4361423 CANADA INC.

Patent Trials and Appeals Board

Mar 30, 2021

IPR2019-01629 (P.T.A.B. Mar. 30, 2021)

Trials@uspto.gov Paper No. 33
571.272.7822 Date: March 30, 2021

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

SQUARE, INC.,
Petitioner,

v.

4361423 CANADA INC.,
Patent Owner.
____________

IPR2019-01629
Patent 9,269,084 B2
____________

Before JAMESON LEE, ROBERT J. WEINSCHENK, and
KEVIN C. TROCK, Administrative Patent Judges.

TROCK, Administrative Patent Judge.

JUDGMENT
Final Written Decision
Determining All Challenged Claims Unpatentable
35 U.S.C. § 318(a)

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INTRODUCTION
We have authority to hear this inter partes review under 35 U.S.C.
§ 6. This Final Written Decision issues pursuant to 35 U.S.C. § 318(a) and
37 C.F.R. § 42.73. For the reasons discussed herein, we determine that
Square, Inc. (“Petitioner”) has shown by a preponderance of the evidence
that claims 1–8 of U.S. Patent No. 9,269,084 B2 (Ex. 1001, “the ’084
patent”) are unpatentable. See 35 U.S.C. § 316(e); 37 C.F.R. § 42.1(d).
A. Procedural History
Petitioner filed a Petition, Paper 2 (“Pet.” or “Petition”), to institute an
inter partes review of claims 1–8 (the “challenged claims”) of the ’084
patent. 4361423 Canada, Inc. (“Patent Owner”) filed a Preliminary
Response. Paper 6 (“Prelim. Resp.”). We instituted inter partes review on
all challenged claims on the grounds presented in the Petition. Paper 11
(“Institution Decision” or “Dec.”).
After institution, Patent Owner filed a Response to the Petition. Paper
19 (“PO Resp.”). Petitioner thereafter filed a Reply to Patent Owner’s
Response. Paper 24 (“Pet. Reply”). Patent Owner filed a Sur-reply to
Petitioner’s Reply. Paper 25 (“PO Sur-reply”). An oral hearing was held on
January 27, 2021. A transcript of the hearing is included in the record. Paper
32 (“Tr.”).
B. Related Proceedings
Petitioner states that the ’084 patent is the subject of the following
action: 4361423 Canada Inc. v. Square, Inc., 4-19-cv-04311 (N.D. Cal.)
filed July 26, 2019. Pet. 4. Patent Owner identifies the same proceeding.
Paper 5, 2.
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Petitioner lists one other petition (IPR2019-01630) filed by Petitioner
against the ’084 patent. Pet. 4. We declined institution in IPR2019-01630.
Petitioner also lists IPR petitions it has filed against other family
members of the ’084 patent (IPR2019-01625 and IPR2019-01626 (U.S.
Patent No. 8,286,875 B2); IPR2019-01627 and IPR2019-01628 (U.S. Patent
No. 8,281,998 B2); IPR2019-01649 (U.S. Patent No. 9,016,566 B2);
IPR2019-01650 (U.S. Patent No. 9,311,637 B2); IPR2019-01651 (U.S.
Patent No. 9,443,239 B2); IPR2019-01652 (U.S. Patent No. 9,613,351 B2);
IPR2019-01653 and IPR2019-01654 (U.S. Patent No. 9,818,107 B2)). Id.
Petitioner also identifies two pending patent applications (Application
Serial Nos. 15/784,578 and 15/990,911). Id. at 5.
C. The ’084 Patent (Ex. 1001)
The ’084 patent relates to an apparatus, system, and method “for
commercial transactions using a transaction card via a communication
device.” Ex. 1001, 2:22–25. Specifically, the ’084 patent describes a
transaction apparatus, such as a portable point of sale (“POS”) device, linked
to a communication device, such as a mobile phone. Id. at 6:4–7. Figure 1
from the ’084 patent is shown below.
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Figure 1, above, is a flow diagram depicting transaction apparatus 12
and communication device 14, which together form
transaction/communication assembly 16. Id. at 6:64–66. Transaction server
18 and transaction processor/issuer 20 are part of remote processor assembly
22. Id. at 7:2–4. Transaction/communication assembly 16 is in
communication with remote processor assembly 22 through communication
network 26.
Figure 2 from the ’084 patent is shown below.
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Figure 2 shows an example of a transaction/communication assembly.
Id. at 5:27–29. The assembly includes POS device 12 linked to mobile
phone 14 via cable 30. Id. at 7:25–45. POS device 12 includes card reader
slot 39. Id. The ’084 patent explains that a user swipes a credit card through
slot 39, a card reader captures information from the credit card, and the card
reader transfers the information to a microcontroller unit (“MCU”). Id. at
7:37–40, 7:62–65. The MCU converts the information into an analog audio
signal and transmits it via cable 30 to mobile phone 14. Id. at 8:4–10.
Transaction data is then transmitted to a transaction server for processing.
Id. at 8:11–12. The transaction server responds to mobile phone 14 by
indicating whether a processor/issuer accepts or rejects the transaction. Id.
at 8:17–24.
D. Challenged Claims
Petitioner challenges claims 1–8 of the ’084 patent. Pet. 1. Claims 1
and 5 are independent and are essentially similar. Claim 1 is an apparatus
claim and claim 5 is a method claim.
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Claim 1 is generally illustrative of the invention.
1. [P] A portable smart card reader device for reading a smart card,
the device comprising:
[A] a sensor for reading information stored on an integrated circuit
incorporated onto said smart card and for producing an encrypted
analog signal indicative of the information;
[B] said sensor including circuitry for converting said encrypted
analog signal to a format suitable for transmission to a hands-free
jack of a mobile communication device; and
[C] an output jack adapted to be inserted into the hands-free jack
associated with said mobile communication device for providing
the converted encrypted analog signal indicative of the
information to said mobile communication device for
transmission to a transaction server for further processing.
Ex. 1001, 11:51–12:6 (lettering and formatting designated by Petitioner; see
Pet. 24–32).
E. Prior Art References
Petitioner relies upon the following prior art references:
(1) U.S. Patent Publication No. 2002/0091633 A1, published July 11,
2002 (“Proctor”) (Ex. 1004);
(2) U.S. Patent Publication No. 2005/0236480 A1, published October
27, 2005 (“Vrotsos”) (Ex. 1006);
(3) U.S. Patent Publication No. 2004/0059682 A1, published March
25, 2004 (“Hasumi”) (Ex. 1009);
(4) U.S. Patent Publication No. 2006/0032905 A1, published February
16, 2006 (“Bear”) (Ex. 1021);
(5) U.S. Patent Publication No. 2007 /0067833 A1, published March
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22, 2007 (“Colnot”) (Ex. 1012);
(6) WIPO International Patent Application Publication No. WO
01/86599 A2, published November 15, 2001 (Ex. 1011, “Landman”).
F. Testimonial Evidence
In support of its Petition, Petitioner relies on a first declaration of Mr.
Bruce McNair (Ex. 1003, “First McNair Decl.”) and a second declaration of
Mr. McNair (Ex. 1042, “Second McNair Decl.”).
In support of its Patent Owner Response, Patent Owner relies on a
declaration of Mr. Ivan Zatkovich. Ex. 2004 (“Zatkovich Decl.”). Petitioner
cross examined Mr. Zatkovich by deposition. Ex. 1041 (“Zatkovich Dep.”).
G. Asserted Grounds of Unpatentability

Claims Challenged 35 U.S.C. § References
1–8 103 Proctor, Vrotsos, Hasumi
1–8 103 Bear, Landman, Colnot

ANALYSIS
A. Level of Ordinary Skill
In determining whether an invention would have been obvious at the
time it was made, we consider the level of ordinary skill in the pertinent art
at the time of the invention. Graham v. John Deere Co., 383 U.S. 1, 17
(1996). “The importance of resolving the level of ordinary skill in the art
lies in the necessity of maintaining objectivity in the obviousness inquiry.”
Ryko Mfg. Co. v. Nu-Star, Inc., 950 F.2d 714, 718 (Fed. Cir. 1991).
Petitioner describes a person of ordinary skill in the art as: “a person
with bachelor’s degree in electrical or computer engineering or equivalent
and have at least one to two years of relevant experience in the fields of
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embedded systems and mobile communication device interfaces, or
otherwise equivalent industry experience in the relevant field.” Pet. 13.
Petitioner also states that “[l]ess work experience may be compensated by a
higher level of education, such as a Master’s Degree, and vice versa.” Id.
(citing Ex. 1003 ¶¶ 22–27, 5–12). Petitioner’s description of the level of
ordinary skill is supported by the testimony of Petitioner’s declarant, Mr.
McNair. See Ex. 1003 ¶¶ 26–27.
Patent Owner’s expert, Mr. Zatkovich, “agree[s] with Mr. McNair that
a [person of ordinary skill in the art] in the field of the challenged claims
would have been someone with good working knowledge of device
interfaces and the integration of devices involving digital and analog signals.
Ex. 2004 ¶ 14. Mr. Zatkovich testifies that a person of ordinary skill in the
art “may have a Bachelor of Science in Electrical Engineering or Computer
Engineering, or the equivalent and have at least one to two years of relevant
experience in the fields of embedded systems and mobile communication
device interfaces, or otherwise equivalent industry experience in the relevant
field. Id.
The parties’ descriptions of a person of ordinary skill are essentially
the same and are consistent with the subject matter of the ’084 patent. We
agree with the parties’ description of a person of ordinary skill in the art at
the time of the claimed invention, with the exception of the qualifier “at
least,” to keep the description from extending to a level reflecting that of an
expert. Accordingly, for purposes of this Final Written Decision, a person of
ordinary skill in the art is a person with a bachelor’s degree in electrical or
computer engineering or equivalent having one to two years of relevant
experience in the fields of embedded systems and mobile communication
device interfaces, or otherwise equivalent industry experience in the field.
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B. Claim Construction
In an inter partes review, we apply the same claim construction
standard that would be used in a civil action under 35 U.S.C. § 282(b),
following the standard articulated in Phillips v. AWH Corp., 415 F.3d 1303
(Fed. Cir. 2005) (en banc). 37 C.F.R. § 42.100(b) (2019). In applying such
standard, claim terms are generally given their ordinary and customary
meaning, as would be understood by a person of ordinary skill in the art, at
the time of the invention and in the context of the entire patent disclosure.
Phillips, 415 F.3d at 1312–13. “In determining the meaning of the disputed
claim limitation, we look principally to the intrinsic evidence of record,
examining the claim language itself, the written description, and the
prosecution history, if in evidence.” DePuy Spine, Inc. v. Medtronic
Sofamor Danek, Inc., 469 F.3d 1005, 1014 (Fed. Cir. 2006) (citing Phillips,
415 F.3d at 1312–17).
Only terms that are in controversy need to be construed, and then only
to the extent necessary to resolve the controversy. Nidec Motor Corp. v.
Zhongshan Broad Ocean Motor Co. Matal, 868 F.3d 1013, 1017 (Fed. Cir.
2017); see Vivid Techs., Inc. v. Am. Sci. & Eng’g, Inc., 200 F.3d 795, 803
(Fed. Cir. 1999) (applying Vivid Techs. in the context of an inter partes
review).
Here, neither party proposes an express construction for any claim
terms. We agree that no claim terms require express construction, and use
the ordinary and customary meaning of the terms. However, to the extent
that the arguments of the parties reflect a particular understanding of the
claim language, we discuss each party’s understanding in our analysis of the
arguments below.
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C. Patentability Challenges
Petitioner presents two grounds challenging the patentability of the
’084 patent claims under 35 U.S.C. §103. Petitioner challenges the
patentability of claims 1–8 as obvious over the combined teachings of
Proctor, Vrotsos, and Hasumi. Pet. 9. Petitioner also challenges the
patentability of claims 1–8 as obvious over the combined teachings of Bear,
Landman, and Colnot. Id.
In its Response (Paper 19, 13–59) and Sur-reply (Paper 25, 2–24),
Patent Owner contests Petitioner’s arguments and evidence on the
unpatentability of the challenged claims.
1. Principles of Law on Obviousness
Section 103(a) forbids issuance of a patent when “the differences
between the subject matter sought to be patented and the prior art are such
that the subject matter as a whole would have been obvious at the time the
invention was made to a person having ordinary skill in the art to which said
subject matter pertains.” 35 U.S.C. § 103(a) (2006). In Graham, 383 U.S.
at 19, the Supreme Court set out a framework for applying the statutory
language of Section 103: the scope and content of the prior art are to be
determined; differences between the prior art and the claims at issue are to
be ascertained; the level of ordinary skill in the pertinent art resolved, and
any objective indicia of non-obviousness considered.
The Supreme Court has made clear that we apply “an expansive and
flexible approach” to the question of obviousness. KSR Int’l Co. v. Teleflex,
Inc., 550 U.S. 398, 415 (2007). Whether a patent claiming the combination
of prior art elements would have been obvious is determined by whether the
improvement is more than the predictable use of prior art elements according
to their established functions. KSR, 550 U.S. at 417. Reaching this
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conclusion, however, requires more than a mere showing that the prior art
includes separate references covering each separate limitation in a claim
under examination. Unigene Labs., Inc. v. Apotex, Inc., 655 F.3d 1352,
1360 (Fed. Cir. 2011). Rather, obviousness requires the additional showing
that a person of ordinary skill at the time of the invention would have
selected and combined those prior art elements in the normal course of
research and development to yield the claimed invention. Id.
2. Obviousness over Proctor, Vrotsos, and Hasumi
Petitioner asserts claims 1–8 are unpatentable as obvious under
35 U.S.C. § 103 over the combination of Proctor, Vrotsos, and Hasumi.
Pet. 15–39. As noted above, claims 1 and 5 are independent.
a. Relevant Prior Art
Proctor (Ex. 1004)
Proctor describes “a financial transaction verification system,” as
illustrated in Figure 1 below. Ex. 1004 ¶ 7.
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Proctor’s Figure 1, above, depicts financial transaction verification
system 10 that includes wireless or cellular network 12 with a user system
(digital cellular telephone 22) connected to the network. Id. “The cellular
network is connected to a conventional telephone system 16,” and “[a]
central verification facility 20 such as a bank, credit card issuer, or agency is
connected to the system 16.” Id. The digital cellular telephone 22 includes
a conventional ear piece and microphone, as well as a supplementary
connector 26 of the type used for communication with accessories such as
hands-free headsets. Id. ¶ 8. “A converter 30 is connected to the phone
connector via a cable 32.” Id. ¶ 9. Converter 30 includes a connector 34, to
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which a conventional credit card verification terminal 36 is connected via a
cable 40. Id. ¶ 10. Credit card verification terminal 36 includes a magnetic
credit card reader slot 46 that reads unique data encoded on a magnetic strip
on a purchaser’s credit card 48. Id.
Proctor describes the operation of the system as follows:
A merchant having a system 14 wishes to accept a customer’s
credit card 48. If the merchant system’s components are not set
up, the merchant connects the components as shown. The phone
22 is activated, and the verification system number is dialed by
the merchant. Other phone functions also may be conducted by
using the device keyboard 44. In any case, the terminal 36 is used
to generate a communication for the center to receive. The
communication may be a standardized inquiry identifying the
customer’s account number and purchase amount, possibly
including other information such as PIN number, and other
identifiers.
The message generated in the terminal 36 is modulated to
an audible stream of tones, which are transmitted to the converter
30. The converter converts this signal into a data stream in
encoded format that is readily transmitted via digital cellular
networks, as described in the incorporated reference. The phone
then transmits this encoded stream to a receiver node on the
network 12, which transmits the stream via the conventional
telephone network to the facility 20.
Id. ¶¶ 15–16.
Vrotsos (Ex. 1006)
Vrotsos describes “[a]n attachment that may be coupled to a wireless
communication device, such as a cellular telephone, personal digital
assistant (PDA), or the like, to perform commercial or other information
transactions” as illustrated in Figure 1 below. Ex. 1006, Abstr.
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Vrotsos’s Figure 10, above, is a block diagram that illustrates
components of the wireless communication device and the attachment. Id.
¶ 23. The attachment includes processor 303, memory 307, and input device
308. Id. ¶ 75. The communications device, which in some embodiments
may be a cellular telephone, includes memory 304, processor 301, antenna 5,
and output device 306. Id. ¶¶ 72–73.
Vrotsos explains that “the system may be used to transmit credit card
information during a point-of-sale transaction, transmit fingerprint
information during a traffic stop, transmit bar code information during a tour
of a warehousing facility or retail location, or the like.” Id. ¶ 26. “The
attachment 21 may include one or more input devices, such as a magnetic
stripe reader, a smartcard reader, a fingerprint scanner, an optical scanner, a
signature pad, an alphanumeric keypad (such as, a PIN pad), a proximity
detector, an audio recording device, or a camera (such as, a digital or charge-
coupled device (CCD) camera).” Id. ¶ 28. “The attachment 21 may also
include an independent processor located on printed circuit board (PCB)
25.” Id. ¶ 33.
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Vrotsos describes the function of processor 303 as follows:
The attachment 21 may also include a processor 303, a memory
307 and an input device 308. The processor may execute a
software application (which may be stored in the attachment
memory 307) allowing the processor to receive input information
from the input device 308 and process the input information to
generate data for transmission to a remote computer 101 via the
antenna 5 of the wireless communication device 1. By executing
the software application, the attachment may determine from
which input device 308 it is receiving input information (if
multiple input devices are provided), encrypt the input
information, append additional information indicating the
identity or location of the user (using locator 302, which may be
a GPS position sensor and/or processor or a processor for
measuring signal strength from multiple base stations of the
communication network to determine the attachments location
by triangulation), divide the input information into data packets
suitable for transmission over the communication network 102,
etc.
Id. ¶ 75.
Hasumi (Ex. 1009)
Hasumi describes “an electronic-commerce assisting method capable
of smoothly and securely conducting electronic commerce on a
communication network, and to an electronic-commerce assisting server for
realizing the same.” Ex. 1009, Abstr.
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Figure 3 of Hasumi is reproduced below.

Hasumi’s Figure 3, above, illustrates an IC card 10 that has a credit
card function. Id. ¶ 52. “IC card 10 has a storage device 12 formed of a
semiconductor memory such as a flash EEPROM, a communication control
section 16 and an antenna 18 for performing communication with the outside
in a non-contact manner in order to transmit/receive data, and a control
section 14 for centrally controlling them.” Id.
b. Independent Claim 1
Claim 1[P] – A portable smart card reader
The preamble of Claim 1 is directed to a “portable smart card reader
device for reading a smart card.” Ex. 1001, 11:51–52. Petitioner presents
evidence that Proctor teaches a credit card verification attachment terminal
for reading a memory chip credit card. Pet. 15–19, 24–26; see also Ex. 1003
¶¶ 71–76. Petitioner relies on Proctor’s teaching that:
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[a] magnetic credit card reader slot 46 is an input device that
reads unique data encoded on a magnetic strip on a purchaser's
credit card 48. In alternative embodiments, the credit card may
include data encoded by other means, such as a memory chip that
records information beyond identifying the card, including
balance and available credit.
Pet. 24 (citing Ex. 1004 ¶ 10). Petitioner argues that “Proctor’s card reader
device is portable because it can be carried or moved,” and “a device linked
to a mobile communication device, such as in Proctor, may be ‘portable.’”
Pet. 26 (citing Ex. 1001, 7:27–30; Ex. 1004 ¶ 3).
Patent Owner argues that “[t]he preamble term ‘portable’ is a
necessary part of the claimed invention,” and that Proctor does not disclose a
portable device. PO Resp. 13, 15; see also PO Sur-reply 2–3. Patent Owner
argues that “one of skill in the art would understand that the portable device
of the ‘084 patent would require a means of power that could be supplied in
a mobile setting.” PO Resp. at 16 (citing Ex. 2004 ¶ 30). Patent Owner
argues that “[o]ne of skill would also understand that portability would
require that a device cannot rely on fixed, non-portable connections for
communication, such as a wired-network connection or a land-line phone.”
PO Resp. 16 (citing Ex. 2004 ¶¶ 30–32). Patent Owner further argues that
“[t]he primary benefit of a portable device is not only that it can be moved to
various locations, but that it can be operated from various locations
regardless of absence of fixed-wired infrastructure such as power outlets or
communication lines.” PO Resp. 16 (citing Ex. 2004 ¶¶ 30–32).
Patent Owner criticizes Petitioner’s reliance on Proctor’s “background
section that describes large commercial enterprises” to show portability,
because, according to Patent Owner, although “Proctor’s background section
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mentions the absence of a land-line telephone,” it “does not rule out other
physical connections, such as any power connections necessary to power the
Proctor components.” PO Resp. 17. Patent Owner argues that “[t]he
examples provided in Proctor are consistent with situations (e.g., craft fairs,
travelling circuses, touring Broadway shows) where large equipment would
be transported to locations where power would most likely be provided.” Id.
In Reply, Petitioner disputes Patent Owner’s position that portability
requires an independent “power supply consistent with portability.” Pet.
Reply 2–3. Petitioner argues that the term “‘portable’ appears only in the
preamble of claim 1 [and] is not limiting.” Id. at 3 n.1. Petitioner also
argues that Patent Owner’s expert, Mr. Zatkovich, admitted that portable
card readers were known in the art. Id. (citing Ex. 1041, 18:7–16 (testifying
he is aware of “restaurants that used portable point of sale devices”).
Petitioner further argues that the ’084 patent “provides a broader
understanding of portable,” such that “[s]o long as the POS [point of sale]
device may be linked to a ‘communication device in the form of a mobile
phone,’ it should readily be considered portable.” Pet. Reply 4.
Finally, Petitioner argues that Patent Owner:
ignores entirely the Proctor embodiment disclosing a portable
device even under [Patent Owner’s] narrow definition—namely,
a [point-of-sale] device for “wandering food and souvenir
vendors at stadium events.” (Ex. 1004 ¶ 3) [Patent Owner] omits
these “wandering” vendors in its Response; likely because
[Patent Owner] knows it cannot credibly suggest that
“wandering” vendors carry an improbably long power cord to a
local outlet.
Id. at 5 (citing PO Resp. 17).
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We disagree with Patent Owner that the portable card reader device of
claim 1 is required to have “a means of power that could be supplied in a
mobile setting.” See PO Resp. 16.
First, claim 1 does not contain any recitation of a particular type of
power supply for a portable card reader device. See Ex. 1001, 11:50–12:6.
Second, the ’084 patent does not define the term “portable,” let alone define
portable to require “a means of power that could be supplied in a mobile
setting,” and Patent Owner does not point to any such definition. See PO
Resp. 13–17; PO Sur-reply 2–3; Ex. 2004 ¶¶ 28–33.
A review of the ’084 patent also shows that it provides minimal
support for Patent Owner’s restrictive view that a person of ordinary skill in
the art would understand that the term “portable” requires “a means of
power that could be supplied in a mobile setting.” PO Resp. 16. Indeed, the
’084 patent explains that “the present invention relates to an apparatus and a
method of transactions via a wireless or a landline communications device
using a transaction card.” Ex. 1001, 1:26–29. A person of ordinary skill in
the art reading this description in the context of claim 1 would be unlikely to
conclude that the claimed invention is restricted to only mobile power
situations as Patent Owner ostensibly argues. See, e.g., PO Resp. 16 (“The
’084 patent envisioned providing a portable point-of-sale system that could
be used in any number of mobile contexts, such as for taxi drivers and other
merchants.”) (emphasis added).
Indeed, as Petitioner points out, the ’084 patent describes an
embodiment where a power source and a printer are connected to a
transaction device, such as transaction device 12 described in connection
with Figure 5. See, e.g., Ex. 1001, 7:53–55 (“In an embodiment, the
transaction apparatus 12 is powered by a power source 56 optionally
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includes a printer 58.”). Patent Owner does not explain how this
embodiment, which includes a connected power source and a printer,
provides support for, or is consistent with, Patent Owner’s view that the ’084
patent “require[s] a means of power that could be supplied in a mobile
setting.”
We also note that Patent Owner’s expert, Mr. Zatkovich,
acknowledged during his deposition that portable point-of-sale devices were
in use at retail establishments such as restaurants the time of the claimed
invention. See Ex. 1041, 18:7–16. Mr. Zatkovich’s testimony that
restaurants used such portable devices is inconsistent with Patent Owner’s
argument that “one of skill in the art would understand that the portable
device of the ‘084 patent would require a means of power that could be
supplied in a mobile setting,” as well as Patent Owner’s argument that
“[o]ne of skill would also understand that portability would require that a
device cannot rely on fixed, non-portable connections for communication,
such as a wired-network connection or a land-line phone,” and its argument
that “[t]he primary benefit of a portable device is . . . that it can be operated
from various locations regardless of absence of fixed-wired infrastructure
such as power outlets or communication lines.” See PO Resp. 16.
We agree with Petitioner that Proctor describes applications that a
person of ordinary skill in the art would understand involve portability as
that term is commonly understood. Petitioner asserts that “Proctor’s card
reader device is portable because it can be carried or moved.” Pet. 26;
Ex. 1003, 50. Petitioner also argues that “a device linked to a mobile
communication device” may be “portable” in the context of the ’084 patent.
Pet. 26 (citing Ex. 1001, 7:27–30) (describing “a portable transaction
apparatus 12 in the form of a point of sale (POS) device linked to a
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communication device in the form of mobile phone 20 via a communication
link in the form of a cable 30”) (emphasis added).
Proctor, for example, describes situations where “merchants seeking
to accept credit cards do not have telephone lines available,” and provides
examples such as “a small merchant at a seasonal craft fair, a large traveling
entertainment production such as a circus or touring Broadway show, and
wandering food and souvenir vendors at stadium events.” Ex. 1004 ¶ 3
(emphasis added); but see PO Resp. 17 (referencing Proctor’s craft fairs,
travelling circuses, and touring Broadway shows, but omitting Proctor’s
“wandering food and souvenir vendors at stadium events”). When asked at
oral hearing whether these merchants described by Proctor would be using
portable devices, Patent Owner’s counsel conceded that Proctor could be
made into a portable device:

Paper 32, 69.
We agree with Patent Owner’s counsel that Proctor suggests a
“portable” card reader. Moreover, Proctor’s teaching of “wandering food
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and souvenir vendors at stadium events” (Ex. 1004 ¶ 3), even satisfies Patent
Owner’s argument that “portability would require that a device cannot rely
on fixed, non-portable connections for communication, such as a wired-
network connection or a land-line phone.” See PO Resp. 16.
Patent Owner also argues that Proctor does not teach a “smart card”
reader. See PO Resp. 18–21; PO Sur-reply 3–7. Patent Owner argues that
Proctor “makes no mention of smart cards,” and also argues that “[a] ‘smart
card’ incorporates an integrated circuit (‘IC’) chip that contains information,
such as account number and expiration date, needed to perform commercial
payment transactions.” PO Resp. 18, 20. Patent Owner argues that a person
of ordinary skill in the art
would understand, based on the language in the ‘084 patent and
industry standards, that a smart card reader would have to be
capable of reading card information (i.e., information identifying
the card) from the integrated circuit of a smart card, such that that
card information can processed by a transaction server.
PO Resp. 20 (citing Ex. 2004 ¶¶ 25–27).
Petitioner asserts that Proctor teaches a smart card reader because with
respect to Figure 1, Proctor teaches that a:
magnetic credit card reader slot 46 is an input device that reads
unique data encoded on a magnetic strip on a purchaser's credit
card 48. In alternative embodiments, the credit card may include
data encoded by other means, such as a memory chip that records
information beyond identifying the card, including balance and
available credit.
Pet. 24–25 (citing Ex. 1004 ¶ 10, Fig.1).
For purposes of claim 1’s preamble, Petitioner also relies on Hasumi,
asserting that “a memory chip card is a smart card (including memory and
processing capabilities).” Pet. 26. According to Petitioner, Hasumi explains
that:
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FIG. 3 shows the overall configuration of the IC card 10
according to the embodiment. The IC card 10 has a credit card
function. The IC card 10 has a storage device 12 formed of a
semiconductor memory such as a flash EEPROM, a
communication control section 16 and an antenna 18 for
performing communication with the outside in a non-contact
manner in order to transmit/receive data, and a control section 14
for centrally controlling them.
Id. (citing Ex. 1009 ¶ 52). Petitioner argues that a person of ordinary skill in
the art:
would have been motivated to configure Proctor’s system, which
discloses a memory chip credit card, for use with a contactless
IC credit card, as taught by Hasumi, to provide the benefit of
allowing the user to use a wireless form of payment. [A person
of ordinary skill in the art] would have recognized that contact-
and contactless-IC cards were known alternative card types used
in the art.
Pet. 23–24 (citing Ex. 1009 ¶ 83).
Petitioner points out that Patent Owner’s expert, Mr. Zatkovich,
admitted that smart cards and smart card readers were well-known at the
time of claimed invention and that point-of-sale (POS) devices commonly
included smart card readers. Pet. Reply 5 (citing Ex. 1001, 1:37–46;
Ex. 1041, 25:2–20, 83:6–8, 85:7–11, 91:8–10).
Petitioner further argues that Patent Owner is attempting to
improperly limit the term “smart card” to “specific types of transaction
protocols, including specific data requirements ‘such as account number and
expiration date, needed to perform commercial payment transactions’ . . .
according to ISO 7816 and 14443 standards.” Pet. Reply 6. Instead,
Petitioner argues, the ’084 patent “concedes that the claimed smart card can
be any of ‘a chip card, EMV card, proximity detector or NFC card,
contactless card, or any combination thereof,’” which would “include
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Proctor’s disclosure of a credit card with a memory chip.” Id. at 6–7 (citing
Ex. 1004 ¶ 10; Ex. 1042 ¶¶ 12–15; Ex. 1001, claims 2 and 6). A person of
ordinary skill in the art, Petitioner argues, “would have understood the term
‘smart card’ to have its plain and ordinary meaning and would include, but is
not necessarily limited to a card with an IC chip such as a memory chip.”
Pet. Reply 6 (citing Ex. 1042 ¶¶ 12–15).
In its Sur-reply, Patent Owner argues that “Proctor’s bare reference to
a ‘memory chip’ would not convey a smart card reader to [a person of
ordinary skill in the art] within the meaning of the ’084 patent and industry
usage.” PO Sur-reply 3 (citing Ex. 1041 ¶¶ 69–74; Ex. 2004 ¶¶ 15–27, 34–
44). Indeed, Patent Owner’s expert, Mr. Zatkovich, testified at deposition
that “no smart cards as far as I know, have what are referred to as a memory
chip or contain a memory chip,” and that “as far as I know, no one has ever
referred to a smart card as containing a memory chip.” Ex. 1041, 72:24–
73:4.
We disagree with Patent Owner that a person of ordinary skill in the
art considering the ’084 in its entirety, would understand that a “smart card,”
as that term is used in the ’084 patent, must incorporate an IC chip, not a
memory chip, and the smart card contains information, such as account
number and expiration date, needed to perform commercial payment
transactions. See PO Resp. 18 (citing Ex. 2004 ¶¶ 34–41).
It is helpful to note that the ’084 patent acknowledges that “smart
card” readers were known in the art at the time of the claimed invention.
Ex. 1001, 1:37–46 (“These POS devices include a processor as well as an
input device to receive and process information from a transaction card.”
“The input device may include . . . a smartcard reader.”). Patent Owner’s
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expert, Mr. Zatkovich, also acknowledges that smart card readers were
known in the art. Ex. 1041, 25:18–20, 91:8–10.
During oral argument, Patent Owner’s counsel acknowledged that the
’084 patent does not expressly state that a smart card requires additional
circuitry beyond a memory chip, such as the card described by Proctor.

Paper 32, 85:12–21.
Patent Owner’s counsel argues, however, that a person of ordinary
skill in the art would understand that a smart card requires more than a card
with a memory chip, such as the one described by Proctor. Id.; see also
Ex. 1004 ¶ 10. Patent Owner’s expert, Mr. Zatkovich, also testifies that “a
smart card [] is a card containing a chip or integrated circuit (IC) as defined
by the ISO 7816 and ISO 14443 standards.” Ex. 2004 ¶ 37.
Petitioner correctly points out, however, that the ’084 patent does not
provide an express definition of a “smart card,” nor does it identify any ISO
standards that would establish such a definition. Pet. Reply 6; Ex. 1042
¶ 13. As Petitioner points out, the ’084 patent explains with respect to
Figure 5, that transaction device 12 may include input device 38 in the form
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of “a digital signal reader 54 such as an Integrated Circuit (IC) or Smart
Card or EMV reader.” Pet. Reply 6; Ex. 1001, 7:50–53. Indeed, the ’084
patent identifies the types of cards it considers to be “smart cards” in claim
2, where it recites, “[t]he card reader device from claim 1, in which the smart
card is selected from a group consisting of a chip card, EMV card, proximity
detector or NFC card, contactless card, or any combination thereof.”
Ex. 1001, 12:7–10 (emphases added).
Based on this description, we agree with Petitioner’s expert, Mr.
McNair, that a person of ordinary skill in the art considering the ’084 patent
as a whole, would understand that a “smart card,” as that term is used in the
’084 patent, could be a chip card, an EMV card, a NFC card, or a contactless
card. See Ex. 1042 ¶ 13.1 As such, we agree with Petitioner that a person of
ordinary skill in the art would understand that the recited “chip card” in
claim 2 could be a “smart card” even though it was not an EMV (Europay,
Mastercard, Visa) card or a NFC (Near Field Communication) card.
Ex. 1042 ¶ 13.
In response to Patent Owner’s arguments and testimony that a person
of ordinary skill in the art would understand that “[a] ‘smart card’
incorporates an integrated circuit (‘IC’) chip that contains information, such
as account number and expiration date, needed to perform commercial

1 In its Sur-reply, Patent Owner states that it “believes that the new
arguments from Petitioner’s expert McNair (EX1042) are improper for
rebuttal; however, if the Board allows the arguments, they actually illustrate
PO’s point.” Sur-reply 6. We disagree that these arguments are improper.
Petitioner’s arguments in the Reply that rely on McNair’s Second
Declaration (Ex. 1042) properly respond to arguments raised by Patent
Owner in the Response. See 37 C.F.R. § 42.23(b); Belden Inc. v. Berk-Tek
LLC, 805 F.3d 1064, 1078–79 (Fed. Cir. 2015).
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payment transactions” (PO Resp. 18), and that “a smart card [] is a card
containing a chip or integrated circuit (IC) as defined by the ISO 7816 and
ISO 14443 standards” (Ex. 2004 ¶ 37), Petitioner directs our attention to
U.S. Patent No. 8,712,892 (“Dixon”), which issued April 29, 2014.2
Ex. 1042 ¶ 15 (citing Ex. 1040). Dixon, which is assigned to Visa U.S.A.,
Inc. (Ex. 1040 (73)), explains that:
[a] smart card is generally defined as a pocket-sized card (or
other portable consumer device) that is embedded with
either a microprocessor and one or more memory chips, or
as one or more memory chips with non-programmable logic.
The microprocessor-type smart card typically can implement
certain data processing functions, such as to add, delete, or
otherwise manipulate information stored in a memory location of
the smart card. In contrast, the memory chip-type card (for
example, a pre-paid phone card) can only act as a file to hold data
that is manipulated by the reading device to perform a predefined
operation, such as debiting a charge from a pre-established
balance held in the memory or secure memory. Smart cards,
unlike magnetic stripe cards (such as conventional credit cards),
can implement a variety of functions and contain a variety of
types of information on the card.
Ex. 1040, 1:62–2:10 (emphasis added). Petitioner’s expert, Mr. McNair,
testifies that “Dixon expressly demonstrates that, at least, Visa used the term
‘smart card’ to refer to cards with a ‘memory-chip.’” Ex. 1042 ¶ 15.
We agree with Petitioner that Dixon defines a “smart card” as a
pocket-sized card embedded with either a microprocessor and one or more
memory chips, or as one or more memory chips with non-programmable
logic. According to Dixon, a “smart card” could be a pocket-sized card
embedded with “one or more memory chips with non-programmable logic,”

2 The ’084 patent was filed on March 30, 2015. Ex. 1001, code (22).
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but without a microprocessor. Dixon directly conflicts with Mr. Zatkovich’s
testimony that “as far as I know, no one has ever referred to a smart card as
containing a memory chip.” See Ex. 1041, 72:24–73:4. Accordingly, we
give Mr. Zatkovich’s testimony on this point little weight.
We agree with Petitioner that a person of ordinary skill in the art
considering the ’084 patent as a whole would understand that a “smart card,”
as that term is used in the ’084 patent, could be a “chip card” wherein the
“chip” could be a “memory chip.” We also agree with Petitioner that
Proctor discloses such a “smart card” where it describes “[i]n alternative
embodiments, the credit card may include data encoded by other means,
such as a memory chip that records information beyond identifying the card,
including balance and available credit.” Ex. 1004 ¶ 10.
Moreover, Patent Owner fails to address Petitioner’s combination of
Proctor and Hasumi teaching a smart card as recited in claim 1’s preamble,
discussed supra. See Pet. 23–26. Patent Owner does not contest that
Hasumi teaches a “smart card,” and Petitioner’s combination of Proctor and
Hasumi for purposes of claim 1’s preamble is unrebutted by Patent Owner.
See PO Resp. 18–21; Sur-reply 3–7. Indeed, Patent Owner acknowledges
that “Hasumi discloses an IC card 10 with a storage device 12 formed of a
memory (such as a flash EEPROM), a communication control section 16,
and an antenna for performing communication functions in order to allow
the device to transmit and receive data.” PO Resp. 9 (citing Ex. 1009 ¶ 52).
Petitioner argues, and we agree, that a person of ordinary skill in the
art would have been motivated to configure Proctor’s system, which
discloses a memory chip credit card, for use with a contactless IC credit
card, as taught by Hasumi, to allow for a wireless form of card payment.
Petitioner argues, and we also agree, that a person of ordinary skill in the art
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would have recognized that contact- and contactless-IC cards were known
alternative card types used in the art. See Pet. 23–26.
We agree with Petitioner that Proctor, or the combination of Proctor
and Hasumi, teach the recited smart card of claim 1’s preamble and that one
of ordinary skill in the art would have been motivated to combine the
references in the manner described by Petitioner.
We do not reach the issue of whether the preamble is limiting.
Regardless of whether the preamble is limiting, we are persuaded that
Petitioner demonstrates that the recitation of the preamble is satisfied by
Proctor, or the combination of Proctor and Hasumi.
Claim 1[A] – A sensor for reading information
Claim 1 also recites “a sensor for reading information stored on an
integrated circuit incorporated onto said smart card and for producing an
encrypted analog signal indicative of the information.” Ex. 1001, 11:53–56.
Petitioner presents evidence that Proctor teaches a sensor (terminal 36) for
capturing information from the memory chip of credit card 48. Pet. 15–19,
26–27; see also Ex. 1003 ¶¶ 71–76. Petitioner explains:
terminal 36 includes a keyboard or other input device 44 for the
user to enter transaction information to be encoded and
transmitted via the cable to the converter. A magnetic credit card
reader slot 46 is an input device that reads unique data encoded
on a magnetic strip on a purchaser's credit card 48. In alternative
embodiments, the credit card may include data encoded by other
means, such as a memory chip that records information beyond
identifying the card, including balance and available credit.
Pet. 26–27 (citing Ex. 1004 ¶ 10).
Petitioner also presents evidence that “Hasumi discloses a sensor
(reading/writing device 4 including an antenna) for reading information on a
credit card integrated circuit to produce an encrypted analog signal
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indicative of the information (encrypted electromagnetic wave data).”
Pet. 23–24, 26–27 (citing Ex. 1009 ¶¶ 53, 65).
Petitioner argues that “Hasumi teaches that when reading information
from a contactless IC credit card 10, the information is received as an
encrypted analog signal, for example as electromagnetic waves encrypted
using the Data Encryption Standard (DES).” Pet. 23 (citing Ex. 1009 ¶¶ 53,
65; see also Ex. 1003 ¶¶ 81–82, 58–63). Petitioner argues, a person of
ordinary skill in the art “would have understood that encryption was
especially important for the transmission of financial information wirelessly,
where transmissions could have been intercepted through the air.” Pet. 24.
Petitioner further argues, a person of ordinary skill in the art “would have
been well-versed in card technologies, including contact and contactless
technologies, and would have had a reasonable expectation of success
implementing [Hasumi’s] contactless encryption technologies in Proctor’s
payment system.” Id. (citing Ex. 1003 ¶¶ 83, 55–63).
Petitioner further argues that:
Vrotsos discloses [an] attachment device [that] includes a
processor 303 (i.e., a type of controller) that controls the
components and operations of a reader attachment to a mobile
communications device, including receiving information (e.g.,
from a magnetic stripe or smartcard), encrypting the information,
and processing the information for transmission over a connector
(e.g., a serial or parallel interface) to a communications device
and remote computer.
Pet. 20 (citing Ex. 1006 ¶¶ 28, 43, 75, Fig. 11; Ex. 1003 ¶¶ 76–78).
Petitioner argues that a person of ordinary skill in the art:
would have been motivated to include a controller, such as a
processor, to control the operations of and provide encryption
functionality to Proctor’s terminal 36, which functions to receive
information from a transaction card (e.g., a magnetic stripe or
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chip card) and process the information for use by a remote
verification facility 20 through the phone 22.
Pet. 21.
Patent Owner first argues that “Proctor does not disclose a sensor for
reading information stored on a smart card” because “Proctor does not
disclose a smart card” as “Proctor’s ‘memory chip’ is not an integrated
circuit (IC) incorporated into a smart card.” PO Resp. 21. Patent Owner
also argues that “Proctor discloses no means for how the memory chip might
be read—i.e., there is no ‘sensor’ or other interface disclosed, other than the
read head that reads the magnetic stripe on the payment card.” Id. at 21–22.
Patent Owner’s arguments that Proctor does not teach a sensor rely on
the same arguments Patent Owner made that Proctor does not teach a “smart
card.” We disagree with Patent Owner for the same reasons discussed
supra. See Section II.C.2.b.Claim1[P]. Moreover, Patent Owner does not
respond to Petitioner’s arguments and evidence that Hasumi also teaches the
recited sensor. See Pet. 23–24, 26–27 (citing Ex. 1009 ¶¶ 53, 65); See also
PO Resp. 21–22. Petitioner’s expert, Mr. McNair, provides credible
testimonial evidence that Hasumi teaches a sensor. See Ex. 1003, 51; see
also id. ¶¶ 81–83.
Patent Owner next argues that “[n]either Proctor nor Hasumi discloses
producing an encrypted analog signal.” PO Resp. 22; see also id. 23–26; PO
Sur-reply 7–9. Patent Owner argues that Proctor “does not disclose any
encryption,” and “Proctor does not produce encrypted analog signals.” PO
Resp. 22–23 (citing Ex. 1004 ¶ 47). With respect to Hasumi, Patent Owner
argues that “[a]lthough Hasumi mentions encryption, it never discloses that
the Hasumi reader (the reading/writing device 4) actually produces an
encrypted analog signal.” PO Resp. 23. Patent Owner also argues that
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Hasumi’s “SSL encryption occurs within Hasumi’s communication
terminal—not within the reader.” Id. at 24 (citing Ex. 2004 ¶¶ 62–65).
Petitioner replies by arguing that Patent Owner is misinterpreting
claim 1 and imposing an unclaimed limitation, “that the reader device itself
must perform the encryption.” Pet. Reply 8. Petitioner points out that the
’084 patent explains that information read from a transaction card by a
reader may be “originally received in analog format [i.e., from a
conventional magnetic stripe transaction card] or in encrypted digital format
[i.e., from an IC or “smart” transaction card] [to be] converted by the MCU
50 into an analog audio signal.” Id. at 8–9 (citing Ex. 1001, 8:4–6, 8:30–
37).
Petitioner asserts that “by virtue of reading the information from a
smart card, the signal produced by the reader already is encrypted, as
required by the claims. Then, per the subsequent limitations, the reader
converts that encrypted signal into a format suitable for transmission.” Pet.
Reply 9 (citing Ex. 1001, claims 1, 5).
Petitioner argues, “Proctor in view of Hasumi’s teachings provide just
this: Proctor discloses a sensor for capturing information from a card and
producing a corresponding signal indicative of the information (Ex. 1004
¶ 10) and Hasumi teaches that the information captured from the card may
be encrypted data (Ex. 1009).” Pet. Reply 9.
Petitioner also argues that “Proctor in view of Vrotsos and Hasumi
discloses the claimed encryption.” Id. at 10. Petitioner argues that “Vrotsos
discloses encrypting information from a smartcard and that [a person of
ordinary skill in the art] would have been motivated to include the
encryption functionality taught by Vrotsos into Proctor’s terminal.” Id.
(citing Pet. 20–21).
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In its Sur-reply, Patent Owner argues “[t]he Hasumi reader doesn’t
produce or send any encrypted signal—much less an encrypted analog
signal suitable for a hands-free jack.” PO Sur-reply 8 (citing Ex. 2004
¶¶ 58–65). Patent Owner also argues that pages cited by Petitioner “never
establish how Vrotsos could disclose a reader that produces an encrypted
analog signal or send an encrypted analog signal to a hands-free jack.” PO
Sur-reply 9 (citing Ex. 2004 ¶¶ 70–76).
We agree with Petitioner that a person of ordinary skill in the art
reading claim 1 in the context of the ’084 specification would understand
that claim 1 requires “a sensor for reading information stored” on an
integrated circuit (IC) a smart card, “and for producing an encrypted analog
signal,” but not necessarily encrypting an analog signal. See Ex. 1001,
11:51–56. According to claim 1, the recited “portable smart card reader
device” comprises “a sensor for reading information stored on an integrated
circuit incorporated onto said smart card and for producing an encrypted
analog signal indicative of the information.” Id. As Petitioner points out,
the ’084 patent describes an embodiment of this claim where:
digital information from the IC chip 48 is captured by the digital
signal reader 54 and is transferred to the MCU 50.
The transaction data whether originally received in
analog format or in encrypted digital format is converted by the
MCU 50 into an analog audio signal suitable for transmission
over the analog communication link between the transaction
device and the communication device. In this example, this audio
signal is then transmitted to the mobile phone via cable 30.
Transaction data is then transmitted to the transaction
server 18 for processing.
Ex. 1001, 7:66–8:12 (emphasis added).
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The ’084 patent explains that the recited “sensor” of claim 1 “read[s]
information stored on an integrated circuit incorporated onto said smart
card,” in this case digital signal reader 54 captures digital information from
IC chip 48 of a smart card, where such information would already be in
encrypted digital format. Id. The recited “sensor” “produc[es] an encrypted
analog signal indicative of the information” from the encrypted digital
information. Here, MCU 50 converts the acquired encrypted digital
information into an analog audio signal suitable for transmission to a
communication device. Id. Thus, the embodiment described in the ’084
patent shows that the recited “sensor for reading . . . and for producing an
encrypted analog signal” does not necessarily do any “encrypting” as Patent
Owner argues. Rather, the recited “sensor,” here MCU 50, simply converts
already encrypted digital information into an analog audio signal, where
such information would still be encrypted, for transmission to a mobile
communication device.
We are persuaded by Petitioner’s evidence that Proctor discloses a
sensor (terminal 36) for capturing information from the memory chip of a
transaction card 48 (i.e. a smart card) and producing a corresponding signal
indicative of the captured information. See Pet. 16, 26–27; Ex. 1004 ¶ 10;
Ex. 1003 ¶¶ 71–76. We are also persuaded that Hasumi teaches a sensor
(reading/writing device 4) for reading information from a credit card
integrated circuit to produce an encrypted analog signal indicative of the
information (encrypted electromagnetic wave data). See Pet. 23–24, 26–27;
Ex. 1009 ¶¶ 53, 65; Ex. 1003 ¶¶ 81–83. We are also persuaded that a person
of ordinary skill in the art would have been motivated to combine Proctor
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and Hasumi in the manner described by Petitioner. 3 See Pet. 23–24;
Ex. 1003 ¶ 83. We are further persuaded that Vrotsos discloses encrypting
information from a smartcard and that a person of ordinary skill in the art
would have been motivated to include the encryption functionality taught by
Vrotsos into Proctor’s terminal 36 in the manner described by Petitioner.
See Pet. 19–22; Ex. 1006 ¶ 75; Ex. 1003 ¶¶ 77–80.
Based on the complete record and for the reasons discussed herein, we
are persuaded that Petitioner has demonstrated that the combined teachings
of Proctor, Vrotsos, and Hasumi as presented teach the recited “sensor for
reading information stored on an integrated circuit incorporated onto said
smart card and for producing an encrypted analog signal indicative of the
information” of independent claim 1.
Claim 1[B] – Circuitry for converting
Claim 1 also recites “said sensor including circuitry for converting
said encrypted analog signal to a format suitable for transmission to a hands-
free jack of a mobile communication device.” Ex. 1001, 11:57–60.
Petitioner presents evidence that the combination of Proctor and
Vrotsos teaches circuitry for converting an encrypted analog signal to a
suitable format for transmission to a hands-free jack of a mobile
communication device. Pet. 15–20, 28–31; see also Ex. 1003 ¶¶ 71–80.
Petitioner explains as follows:
terminal 36 operates conventionally, and includes what is
essentially a modem that converts the scanned or entered data to
be sent from a digital form to a modulated tonal pattern
transmissible via conventional telephone lines; it further operates

3 We consider the parties’ arguments and evidence on the motivation
to combine Proctor, Vrotsos, and Hasumi in greater detail Section II.C.2.c,
infra.
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to receive such a modulated audio signal and convert it to digital
form for display.
Pet. 28 (citing Ex. 1004 ¶ 11).
Petitioner asserts that Vrotsos teaches circuitry (processor 303) that
controls the components and operations of a reader attachment to a mobile
communications device. Pet 20. According to Petitioner, this includes
“receiving information (e.g., from a magnetic stripe or smartcard),
encrypting the information, and processing the information for transmission
over a connector (e.g., a serial or parallel interface) to a communications
device and remote computer.” Id. at 20, 28 (citing Ex. 1006 ¶¶ 28, 43, 75;
see also Fig. 11 showing processor 303; Ex. 1003 ¶¶ 76–78).
Patent Owner argues that “Proctor’s terminal 36 has no encrypted
analog signal to convert. And, as discussed above, Proctor also does not
perform any encryption itself. Therefore, Proctor does not convert said
encrypted analog signal.” PO Resp. 26–27 (citing Ex. 2004 ¶¶ 47, 68)
(emphasis omitted).
Patent Owner also argues that “Vrotsos’s processor 303
communicates with the communication device using connector 27 of the
attachment to the communication port 309 of the communications device,”
or uses “a connection to the antenna of the communication device.” PO
Resp. 27 (citing Ex. 2004 ¶ 71; Ex. 1006 ¶ 42, Fig. 10) (emphasis omitted).
Patent Owner argues that “[n]either of these two connections—the
communication port 309 and the antenna—is an analog hands-free jack as
the ’084 patent claims require.” PO Resp. 28 (citing Ex. 2004 ¶¶ 72–73).
Patent Owner also argues that “Vrotsos does not transmit anything in an
analog-audio format, or disclose any attachment suitable for communication
with an analog hands-free jack.” PO Resp. 28 (citing Ex. 2004 ¶ 74).
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In Reply, Petitioner criticizes Patent Owner’s arguments for
“improperly attack[ing] the Proctor, Vrotsos, and Hasumi references
individually as purportedly failing to disclose the claimed conversion of an
encrypted signal to a format suitable for a hands-free jack, but fail[ing] to
address the combination as a whole.” Pet. Reply 10 (citing PO Resp. 26–
30). “In fact,” Petitioner argues:
the Petition does not rely on Vrotsos for any teaching of
converting and transmitting credit card information, but relies on
Vrotsos simply for the teaching that it would have been obvious
to include a controller, such as a processor, to perform the
conversion operations of and provide (to the extent needed)
encryption functionality to Proctor’s terminal.
Pet. Reply 11 (citing PO Resp. 28–31).
Petitioner also points out that Patent Owner “does not dispute here
that Proctor converts a credit card signal into the claimed analog audio
signal; instead, [Patent Owner] repeats its argument that Proctor’s signal
isn’t encrypted in the first instance and so is unable to meet the limitations of
the claims.” Pet. Reply 11 (citing PO Resp. 26–27). Petitioner clarifies that
the asserted prior art combination in the Petition is that “Proctor discloses
the claimed conversion to an audio signal suitable for a hands-free jack
while Hasumi and/or Vrostos teach the encryption of transaction
information.” Pet. Reply 11.
We agree with Petitioner that Patent Owner’s arguments criticize the
prior art references individually rather than addressing the combined
teachings of Proctor, Vrotsos, and Hasumi asserted by Petitioner. The test
for obviousness considers what the combined teachings of the references
would have suggested to those of ordinary skill in the art. In re Keller, 642
F.2d 413, 425 (CCPA 1981). Accordingly, “one cannot show non-
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obviousness by attacking references individually where, as here, the
rejections are based on combinations of references.” Id. at 426.
Here, Petitioner asserts that Proctor teaches the claimed conversion to
an audio signal suitable for a hands-free jack, while Hasumi and/or Vrostos
teach the encryption of transaction information. Patent Owner’s argument
that “Proctor’s terminal 36 has no encrypted analog signal to convert,”
therefore, “Proctor does not convert said encrypted analog signal,” is
unavailing because Petitioner does not rely on Proctor to provide the recited
encryption. Rather, Petitioner relies on Hasumi and/or Vrotsos to supply the
encryption. See Pet. 22, 24, 28–30; see also Ex. 1003 ¶¶ 79–80, 83.
Patent Owner’s argument that neither of Vrotsos’ “two connections—
the communication port 309 and the antenna—is an analog hands-free jack,”
is similarly misplaced because Petitioner relies on Proctor, not Vrotsos, to
teach the recited “transmission to a hands-free jack of a mobile
communication device.” As Petitioner points out, Proctor’s “connector 26
on phone 22 is a hands-free jack ‘of the type used for communication with
accessories such as hands-free headsets’ and includes an ‘analog microphone
input.’” Pet. Reply 11 (citing Ex. 1004 ¶ 8).
We are persuaded by Petitioner’s evidence that Proctor discloses a
sensor (terminal 36) for capturing information from the memory chip of a
transaction card 48 (i.e. a smart card) and producing a corresponding analog
audio signal indicative of the captured information and transmitting it to a
hands free jack of a cell phone 22. See Pet. 15–19, 28–31; Ex. 1004 ¶¶ 8–
11; Ex. 1003 ¶¶ 71–76. We are also persuaded that Hasumi teaches a sensor
(reading/writing device 4) for reading information from a credit card
integrated circuit to produce an encrypted analog signal indicative of the
information. See Pet. 23–24; Ex. 1009 ¶¶ 53, 65; Ex. 1003 ¶¶ 81–83. We
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are further persuaded that Vrotsos teaches circuitry (processor 303) that
controls the components and operations of a reader attachment to a mobile
communications device and also discloses encrypting information obtained
from a smartcard. See Pet. 19–22; Ex. 1006 ¶¶ 28, 74–75; Ex. 1003 ¶¶ 77–
80.
Based on the complete record and for the reasons discussed herein, we
are persuaded that Petitioner has demonstrated that the combined teachings
of Proctor, Vrotsos, and Hasumi as presented teach the recited “sensor
including circuitry for converting said encrypted analog signal to a format
suitable for transmission to a hands-free jack of a mobile communication
device” of independent claim 1.
Claim 1[C] – An output jack adapted to be inserted
Claim 1 also recites “an output jack adapted to be inserted into the
hands-free jack associated with said mobile communication device for
providing the converted encrypted analog signal indicative of the
information to said mobile communication device for transmission to a
transaction server for further processing.” Ex. 1001, 12:1–6.
Petitioner provides evidence that Proctor teaches “an output jack
(including cable 40 and/or 32) adapted to be inserted into the hands-free jack
(connector 26) associated with the mobile communication device (phone
22).” Pet. 31–32. According to Petitioner, Proctor explains that:
[p]hone 22 receives the analog audio signal from terminal 36 at
connector 26, a hands-free jack—it is “of the type used for
communication with accessories such as hands-free headsets
[and] has several lines, some of which are a remote analog
microphone input and an analog speaker output.” After phone
22 receives the analog audio signal via the hands-free jack, the
signal is converted, by the functionality incorporated from
converter 30, into an encoded format readily transmitted via
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digital cellular networks and transmitted to verification facility
20.
Id. at 16–17 (emphasis omitted), see also id. at 31–32 (citing Ex. 1004 ¶¶ 8–
10, 16–18; see also Ex. 1003 ¶¶ 71–75).4
According to Proctor:
The message generated in the terminal 36 is modulated to an
audible stream of tones, which are transmitted to the converter
30. The converter converts this signal into a data stream in
encoded format that is readily transmitted via digital cellular
networks, as described in the incorporated reference [Preston].
The phone then transmits this encoded stream to a receiver node
on the network 12, which transmits the stream via the
conventional telephone network to the facility 20.
The facility identifies the stream as an encoded stream in the
transmissible format, and if necessary, routes the call to the
converter 52. The converter 52 converts the encoded stream into
the modulated audible tone signal, which is demodulated by a
modem in the computer 56, and processed.
Ex. 1004 ¶¶ 16–17; see also Pet. 32.
In a footnote, Patent Owner argues that:
Petitioner is already on record asserting that one of skill in the art
would not connect an RJ-11 connection to a hands-free jack
connection without the reference explaining how the connection
and signals would need be modified so the substitution would
work, and here Petitioner provides no evidence that Proctor’s
terminal 36, which would have an RJ-11 jack, could be readily
adapted to feed directly into the hands-free jack of a mobile
communication device.
PO Resp. 29 n.1.

4 In a slightly different embodiment also relied on by Petitioner,
Proctor explains that, “the telephone may incorporate the decoder circuitry.”
Pet. 31 (citing Ex. 1004 ¶18). Petitioner argues, “when the functionality of
converter 30 is in phone 22, terminal 36 connects to phone 22 at connector
26 through cable 40 and/or 32).” Id.
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In Reply, Petitioner reiterates its argument from the Petition that “any
such configurations [technical requirements of particular jacks] would have
been obvious to [a person of ordinary skill in the art], who would have
recognized that different electrical connections in the art have different
signaling requirements (e.g., amplitude, impedance, frequency) and, in
practice, designed systems to such specifications.” Pet. Reply 12 (citing
Pet. [29–30]; see also Ex. 1003 ¶¶ 48–51).
Petitioner also points out that:
the ’084 itself describes the transmission of raw credit card data
to a mobile phone’s hand free jack without providing any detail
on how that credit card data is processed or converted to make it
“suitable” for transmission: “The transaction apparatus 12′
comprises one-way device without a screen or control pad and as
such, only includes an input device 38′ in the form of a slot 39′
for capturing information from a transaction card 24 and sending
this information without conversion directly to the mobile phone
14 via cable 30.”
Pet. Reply 13 (citing Ex. 1001, 10:36–41). Petitioner also points out that
Patent Owner’s expert, Mr. Zatkovich, acknowledged that a person of
ordinary skill in the art would have understood how to handle the necessary
processing in such a configuration. Pet. Reply 13–14 (citing Ex. 1041,
41:14–43:16).
We agree with Petitioner that Proctor teaches an output jack (from
card reader terminal 36), adapted to be inserted into the hands-free jack
(connector 26) associated with said mobile communication device (mobile
phone 22) for providing the converted encrypted analog signal indicative of
the information to said mobile communication device (mobile phone 22) for
transmission to a transaction server for further processing.
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Patent Owner’s argument that “Petitioner provides no evidence that
Proctor’s terminal 36, which would have an RJ-11 jack, could be readily
adapted to feed directly into the hands-free jack of a mobile communication
device,” is unavailing for several reasons. First, Petitioner provides
evidence demonstrating that Proctor’s output jack from card reader terminal
36 is adapted for insertion into the hands-free jack (connector 26) of
Proctor’s mobile phone 22 for providing a converted encrypted analog signal
to mobile phone 22 for transmission to a transaction server for further
processing. See Ex. 1003 ¶¶ 71–76, 84.
Second, the ’084 patent shows a similar configuration in Figure 7,
where transaction apparatus 12′ is a one-way device without a screen or
control pad and only includes input device 38′ in the form of a slot 39′ for
capturing information from a transaction card 24 and sends this information
without conversion directly to mobile phone 14 via cable 30. See Ex. 1001,
10:36–41, Fig. 7. Finally, Patent Owner’s expert, Mr. Zatkovich,
acknowledged that given the device in Figure 7 and the description in the
’084 patent, one would know how to properly condition the signal in order
to get such a device to operate correctly. See Ex. 1041, 41:14–43:16.
Based on the complete record and for the reasons discussed herein, we
are persuaded that Petitioner has demonstrated that Proctor teaches the
recited “output jack adapted to be inserted into the hands-free jack
associated with said mobile communication device for providing the
converted encrypted analog signal indicative of the information to said
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mobile communication device for transmission to a transaction server for
further processing” of independent claim 1.5
c. Motivation to Combine
Petitioner argues that a person of ordinary skill in the art would have
had reason to combine the teachings of Proctor, Vrotsos, and Hasumi in the
manner described in the Petition. Pet. 21–24 (citing Ex. 1003 ¶¶ 29–31, 48–
51, 55–63, 79–80, 83). Specifically, Petitioner asserts that a person of
ordinary skill in the art “would have been motivated to include a controller,
such as [Vrotsos’s] processor, to control the operations of and provide
encryption functionality to Proctor’s terminal 36.” Pet. 21 (emphasis
omitted). Petitioner contends that doing so would have been “the
application of a known technique (Vrotsos’s control via a processor) to a
known device ready for improvement (Proctor’s terminal 36 with
unspecified circuitry) to yield the predictable result of providing a central
processor within a card reader to manage the receiving, processing, and
transmitting of transaction card information.” Id. at 22 (emphasis omitted).
Petitioner also argues that processors “make available more complex tasks,
such as encrypting information, which is important for keeping personal

5 In a footnote, Petitioner explains that, “[w]hile the embodiment of
Proctor primarily used in this Petition and applied in the claim charts takes
the option, explicitly given by Proctor, of incorporating converter 30’s
functionality into phone 22 (see [Ex. 1004] ¶ 18), Proctor’s system and
method meet the claim limitations of the ’084 patent even in the alternative
embodiments where (1) the converter 30 is a physical unit between terminal
36 and phone 22 and (2) the converter 30 is incorporated in terminal 36.”
Pet. 17 n.2. While we agree that Proctor’s embodiments incorporating
converter 30 in terminal 36 or in phone 22 meet this limitation, we are not so
persuaded by Proctor’s embodiment where converter 30 is a physical unit
between terminal 36 and phone 22.
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information secure during financial transactions and preventing misuse.” Id.
(citing Ex. 1006 ¶¶ 8, 71, 75, 78, 80; Ex. 1003 ¶¶ 79, 29–31, 58–63).
Petitioner also argues that a person of ordinary skill in the art:
would have recognized that controllers and processors were
staple components of electronic devices and, having real-world
examples of controllers in various devices, would have had a
reasonable expectation of success in implementing any such
controller in Proctor’s terminal 36. See, e.g., Ex. 1007 at 6:41–
54 and Figs. 2A, 2B (disclosing a microprocessor controller 205
for processing information from an electronic wallet). Similarly,
encryption is old and well-known in the card reader art, and a [a
person of ordinary skill in the art] would have recognized a
number of ways to generate encrypted information, including
Vrotsos’s detailed example described in Figures 9(a)–(c), and
would have had a reasonable expectation of success in doing so.
See also Ex. 1008, 5:3–49 (prior art example converting card data
to an encrypted analog signal).
Pet. 22 (citing Ex. 1003 ¶¶ 80, 29–31, 48–51).
Petitioner also asserts that a person of ordinary skill in the art “would
have been motivated to configure Proctor’s system, which discloses a
memory chip credit card, for use with a contactless IC credit card, as taught
by Hasumi, to provide the benefit of allowing the user to use a wireless form
of payment.” Pet. 23. Petitioner argues that a person of ordinary skill in the
art “would have understood that encryption,” such as that taught by Hasumi,
“was especially important for the transmission of financial information
wirelessly, where transmissions could have been intercepted through the
air.” Id. at 24. Petitioner argues that “the wireless payment card encryption
and technologies described in Hasumi were old and well-known in the art of
contactless cards.” Id. (citing Ex. 1013 §§ 1, 2, 3, 5; Ex. 1014 §§ 4.3.1,
4.3.2, 4.6; Ex. 1015 § III.C; and Ex. 1016 ¶¶ 34–47). Petitioner also argues
that a person of ordinary skill in the art “would have been well-versed in
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card technologies, including contact and contactless technologies, and would
have had a reasonable expectation of success implementing contactless
encryption technologies in Proctor’s payment system.” Pet. 24 (citing Ex.
1003 ¶¶ 55–63, 83).
Patent Owner argues that a person of ordinary skill in the art:
would not be motivated to integrate Vrotsos’s digital controller
into Proctor. Petitioner does not even bother to teach how
Vrotsos would even connect to Proctor or Proctor’s mysterious
“converter 30.” In any event, the combination of the references
would still not result in a device that would convert payment-
card information into an encrypted analog-audio signal and
transmit that signal to the hands-free jack of a mobile phone.
PO Resp. 29.
Patent Owner also argues that:
Petitioner fails to explain why a [a person of ordinary skill in the
art] would be motivated to combine Proctor with Vrotsos and still
convert to an analog-audio signal and transmit to the hands-free
jack of a mobile communication device, when Vrotsos already
describes a perfectly good means of converting card information
to digital signals and data packets and connecting to a digital
communication port or antenna of a cell phone for transmission
over a cellular network – means that would appear to be much
more simplified and efficient than using a controller or circuitry
that converts to digital, then somehow (not explained how or
why) converting back to analog and sending to the analog hands-
free jack instead, where the signal it then must be converter [sic]
to DTMF signals by a specialized communication device that
incorporates Proctor’s converter 30.
Id. at 52 (citing Ex. 2004 ¶¶ 159–161).
Patent Owner further argues that
Petitioner assumes combinability, without providing any
indication of how [a person of ordinary skill in the art] would
integrate Vrotsos’s digital controller into [Proctor’s] modem-
based approach, leaving out explanations of physical
connections, what becomes of Proctor’s converter, or how the
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combination of the two disparate references would even yield the
elements of the ’084 patent claims.
PO Resp. 53 (citing Ex. 2004 ¶¶ 159–161).
Patent Owner argues “the only logical conclusion is that [Proctor’s]
card-reader’s connection to the converter would require a specialized
communication device containing a port equipped to receive modem signals
and direct them to Proctor’s converter.” PO Resp. 54 (citing Ex. 2004 ¶ 53).
“This, alone,” Patent Owner argues, “severely diminishes the incentive for [a
person of ordinary skill in the art] to use Proctor as part of any combination
pertaining to the ‘084 patent.” Id.
Patent Owner further argues a person of ordinary skill in the art:
would understand that one of the primary advantages to the
invention claimed in the ’084 patent is to engage in commercial
transactions using a standard device. [A person of ordinary skill
in the art] would understand that any solution requiring the
manufacture of a specialized form of mobile phone would not be
an acceptable solution. Aside from the manufacturing expense,
the additional expense to merchants in having to buy a
specialized phone in order to take card payments, and the overall
unlikelihood of the market to accept such a product, this solution
is simply at fundamental odds with the ’084 patent, which is
designed to provide a widely accessible and more simple mobile-
payment technology because it is designed to be used with
standard (i.e., not specialized) mobile phones.
Id. at 56.
Patent Owner continues arguing that a person of ordinary skill in the
art:
trying to solve the problem addressed by the ’084 patent and
understanding the importance of providing a mobile point-of-
sale solution designed to be used with standard mobile phones,
would not seek out a solution that would require a specialized
communication device. Petitioner’s brief assertions concerning
motivation to combine references with Proctor do not account for
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this very significant motivation against combining a reference
with Proctor.
Id. (citing Ex. 2004 ¶¶ 51–55).
In Reply, Petitioner argues that Patent Owner:
does not challenge that [a person of ordinary skill in the art]
would have known how to incorporate such teachings into
Proctor or that the combination would yield predictable results.
Instead, [Patent Owner] argues that the Petition does not show
how Proctor’s converter would improve Vrotsos’s and Hasumi’s
disclosed systems. [PO Resp. 52–53]. But this argument misses
the point; the Petition does not suggest bodily incorporating
Proctor into Vrotsos or Hasumi but instead specifies that [a
person of ordinary skill in the art] would have been motivated to
adopt certain teachings from Vrotsos and Hasumi into Proctor’s
system.
Pet. Reply 24 (citing Pet. 21–24).
Petitioner also argues that Patent Owner’s arguments against Proctor
“are meritless,” in part because Patent Owner “ignores the Petition’s clear
explanation for how the claims are met across any of Proctor’s
embodiments.” Pet. Reply 24–25 (citing Pet. 17–18). Petitioner also points
out that:
[Patent Owner’s] expert expressly admitted, where the converter
is implemented outside the phone and transmits DTMF signals
to the phone through the headset jack, this meets the limitations
of the challenged claims. (Ex. 1041, 57:21–59:2). Likewise,
[Patent Owner’s] expert admitted disclosure of a signal going
into a hands-free jack is sufficient for [a person of ordinary skill
in the art] to know how to condition those signals appropriately
(Ex. 1041, 41:14–43:16); [Patent Owner] cannot now dispute,
where Proctor’s converter is incorporated into the mobile phone,
that [a person of ordinary skill in the art] would know how to
appropriately condition Proctor’s “audible stream of tones” for
transmission from the terminal to the hands-free jack.
Pet. Reply 25.
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Petitioner also argues that Patent Owner’s “reliance on the purpose of
the ’084 [patent]—to be able to use conventional devices—and its complaint
about hindsight bias [PO Resp. 54–56] does not rebut Petitioner’s
demonstration that [a person of ordinary skill in the art] would have been
motivated to modify Proctor to incorporate the straightforward teachings of
the secondary references.” Id.
We agree with Petitioner that a person of ordinary skill in the art
would have been motivated to combine the Proctor, Vrotsos, and Hasumi
references in the manner described in the Petition. Petitioner provides
credible evidence and persuasive argument that a person of ordinary skill in
the art would have been sufficiently motivated to include Vrotsos’s
processor as a controller to manage the operations and provide desired
encryption for Proctor’s terminal 36. See Pet. 21; Ex. 1003 ¶¶ 79–80. We
are persuaded that doing so would have been the application of a known
technique (Vrotsos’s control using a processor) to a known device ready for
improvement (Proctor’s terminal 36) to yield the predictable result of
providing a central processor within a card reader to manage the receiving,
processing, and transmitting of transaction card information. See Pet. 22;
Ex. 1003 ¶¶ 79–80. Such a combination would have provided the obvious
benefit of allowing Proctor’s controller to engage in more complex tasks,
such as encrypting information, which is important for keeping personal
information secure during financial transactions and preventing misuse. See
Pet. 22; Ex. 1003 ¶¶ 29–31, 58–63, 79–80.
We also agree that a person of ordinary skill in the art would have
been motivated to configure Proctor’s system to work with Hasumi’s
contactless IC credit cards and encryption. Petitioner provides credible
evidence and persuasive argument that use of a contactless IC credit card,
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such as taught by Hasumi, would provide the benefit and convenience of a
wireless form of payment with the added security of encryption, which is
especially important during the wireless transmission of financial
information, where transmissions can be intercepted through the air. See
Pet. 23–24; Ex. 1003 ¶¶ 81–83. Such a combination would have had a
reasonable expectation of success implementing contactless encryption
technologies in Proctor’s payment system. See Pet. 24; Ex. 1003 ¶¶ 55–63,
83.
We disagree with Patent Owner that Petitioner fails to sufficiently
explain how and why a person of ordinary skill in the art would have
combined the references Proctor, Vrotsos, and Hasumi in the manner
described by Petitioner. In large part, Patent Owner criticizes, but fails to
address the asserted combination provided by Petitioner, while largely
ignoring the evidence that many of these technologies, including smart
cards, control processors, encryption, wireless transaction cards, and mobile
phones, were pre-existing and well-known technologies in the art at the time
of the invention. For example, the ’084 patent points out that “[e]lectronic
fund transfer over mobile phones is growing popular. Many systems include
combining a point of sale (POS) device with a wireless communication
device such as a cell phone.” Ex. 1001, 1:33–36. The ’084 patent goes on
to explain that:
These [prior art] POS devices include a processor as well as an
input device to receive and process information from a
transaction card such as a debit card, a credit card, a cash card, a
stored value card, an ATM card or combinations thereof and the
like. The input device may include a bar code reader, a magnetic
stripe reader, an integrated circuit reader, a smartcard reader, a
fingerprint scanner, an optical scanner, a signature pad, an
alphanumeric keypad (including a PIN pad), a proximity
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detector, an audio recording device, a camera or combinations
thereof and the like.
Id. at 1:37–46.
The ’084 patent even explains how these prior art systems largely
work:
The processor of the POS device receives information from the
transaction card and sends it to a remote computer via a
communication network. This information can be transmitted by
the processor via the wireless communication device. The
wireless communication device includes a transceiver, a
communication port or any other type of similar communication
device capable of transmitting information received by the
portable transaction device processor from the transaction card
to the remote computer. The communication link between the
remote computer and the wireless communication device can be
provided by the processor of the wireless communication device.
Id. at 1:46–57.
Given this background, Patent Owner’s repeated criticism that
Petitioner has not articulated sufficiently how to electrically adapt and
physically connect the teachings of the references is unavailing. For
example, Patent Owner argues that “Petitioner does not even bother to teach
how Vrotsos would even connect to Proctor” (PO Resp. 29), or Petitioner
does not “provid[e] any indication of how [a person of ordinary skill in the
art] would integrate Vrotsos’s digital controller into [Proctor’s] modem-
based approach” (Id. at 53), or Petitioner “never bothers to explain how
Proctor’s converter would physically connect to the systems disclosed in the
other references (id.).” However, Patent Owner does not appear to take into
account the level of skill of someone of ordinary skill in the art, here, a
person with bachelor’s degree in electrical or computer engineering or
equivalent having one to two years of relevant experience in the fields of
embedded systems and mobile communication device interfaces, or
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otherwise equivalent industry experience in the field. See Section II.A,
supra.
Indeed, Patent Owner also appears to ignore the testimony of the
Petitioner’s expert, Mr. McNair, who testifies that a person of ordinary skill
in the art
would recognize that various devices, such as microphones, and
other external signal sources, such as financial card reading
devices, produce various signal levels. [A person of ordinary
skill in the art] would also recognize that various networking
facilities and devices, such as landline telephone connections or
cellular telephone audio inputs will require particular input
signal levels, and they would further recognize that there are a
variety of ways to match these input and output requirements.
Ex. 1003 ¶ 51.
Mr. McNair also testifies that “[t]o the extent it may be argued that
Proctor does not explicitly describe features claimed in the ’084 patent, such
as the use of particular circuitry or the encryption of certain information,
such components and techniques were well-known in the art at the time of
the ’084 patent,” and a person of ordinary skill in the art “would have also
known how to implement such systems (and minor variations) because each
of the components and functions, individually and as combined in the ’084
patent, were widely used and practiced in the art.” Id. ¶¶ 75–76.
Even Patent Owner’s expert, Mr. Zatkovich, acknowledges that one
would have known how to properly condition a signal, such as the one
necessarily depicted in Figure 7 of the ’084 patent, in order to get such a
device to operate correctly. See Ex. 1041, 41:14–43:16. We also note that
some of Patent Owner’s arguments as to what a person of ordinary skill in
the art would, or would not have understood are not supported by any
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citation to evidence of record, and are therefore unsupported attorney
argument. See, e.g., PO Resp. 56, 1st Para.
We also disagree with Patent Owner’s argument that Petitioner’s use
of Proctor would “require[e] the manufacture of a specialized form of
mobile phone.” See id. at 54–56. Indeed, Proctor itself teaches use of a
“digital cellular telephone,” and that its converter “operates conventionally,”
and “may be included as an internal circuit board in existing systems or
integrated into the circuitry [and/or] software of systems.” Ex. 1004 ¶¶ 11,
13. Moreover, Petitioner’s expert, Mr. McNair, explains how Proctor’s
different implementations each generate signals in a format suitable for
transmission to a phone’s headset jack. See Ex. 1042 ¶ 16.
We find that Petitioner has shown persuasively by a preponderance of
the evidence that one of ordinary skill in the art at the time of the invention
would have been motivated to combine the teachings of Proctor, Vrotsos,
and Hasumi in the manner proffered by Petitioner.
d. Conclusion as to Claim 1
Based upon consideration of the entire record, we are persuaded by
Petitioner’s arguments and evidence, notwithstanding Patent Owner’s
arguments, and determine that Petitioner has demonstrated by a
preponderance of the evidence that independent claim 1 is unpatentable
under 35 U.S.C. § 103(a) as obvious over the combination of Proctor,
Vrotsos, and Hasumi.
e. Independent Claim 5
Independent claim 5 is similar to independent claim 1, but differs
from claim 1 in a few respects. Claim 5 is written as a method claim
whereas claim 1 is written as an apparatus claim. Claim 5 does not recite
“circuitry for converting” as part of the sensor as claim 1 does, but claim 5
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does recite “further processing” of the encrypted analog signal “by circuitry
contained in said mobile communication device.” Claim 5 in its entirety
reads as follows.
5. [P] A method for reading a smart card, the method comprising the
steps of:
[A] providing a portable card reader device comprising a sensor for
reading information stored on the integrated circuit of a smart
card, and an output jack adapted to be inserted into a hands-free
jack associated with a mobile communication device;
[B] wherein said portable card reader device produces an encrypted
analog signal indicative of the information stored on said
integrated circuit;
[C] said encrypted analog signal suitable for transmission to said
hands-free jack of said mobile communication device;
[D] providing said encrypted analog signal indicative of the
information stored on the integrated circuit to said mobile
communication device for further processing by circuitry
contained in said mobile communication device; and
[E] transmitting said encrypted analog signal to a transaction server
for further processing.
Ex. 1001, 12:24–43.
With respect to sections 5[P]–5[C] and 5[E] of claim 5, both
Petitioner and Patent Owner rely on the same evidence and arguments as
they relied on for claim 1. See Pet. 35–37; PO Resp. 13–30. However,
5[D], “providing said encrypted analog signal indicative of the information
stored on the integrated circuit to said mobile communication device for
further processing by circuitry contained in said mobile communication
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device,” presents unique issues, where Petitioner and Patent Owner provide
different evidence and arguments. See Pet. 36–37; PO Resp. 30–32. We
address section 5[D] as follows.6
For 5[D], Petitioner argues that “Proctor discloses providing said
encrypted analog signal indicative of the information stored on the
integrated circuit to said mobile communication device for further
processing by circuitry contained in said mobile communication device
(converter 30 circuitry contained in phone 22).” Petitioner points to Proctor,
which states that:
[t]he message generated in the terminal 36 is modulated to an
audible stream of tones, which are transmitted to the converter
30 [in phone 22]. The converter converts this signal into a data
stream in encoded format that is readily transmitted via digital
cellular networks, as described in the incorporated [Preston]
reference. The phone then transmits this encoded stream to a
receiver node on the network 12, which transmits the stream via
the conventional telephone network to the facility 20.
Pet. 36 (citing Ex. 1004 ¶ 16). Petitioner also points out that Proctor’s
“telephone may incorporate decoder circuitry.” Pet. 36 (citing Ex. 1004
¶ 18).
Petitioner also argues that a person of ordinary skill in the art would
have understood that to communicate any information to a communications
network, the mobile communication device must have inherently, or at least
obviously, included some circuitry for processing such information for
transmission, such as radio transceiver circuitry (e.g., phone circuitry as in
Proctor ¶ 8). Pet. 36–37 (citing Ex. 1003 ¶¶ 52–54).

6 Patent Owner’s counsel clarified at Oral Argument that Section IV.F
of its Response does not apply to independent claim 1. See Paper 32, 88:6–
13.
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Patent Owner argues that Petitioner’s evidence “does not show further
processing of card information by the mobile device.” PO Resp. 31
(emphasis added). Patent Owner argues “Proctor does not disclose any
embodiment in which the mobile phone recovers card information from the
audio signals in order to be processed.” Id. (citing Ex. 2004 ¶ 79) (emphasis
added).
Patent Owner argues:
[o]ne of skill in the art would understand that the intent is for the
mobile phone to further process the card information before
transmitting that information to a transaction server. Ex. 2004
¶ 80. In order to further process the payment card information,
[a person of ordinary skill in the art] would understand that the
mobile communication device needs to extract the card
information from the analog signal in order to have something to
process. Id. At minimum, this would require converting the
received analog signal to digital data representing the credit card
information.
PO Resp. 31 (emphasis added).
Patent Owner argues that the ’084 patent’s discussion of “[t]he analog
signal from the magnetic card 24 is sent via the hands-free interface 41
where the software application of the controller 51 [in the cell phone]
converts the received signal back to binary data for example as stored on the
magnetic card 34,” shows that “the limitation of ‘further processing’ is not
merely relaying an encrypted signal or reformatting the signal for
transmission to the transaction server.” Id. at 32 (citing Ex. 2004 ¶¶ 81–84;
see also Ex. 1001, 10:46–50, 58–62 and Figs. 7-8).
In Reply, Petitioner argues that “the claims do not specify what
further processing is required or provide any basis to limit and exclude
transmission processing performed by the phone to transmit received signals
to the verification server over a cellular communications network.” Pet.
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Reply 15. Petitioner also point out that Patent Owner’s expert, Mr.
Zatkovich, “admit[ted] that simple audio-to-digital conversion (for relaying
of information from the mobile phone’s jack to the cellular network), as
described in the prior art, is further processing.” Id. (citing Ex.1041,
153:16–19).
In its Sur-reply, Patent Owner disputes that its expert admitted that
simple audio-to-digital conversion amounts to the recited “further
processing.” PO Sur-reply 14 n.7 (citing Ex. 1041, 153:14–15).
We disagree with Patent Owner. Patent Owner argues that
Petitioner’s evidence “does not show further processing of card information
by the mobile device.” PO Resp. 31 (emphasis omitted). Claim 5, however,
recites “providing said encrypted analog signal . . . for further processing by
circuitry contained in said mobile communication device.” Claim 5 does not
recite “further processing of card information by the mobile device” as
Patent Owner argues. To the extent Patent Owner invites us to limit claim 5
to “further processing of card information” because “another embodiment”
of the ’084 patent describes “installation of a software application controller
51” on “communication device 14 (a mobile phone),” which “is used to
convert between audio and digital signal and to receive and transmit and
[sic] audio data to and from the hands-free interface 41,” we decline the
invitation. “A particular embodiment appearing in the written description
may not be read into a claim when the claim language is broader than the
embodiment.” SuperGuide Corp. v. DirecTV Enters., Inc., 358 F.3d 870,
875 (Fed. Cir. 2004) (citation omitted); see also In re Van Geuns, 988 F.2d
1181, 1184 (Fed. Cir. 1993).
We agree with Petitioner that Proctor shows that a message generated
in the terminal 36 is modulated to an audible stream of tones, which are
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transmitted to the converter 30 located in phone 22 in this embodiment.
Converter 30 converts this signal into a data stream in encoded format that is
transmitted via digital cellular networks as described in the incorporated
Preston reference. The phone then transmits this encoded stream to a
receiver node on the network 12. See Pet. 36 (citing Ex. 1004 ¶ 16); see also
Ex. 1003, 58–60. We also agree with Petitioner’s expert, Mr. McNair, that:
In the ’084 patent and in the prior art, it would have been
expected that the mobile communication devices perform at least
some minimal processing in order to receive signals (i.e., from
the hands-free jacks) and transmit the signals (i.e., to a remote
server). This is because an audio signal (e.g., an analog signal
having frequencies in the range of 300 to 3000 Hz) cannot simply
be transmitted, as-is, by mobile device antenna. . . . This requires
proper digital processing of speech, translation to the right
frequency, amplification, modulation into a suitable format for
long distance transmission, coordination with control networks,
and reversing the process by filtering, amplifying, detection,
demodulation, and ultimately conversion to the proper analog or
digital format.
Therefore, some processing in the mobile communication device
would have been required and expected. Examples of this
processing would have included microprocessor and transceiver
circuitry for encoding and packaging the data (encoding,
modulation, frames, packets) and for processing those signals to
cause the appropriate wireless antenna(s) to radiate the
corresponding mobile communication signals.
Ex. 1003 ¶¶ 53–54.
Mr. McNair further explains, and we agree, that Proctor teaches its
“telephone may incorporate the decoder circuitry” and that a person of
ordinary skill in the art “would have understood that to communicate any
information to a communications network, the mobile communication
device must have inherently, or at least obviously, included some circuitry
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for processing such information for transmission, such as radio transceiver
circuitry (e.g., phone circuitry as in Proctor ¶ 8).” Ex. 1003, 60.
We are persuaded that Petitioner has demonstrated that Proctor
teaches the recited “providing said encrypted analog signal indicative of the
information stored on the integrated circuit to said mobile communication
device for further processing by circuitry contained in said mobile
communication device” of independent claim 5.
Based upon consideration of the entire record, we are persuaded by
Petitioner’s arguments and evidence, notwithstanding Patent Owner’s
arguments. For the reasons discussed directly above, and for the reasons
discussed with respect to claim 1, we determine that Petitioner has
demonstrated by a preponderance of the evidence that independent claim 5 is
unpatentable under 35 U.S.C. § 103(a) as obvious over the combination of
Proctor, Vrotsos, and Hasumi.
f. Dependent Claim 2
Dependent claim 2 recites: “The card reader device from claim 1, in
which the smart card is selected from a group consisting of a chip card,
EMV card, proximity detector or NFC card, contactless card, or any
combination thereof.”
Petitioner asserts that “Proctor, in view of Hasumi, discloses that the
smart card is a chip card or contactless card.” Pet. 32. Petitioner relies on
Proctor, which states that “[i]n alternative embodiments, the credit card may
include data encoded by other means, such as a memory chip that records
information beyond identifying the card, including balance and available
credit.” Id. (citing Ex. 1004 ¶ 10).
Petitioner also relies on Hasumi, which states that “[w]hen the IC card
10 is held above the reading/writing device 4, transmission/reception of data
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using electromagnetic waves is performed between the antenna 18 of the IC
card 10 and the antenna (not shown) within the reading/writing device 4.”
Pet. 32–33 (citing Ex. 1009 ¶ 53). Petitioner further relies on Hasumi,
which states that “[w]hen the person desiring to purchase a product holds up
the IC card 10 to the reading/writing device 4, at least the unique number
data within the credit card information stored in the storage device 12 of the
IC card 10 is received, as electromagnetic data encrypted by triple DES, by
the reading/writing device 4.” Pet. 33 (citing Ex. 1009 ¶ 65).
Patent Owner relies on the same arguments and evidence it provided
with respect to claims 1 and 5, and does not appear to address claim 2
separately. See PO Resp. 13–32; PO Sur-reply 2–15. Patent Owner’s expert
does not appear to address claim 2 separately. See Ex. 2004, 13–32.
Petitioner does not address claim 2 separately in its Reply. See Pet.
Reply 2–16. Petitioner’s expert provides the same claim chart that appears
in the Petition. See Ex. 1003, 56.
We are persuaded that Proctor’s memory chip credit card and
Hasumi’s IC card 10, as presented by Petitioner, teach a “smart card []
selected from a group consisting of a chip card, EMV card, proximity
detector or NFC card, contactless card, or any combination thereof” as
recited in dependent claim 2.
Based upon consideration of the entire record, we are persuaded by
Petitioner’s arguments and evidence, notwithstanding Patent Owner’s
arguments, and determine that Petitioner has demonstrated by a
preponderance of the evidence that dependent claim 2 is unpatentable under
35 U.S.C. § 103(a) as obvious over the combination of Proctor, Vrotsos, and
Hasumi.
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g. Dependent Claim 3
Dependent claim 3 recites: “The card reader device of claim 1,
wherein said device comprises a device selected from the group consisting
of: an analog signal reader, a digital signal reader, a bar code reader, a
magnetic stripe reader, and integrated circuit reader, a smartcard reader, an
EMV reader, and optical scanner, and any combination thereof.”
Petitioner asserts that “Proctor discloses the device is a magnetic
stripe reader (magnetic credit card reader slot 46).” Pet. 33. Petitioner relies
on Proctor, which states that “[a] magnetic credit card reader slot 46 is an
input device that reads unique data encoded on a magnetic strip on a
purchaser's credit card 48.” Id. (citing Ex. 1004 ¶ 10).
Petitioner argues that “Proctor further discloses that the credit card
may store information in a memory chip (i.e., an integrated circuit).”
Pet. 33. Petitioner relies on Proctor, which states that “[i]n alternative
embodiments, the credit card may include data encoded by other means,
such as a memory chip that records information beyond identifying the card,
including balance and available credit.” Id. (citing Ex. 1004 ¶ 10).
Petitioner also argues that a person of ordinary skill in the art “would
have recognized that reading information from an integrated circuit would
have inherently required an integrated circuit reader.” Pet. 33.
Petitioner further argues that “Hasumi teaches that credit cards with
integrated circuits include contactless cards and can be read by an analog
integrated circuit reader.” Id. Petitioner relies on Hasumi, which states that
“[w]hen the IC card 10 is held above the reading/writing device 4,
transmission/reception of data using electromagnetic waves is performed
between the antenna 18 of the IC card 10 and the antenna (not shown) within
the reading/writing device 4.” Id. (citing Ex. 1009 ¶ 53).
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Petitioner further relies on Hasumi, which states that “[w]hen the
person desiring to purchase a product holds up the IC card 10 to the
reading/writing device 4, at least the unique number data within the credit
card information stored in the storage device 12 of the IC card 10 is
received, as electromagnetic data encrypted by triple DES, by the
reading/writing device 4.” Pet. 34 (citing Ex. 1009 ¶ 65).
Patent Owner relies on the same arguments and evidence it provided
with respect to claims 1 and 5, and does not appear to address claim 3
separately. See PO Resp. 13–32; PO Sur-reply 2–15. Patent Owner’s expert
does not appear to address claim 3 separately. See Ex. 2004, 13–32.
Petitioner does not address claim 3 separately in its Reply. See Pet.
Reply 2–16. Petitioner’s expert provides the same claim chart that appears
in the Petition. See Ex. 1003, 56–57.
We are persuaded that Proctor’s magnetic credit card reader slot 46
and Hasumi’s reading/writing device 4, as presented by Petitioner, teach a
card reader device “selected from the group consisting of: an analog signal
reader, a digital signal reader, a bar code reader, a magnetic stripe reader,
and integrated circuit reader, a smartcard reader, an EMV reader, and optical
scanner, and any combination thereof” as recited in dependent claim 3.
Based upon consideration of the entire record, we are persuaded by
Petitioner’s arguments and evidence, notwithstanding Patent Owner’s
arguments, and determine that Petitioner has demonstrated by a
preponderance of the evidence that dependent claim 3 is unpatentable under
35 U.S.C. § 103(a) as obvious over the combination of Proctor, Vrotsos, and
Hasumi.
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h. Dependent Claim 4
Dependent claim 4 recites: “The card reader device of claim 1,
wherein the mobile communication device comprises a device selected from
the group consisting of: a wireless communication device a mobile phone, a
cellular phone, a personal digital assistant, a pager, a computer, a
smartphone, a Blackberry™, an iPhone™, an Android™ phone, an iPad™,
and a tablet.”
Petitioner asserts that “Proctor discloses the communication device is,
e.g., a wireless phone, mobile phone, or cellular phone.” Pet. 34. Petitioner
relies on Proctor, which states that “[t]he user system includes a digital
cellular telephone 22 having an antenna 24 communicating with the cellular
network 12.” Id. (citing Ex. 1004 ¶ 8).
Patent Owner relies on the same arguments and evidence it provided
with respect to claims 1 and 5, and does not appear to address claim 4
separately. See PO Resp. 13–32; PO Sur-reply 2–15. Patent Owner’s expert
does not appear to address claim 4 separately. See Ex. 2004, 13–32.
Petitioner does not address claim 4 separately in its Reply. See Pet.
Reply 2–16. Petitioner’s expert provides the same claim chart that appears
in the Petition. See Ex. 1003, 57.
We are persuaded that Proctor’s digital cellular telephone 22, as
presented by Petitioner, teaches “a device selected from the group consisting
of: a wireless communication device a mobile phone, a cellular phone, a
personal digital assistant, a pager, a computer, a smartphone, a
Blackberry™, an iPhone™, an Android™ phone, an iPad™, and a tablet,”
as recited in dependent claim 4.
Based upon consideration of the entire record, we are persuaded by
Petitioner’s arguments and evidence, notwithstanding Patent Owner’s
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arguments, and determine that Petitioner has demonstrated by a
preponderance of the evidence that dependent claim 4 is unpatentable under
35 U.S.C. § 103(a) as obvious over the combination of Proctor, Vrotsos, and
Hasumi.
i. Dependent Claims 6–8
Dependent claims 6–8 are substantially similar to dependent claims 2–
4, with the exception that dependent claims 6-8 depend from claim 5 rather
than claim 1. See Ex. 1001, 12:7–22, 43–59. Petitioner relies on the same
evidence for claims 6-8 as it relied on for claims 2–4. See Pet. 37–39.
Patent Owner does not address claims 6–8 separately. See PO Resp. 13–32;
PO Sur-reply 2–15.
Based upon consideration of the entire record, and for the reasons
stated, supra, with respect to dependent claims 2–4, we are persuaded by
Petitioner’s arguments and evidence, notwithstanding Patent Owner’s
arguments, and determine that Petitioner has demonstrated by a
preponderance of the evidence that dependent claims 6–8 are unpatentable
under 35 U.S.C. § 103(a) as obvious over the combination of Proctor,
Vrotsos, and Hasumi.
3. Obviousness over Bear, Landman, and Colnot
Petitioner asserts claims 1–8 are unpatentable as obvious under 35
U.S.C. § 103 over the combination of Bear, Landman, and Colnot. Pet. 39–
67.
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a. Relevant Prior Art
Bear (Ex. 1021)
Bear describes a smart card device that may be directly hooked to a
network or Internet via a phone or other communication interfaces, as
illustrated in Figure 3 below. Ex. 1021, Abstr.

Bear’s Figure 3, above, “is a schematic illustration of a smart card
device hooked on to a cellular telephone.” Id. ¶ 25. “Smart card device 100
comprises a controller 52 connected to a smart card reader 64 and coupled to
an infra-red (IR) transceiver 102, or any other interface capable of being
supported by cellular phones.” Id. ¶ 40. Smart card device 100 transmits
and receives the data read by smart card reader 64 via the IR transceiver 102
to an IR transceiver located within the cellular device 104, which may then
act as a device controller for a specific application. Id. ¶ 41. Bear also
discloses that authentication of the user’s identity can be accomplished using
a “PIN that may be keyed on a keyboard that forms an integral part of the
device, an external keyboard or the telephone keyboard.” Id. ¶ 47.
Landman (Ex. 1011)
Landman describes providing “a wireless device with the ability to
have secure e-commerce transactions utilizing a contactless smart card.”
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Ex. 1011, 5:4–5. Landman discloses that a smart card reader/writer module
may be provided as an attachment to a standard wireless device, as
illustrated in Figure 3 below. Id. at 11:13–14.

Landman’s Figure 3, above, depicts device 320 (cellular telephone) in
communication with module 310 via a modem 305. Id. at 14:18. Central
processor unit (PCU) 315 controls activity indicators 325, a display (not
shown), and encryption/decryption unit 335. Id. at 14:19–15:2. Landman
describes the operation of encryption/decryption unit 335 as follows:
The encryption/decryption unit 335 is used to prevent a third
party from intercepting the data transferred to and from the
contactless card. The information exchanged between the smart
card and the module/device may be encrypted according to
various well-documented methods. In one embodiment, the card
may authenticate the card reader/writer by generating a random
number and sending it to the reader/writer. The reader/writer has
to encrypt the random challenge (number) with a shared
encryption key and return the result to the card. The card then
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compares the returned result with its own encryption before
agreeing to communicate with the reader/writer. Conversely, the
card reader/writer may also authenticate the card’s identity by
sending a random challenge (number) to the card. The card is
then required to sign the number with its own private key, which
is part of a private key/public key pair, and return it to the
reader/writer for verification.
Id. at 15:2–13.
Colnot (Ex. 1012)
Colnot describes a system for providing secure authentication over a
network for users and user groups. Ex. 1012, ¶ 32. “[T]he system uses a
modulated sound consisting at least in part of an identification number and a
session key.” Id. Colnot discloses that the sound signal, or “sound pass,”
can be generated by a smart card or other hardware device. Id. ¶ 51. Colnot
also describes that the sound pass can be generated by “a unique key device
termed a key jack” that is “adapted to be inserted into any ‘audio in’ line on
a PC such as the microphone port, telephone jack, or any auxiliary port
having connection directly or indirectly to the sound card on the PC,” as
illustrated in Figure 4 below. Id.

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Colnot’s Figure 4, above, is a block diagram illustrating “a key jack
sound pass generator.” Id. ¶ 53. As shown in Figure 4, “chip circuitry 400
includes an electrically erasable programmable read-only memory
(EEPROM) 401,” “a modem circuit 406, an on-chip oscillator 405, a
processing unit 409, and a serial input interface 408.” Id. ¶ 54. “A tip/ring
interface for plugging into a microphone jack or other line in is illustrated in
reference to the chip circuitry and electrical paths.” Id. ¶ 55. In operation,
“[t]he key jack is manipulated to play the modulated sound pass by pressing
a button provided on the device when the device is properly inserted into the
PC.” Id. ¶ 51. “The applet on the PC makes use of the sound pass token,
demodulating the signal and generating the hash code for [sending] to the
authentication server.” Id.
b. Independent Claim 1
Claim 1[P] – A portable smart card reader
The preamble of claim 1 is directed to a “portable smart card reader
device for reading a smart card.” Ex. 1001, 11:51–52. Petitioner presents
evidence that Bear teaches a smart card device 100 that includes a smart card
reader 64, which reads data from smart card 60. Pet. 39–40, 49–50 (citing
Ex. 1021 ¶¶ 8, 11, 37, 39, 40–41, 62, 72–73); see also Ex. 1003 ¶¶ 86–90.
Patent Owner acknowledges that “Bear describes a smart card device
100 that transmits/receives data read by the smart card reader 64 via the
reader device’s IR transceiver 102 connected to an IR transceiver in the
cellular device 104.” PO Resp. 9 (citing Ex. 1021 ¶ 41). Patent Owner
disputes, however, that Bear’s smart card device is “portable.” PO
Resp. 33–36. Patent Owner argues that “at least one embodiment of the
Bear reader is connected to a land-line phone line.” Ex. 2004 ¶ 92. Patent
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Owner argues this indicates that the device would not be portable.
PO Resp. 34. Patent Owner also argues that a person of ordinary skill in the
art “would find at a minimum that a portable device would be able to
provide for a means of power and would not need to rely on fixed
connections for communication such as a wired network or land line phone.”
Id. at 35 (citing Ex. 2004 ¶¶ 30–32, 94).
Patent Owner’s argument is unavailing. First, Bear teaches that its
smart card device “may include at least one energy source from a group
including an internal battery.” Ex. 1021 ¶ 13. Second, Bear also teaches
that its smart card device may be connected to a cellular phone. Id. ¶¶ 10,
39–42, 68, Fig. 3. Patent Owner concedes as much. See PO Resp. 34 (“Yes,
it is true that the same Bear reader can be connected to a cell phone.”). Bear
therefore teaches that it does not need to rely on fixed connections for
communication such as a wired network or land line phone as Patent Owner
argues. Finally, the ’084 patent itself indicates that “portability” involves
having a point of sale (POS) device linked to a communication device such
as a mobile phone by a cable. See Ex. 1001, 7:25–30. This is the same basic
configuration described by Bear.
We agree with Petitioner that Bear’s smart card device 100 and smart
card reader 64 teaches the recited “portable smart card reader device” of
claim 1’s preamble. We do not reach the issue of whether the preamble is
limiting, because regardless of whether the preamble is limiting, we are
persuaded that Petitioner demonstrates that the recitation of the preamble is
satisfied by Bear.
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Claim 1[A]- A sensor for reading information
Claim 1 also recites “a sensor for reading information stored on an
integrated circuit incorporated onto said smart card and for producing an
encrypted analog signal indicative of the information.” Ex. 1001, 11:53–56.
Petitioner presents evidence that Bear teaches “a sensor (card reader
64 and controller 52) for reading information stored on the smart card (card
reader 64 reads smart card 60).” Pet. 50. Petitioner presents evidence that
Landman teaches a “smart card (e.g., a contactless smart card) incorporating
an integrated circuit (a chip, memory) storing information.” Id. at 51 (citing
Ex. 1011, 2:13–16, 10:14–23, 11:4–7). Petitioner presents evidence that
Colnot also teaches smart cards with integrated circuits. Id. (citing Ex. 1012
¶ 5).
Petitioner presents evidence that Landman teaches “generating analog
signals (analog waveforms, radio frequency signals, intermediate frequency
signals) and encrypting the information read from smart cards.” Pet. 51–54
(citing Ex. 1011, 11:1–7, 15:1–5, 6–23, 3:3–4:11). Petitioner argues that a
person of ordinary skill in the art would have been motivated to combine
Bear, Landman, and Colnot, which we discuss in more detail below.
Pet. 43–44, 46–48.
Patent Owner argues that “[n]either Bear nor Landman disclose
producing an encrypted analog signal.” PO Resp. 36–38. Patent Owner
argues that “Bear only discloses that communicated information may be
encrypted, but not by what device or component.” PO Resp. 36 (citing Ex.
2004 ¶ 100). Patent Owner also argues that “Landman discloses using the
encryption/decryption unit 335 only for the exchange of information
between the smart card and the reader device”—“not for encrypting the card
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information as the claims require.” PO Resp. 37–38 (citing Ex. 2004 ¶¶ 104,
106).
Patent Owner’s arguments are unavailing. First, Patent Owner
criticizes the references individually rather than addressing the combined
teachings of the references presented by Petitioner. See In re Keller, 642
F.2d at 426 (“[O]ne cannot show non-obviousness by attacking references
individually where, as here, the rejections are based on combinations of
references.”). Bear teaches a smart card device 100 using a “sensor” (smart
card reader 64 and controller 52) for reading information from a smart card
60 and sending the data read from the smart card 60 to a remote server 106,
through a cellular phone 104 connected to the smart card device 100. See
Ex. 1021 ¶¶ 37–41, Fig. 3. Petitioner combines Bear with Landman, which
teaches reading information from contactless smart card 385 by reader/writer
antenna 375 and RF unit 345 as an analog signal (analog waveforms, radio
frequency signals, intermediate frequency signals) and using
encryption/decryption unit 335 to encrypt the information to prevent a third
party from intercepting the data. See Ex. 1011, 3:3–4:11, 11:1–7, 15:1–23,
Fig. 3.
Second, Patent Owner’s argument is based on the mistaken notion that
the claim requires the recited “sensor” to “encrypt” an analog signal, rather
than to merely “produce” an already encrypted analog signal. Claim 1
recites “a sensor for reading . . . and for producing an encrypted analog
signal . . . .” The ’084 patent does not disclose any encryption occurring on
the reader device subsequent to reading encrypted digital information from
an IC card and prior to converting such a signal to an analog/audio signal for
transmission to the transaction server. Instead, the ’084 patent discloses that
“digital information from the IC chip 48 is captured by the digital signal
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reader. . . . The transaction data whether originally received in analog format
or in encrypted digital format is converted by the MCU 50 into an analog
audio signal suitable for transmission.” Ex. 1001, 7:65–8:10.
Based on the complete record and for the reasons discussed herein, we
are persuaded that Petitioner has demonstrated that the combined teachings
of Bear, Landman, and Colnot as presented teach the recited “sensor for
reading information stored on an integrated circuit incorporated onto said
smart card and for producing an encrypted analog signal indicative of the
information” of independent claim 1.
Claim 1[B] – Circuitry for converting
Claim 1 also recites “said sensor including circuitry for converting
said encrypted analog signal to a format suitable for transmission to a hands-
free jack of a mobile communication device.” Ex. 1001, 11:57–60.
Petitioner presents evidence that Bear teaches “a sensor including
circuitry (controller 52) for converting the encrypted analog signal to a
format suitable for transmission (correctly packaging one communications
protocol to another; e.g., audio tones) to a hands-free jack of a mobile
communication device (ear-phone-speaker interface of a cell phone).”
Pet. 54–55 (citing Ex. 1021 ¶¶ 8, 11, 33, 39–40, Figs. 2–3).
To the extent Bear’s “ear-phone-speaker” is not considered a “hands-
free jack,” Petitioner presents evidence that Colnot teaches “transmitting
smart card information to a cell phone via a hands-free jack (microphone
jack accommodating a tip/ring/sleeve (TRS) plug) after converting it to a
format suitable for transmission for the hands-free jack.” Pet. 55–57 (citing
Ex. 1012 ¶¶ 15, 16, 42, 53, 55, 57, 60, Figs. 4–6). Petitioner argues that a
person of ordinary skill in the art would have been motivated to combine
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Bear, Landman, and Colnot, which we discuss in more detail below.
Pet. 43–44, 46–48.
Patent Owner asserts that “Bear does not disclose converting the
signal to a format suitable for a hands-free jack.” PO Resp. 38. Patent
Owner argues that “Bear does not explain, for example, whether an
encrypted analog signal is transmitted via this [ear-phone-speaker]
connection, or if it is suitable for a hands-free jack.” Id. Patent Owner
argues that “the only method Bear indicates for producing audio tones is the
MODEM interface described at Bear ¶ 8 [, but] [m]odem audio signals
cannot be used to transmit data over a cellular network.” Id. at 39 (citing
Ex. 1021; Ex. 2004 ¶ 110).
Patent Owner also criticizes Colnot, arguing that Colnot makes “an
erroneous assumption” that its “key jack [of the modem sound generator]
may be plugged into the sound input or headset connector jack associated
with a mobile Smart telephone or PDA enabling authentication through a
telephone network.” PO Resp. 40–41.
Patent Owner’s arguments are unavailing because Patent Owner again
criticizes the references individually rather than addressing the combined
teachings of the references presented by Petitioner. In re Keller, 642 F.2d at
426. Patent Owner does not dispute that Bear teaches the use of tones and
transmission of those tones to a transaction server. See Pet. 54–56; PO
Resp. 38–42. Nor does Patent Owner dispute that Colnot teaches a hands-
free jack. Petitioner’s combination of Bear’s teaching of tones and the
transmission of those tones with Colnot’s teaching of a hands-free jack is
sufficient to satisfy the limitation of “a format suitable for transmission to a
hands-free jack of a mobile communication device.”
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Moreover, Bear actually teaches a connection between a smart card
reader and a cellular phone’s “ear-phone-speaker” using audio tones rather
than a modem, as Patent Owner argues. See Ex. 1021 ¶¶ 8, 39. Thus, a
person of ordinary skill in the art would understand that the audio tone
signals transmitted to this earphone jack are, in fact, suitable for
transmission to the jack. See Pet. 54–56; Ex. 1003 ¶¶ 86–90; Ex. 1042 ¶¶ 7–
11, 16.
Patent Owner’s argument that “Bear does not disclose converting the
signal to a format suitable for a hands-free jack” because “[m]odem audio
signals cannot be used to transmit data over a cellular network” (PO
Resp. 39 (emphasis added)), is unavailing because the limitation only
requires “converting said encrypted analog signal to a format suitable for
transmission to a hands-free jack,” not suitable for transmission over a
cellular network, as Patent Owner argues. Moreover, Colnot teaches that its
modem produces “audible sound” signals that are “compatible with
telephone networks (wired and mobile)” and are “demodulated by an FSK
modem at the server.” Ex. 1012 ¶ 42. Indeed, Patent Owner’s argument
about the incompatibility of modem audio signals and cellular networks is
directly refuted by Petitioner’s expert, Mr. McNair, which we credit. See
Ex. 1042 ¶¶ 7–11.
Based on the complete record and for the reasons discussed herein, we
are persuaded that Petitioner has demonstrated that the combined teachings
of Bear, Landman, and Colnot as presented teach the recited “said sensor
including circuitry for converting said encrypted analog signal to a format
suitable for transmission to a hands-free jack of a mobile communication
device” of independent claim 1.
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Claim 1[C] – An output jack adapted to be inserted
Claim 1 also recites “an output jack adapted to be inserted into the
hands-free jack associated with said mobile communication device for
providing the converted encrypted analog signal indicative of the
information to said mobile communication device for transmission to a
transaction server for further processing.” Ex. 1001, 12:1–6.
Petitioner provides evidence that Bear teaches “a smart card device,
generally designated 100 may be connected to a transceiver, such as a
cellular telephone 104, via any of the cellular telephone interfaces (such as,
IR, ear-phone-speaker, or Bluetooth), and provide all the required access
functions to a remote server 106.” Pet. 55 (citing Ex. 1021, Fig. 3, ¶ 39).
Petitioner also provides evidence that Colnot teaches transmitting smart card
information to a cell phone via a hands-free jack (microphone jack
accommodating a tip/ring/sleeve (TRS) plug). Pet. 55–56 (citing Ex. 1012,
Fig. 4, ¶¶ 53, 55, 60).
Petitioner also provides evidence that Bear teaches “providing the
converted signal to a transaction server (remote server 106) for further
processing (e.g., authenticating a user, authorizing access or an action).”
Pet. 58 (citing Ex. 1021, Fig. 3, ¶¶ 39, 41). To the extent Bear does not
explicitly disclose transmitting audio tones from a cell phone to a transaction
server for further processing, Petitioner provides evidence that Colnot
teaches “sending information to a remote server for further processing to
secure online transactions over the phone,” including “an encoded and sound
modulated transmission.” Pet. 58–60 (citing Ex. 1012 ¶¶ 8–9, 14, 37, 42).
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Patent Owner argues:
Bear does not disclose producing encrypted audio signals at all.
Ex. 2004 ¶¶ 100-101. In the case of Colnot, only the individual
data elements may be encrypted and an encryption key or token
sent along with the challenge/response conversation. Id. ¶ 140.
Thus, Colnot does not teach producing an encrypted analog
signal.
PO Resp. 44–45.
Patent Owner’s argument is unavailing because Patent Owner
criticizes the references individually rather than addressing the combined
teachings of the references presented by Petitioner. In re Keller, 642 F.2d at
426. We determine that the combined teachings of Bear, Landman, and
Colnot produce an encrypted analog signal for the reasons discussed supra
in connection with limitation 1[A]. See Section II.C.3.b.Claim 1[A].
Patent Owner also argues that “[n]either Bear nor Colnot discloses a
remote transaction server for processing an encrypted analog signal” and
“Colnot does not disclose transmitting a signal to a transaction server for
further processing.” See PO Resp. 45–50. With respect to Bear, Patent
Owner argues that a person of ordinary skill in the art “would not consider
an IVR [interactive voice response] unit capable of processing encrypted
analog signals, or capable of processing a payment card transaction” because
“[a]n IVR system is not capable of performing secure transactions that
require a standardized two-way communication, for at least the reason that
an IVR system has no way of providing transaction-process status back to
the point of sale device.” Id. at 45–46.
Patent Owner then criticizes Colnot, arguing that “[t]here are no
embodiments within Colnot that use a mobile communication device for
transmitting information to a transaction server.” Id. at 48 (citing Ex. 2004
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¶ 152). Patent Owner also criticizes Colnot because “[t]he embodiments of
Colnot refer only to performing a client-authentication transaction” and
Colnot “never discloses the use of a transaction server for processing
smartcard information or transactions.” PO Resp. 49.
These arguments are also unavailing because Patent Owner criticizes
the cited references separately rather than addressing the combination of the
prior art proposed by Petitioner. In re Keller, 642 F.2d at 426. Moreover,
Patent Owner misconstrues Petitioner’s arguments. The Petition provides
evidence and argument that the combination of Bear and Colnot teaches
transmission of a signal to a remote transaction server for further processing
and that person of ordinary skill in the art would have understood that the
remote server would decrypt the tones (further processing) as necessary. See
Pet. 57–60. Patent Owner’s argument that Bear’s remote server is an IVR
(interactive voice server) and that it would be incapable of processing
encrypted signals misses the point. Colnot teaches that its server is “adapted
to authenticate secure access” including “decipher[ing]” the received signal.
See Ex. 1012 ¶ 37. Landman also teaches encryption/decryption to the
extent that is necessary for further signal processing. See, e.g., Ex. 1011,
claim 13.
Patent Owner’s separate criticism of Colnot is also based on a
misunderstanding of Petitioner’s argument. Petitioner relies on at least
Bear’s teaching of cellular telephone 104, and its connection to remote
server 106 for transmission of a signal to a remote server for further
processing. See Pet. 57–60; Ex. 1021 ¶ 41, Fig. 3. Patent Owner’s
argument that Colnot doesn’t show a mobile communication device
transmitting information to a remote server fails to address Petitioner’s
combination. See PO Resp. 46–48. Patent Owner’s argument that Colnot
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does not disclose the use of a transaction server for processing smartcard
information or transactions also misses the point. See id. at 49. Petitioner
relies on Colnot for its teaching of transmitting audio tones to a transaction
server. See Pet. 58–60. The teaching of the type of transaction being further
processed by the remote server comes from Bear and Landman. See id.
Based on the complete record and for the reasons discussed herein, we
are persuaded that Petitioner has demonstrated that the combined teachings
of Bear, Landman, and Colnot as presented teach the recited “an output jack
adapted to be inserted into the hands-free jack associated with said mobile
communication device for providing the converted encrypted analog signal
indicative of the information to said mobile communication device for
transmission to a transaction server for further processing” of independent
claim 1.
c. Motivation to Combine
Petitioner argues that a person of ordinary skill in the art would have
had reason to combine the teachings of Bear, Landman, and Colnot in the
manner described in the Petition.
Petitioner asserts that a person of ordinary skill in the art “would have
been motivated to configure Bear’s smart card device with a contactless
smart card reader and an encryption/decryption unit, as taught by Landman.”
Pet. 43. Petitioner asserts Landman teaches that “both contact and
contactless smart cards were known in the art, and the benefit of contactless
smart cards was that they did not require any physical contact to transfer
data between the card and the card reader—data modulated into radio
frequencies were transmitted wirelessly.” Id. (citing Ex. 1011, 2:13–17,
11:1–3). Furthermore, Petitioner argues, “by encrypting information
exchanged between the smart card and the card reader device, third parties
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are prevented from intercepting the information.” Pet. 43 (citing Ex. 1011,
15:1–4). Petitioner argues, a person of ordinary skill in the art, “well aware
of these security concerns, would have been further motivated to implement
encryption as taught by Landman.” Pet. 43 (citing Ex. 1006 ¶¶ 6, 8, 71, 75,
78, 80; Ex. 1003 ¶¶ 95, 58–63).
Petitioner argues a person of ordinary skill in the art “would have had
a reasonable expectation of success in implementing Landman’s contactless
smart card and encryption technologies in Bear’s smart card device, as
commercial contactless reader technologies were known in the art, and
encryption methods were well-documented.” Pet. 44 (citing Ex. 1011, 15:4–
5, 16:3–4, 19:3–5). Petitioner also argues a person of ordinary skill in the art
“would have recognized the various signaling requirements of such
components, such that implementation would have required no more than
routine experimentation.” Pet. 44 (citing Ex. 1003 ¶¶ 96, 48–51, 55–57).
Petitioner also argues a person of ordinary skill in the art “would have
been motivated to transmit information between a card reader device and a
mobile communication device using a hands-free jack, as taught by Colnot,
in the card reader system of Bear.” Pet. 46–47. Petitioner argues, “Colnot
teaches one such interface for audio tones using the well-known TRS plug,
which interfaces with hands-free jacks commonly found on a wide range of
consumer devices, including computers, laptops, PDAs, and cell phones,
thereby improving on the usefulness of Bear’s smart card device by making
it compatible with a variety of devices.” Id. at 47. Moreover, Petitioner
argues, “Colnot shows that, with respect to the transmission of audio tones,
the techniques of playing tones over a speaker or transmitting them over an
electrical connection/cable were known alternatives.” Id. (citing Ex. 1012
¶¶ 68–70; Ex. 1003 ¶103).
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Petitioner further argues that a person of ordinary skill in the art
“would have recognized that hands-free jacks were well-known standard
connections, and [a person of ordinary skill in the art] would have had a
reasonable expectation of success in configuring Bear’s smart card device to
interface with a hands-free jack, thereby increasing its compatibility across
all such devices.” Pet. 47 (citing Ex. 1003 ¶¶ 104, 34). Petitioner also
argues that a person of ordinary skill in the art “would have been further
motivated to transmit sound signals to transaction servers for additional
processing, as taught by Colnot, in the system of Bear. Both Bear and
Colnot disclose that transactions may be processed by Interactive Voice
Response (IVR) servers.” Pet. 47 (citing Ex. 1012 ¶ 8; Ex. 1021 ¶¶ 37, 39,
claim 42).
Petitioner also argues that a person of ordinary skill in the art “would
have been motivated to transmit the sound signal in order to make use of the
IVR servers’ sound-processing capabilities and further so that the cell phone
would not have needed to perform additional decoding, repackaging, etc.,
thereby saving time and energy, which is in limited supply for portable
battery-operated devices like cell phones.” Pet. 48. Furthermore, Petitioner
argues, a person of ordinary skill in the art “would have recognized the
security benefits of bypassing any unnecessary processing in the cell phone
in possession of a user.” Id. (citing Ex. 1003 ¶¶ 105, 58–63). Petitioner
argues a person of ordinary skill in the art “would have had a reasonable
expectation of success in forwarding sound information to a server for
processing, as taught by Bear and Colnot, with a reasonable expectation of
success.” Pet. 48 (citing Ex. 1003 ¶¶ 106, 52–54).
Patent Owner argues that “[n]either Bear’s encryption of
PIN/biometric data, Landman’s local encryption, nor Colnot’s PC-based
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authentication somehow transforms into the encrypted analog-audio signal
claimed in the ‘084 patent merely because they use the word ‘encryption’
and [a person of ordinary skill in the art] would have generally ‘was well
aware of … security concerns.’” PO Resp. 57 (citing Pet. 43).
Patent Owner also argues that “Landman describes a connection to a
cellular phone via a modem, while Bear describes a connection to a phone
via IR transceiver, and Petitioner does not explain how or why [a person of
ordinary skill in the art] would modify either reference to combine them.”
PO Resp. 57–58.
Patent Owner further argues that “Colnot’s device acts as little more
than a security token, and Petitioner has not established why [a person of
ordinary skill in the art] would be motivated to consult Colnot as part of
solving the issues addressed in the ’084 patent. Id. at 58.
Patent Owner’s arguments concerning encryption appear directed to
how Petitioner explains its proposed combination satisfies the limitation of
claim 1 reciting “a sensor for reading information stored on an integrated
circuit incorporated onto said smart card and for producing an encrypted
analog signal indicative of the information.”
Petitioner’s proposed combination involves configuring Bear’s smart
card device with a contactless smart card reader and an
encryption/decryption unit, as taught by Landman. Pet. 43. Bear teaches a
smart card device 100, including a smart card reader 64, a controller 52, and
a communications interface 102. Id. at 39–40 (citing Ex. 1021 ¶¶ 8, 11, 39,
40). Smart card reader 64 reads data from smart card 60. Ex. 1021 ¶¶ 37,
41. This data is transmitted to cellular device 104 via communications
interface 102. Id. ¶ 39.
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Landman teaches implementation of an encryption/decryption unit
within a card reader module. See Ex. 1006 ¶¶ 6, 8, 71, 75, 78, 80.
Commercial contactless reader technologies were already known in the art,
and encryption methods were well-documented. See Ex. 1011, 15:4–5,
16:3–4, 19:3–5. Petitioner’s expert, Mr. McNair, testifies that a person of
ordinary skill in the art would have recognized the various signaling
requirements of such components, such that implementation of Landman’s
encryption/decryption features with Bear’s smart card device 100, including
smart card reader 64 and controller 52, would have required no more than
routine experimentation. Ex. 1003 ¶¶ 95–96, 48–51, 55–57.
Given the level of skill of a person of ordinary skill in the art at the
time of the invention (a bachelor’s degree in electrical or computer
engineering or equivalent and at least one to two years of relevant
experience in the fields of embedded systems and mobile communication
device interfaces, or otherwise equivalent industry experience in the relevant
field), we find Petitioner’s proposed combination of Bear and Landman
sufficiently detailed such that a person of ordinary skill in the art would have
been able to produce the proposed combination with only routine
experimentation.
Patent Owner’s argument that Petitioner does not explain how or why
a person of ordinary skill in the art would have modified Bear’s connection
to a phone via IR transceiver and Landman’s connection to a cellular phone
via a modem to combine them (PO Resp. 57–58), is unavailing because
Petitioner does not propose combining Bear’s IR transceiver with
Landman’s modem.
As discussed, supra, Petitioner proposes configuring Bear’s smart
card device with a contactless smart card reader and an
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encryption/decryption unit, as taught by Landman. See Pet. 43–44. With
respect to signal transmission, Petitioner relies on Bear’s teaching that its
smart card device may be coupled to any interface capable of being
supported by cellular phones and may be connected to a transceiver, such as
a cellular telephone, via any of the cellular telephone interfaces, such as an
ear-phone-speaker, to provide all the required access functions to a remote
server. Id. at 54–55 (citing Ex. 1021 ¶¶ 39, 40). Bear also points out that
the communications interface may be audio tones, or any other
communication media, coupled to a smart card reader. Pet. 55 (citing Ex.
1021 ¶ 8).
Patent Owner’s criticism concerning Colnot, is equally unavailing.
Petitioner provides competent evidence and compelling argument as to why
a person of ordinary skill in the art would have relied on Colnot for the
proposed combination. See Pet. 46–48.
We find that Petitioner has shown persuasively by a preponderance of
the evidence that one of ordinary skill in the art at the time of the invention
would have been motivated to combine the teachings of Bear, Landman,
and Colnot in the manner proffered by Petitioner.
d. Conclusion as to Claim 1
Based upon consideration of the entire record, we are persuaded by
Petitioner’s arguments and evidence, notwithstanding Patent Owner’s
arguments, and determine that Petitioner has demonstrated by a
preponderance of the evidence that independent claim 1 is unpatentable
under 35 U.S.C. § 103(a) as obvious over the combination of Bear,
Landman, and Colnot.
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e. Independent Claim 57
With respect to sections 5[P]–5[C] and 5[E] of claim 5, Petitioner and
Patent Owner rely on the same evidence and arguments as they relied on for
claim 1. See Pet. 62–66; PO Resp. 32–50. However, with respect to 5[D],
“providing said encrypted analog signal indicative of the information stored
on the integrated circuit to said mobile communication device for further
processing by circuitry contained in said mobile communication device,”
Petitioner and Patent Owner provide separate arguments. See Pet. 64–65;
PO Resp. 42–44. We address section 5[D] as follows.
Petitioner asserts that “Bear, in view of Landman and Colnot,
discloses providing the encrypted analog signal indicative of the information
stored on the integrated circuit to said mobile communication device and
transmitting the signal to a transaction server for further processing.”
Pet. 64–65. Petitioner also asserts that Bear discloses transmission of the
signal using cell phone channels (id. at 64 (citing Ex. 1021 ¶ 41), and that a
person of ordinary skill in the art “would have recognized that in order for
the mobile communication device to receive and transmit the signal to a
transaction server over cellular channels, circuitry in the device would have
processed the signal, for example to prepare the signal data for
transmission.” Pet. 64 (citing Ex. 1011, 6:4–13, Fig. 4).
Patent Owner argues that neither Bear nor Landman disclose further
processing of card information in the mobile communication device. PO
Resp. 42–44. Patent Owner argues that “the ‘084 patent requires that the

7 A complete recitation of independent claim 5, as well as the
differences between independent claims 5 and 1, are discussed in Section
II.C.2.e, supra.
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information stored on the integrated circuit be ‘further processed’ by the
mobile communication device before transmitting that information to a
transaction server. Id. at 42–43 (citing Ex. 1001, claim 5, 10:48–49;
Ex. 2004 ¶¶ 124–125). Patent Owner also argues that a person of ordinary
skill in the art “would understand, in order to further process the information
from the card, the mobile communication device needs to extract the card
information from the analog signal in order to process it, requiring at least
converting the analog signal to digital data representative of the information
on the credit card.” PO Resp. 43. Patent Owner argues “Bear never
discloses the further processing as claimed in the ‘084 patent.” Id. (citing
Ex. 2004 ¶¶ 128–129).
Patent Owner also argues that although “Landman’s wireless
communications device asserts the capability of processing information,”
Landman is missing “any actual examples of embodiments of further
processing.” PO Resp. 44 (citing Ex. 2004 ¶ 132).
Patent Owner’s arguments are unavailing because claim 5 does not
recite further processing of card information by circuitry contained in the
mobile communication device before transmitting the signal to a transaction
server. See Ex. 1001, 12:36–42. Moreover, a single example in the ’084
patent that describes “installation of a software application controller 51” on
“communication device 14 (a mobile phone),” which “is used to convert
between audio and digital signal and to receive and transmit and [sic] audio
data to and from the hands-free interface 41,” cannot be used to limit claim 5
as Patent Owner argues. “A particular embodiment appearing in the written
description may not be read into a claim when the claim language is broader
than the embodiment.” SuperGuide Corp., 358 F.3d at 875 (citation
omitted); see also In re Van Geuns, 988 F.2d at 1184.
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We are persuaded that Petitioner’s proposed combination satisfies the
requirement of claim 5 for further processing of the encrypted analog signal
by circuitry contained in a mobile communication device, in particular by
Landman’s teaching of a wireless communication device comprised of a
communications interface and a contactless smart card interface, such as a
contactless reader/writer, connected to the communications interface. See
Pet. 64–65.
We are also persuaded that Petitioner has demonstrated that the
proffered combination teaches the recited “providing said encrypted analog
signal indicative of the information stored on the integrated circuit to said
mobile communication device for further processing by circuitry contained
in said mobile communication device” of independent claim 5.
For the reasons discussed directly above, and for the reasons
discussed with respect to claim 1, we determine that Petitioner has
demonstrated by a preponderance of the evidence that independent claim 5 is
unpatentable under 35 U.S.C. § 103(a) as obvious over the combination of
Bear, Landman, and Colnot.
f. Dependent Claim 2
Dependent claim 2 recites: “The card reader device from claim 1, in
which the smart card is selected from a group consisting of a chip card,
EMV card, proximity detector or NFC card, contactless card, or any
combination thereof.”
Petitioner asserts that Bear in view of Landman teaches a smart card
that is a contactless chip card. Pet. 60–61 (citing Ex. 1011, 2:13–14, 6:11–
13, 7:9–10, 10:15–17).
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Patent Owner relies on the same arguments and evidence it provided
with respect to claims 1 and 5, and does not appear to address claim 2
separately. See PO Resp. 32–50; PO Sur-reply 15–21.
Based upon consideration of the entire record, we are persuaded by
Petitioner’s arguments and evidence, notwithstanding Patent Owner’s
arguments, and determine that Petitioner has demonstrated by a
preponderance of the evidence that dependent claim 2 is unpatentable under
35 U.S.C. § 103(a) as obvious over the combination of Bear, Landman, and
Colnot.
g. Dependent Claim 3
Dependent claim 3 recites: “The card reader device of claim 1,
wherein said device comprises a device selected from the group consisting
of: an analog signal reader, a digital signal reader, a bar code reader, a
magnetic stripe reader, and integrated circuit reader, a smartcard reader, an
EMV reader, and optical scanner, and any combination thereof.”
Petitioner asserts that Bear in view of Landman teaches a device that
is a contactless smart card/integrated circuit reader. Pet. 61 (citing Ex. 1011,
2:13–14, 6:11–13, 7:9–10, 10:15–17, 11:12–14, 15:23).
Patent Owner relies on the same arguments and evidence it provided
with respect to claims 1 and 5, and does not appear to address claim 3
separately. See PO Resp. 32–50; PO Sur-reply 15–21.
Based upon consideration of the entire record, we are persuaded by
Petitioner’s arguments and evidence, notwithstanding Patent Owner’s
arguments, and determine that Petitioner has demonstrated by a
preponderance of the evidence that dependent claim 3 is unpatentable under
35 U.S.C. § 103(a) as obvious over the combination of Bear, Landman, and
Colnot.
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h. Dependent Claim 4
Dependent claim 4 recites: “The card reader device of claim 1,
wherein the mobile communication device comprises a device selected from
the group consisting of: a wireless communication device a mobile phone, a
cellular phone, a personal digital assistant, a pager, a computer, a
smartphone, a Blackberry™, an iPhone™, an Android™ phone, an iPad™,
and a tablet.”
Petitioner asserts that Bear discloses the communication device is,
e.g., a wireless phone, a mobile phone, or a cellular phone. Pet. 61–62
(citing Ex. 1021 ¶ 39).
Patent Owner relies on the same arguments and evidence it provided
with respect to claims 1 and 5, and does not appear to address claim 4
separately. See PO Resp. 32–50; PO Sur-reply 15–21.
Based upon consideration of the entire record, we are persuaded by
Petitioner’s arguments and evidence, notwithstanding Patent Owner’s
arguments, and determine that Petitioner has demonstrated by a
preponderance of the evidence that dependent claim 4 is unpatentable under
35 U.S.C. § 103(a) as obvious over the combination of Bear, Landman, and
Colnot.
i. Dependent Claims 6–8
Dependent claims 6–8 are substantially similar to dependent claims 2–
4, with the exception that dependent claims 6–8 depend from claim 5 rather
than claim 1. See Ex. 1001, 12:7–22, 43–59. Petitioner relies on the same
evidence for claims 6–8 as it relied on for claims 2–4. See Pet. 66–67.
Patent Owner does not address claims 6–8 separately. See PO Resp. 32–50;
PO Sur-reply 15–21.
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Based upon consideration of the entire record, and for the reasons
stated, supra, with respect to dependent claims 2–4, we are persuaded by
Petitioner’s arguments and evidence, notwithstanding Patent Owner’s
arguments, and determine that Petitioner has demonstrated by a
preponderance of the evidence that dependent claims 6–8 are unpatentable
under 35 U.S.C. § 103(a) as obvious over the combination of Bear,
Landman, and Colnot.
D. Appointments Clause
Patent Owner argues that the appointment of Administrative Patent
Judges (“APJs”) of the Patent Trial and Appeal Board by the Secretary of
Commerce “is not constitutional under the Appointments Clause.” PO
Resp. 60. Patent Owner also argues that the Federal Circuit’s “attempted
cure of the Constitutional violation” in Arthrex, Inc. v. Smith & Nephew,
Inc., 941 F.3d 1320 (Fed. Cir. 2019), “is insufficient, because it does not
give a constitutionally appointed principal officer the power to review APJ
decisions.” PO Resp. 60. We decline to consider Patent Owner’s
constitutional challenge as the Federal Circuit addressed this issue in
Arthrex, 941 F.3d at 1325.
E. Due Process
Patent Owner argues that “subjecting a patent effectively filed before
September 16, 2012 (when the relevant provisions of the AIA went into
effect), as is the case here, to IPR is an impermissibly retroactive,
unconstitutional taking” and “violates the Due Process Clause of the Fifth
Amendment.” PO Resp. 60–61. We decline to consider Patent Owner’s
constitutional challenge as the Federal Circuit addressed this issue in
Celgene Corp. v. Peter, 931 F.3d 1342, 1362–63 (Fed. Cir. 2019).
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CONCLUSION
For the foregoing reasons, we determine that Petitioner has
demonstrated by a preponderance of the evidence that claims 1–8 of the ’084
patent are unpatentable on the bases set forth in the following table.8

Claims 35 U.S.C. § References Claims
Shown
Unpatentable
Claims
Not shown
Unpatentable
1–8 103 Proctor,
Vrotsos,
Hatsumi
1–8
1–8 103 Bear,
Landman,
Colnot
1–8
Overall
Outcome
1–8

8 Should Patent Owner wish to pursue amendment of the challenged
claims in a reissue or reexamination proceeding subsequent to the issuance
of this Final Decision, we draw Patent Owner’s attention to the April 2019
Notice Regarding Options for Amendments by Patent Owner Through
Reissue or Reexamination During a Pending AIA Trial Proceeding. See 84
Fed. Reg. 16,654 (Apr. 22, 2019). If Patent Owner chooses to file a reissue
application or a request for reexamination of the challenged patent, we
remind Patent Owner of its continuing obligation to notify the Board of any
such related matters in updated mandatory notices. See 37 C.F.R.
§ 42.8(a)(3), (b)(2).
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ORDER
In consideration of the foregoing, it is hereby
ORDERED that Petitioner has demonstrated by a preponderance of
the evidence that claims 1–8 of U.S. Patent No. 9,269,084 B2 are
unpatentable; and
FURTHER ORDERED that because this is a Final Written Decision,
any party to the proceeding seeking judicial review of this Decision must
comply with the notice and service requirements of 37 C.F.R. § 90.2.

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PETITIONER:

Scott A. McKeown
Gabrielle E. Higgins
Victor Cheung
ROPES & GRAY LLP
scott.mckeown@ropesgray.com
gabrielle.higgins@ropesgray.com
victor.cheung@ropesgray.com

David Tennant
WHITE & CASE LLP
dtennant@whitecase.com

PATENT OWNER:

Jason S. Jackson
Niall A. MacLeod
Jacob Song
KUTAK ROCK LLP
jason.jackson@kutakrock.com
niall.macleod@kutakrock.com
jacob.song@kutakrock.com