill in the art (“POSITA”) in the field of the
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`’785 Patent, as of its earliest possible filing date of August 24, 2012, would have
`
`been someone knowledgeable and familiar with the software arts that are pertinent
`
`to the ’785 Patent. That person would have a bachelor’s degree in electrical
`
`engineering, computer science, or equivalent training, and approximately two years
`
`of experience working in the field of software programming. Lack of work
`
`experience can be remedied by additional education, and vice versa.
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`22. For purposes of this Declaration, in general, and unless otherwise
`
`noted, my statements and opinions, such as those regarding my experience and the
`
`understanding of a POSITA generally (and specifically related to the references I
`
`consulted herein), reflect the knowledge that existed in the field as of the priority
`
`date of the ’785 Patent (i.e., August 24, 2012). Unless otherwise stated, when I
`
`provide my understanding and analysis below, it is consistent with the level of a
`
`POSITA prior to the priority date of the ’785 Patent.
`
`IV. RELEVANT LEGAL STANDARDS
`23.
`
`I am not an attorney. In preparing and expressing my opinions and
`
`considering the subject matter of the ’785 Patent, I am relying on certain basic
`
`legal principles that counsel have explained to me. These principles are discussed
`
`below.
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`24.
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`I understand that prior art to the ’785 Patent includes patents and
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`printed publications in the relevant art that predate the priority date of the alleged
`
`invention recited in the ’785 Patent. For purposes of this Declaration, I am
`
`applying August 24, 2012 as the earliest possible priority date of the ’785 Patent.
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`25.
`
`I have been informed that a claimed invention is unpatentable under
`
`35 U.S.C. § 103 if the differences between the invention and the prior art are such
`
`that the subject matter as a whole would have been obvious at the time the
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`invention was made to a person having ordinary skill in the art to which the subject
`
`matter pertains. I have also been informed by counsel that the obviousness analysis
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`takes into account factual inquiries including the level of ordinary skill in the art,
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`the scope and content of the prior art, and the differences between the prior art and
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`the claimed subject matter.
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`26.
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`I have been informed by counsel that the Supreme Court has
`
`recognized several rationales for combining references or modifying a reference to
`
`show obviousness of claimed subject matter. Some of these rationales include the
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`following: (a) combining prior art elements according to known methods to yield
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`predictable results; (b) simple substitution of one known element for another to
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`obtain predictable results; (c) use of a known technique to improve a similar device
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`(method, or product) in the same way; (d) applying a known technique to a known
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`device (method, or product) ready for improvement to yield predictable results; (e)
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`choosing from a finite number of identified, predictable solutions, with a
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`reasonable expectation of success; and (f) some teaching, suggestion, or motivation
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`in the prior art that would have led one of ordinary skill to modify the prior art
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`reference or to combine prior art reference teachings to arrive at the claimed
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`invention.
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`27.
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`I further understand that certain factors may support or rebut the
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`obviousness of a claim. I understand that such secondary considerations include,
`
`among other things, commercial success of the patented invention, skepticism of
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`those having ordinary skill in the art at the time of invention, unexpected results of
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`the invention, any long-felt but unsolved need in the art that was satisfied by the
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`alleged invention, the failure of others to make the alleged invention, praise of the
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`alleged invention by those having ordinary skill in the art, and copying of the
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`alleged invention by others in the field. I understand that there must be a nexus—a
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`connection—between any such secondary considerations and the alleged invention.
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`I also understand that contemporaneous and independent invention by others is a
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`secondary consideration tending to show obviousness.
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`28.
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`I am not aware of any allegations by the named inventor of the ’785
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`Patent or any assignee of the ’785 Patent that any secondary considerations are
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`relevant to the obviousness analysis of any Challenged Claim of the ’785 Patent.
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`V. BACKGROUND
`29. Mobile wallets, sometimes referred to as e-wallets, are virtual wallets
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`that allow users to enter debit card, credit card, or other account type information
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`into an application on their mobile phones. The application on the mobile phone
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`can then be used to pay for goods or services either online or at point-of-sale
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`terminals at merchant locations. In some cases, the mobile application may
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`generate a barcode for scanning at a point-of-sale terminal. The barcode may have
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`embedded therein various pieces of information, such as the user’s account number
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`and other data for processing a transaction. As will be explained in more detail
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`below, the ’785 Patent describes and claims no more than commonly known pieces
`
`of information that can be embedded within such a barcode.
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`VI. OVERVIEW OF THE ’785 PATENT
`30. The ’785 Patent was filed on August 23, 2013 and claims priority to a
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`provisional application filed August 24, 2012. The ’785 Patent relates to a payment
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`processing system in which a customer uses an application on their phone to create
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`a “scannable code” such as a QR code that is then presented to the merchant for
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`payment of goods or services. The ’785 Patent summarizes its purported invention
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`as follows:
`
`Embodiments described herein are directed to selecting a debit network
`using a quick response (QR) code and to processing a payment using a
`debit network selected according to information embedded in a QR
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`code. In one embodiment, a mobile computer system receives input
`indicating that a user has initiated a payment for various items sold by
`a provider of goods or services. The mobile computer system
`determines that the user or the provider has specified a preference
`indicating which debit network is to be used to process the payment.
`The mobile computer system then generates a QR code with the debit
`network selection and portions of the user's debit account information
`embedded in the QR code, and sends the generated QR code to a
`payment processing system. The payment processing system may be
`cloud-based, or may be run locally at the provider's point of sale.
`
`’785 Patent, 1:37-51; see also abstract.
`
`31. To get the patent allowed, the Patent Owner amended the claims to
`
`further recite the types of information that are included in the QR code. ’785 File
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`History, 90. The information in the scannable code is illustrated in Fig. 5.
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`’785 Patent, Fig. 5.
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`32.
`
` The independent claims of the ’785 patent recite that the barcode
`
`includes each of the items shown above, except for the user’s purchase history.
`
`Claim 1 (originally claim 12 in prosecution) is recited below as an example.
`
`A computer system comprising the following:
`one or more processors;
`system memory;
`one or more computer-readable storage media having stored
`thereon computer-executable instructions that, when executed by the
`one or more processors, cause the computing system to perform a
`method for processing a payment using a debit network selected
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`according to information embedded in a scannable code, the method
`comprising the following:
`receiving a scannable code with one or more portions of
`embedded payment information, the embedded payment information
`including at least the following: a total payment amount that is to be
`paid by a user, debit account information for the user, and an
`indication of which debit network is to be used to process the payment,
`the debit network comprising a debit payment processing entity that
`processes the initiated debit payment, wherein the indication of which
`debit network to be used includes (1) a user preferred network, (2) a
`provider preferred network and (3) a selected network, such that the
`scannable code includes all of (1) the user preferred network, (2) the
`provider preferred network and (3) the selected network, the scannable
`code also including an identification of rewards to be provided when
`the selected network is used and an identification of one or more
`goods or services associated with the total payment amount;
`determining which debit network is to be used to process the
`payment based on the indication provided in the embedded payment
`information in the received scannable code;
`sending the payment amount and the user's debit account
`information to the determined debit network; and
`receiving an indication that the payment was processed by the
`determined debit network.
`
`’785 Patent, Claim 1.
`
`33. The other claim limitations relate to routine payment processing steps,
`
`such as sending the payment amount and account numbers for processing and
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`18
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`receiving confirmation of payment.
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`34. As I explain below, the concept of a using a scannable code (e.g., QR
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`code) to pay for goods and services was well known at the time the ’785 patent
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`was filed. Moreover, the prior art shows that it was known for each of the claimed
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`pieces of information to be included in the barcode.
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`VII. CLAIM CONSTRUCTION
`35.
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`It is my understanding that in order to properly evaluate the ’785
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`Patent, the terms of the claims must first be interpreted. It is my understanding that
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`for the purposes of this inter partes review, the claims are to be construed under
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`the so-called Phillips standard, under which claim terms are given their ordinary
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`and customary meaning as would be understood by one of ordinary skill in the art
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`in light of the specification and prosecution history, unless the inventor has set
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`forth a special meaning for a term. Counsel has explained to me that none of the
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`claim terms are believed to require express construction.
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`VIII. IDENTIFICATION OF HOW THE CLAIMS ARE UNPATENTABLE
`36.
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`I have been asked to provide my opinion as to whether the Challenged
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`Claims of the ’785 Patent would have been obvious in view of the prior art. The
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`discussion below provides a detailed analysis of how the prior art references
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`identified below teach the limitations of the Challenged Claims of the ’785 Patent.
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`37. As part of my analysis, I have considered the scope and content of the
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`prior art and any differences between the alleged invention and the prior art. I
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`describe in detail below the scope and content of the prior art, as well as any
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`differences between the alleged invention and the prior art, on an element-by-
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`element basis for each Challenged Claims of the ’785 Patent.
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`38. As described in detail below, the alleged invention of the Challenged
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`Claims would have been obvious in view of the teachings of the identified prior art
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`references as well as the knowledge of a POSITA.
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`Ground 1: Claims 1-21 are obvious under 35 U.S.C. § 103(a) over
`A.
`Easterly in view of Luz.
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`1.
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`Summary of Easterly
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`39.
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`Like the ’785 Patent, Easterly relates to “the facilitation of certain
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`financial and nonfinancial transactions between customers, retailers and suppliers
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`using smart devices.” Easterly, [0002]. Easterly describes “an application residing
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`on a smart device to provide secure, encrypted communications with a proprietary
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`server using scanable barcodes to authenticate the identity of the purchaser and
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`authorize, clear and settle a transaction between the purchaser and a third party
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`who may be a merchant.” Easterly, [0002].
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`40.
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`Easterly describes a proprietary application referred to as “eCache.”
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`The eCache application utilizes “a link between the retailer's POS system and the
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`ACH network.” Easterly, [0013]. The eCache system also provides an additional
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`link that “allows general purpose cards such as credit cards, debit cards, charge
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`cards, gift cards, and prepaid cards, to be switched to and authorized through a
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`merchant processor network, association network, debit (EFT) network or ATM
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`network, where they may be used to complete a sales transaction.” Easterly,
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`[0013].
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`Easterly, Fig. 1.
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`41. To facilitate payment over such networks, Easterly describes “a
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`system of unique primary barcodes which are personal to a customer and may be
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`tendered at the POS of a merchant or retailer.” Easterly, [0018]. Easterly provides
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`an example in which the primary barcodes are “2-D barcodes.” In Easterly’s
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`system, “[e]ach customer-specific primary barcode is further linked to an extension
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`barcode or barcodes. The extension barcodes are linked to specific retailers' POS
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`systems.” Easterly, [0019]. “In a preferred embodiment of the invention, primary
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`and extension barcode data may be combined into a single ‘combined’ barcode for
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`scanning.” Easterly, [0020]. The combined barcode may be presented to a
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`merchant to facilitate the sale of goods or services, and includes “all of the data
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`required to authenticate, authorize, clear and settle a transaction.” Easterly,
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`[0020].
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`2-D barcode
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`Easterly, Fig. 17 (annotated).
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`42. Easterly further describes information that is included in the code, as
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`part of “all of the data required to authenticate, authorize, clear and settle a
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`transaction.” Easterly, [0020]. For example, Easterly describes how “[t]he 2-D
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`barcode has encoded detailed information concerning the transaction which may
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`include designating particular accounts through which a transaction may be
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`settled.” Easterly, [0125]. The code may also include “a specific route to settle
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`the transaction, say from a checking account or by executing an ACH
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`transaction.” Easterly, [00124].
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`43. Easterly’s barcode includes both preferences from the user as well as
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`the merchant. “[T]he eCache system will generate a unique 2-D barcode that
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`encodes all such preferences and instructions.” Easterly, [0095]. “The system is
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`not, however, just limited to customer's preferences. Merchants themselves may
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`also establish a profile and incorporate preferences.” Easterly, [0096]. These
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`preferences include the route for settling a transaction: “Where a customer has
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`expressed no preference for possible clearance routes, the merchant can indicate
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`preferences of its own that could be used to advantageously clear a transaction
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`through the least expensive or fastest route.” Easterly, [0096]. As mentioned
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`above, Easterly provides one example in which the route for settling a transaction
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`is a debit network. See Easterly, [0013].
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`44. Accordingly, Easterly provides evidence that it was known to use a
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`scannable barcode to facilitate payment between a purchaser and a merchant.
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`Easterly also provides examples of the types of information that may be included
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`in the barcode.
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`2.
`Summary of Luz
`45. Luz provides additional examples of what types of information may
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`be included within a scannable code. Like Easterly and the ’785 Patent, Luz
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`describes