`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`__________________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`__________________________________________________________________
`
`
`
`APPLE INC.,
`
`Petitioner,
`
`v.
`
`RFCYBER CORP.,
`
`Patent Owner.
`
`
`Patent No. 10,600,046
`Filing Date: June 2, 2015
`Issue Date: March 24, 2020
`
`Inventors: Xiangzhen Xie, Liang Seng Koh, and Hsin Pan
`Title: METHOD AND APPARATUS FOR MOBILE PAYMENTS
`
`
`__________________________________________________________________
`
`PATENT OWNER’S SUR-REPLY
`
`Case No. IPR2022-01239
`
`__________________________________________________________________
`
`
`
`
`
`
`
`
` IPR2022-01239
` PATENT NO. 10,600,046
`
`TABLE OF CONTENTS
`
`Page(s)
`
`I.
`
`PETITIONER’S COMBINATION DOES NOT RENDER AN E-
`PURSE OBVIOUS .......................................................................................... 1
`A.
`Petitioner Cannot Remedy its Failure to Identify an E-purse in
`the Petition ............................................................................................. 1
`Petitioner Does Not Show that any E-purse Is “maintained
`locally in the mobile device” ................................................................. 3
`1.
`Laracey maintains its balance and other financial
`information on a server, even if out-of-date data were
`stored on the mobile device ........................................................ 3
`Petitioner’s use of Jogu’s “balance update” does not
`remedy Laracey’s deficiencies .................................................... 6
`Laracey Does Not Store Financial Information on the Mobile
`Device .................................................................................................... 7
`A POSITA WOULD NOT COMBINE JOGU AND LARACEY ................10
`II.
`III. CONCLUSION ..............................................................................................13
`
`
`B.
`
`C.
`
`2.
`
`i
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`
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` IPR2022-01239
` PATENT NO. 10,600,046
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`TABLE OF AUTHORITIES
`
` Page(s)
`
`Cases
`Apple Inc. v. UUSI, LLC,
`No. 2021-1035, 2023 WL 3071643 (Fed. Cir. Apr. 25, 2023) ............................. 2
`MModal LLC v. Nuance Commc’ns,
`846 F. App’x 900 (Fed. Cir. 2021) ............................................................. 1, 2, 10
`
`
`
`
`
`ii
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`
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` IPR2022-01239
` PATENT NO. 10,600,046
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`EXHIBIT LIST
`
`Exhibit No. Description of Document
`
`2001
`
`2002
`
`2003
`
`Declaration of Alfred C. Weaver, Ph.D.
`
`CV of Alfred C. Weaver, Ph.D.
`
`Transcript of May 11, 2023 Deposition of Gerald W. Smith
`
`
`
`
`
`
`
`
`iii
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`
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`Petitioner’s Reply attempts to shift the burden of persuasion by arguing that
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` IPR2022-01239
` PATENT NO. 10,600,046
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`
`
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`Patent Owner “must convince this Board” that Petitioner’s combination fails to
`
`render the Challenged Claims obvious. Reply, 3. But it is Petitioner’s burden to
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`persuade the Board that the claims are obvious. As shown below, Petitioner has
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`failed to do so, and the Board should issue a Final Written Decision finding all
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`Challenged Claims not unpatentable.
`
`I.
`
`
`
`PETITIONER’S COMBINATION DOES NOT RENDER AN E-
`PURSE OBVIOUS
`Petitioner Cannot Remedy its Failure to Identify an E-
`A.
`purse in the Petition
`Petitioner has failed to identify any “software” in meeting the e-purse
`
`limitation in its Petition. POR, 14. In its Reply, Petitioner attempts to handwave
`
`away this deficiency. Reply, 20 (“Neither PO nor Dr. Weaver dispute that Laracey’s
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`mobile device utilizes software for its transaction functionality.”). But Petitioner did
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`not identify Laracey’s “transaction functionality” software as the claimed e-purse.
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`Instead, it identified a “stored value account.” Pet., 29; POR, 14.
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`
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`The Board should reject Petitioner’s late attempt to backfill its Petition.
`
`MModal LLC v. Nuance Commc’ns, 846 F. App’x 900, 906-07 (Fed. Cir. 2021)
`
`(affirming Board’s rejection of new argument raised on Reply). MModal is
`
`instructive. There, the Petitioner identified specific portions of a reference (Taira)
`
`as disclosing an element. Id. After the Patent Owner rebutted those portions, the
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`1
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`
`
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`Petitioner attempted on Reply to rely on a separate discussion in Taira. Id. at 906.
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` IPR2022-01239
` PATENT NO. 10,600,046
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`The Board rejected that attempt, and the Federal Circuit agreed, noting that “A
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`petitioner generally must provide in the petition an understandable explanation of
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`the element-by-element specifics of the unpatentability challenges, including the
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`particular portions of prior art supporting those challenges.” (emphasis added)).
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`Here, Petitioner identified one aspect, and only one aspect, of Laracey as disclosing
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`the e-purse—the “stored value account.” It cannot now expand that to some
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`unspecified portion of Laracey’s software. Id. See also Apple Inc. v. UUSI, LLC,
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`No. 2021-1035, 2023 WL 3071643, at *3 (Fed. Cir. Apr. 25, 2023) (affirming
`
`Board’s decision not to consider “what Apple meant to argue in its Petition”). It
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`would be manifestly unfair to allow Petitioner, at the last moment, to expand its
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`invalidity theory and deprive Patent Owner of the opportunity to meaningfully
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`respond with expert testimony.
`
`
`
`Accordingly, Petitioner should be held to its original mapping of the e-purse
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`to a “stored value account.” As explained by Dr. Weaver, and uncontroverted by
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`Petitioner, an “account” is not software; it is a representation of data. POR, 14; Ex.
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`2001, ¶ 56.
`
`
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`Similarly, an account does not store financial information. POR, 14-15. And
`
`as explained further below, the financial information of Laracey is stored on the
`
`TMS. POR, 14-22.
`
`2
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`
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`The e-purse is a required element of all Challenged Claims. Because
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` IPR2022-01239
` PATENT NO. 10,600,046
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`
`
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`Laracey’s “stored value account” does not meet the agreed construction for e-purse,
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`Petitioner’s challenge must fail, and the Board should issue a Final Written Decision
`
`finding all Challenged Claims not unpatentable.
`
`B.
`
`Petitioner Does Not Show that any E-purse Is “maintained
`locally in the mobile device”
`Laracey maintains its balance and other financial
`1.
`information on a server, even if out-of-date data were
`stored on the mobile device
`In Reply, Petitioner fundamentally misunderstands Laracey’s dynamic
`
`
`
`checkout token. Laracey explains that a merchant POS device may generate a
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`dynamic checkout token that contains “all of the transaction details.” Laracey,
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`[0038], [0055]. The user’s payment information cannot be a transaction detail
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`because the merchant POS never has any payment information and thus cannot
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`generate a token that includes it. E.g., id., [0003] (“It would be desirable to provide
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`systems and methods in which payment card information is not stored, captured,
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`or transmitted by merchants”), [0041] (“By ensuring that actual payment
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`credentials are not revealed to or stored at a merchant 108 or mobile device 102,
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`embodiments provide increased account security and reduced potential for fraud or
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`abuse.”) (emphases added). Every embodiment described in Laracey obtains
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`financial information from the TMS. E.g., id., Figs. 4A-4C, 9.
`
`3
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`
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`Petitioner misconstrues Laracey’s disclosure as silently describing storing
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` IPR2022-01239
` PATENT NO. 10,600,046
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`
`
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`financial information on the local device. Reply, 6-9. Key to Petitioner’s argument
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`is Laracey’s pervasive use of “may.” Id. According to Petitioner, using “may”
`
`indicates that a POSITA would feel free to discard Laracey’s teachings for a system,
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`never described, that happens to meet the limitations of the Challenged Claims.
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`Laracey’s use of “may” does not provide support or motivation for a POSITA
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`choosing to maintain financial information locally and, thus rendering the described
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`TMS database superfluous.
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`
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`Petitioner tacitly admits that there is no disclosure of an embodiment in
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`Laracey that maintains financial information locally. At best, Petitioner argues that
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`“Laracey’s system fairly suggests maintaining account information on both the
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`mobile device and the TMS.” Id., 11 (emphasis added). But even under Petitioner’s
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`hypothetical and undisclosed Laracey system, it is still the TMS that maintains the
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`information. As Petitioner admits, “This payment account management system is
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`used by Laracey to update and synchronize account balances maintained in
`
`separate locations.” Id. (emphasis added). A POSITA would understand that
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`maintaining financial information entails having the correct non-stale value of the
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`information. POR, 22. Thus, the payment account management system, which
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`Petitioner admits is part of the TMS (id.), maintains the actual financial information.
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`4
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`
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`Petitioner’s confusion comes from
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`its conflation of “stored” with
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`
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`“maintained.” But as explained in the POR, even if Laracey stores potentially
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`outdated financial information on the mobile device, that information is maintained
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`in the TMS. POR, 24-25; Ex. 2001, ¶ 71. Indeed, the TMS must “match messages”
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`from the mobile device with messages from the merchant to send the actual payment
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`information to the account issuer or agent. Laracey, [0035], [0038] (“In either event
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`[dynamic or static token], however, the checkout token is used to match messages
`
`from the mobile device 102 with messages from the merchant 108 at the transaction
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`management system 130.”). As noted above, Petitioner itself admits that the TMS
`
`maintains the actual information, and merely updates the (hypothetically stored)
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`information on the mobile devices.
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`
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`Finally, Petitioner draws a false equivalence between Laracey and Jogu.
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`Reply, 11-12. Jogu is designed such that the payment account (maintained at the
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`phone company) is associated with only one phone number (i.e., one device). POR,
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`8-10. Since there is only one device using the payment account, the data cannot be
`
`stale; all purchases are made through the device itself, and thus the balance in the
`
`device is always correct. POR, 8-10, 28-30.
`
`
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`Accordingly, for this separate reason, Petitioner’s combination fails to
`
`disclose or render obvious an “e-purse maintained locally in the mobile device” and
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`5
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`
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`the Board should issue a Final Written Decision finding all Challenged Claims not
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` IPR2022-01239
` PATENT NO. 10,600,046
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`unpatentable.
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`2.
`
`Petitioner’s use of Jogu’s “balance update” does not
`remedy Laracey’s deficiencies
`Petitioner argues that its reference to Jogu’s “balance update” had the effect
`
`
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`of importing a locally stored balance into the combination. Reply, 12-14. The
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`Petition, however, does not refer to Jogu at all with respect to the e-purse limitation.
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`See Pet. at 29-32. Indeed, Mr. Smith explained that the combination uses Jogu only
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`for the balance verification process. Ex. 2003, 57:17-19 (“But the balance
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`verification would be Jogu, and the rest would be Laracey -- is the best I can
`
`answer.”); 75:11-15 (“Okay. And in your declaration, you just used Jogu for the
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`balance verification step. Is that right? A That is correct: S718 in your Figure 22,
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`balance verification.”).
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`
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`The Petition only mentions Jogu’s balance update in the context of the
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`verification step. Pet. at 34-42. Even, then, the balance update is presented as
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`updating Laracey’s alleged locally stored balance and not introducing a new locally
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`stored balance. Pet. at 42 (“As in Jogu, Laracey maintains an account balance and
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`receives a total invoiced amount from the POS terminal.”).
`
`6
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`
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`In any event, including Jogu’s balance update results in the same deficiency
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` IPR2022-01239
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`
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`as discussed above: Jogu’s balance is maintained on the server and downloaded to
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`the mobile device. Pet. at 39-40 (describing the balance maintained at the server).
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`C. Laracey Does Not Store Financial Information on the
`Mobile Device
`Petitioner devotes the bulk of its Reply to arguing that Laracey teaches or
`
`
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`renders obvious storing financial information locally on the mobile device. See
`
`generally Reply. As shown above, though, regardless of whether Laracey stores
`
`financial information locally, Petitioner failed to identify any e-purse that is
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`maintained locally.
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`
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`Moreover, Laracey does not store the financial information on the local
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`device. Petitioner first attempts to wave away Laracey’s discussion of a single user
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`with multiple devices using the system. Reply, 17-18. But this functionality exists
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`in every embodiment in Laracey. POR, 25-28. Indeed, Laracey’s multiple device
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`functionality is explicitly discussed—far more disclosure than the supposed local
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`storage on which the Petition relies. See id.
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`
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`Petitioner next, curiously, argues that Laracey must only allow for a single
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`device because Laracey never mentions the stale data issue. Reply, 19. But, as
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`explained by Dr. Weaver and in the POR, the stale data issue is a result of
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`Petitioner’s combination and does not occur in Laracey’s system as described,
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`7
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`
`
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`because Laracey always downloads the current information before processing a
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` IPR2022-01239
` PATENT NO. 10,600,046
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`transaction. POR, 30-32; Ex. 2001, ¶¶ 82-86.1 Laracey would have no need to
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`mention a problem that its system avoids. Moreover, the correct inquiry is whether
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`a POSITA at the time of the invention would be aware that the proposed combination
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`would cause the stale data problem. Both experts agree that one would. Ex. 2001,
`
`¶¶ 82-86; Ex. 1028, ¶¶ 11-13 (“Dr. Weaver correctly notes that stale data is a
`
`problem when multiple devices have access to the same account.”). Mr. Smith’s
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`statement on this issue is nonsensical: “I acknowledge that Laracey suggests a user
`
`may register one or more device within Laracey’s system (e.g., Laracey, [0018]),
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`but a POSITA would not interpret this to mean that a user might register multiple
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`devices and assign different accounts to each device.” Ex. 1028, ¶11 (emphasis
`
`added). Mr. Smith immediately goes on: “Nothing in Laracey’s disclosure suggests
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`accommodating the more complicated scenario in which the system allows multiple
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`devices, potentially simultaneously, to access a single account.” Id. The Reply
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`ignores the inherent contradiction: i) a POSITA would not interpret Laracey as using
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`different accounts with different devices and ii) Laracey does not suggest allowing
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`multiple devices to access a single account). Reply, 19.
`
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`1 Mr. Smith concurred that Laracey always communicates with the TMS during a
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`transaction. Ex. 2003, 63:11-15.
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`8
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`
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`Instead, the Reply argues that a “POSITA would have interpreted Laracey to
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`
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`contemplate a system in which each account is used by only a single device.” Id.2
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`Such an interpretation is contrary to Laracey’s stated goals to allow customers to
`
`have access to all of their payment cards for all transactions. As Laracey explains:
`
`As another example disadvantage, current payment cards are
`typically associated with a single payment account. A cardholder
`may have a number of payment cards, but must make a conscious
`decision regarding which one (or ones, in the case of a split
`tender transaction) of those payment cards to use in a given
`transaction. It would be desirable to provide systems and
`methods which allow a customer to select one or more payment
`accounts for use in conducting a transaction.
`Laracey, [0004]. Petitioner’s interpretation would result in a system where a
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`customer with multiple devices would essentially have the same problem as prior
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`cards: the customer would not be able to access all their payment methods without
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`carrying all devices. Neither Petitioner nor Mr. Smith provide any basis to conclude
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`that a POSITA would interpret Laracey in such a contradictory and unwieldy
`
`fashion.
`
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`2 Patent Owner presumes that Mr. Smith’s contradictory testimony is the result of a
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`typographical error.
`
`9
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`
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`Finally, Petitioner argues that the combination of Laracey and Jogu
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` IPR2022-01239
` PATENT NO. 10,600,046
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`
`
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`overcomes Laracey’s deficiencies as to the local storage. Reply, 19. First, Petitioner
`
`did not raise this argument in its Petition; instead, it relied solely on an unmodified
`
`Laracey for the e-purse element. Pet., 29-32; see also Ex. 2003, 57:17-19 (“But the
`
`balance verification would be Jogu, and the rest would be Laracey -- is the best I
`
`can answer.”) (emphasis added). Petitioner cannot now expand its theories to use
`
`Jogu for this element. MModal, 846 F. App’x at 906-07. Second, contrary to
`
`Petitioner’s assertion in the Reply (Reply, 19) adding the single-device Jogu causes
`
`the exact stale data issues discussed above. POR, 30-32. In the multiple-device
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`scenario, storing an account balance locally can result in a separate device using the
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`same account to change the balance, rendering the local data stale. POR, 30-32.
`
`
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`Accordingly, a POSITA would not find storing financial data locally to be
`
`disclosed or rendered obvious by Laracey.
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`II. A POSITA WOULD NOT COMBINE JOGU AND LARACEY
`
`The POR explained that a POSITA would not combine Jogu and Laracey
`
`because Jogu’s offline balance check is incompatible with Laracey’s server-based
`
`balance storage and because there would be no benefit to doing so. POR, 28-32.
`
`
`
`In its Reply, Petitioner mischaracterizes Patent Owner’s arguments. First,
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`Petitioner asserts that “the proposed combination does not rely on Jogu’s offline
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`transaction functionality.” Reply, 24. Petitioner further states:
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`10
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` IPR2022-01239
` PATENT NO. 10,600,046
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`Instead, the Petition explains that Laracey’s system would have been
`improved by specific features from Jogu, including (1) performing a
`balance check, (2) displaying a denial when the account balance is
`insufficient, (3) generating a payment request only when sufficient
`funds exist, and (4) reducing the account balance on the mobile device
`after a successful transaction to ensure the local balance is accurate.
`Petition, 36-42. None of these functionalities requires Laracey’s
`process to be offline.
`
`Reply, 24. Even if Jogu’s functionalities do not require Laracey to be offline, the
`
`Challenged Claims do. The Reply’s confusion appears to stem from not reading the
`
`critical limitation in full. As explained in the POR, the claims require verifying the
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`balance without sending a request to a payment gateway. POR, 29-30. ’046 Patent,
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`cl. 1 (“wherein said verifying the total amount with a balance in the e-purse is
`
`performed within the mobile device without sending the payment request to a
`
`payment gateway”), 12 (“the payment request is denied in the mobile device when
`
`the amount is more than a balance of an electronic purse (e-purse) maintained locally
`
`in the mobile device, the payment request is sent to a payment gateway when the
`
`amount is less than a balance of an electronic purse (e-purse) maintained locally
`
`in the mobile device”); 18 (“wherein the payment request is denied within the mobile
`
`device without sending the payment request to the payment gateway”) (emphases
`
`added).
`
`11
`
`
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`Patent Owner never argued that the combination was reliant on Jogu’s offline
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` PATENT NO. 10,600,046
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`
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`functionality. Instead, a POSITA would not be motivated to use Jogu’s balance
`
`verification step because it is incompatible and lacks any benefit in a Laracey
`
`system. POR, 29-30. The motivating reason for Jogu’s offline balance verification
`
`is that Jogu, unlike Laracey, may be used to make a purchase while not in
`
`communication with any servers. POR, 28-29. A POSITA would not import this
`
`offline balance check into a system where the balance is maintained on the server.
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`Id., 28-32. And Petitioner explicitly admits that (under its combination) Laracey
`
`keeps a balance on the server and uses that balance to update all alleged copies.
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`Reply, 11 (“This payment account management system is used by Laracey to update
`
`and synchronize account balances maintained in separate locations.”) (emphasis
`
`added).
`
`
`
`With
`
`that undisputed understanding of Laracey, Petitioner’s stated
`
`motivations to combine fall short. As explained in the POR, the possibility of stale
`
`data (again, undisputed by Petitioner and its expert) renders the first alleged
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`motivation (to inform a user “of insufficient funds before attempting to proceed with
`
`a transaction that will ultimately fail”) impossible to achieve, as sufficient funds may
`
`likely have been added by other means than Laracey, rendering any hypothetical
`
`balance in the mobile device stale. POR, 31-32. Indeed, the Laracey system itself
`
`does not set out any method to add money to a gift card or stored value account, so
`
`12
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`
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`any additions must be through other means. Similarly, the alleged motivation to
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`avoid “human error” runs headlong into the same problem. Id.
`
`
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`Finally, as explained in the POR, Jogu’s offline balance check is incompatible
`
`with Laracey’s explicit steps of downloading the balance and other payment
`
`information. Using an offline balance check would merely check against stale data
`
`and prevent the balance from actually updating (as the update in Laracey’s program
`
`flow comes after where the balance check would happen). POR, 29-32.
`
`
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`Accordingly, a POSITA would not combine Jogu and Laracey to include
`
`Jogu’s balance check.
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`III. CONCLUSION
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`For the foregoing reasons, the Board should issue a Final Written Decision
`
`finding all Challenged Claims not unpatentable.
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`
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`Dated: September 1, 2023
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`Respectfully submitted,
`
`/
`
`
`/Vincent J. Rubino, III
`Vincent J. Rubino, III (Reg. No. 68,594)
`Lead Counsel for Patent Owner
`Fabricant LLP
`411 Theodore Fremd Avenue,
`Suite 206 South
`Rye, New York 10580
`Tel. 212-257-5797
`Fax. 212-257-5796
`Email: vrubino@fabricantllp.com
`
`13
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` IPR2022-01239
` PATENT NO. 10,600,046
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`CERTIFICATE OF WORD COUNT
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`The undersigned hereby certifies that the portions of the above-captioned
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`PATENT OWNER’S SURREPLY specified in 37 C.F.R. § 42.24 have 2,763 words
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`in compliance with the 5,600 word limit set forth in 37 C.F.R. § 42.24. This word
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`count was prepared using Microsoft Word for Office 365.
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`
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`Dated: September 1, 2023
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`
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`Respectfully submitted,
`
`/
`
`
`/Vincent J. Rubino, III
`Vincent J. Rubino, III (Reg. No. 68,594)
`Lead Counsel for Patent Owner
`Fabricant LLP
`411 Theodore Fremd Avenue,
`Suite 206 South
`Rye, New York 10580
`Tel. 212-257-5797
`Fax. 212-257-5796
`Email: vrubino@fabricantllp.com
`
`14
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`IPR2022-01239
`PATENT NO. 10,600,046
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`CERTIFICATE OF SERVICE
`A copy of PATENT OWNER’S SUR-REPLY has been served on Petitioner’s
`
`counsel of record as follows:
`
`Paul R. Hart
`Email: paul.hart@eriseip.com
`Email: PTAB@eriseip.com
`ERISE IP, P.A.
`5299 DTC Boulevard, Suite 1340
`Greenwood Village, Colorado 80111
`
`Adam P. Seitz
`Email: adam.seitz@eriseip.com
`ERISE IP, P.A.
`7015 College Boulevard, Suite 700
`Overland Park, Kansas 66211
`
`Attorneys for Apple Inc.
`
`
`
`September 1, 2023
`
`
`
`By:
`
`/Vincent J. Rubino, III /
`Vincent J. Rubino, III (Reg. No. 68,594)
`FABRICANT LLP
`411 Theodore Fremd Avenue,
`Suite 206 South
`Rye, New York 10580
`Tel. 212-257-5797
`Fax. 212-257-5796
`Email: vrubino@fabricantllp.com
`
`
`
`
`
`