DYNAMICS INC.

Patent Trials and Appeals Board

Aug 11, 2021

IPR2020-00502 (P.T.A.B. Aug. 11, 2021)

Trials@uspto.gov Paper 55
571-272-7822 Entered: August 11, 2021

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

SAMSUNG ELECTRONICS CO., LTD., SAMSUNG ELECTRONICS
AMERICA, INC., SAMSUNG RESEARCH AMERICA, INC.,
Petitioner,

v.

DYNAMICS, INC.,
Patent Owner.
_______________

Case IPR2020-00502
Patent 10,032,100 B2
____________

Before TREVOR M. JEFFERSON, GEORGIANNA W. BRADEN, and
JON M. JURGOVAN, Administrative Patent Judges.

JEFFERSON, Administrative Patent Judge.

JUDGMENT
Final Written Decision
Determining All Challenged Claims Unpatentable
35 U.S.C. § 318(a)
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I. INTRODUCTION
Petitioner, Samsung Electronics Co., Ltd., Samsung Electronics
America, Inc., and Samsung Research America, Inc., filed a Petition
requesting inter partes review of claims 1–20 of U.S. Patent No. 10,032,100
B2 (Ex. 1001, the “’100 Patent”). Paper 1 (“Petition” or “Pet.”). Patent
Owner, Dynamics Inc., filed a Preliminary Response to the Petition. Paper 8
(“Prelim. Resp.”). On August 12, 2020, we instituted inter partes review of
claims 1–20 of the ’100 Patent. Paper 34 (“Dec.”).
Following institution, Patent Owner filed its Response to the Petition.
Paper 41 (“PO Resp.”). On January 29, 2021, Petitioner filed a Reply to
Patent Owner’s Response, and on March 9, 2021, Patent Owner filed a Sur-
Reply. Paper 44 (“Reply”); Paper 45 (“Sur-Reply”).
An Oral Hearing took place on May 12, 2021. The Hearing
Transcript is included in the record. Paper 53 (“Tr.”).
After considering the parties’ arguments and supporting evidence, we
determine that Petitioner has proved by a preponderance of the evidence that
claims 1–16 are unpatentable. 35 U.S.C. § 316(e); 37 C.F.R. § 42.1(d)
(2019).
II. BACKGROUND
A. Related Proceedings
Petitioner informs us of one pending district court proceedings based
on the ’100 Patent that involves Petitioner, Dynamics Inc. v. Samsung Elecs.
Co., Ltd. et al., Case No. 1:19-cv-6479 (S.D.N.Y.), filed July 12, 2019,
which was stayed on September 4, 2019. Pet. 71–72. Petitioner also
informs us of one proceeding pending before the International Trade
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Commission (“ITC”), In re Certain Mobile Devices With Multifunction
Emulators, Inv. No. 337-TA-1170 (U.S.I.T.C.), filed July 12, 2019. Id.
Patent Owner informs us of the same pending proceedings listed
above. Paper 6 (Patent Owner’s Mandatory Notices), 2–3.
B. The ʼ100 Patent
The ’100 Patent was filed on April 25, 2016, issued on July 24, 2018,
from a continuation filed July 25, 2012, and is titled “Cards and Devices
with Multifunction Magnetic Emulators and Methods for Using Same.”
Ex. 1001, codes (22), (45), (54). The ’100 Patent relates to
A payment card (e.g., credit and/or debit card) is provided with
a magnetic emulator operable of communicating information to
a magnetic stripe reader. Information used in validating a
financial transaction is encrypted. . . . Such dynamic information
may be communicated using such an emulator such that a card
may be swiped through a magnetic stripe reader—yet
communicate different information based on time. An emulator
may receive information as well as communicate information to
a variety of receivers (e.g., an RFID receiver).
Ex. 1001, Abstract. The ’100 Patent discloses “[a] card is provided, such as
a credit card or security card, that may transmit information to a magnetic
stripe reader via a magnetic emulator.” Id. at 1:28–36.
The ’100 Patent states that “[t]he magnetic emulator may be, for
example, a circuit that emits electromagnetic fields operable to electrically
couple with a read-head of a magnetic stripe reader such that data may be
transmitted from the circuit to the magnetic stripe reader.” Id. at 1:30–34.
The ’100 Patent further states that the magnetic emulator may also “be
operated to electrically couple, and transmit data to, a device using a Radio
Frequency Identification (RFID) protocol.” Id. at 2:9–16. The ’100 Patent
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specification further states that the magnetic emulator may be swiped
through a magnetic stripe reader to communicate data, “placed outside and
within the proximity of (e.g., 0.25 inches) the read-head.” See id. at 2:2–6,
4:29–33.
Figure 7 shows the electrical coupling between a card and a reader of
the invention.

Figure 7 depicts “cards 720 and 730 as well as magnetic stripe reader 710.
Read-head housing 711 may be included on a wall of a trough of magnetic
stripe reader 710.” Id. at 8:24–27. Card 720 shows emulator 721 that
provides electromagnetic field 791 capable of transmitting through the
housing of the magnetic stripe reader 710, thus card 720 may be outside of
the reader and operable to communicate through the outer wall of a
thickness of a quarter inch or more. Id. at 8:29–39.
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The ’100 Patent describes that the invention could be implemented in
devices other than cards, such as “a portable telephonic device, portable
media player, or any type of electronic device.” Id. at 2:48–51, 12:32–34.
Figure 12 shows a personal electric device in accordance with the invention.
Id. at 3:35–37.

Figure 12 shows personal electronic device 1200, with user inputs 1240,
display 1210, and virtual card 1220. Id. at 12:37–40. “Personal electronic
device 1200 may communicate to a card reader such as . . . an RFID reader.”
Id. at 12:45–46.
C. Illustrative Claims
Claims 1 and 12 are independent and illustrative.
1. A device comprising:
a circuit operable to emit an electromagnetic field
and to electrically couple to, and transmit data to, a read-
head located on a magnetic stripe reader; and
a processor for controlling the circuit,
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wherein the circuit is operable to communicate the
data to the read-head while located outside of the magnetic
stripe reader at a distance of at least a quarter of an inch
from the read-head.

12. A portable telephonic device comprising:
a circuit operable to emit an electromagnetic field
and to electrically couple to, and transmit data to, a read-
head located on a magnetic stripe reader; and
a processor for controlling the circuit, wherein the
circuit is operable to communicate the data to the read-
head while located outside of the magnetic stripe reader.

Ex. 1001, 14:45–53, 15:8–14.
D. Instituted Grounds of Unpatentability and Evidence of Record
We instituted inter partes review based on information presented in
the Petition that challenged the claims of the ’100 Patent on the grounds
listed below. Pet. 9; Dec. 7, 44.

Reference(s)/Basis 35 U.S.C. §1 Claim(s) Challenged
Moullette2 103 1–3, 8, 10
Moullette, Poidomani3 103 9, 11
Zellner,4 Moullette 103 1, 4–7, 12–18, 20

1 The Leahy-Smith America Invents Act, Pub. L. No. 112-29, 125 Stat. 284
(September 16, 2011) (“AIA”), included revisions to 35 U.S.C. §103 that
became effective on March 16, 2013. Because the ’100 Patent issued from
an application filed before March 16, 2013, we apply the pre-AIA version of
the statute.
2 U.S. Patent No. 7,114,652 B2, issued Oct. 3, 2006 (Ex. 1007, “Moullette”).
3 U.S. Patent Application Publication No. 2007/0034700 A1, Published Feb.
15, 2007 (Ex. 1009, “Poidomani”).
4 U.S. Patent No. 7,097,108 B2, issued Aug. 29, 2006 (Ex. 1008,
“Zellner”).
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Reference(s)/Basis 35 U.S.C. §1 Claim(s) Challenged
Zellner, Moullette,
Poidomani 103 19
Doughty5 103 1–3, 8, 10
Doughty, Poidomani 103 9, 11
Doughty, Zellner 103 4–7, 12–18, 20
Doughty, Zellner,
Poidomani 103 19

Petitioner supports its challenges with the Declaration of Stephen G.
Halliday, Ph.D. (Ex. 1002). In support of its contentions, Patent Owner
relies on a Declaration of Ivan Zatkovich (Ex. 2042). See, e.g., PO Resp. 2.
The parties also submit the depositions of Halliday and Zatkovich. Ex. 1032
(Zatkovich Deposition); Ex. 2039, Ex. 2040 (Halliday Depositions). Patent
Owner relies on a deposition of Stuart Lipoff, its expert witness from the
related ITC litigation (Ex. 2041). Petitioner supports its evidence with the
trial transcript from the ITC action providing Mr. Zatkovich’s testimony
before the ITC regarding the patent at issue (Ex. 1030).
III. ANALYSIS
A. Level of Ordinary Skill in the Art
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
(1966). “The importance of resolving the level of ordinary skill in the art

5 U.S. Patent Application Publication No. 2006/0161789 Al, Published Jul.
20, 2006 (Ex. 1012, “Doughty”).
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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). Factors
pertinent to a determination of the level of ordinary skill in the art include
“(1) the educational level of the inventor; (2) type of problems encountered
in the art; (3) prior art solutions to those problems; (4) rapidity with which
innovations are made; (5) sophistication of the technology; and (6)
educational level of active workers in the field.” Envtl. Designs, Ltd. v.
Union Oil Co. of Cal., 713 F.2d 693, 696–697 (Fed. Cir. 1983) (citing
Orthopedic Equip. Co. v. All Orthopedic Appliances, Inc., 707 F.2d 1376,
1381–82 (Fed. Cir. 1983)). “Not all such factors may be present in every
case, and one or more of these or other factors may predominate in a
particular case.” Id.
Petitioner argues that a person having ordinary skill in the art at the
time of the alleged invention “would have had at least a Bachelor’s degree in
Electrical Engineering, or an equivalent technical degree or equivalent work
experience, and knowledge regarding the use of magnetic fields to transmit
or otherwise convey information.” Pet. 15 (citing Ex. 1002 ¶¶ 33).
Petitioner further argues that “[a]dditional education might supplement
practice experience and vice-versa.” Id.
In the ITC litigation, Patent Owner proposed that a person of ordinary
skill in the art (“POSITA”) would have
“at least two years of experience with point of sale systems and
financial transactions,” and “at least a Bachelor’s degree in
Electrical Engineering, or an equivalent technical degree or
equivalent work experience, and knowledge regarding the use of
magnetic fields to transmit or otherwise convey information,”
while superior education would compensate for a deficiency in
experience, and vice-versa.
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PO Resp. 17 (citing Ex. 2012, 10–11). Patent Owner indicates “the ALJ in
the ITC litigation decided that a POSITA had [an] ‘undergraduate degree in
computer science, electrical engineering, or the equivalent (including
computer engineering) and at least three years of experience with point of
sale systems and the use of magnetic fields to convey information.’” PO
Resp. 17; See Ex. 2012, 6–7 (ITC Claim Construction).
To establish the level of ordinary skill in the art, we look to various
factors including “the types of problems encountered in the art; prior art
solutions to those problems; rapidity with which innovations are made;
sophistication of the technology; and education level of active workers in the
field.” In re GPAC, 57 F.3d 1573, 1579 (Fed. Cir. 1995) (citing Custom
Accessories, Inc. v. Jeffrey-Allan Indus., Inc., 807 F.2d 955, 962 (Fed. Cir.
1986)). Problems encountered in the art are identified in the background
sections of Doughty, Moullette, and Zellner. See Ex. 1012 ¶ 7; Ex. 1008,
1:13–42; Ex. 1007, 2:38–47; see Pet. 10–14; Ex. 1002 ¶¶ 59–62.
Considering these factors, for purposes of this decision, we determine
that a person of ordinary skill in the art at the time of the invention would
have had a bachelor’s degree in computer science, electrical engineering,
computer engineering, or equivalent, and three years of experience working
with payment device technologies including magnetic stripe cards and
emulators, card readers, RFID, and cellular network communications for
payment transactions. While this definition is in some respects more
specific than the other proposed definitions, we think it is better tailored to
cover all types of technologies recited in the claims. Specifically, the other
proposed definitions do not cover cellular network while our definition does.
Apart from this, we do not consider our definition to be materially different
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from what the ITC adopted or parties propose here. And neither party
contends that the outcome of this case turns on the definition of the level of
ordinary skill in the art. See generally Pet. and PO Resp. Accordingly, we
apply this level of ordinary skill in the art in our obviousness analysis.
B. Claim Interpretation
In an inter partes review for a petition filed on or after November 13,
2018, a claim “shall be construed using the same claim construction standard
that would be used to construe the claim in a civil action under
35 U.S.C. 282(b).” 37 C.F.R. § 42.100(b) (2019); see Changes to the Claim
Construction Standard for Interpreting Claims in Trial Proceedings Before
the Patent Trial and Appeal Board, 83 Fed. Reg. 51,340 (Oct. 11, 2018)
(amending 37 C.F.R. § 42.100(b) effective November 13, 2018). In
applying this claim construction standard, we are guided by the principle
that the words of a claim “are generally given their ordinary and customary
meaning,” as understood by a person of ordinary skill in the art in question
at the time of the invention. Phillips v. AWH Corp., 415 F.3d 1303,
131213 (Fed. Cir. 2005) (en banc) (citation omitted). “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). There is a “heavy presumption,”
however, that a claim term carries its ordinary and customary meaning. CCS
Fitness, Inc. v. Brunswick Corp., 288 F.3d 1359, 1366 (Fed. Cir. 2002)
(citation omitted).
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Petitioner states that it does not believe any terms need be construed
to resolve the prior art issues presented in this Petition. Pet. 15. Petitioner
notes there were claim constructions proposed by the parties in the ITC
proceeding. Id. at 15–16 (citing Ex. 1016, 6). Petitioner further states these
terms need not be construed because they are disclosed by the prior art under
either party’s proposed construction. Id. at 16.
Patent Owner indicates certain terms were construed in the ITC
litigation in a claim construction order dated January 31, 2020, and states
“[a]ll of the claims of the ’100 patent are patentable under these
constructions.” PO Resp. 17–18; Ex. 2012, 34–36.
Neither Petitioner nor Patent Owner offer any claim construction in
this proceeding. Consequently, there is no dispute regarding the claim
language that we need to resolve, and we proceed by applying the ordinary
and customary meaning of the claim terms consistent with their use in the
specification and prosecution history. Our use of the ordinary and customary
meaning of the claim terms is consistent with the ITC’s claim construction
of “virtual card” (claims 6, 7, 16, and 17)) as “a visual representation of a
payment card.” Ex. 2012, 40–41; PO Resp. 17–18.
C. Principles of Law
A patent claim is unpatentable under 35 U.S.C. § 103(a) if the
differences between the claimed subject matter 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.” KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 406
(2007). The question of obviousness is resolved on the basis of underlying
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factual determinations, including (1) the scope and content of the prior art;
(2) any differences between the claimed subject matter and the prior art;
(3) the level of skill in the art; and (4) objective evidence of nonobviousness,
i.e., secondary considerations. Graham v. John Deere Co., 383 U.S. 1, 17–
18 (1966).
The Supreme Court has made clear that we apply “an expansive and
flexible approach” to the question of obviousness. KSR, 550 U.S. at 415.
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 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.
“In an [inter partes review], the petitioner has the burden from the
onset to show with particularity why the patent it challenges is
unpatentable.” Harmonic Inc. v. Avid Tech., Inc., 815 F.3d 1356, 1363 (Fed.
Cir. 2016) (citing 35 U.S.C. § 312(a)(3) (requiring inter partes review
petitions to identify “with particularity . . . the evidence that supports the
grounds for the challenge to each claim”)). This burden of persuasion never
shifts to Patent Owner. See Dynamic Drinkware, LLC v. Nat’l Graphics,
Inc., 800 F.3d 1375, 1378 (Fed. Cir. 2015) (discussing the burden of proof in
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inter partes review). Furthermore, Petitioner cannot satisfy its burden of
proving obviousness by employing “mere conclusory statements.” In re
Magnum Oil Tools Int’l, Ltd., 829 F.3d 1364, 1380 (Fed. Cir. 2016). To
prevail in an inter partes review, Petitioner must explain by a preponderance
of the evidence how the proposed prior art or combinations of prior art
would have rendered the challenged claims unpatentable.
D. Alleged Obviousness of Claims 1–3, 8, and 10: Moullette
Petitioner provides argument that Moullette renders claims 1–3, 8,
and 10 obvious. Pet. 17–25; Ex. 1002 ¶¶ 64–74.6
1. Overview of Moullette (Ex. 1007)
Moullette is a patent titled “External Adaptor for Magnetic Stripe
Card Reader.” Ex. 1007, code (54). Moullette discloses an adaptor for use
with a conventional magnetic stripe card point of sale reader that receives
information from a contact or wireless source. Id. at Abstract.

6 Patent Owner argues that we should dismiss this ground as improper
because Petitioner asserts that the challenged claims are obvious over the
single reference Moullette (Pet. 17–67), when Petitioner’s declarant asserts
that Moullette discloses each element of the challenged claims and thus the
asserted ground should have been anticipation. PO Resp. 64–65 (citing
Cohesive Techs., Inc. v. Waters Corp., 543 F.3d 1351, 1364 (Fed. Cir.
2008)). We decline Patent Owner’s request to dismiss this grounds, as the
Petitioner is the master of the petition, and we will not rely on a position not
articulated to dismiss a petition. See SAS Inst., Inc. v. Iancu, 138 S.Ct. 1348,
1355 (2018); see Sirona Dental Sys. GmbH v. Institut Strautmann AG, 892
F.3d 1349, 1356 (Fed. Cir. 2018); cf. In re Magnum Oil Tools Int'l, Ltd., 829
F.3d 1364, 1381 (Fed. Cir. 2016). (“[T]he Board must base its decision on
arguments that were advanced by a party, and to which the opposing party
was given a chance to respond.”).
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Figure 1, below, illustrates “a simplified schematic view of an adaptor
system in accordance with one embodiment” that allows for magnetic
emulation outside of the reader. Id. at 3:66–4:1.

Moullette describes an adaptor that “allows a conventional magnetic stripe
card POS reader to receive information from contact-based or wireless
sources.” Id. at 2:51–55. Figure 1 shows conventional point-of-sale (POS)
magnetic stripe card reader 2, with display 4, keypad 6, and magnetic card
swipe slot 8. Id. at 4:1–3. Magneto-inductive readers 10a and 10b receive
signals from Track One 43 or Track Two 45 of magnetic stripe card 44. Id.
at 4:3–7. Figure 1 shows consumer pod portion 16 in electrical
communication with merchant pod portion 18 through cable 20, where the
consumer interacts bringing an RF proximity chip card 97, mobile personal
device, or other RF or IR transceiver device in proximity to a wireless
transceiver 22 to communicate information. Id. at 4:8–15. Consumer pod
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portion 16 is positioned at a location convenient for a customer, who may
interact with adaptor 14 using personal trusted device (PTD) 99 (shown as a
wireless telephone in Figure 1) by bringing PTD 99 in proximity to wireless
transceiver 22 of adaptor 14. Id. at 4:10–15, 4:46–49. Merchant pod
portion 18 is affixed beneath the external housing of reader device 2 and
communicates with its reader heads 10a, 10b. Id. at 5:21–31.
2. Claim 1
a. “a device,”“a circuit operable to emit an electromagnetic field
and to electrically couple to, and transmit data to, a read-head
located on a magnetic stripe reader,” and “circuit is operable to
communicate while located outside the magnetic stripe reader”
Petitioner argues that Moullette teaches the claim 1 preamble for “a
device comprising” via the adaptor that allows the consumer pod to
communicate with the magnetic stripe card POS reader. Pet. 17–18;
Ex. 1007, Abstract, 4:8–10; Ex. 1002 ¶ 64.
Petitioner further asserts that Moullette discloses the “circuit operable
to emit an electromagnetic field and to electrically couple” limitation
describing that current flows to generate a magnetic field, which activates
the card, and communicates to the magnetic track readers. Pet. 18–19; Ex.
1007, 6:49–56, 6:60–66; Ex. 1002 ¶¶ 65, 66. Petitioner argues that Figure 1
of Moullette discloses transceivers 22 shown in communication with
interface processor 24. Pet. 19–20; Ex. 1002 ¶ 67. Module 26 in Figure 1 of
Moullette communicates with the card reader, teaching that “a circuit that
can emit an electromagnetic field, can couple with a magnetic stripe card
reader read-head, and can communicate with (i.e., transmit data to) the read
head [of the card reader]” Pet. 19 (citing Ex. 1002 ¶ 65).
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Patent Owner argues that the preamble reciting “a device” is limiting
(Sur-Reply 3–4) and that Moullette does not teach a device but instead
teaches a “system,” which includes multiple portions with different
functions (PO Resp. 19; Ex. 2043 2 ¶ 74). Specifically, Patent Owner
asserts that the adaptor in Moullette is affixed to the housing of the reader,
becoming an integral part of the magnetic stripe system. PO Resp. 20 (citing
Ex. 2042 ¶ 75; Ex. 1007, 2:43–46, 3:60–62). Asserting that the Moullette
adaptor must be affixed to a particular location to function properly, Patent
Owner argues that
Moullette does not disclose a standalone device but, rather, a
system in which the Moullette component is an integral part of
the reader upon being affixed to the reader. Id. EX. 1007 5:22–
32. Moullette discloses “an adaptor system” including
“consumer pod (C-Pod) portion 16 in electrical communication
with merchant pod (M-Pod) portion 18 through cable 20 . . . EX.
1007, Fig. 1.
PO Resp. 21. Patent Owner argues that Moullette fails to teach the “circuit
is operable to communicate while located outside the magnetic stripe reader”
limitation of claim 1 (which also appears in claim 12). Pet. 20. In sum, the
affixed adaptor fails to teach the preamble “device” and the location
limitation because it is affixed to the external housing as shown in Figures
3A and 4A of Moullette. PO Resp. 21–22.
We are not persuaded by Patent Owner’s arguments. PO Resp. 19–
20; Sur-Reply 4–7. As Petitioner argues, and we agree, “Moullette
consistently describes it as a device separate from the merchant’s reader, and
discloses embodiments where the adaptor is positioned ‘near’ or ‘proximate’
to the reader’s housing, as [Patent Owner’s] expert admits.” Reply 2 (citing
Ex. 1007, 2:42–47, 2:66–3:6, 8:67–9:6, 7:44–49; Ex. 1030, 832:20–25).
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Patent Owner’s argument is not commensurate in scope with the claim
language that the circuit be located “outside located outside of the magnetic
stripe reader,” and provides a specific distance in claim 1. See Ex. 1001,
14:45–53, 15:8–14 (claim 12 requiring “outside” the reader but without
specifying the distance outside). Furthermore, Patent Owner’s declarant
agrees that Moullette teaches positioning the adaptor outside of the reader.
See Ex. 1030, 806:7–10, 832:20–25 (Mr. Zatkovich agreeing that the adaptor
is outside of the reader).
Neither claim 1 nor the ’100 Patent specification address the method
or manner of locating the circuit “outside” the reader. We find that
Moullette’s adaptor that is disclosed as being “proximate to the housing of a
magnetic stripe reader device,” “positioned near a magnetic stripe reader,”
and “positioned external to the reader device” teaches the recited claim
limitation for a “circuit . . . located outside the magnetic stripe reader.”
Ex. 1007, 2:62–3:6, 8:67–9:6; see also Ex. 1007, Figs 1, 3B (showing the
adaptor external to the terminal reader device). We also find that
Moullette’s teaching is not limited to specific affixed positions. See Ex.
1007, 2:66–3:6 (positioned near the reader).
Moullette’s teaching that the adaptor “may be affixed to the reader
device” (Ex. 1007, 5:29–31 (emphasis added)) is permissive and undermines
Patent Owner’s argument that the Moullette adaptor is an “integral” part of
the magnetic stripe system and is not a device as recited in claim 1. PO
Resp. 20. We find that Moullette teaches external positioning to allow
aligned communication “through the housing” to the head of the magnetic
stripe reader but does not otherwise limit the external position. Ex. 1007,
3:62–65. Indeed, Moullette teaches a separate fully integrated unit lending
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further supporting Petitioner’s argument that the externally placed adaptor
embodiment differs from a fully integrated unit. See Ex. 1007, 7:44–49
(noting that the adaptor could be integrated into a single-piece unit). We
credit Petitioner’s argument and evidence that Moullette teaches the device
of claim 1.
Patent Owner contentions that the device of the claim 1 preamble is a
limiting feature that excludes Moullette’s “system” is unpersuasive. Sur-
Reply 2–4. Patent Owner asserts in the Sur-Reply that a device in the
claim 1 preamble should be construed to mean “a device,” as distinguished
from a system or apparatus. Sur-Reply 3. Patent Owner argues in the Sur-
Reply that the preamble of claim 1 recites essential structure, constitutes a
limitation based on antecedent basis, and differentiates the scope of devices
in claim 1 from claim 12. Id. at 2–4. Patent Owner improperly raised these
preamble arguments for the first time in its Sur-Reply brief.7 Although these
arguments are new and need not be considered, we find them unavailing.
Patent Owner erroneously asserts that the “device” in the claim 1 preamble
is used in the body of the claim and provides an antecedent basis for the

7 Our Scheduling Order and Practice Guide each make clear that Patent
Owner must set forth all substantive arguments for patentability in the
Response, and may not raise new arguments in the Sur-Reply. See Paper 35,
9 (“Patent Owner is cautioned that any arguments for patentability not raised
in the response may be deemed waived.”); Patent Trial and Appeal Board
Consolidated Trial Practice Guide (Nov. 2019) (“Consolidated TPG”),7 74
(“[A] reply or sur-reply may only respond to arguments raised in the
preceding brief. . . . ‘Respond’ . . . does not mean proceed in a new
direction with a new approach as compared to positions taken in a prior
filing. . . . [A] reply or sur-reply that raises a new issue or belatedly presents
evidence may not be considered.”).
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subsequent use. Sur-Reply 4. The preamble term “device,” however, does
not appear in the body of claim 1 or in related claim 12. We also do not find
persuasive support in the claims or Specification for Patent Owner’s
arguments that “device” should be construed negatively to exclude systems
or apparatuses. Notwithstanding our disagreement with Patent Owner’s
contentions, we need not resolve whether the preamble is limiting because
we find Petitioner’s evidence shows that Moullette teaches a device as
recited in claim 1’s preamble.
b. “a processor for controlling the circuit”
Petitioner argues that Figure 1 of Moullette discloses transceivers 22
shown in communication with interface processor 24. Pet. 19–20; Ex. 1002
¶ 67. Module 26 in Figure 1 of Moullette communicates with the card
reader, teaching that “a circuit that can emit an electromagnetic field, can
couple with a magnetic stripe card reader read-head, and can communicate
with (i.e., transmit data to) the readhead [of the card reader].” Pet. 19 (citing
Ex. 1002 ¶ 65). Patent Owner asserts that the processor Petitioner cites for
teaching the “processor for controlling the circuit” limitation is misleading.
PO Resp. 23–24. Patent Owner argues that
Moullette makes clear that interface processors 24 process
interface communications, such as infrared bidirectional
communications (Id., 4:44-46), Bluetooth (Id., 4:52-56), cellular
communications (Id., 4:56-60), etc. There is nothing in the
specification to suggest that Moullette includes a processor that
controls the dynamic magnetic stripe communication device, nor
is there even the slightest suggestion that any of those specialized
processors would, somehow, also be a “processor for controlling
the dynamic magnetic stripe communication device” required by
claim 1.
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PO resp. 23–24. Patent Owner then argues that “a separate processor that is
not shown, taught, or suggested anywhere in Moullette would be required to
control the dynamic magnetic stripe communication device.” Id. at 24.
We find that Petitioner’s argument and evidence support that
“Moullette’s C-Pod, which translates the payment signal received from
cellphone 99 and drives the M-Pod under control of the interface processors
(all in real time) is part of the magnetic stripe emulating circuit.” Reply 6
(citing Ex. 1007, Fig. 1). Indeed, Petitioner cites the full “‘adaptor 14,
[which] comprises consumer pod (C-Pod) portion 16 in electrical
communication with merchant pod (M-Pod) portion 18 through cable 20’”
as teaching the device. Pet. 17 (quoting Ex. 1007, 4:8–10). The C-Pod
portion is in electrical communication with interface processors 24. Pet. 19–
20; Ex. 1007, 4:41–43; Ex. 1002 ¶ 67. Petitioner provides persuasive
evidence that Moullette teaches that Moullette’s C-Pod translates payment
signals from the cell phone and drives the M-Pod inductors. Pet. 19–20;
Ex. 1002 ¶ 67; Ex. 1007, Fig. 1, 3:63–65 (stating that C-Pod transceivers
communicate with interface processors); Ex. 1032, 51:5–9, 52:9–24
(agreeing that Moullette signals are translated from the C-Pod to the M-
Pod); see also Ex. 1001, 5:54–57, 7:5–8 (recognizing that a processor can
drive inductors).
We also note that Patent Owner tacitly concedes that a separate
processor that is not shown in Moullette would be required to control the
magnetic stripe communication disclosed in Moullette. PO Resp. 24. With
respect to claim 1 of the ’100 Patent, Petitioner provides persuasive evidence
that the interface processors allow communication from the cell phone
payment data to the magnetic card reader. Pet. 19–20; Ex. 1002 ¶ 67;
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Ex. 1007, Fig. 1, 3:63–65; Ex. 1032, 51:5–9, 52:9–24. Indeed, Patent
Owner’s declarant, Mr. Zatkovich, agrees that data conversion beyond the
inductors is necessary for the Moullette adaptor to function. Ex. 1032,
41:17–42:4 (agreeing there would have to be data conversion). Having
reviewed the full record, we conclude that Moullette teaches “a processor for
controlling the circuit” used to emit and communicate with the magnetic
stripe reader. Id.
c. “wherein the circuit is operable to communicate the data to the
read-head while located outside of the magnetic stripe reader at a
distance of at least a quarter of an inch from the read-head.”
Petitioner argues that Moullette teaches this limitation in describing
“an adaptor with ‘an inductor capable of generating a magnetic field of
sufficient power to couple with a head of a magnetic stripe card reader
through the housing of the reader device’” such that “the adaptor can be
positioned external to the reader device.” Pet. 20–21 (quoting Ex. 1007,
Abstract); see Ex. 1002 ¶¶ 67, 69. Petitioner avers that Moullette discloses
generating a magnetic field sufficient to communicate the continuous data to
the read heads from the outside of the housing. Pet. 21; Ex. 1007, 5:54–57,
6:1–5, 6:25–29, Fig. 3B (items 27, 10a, 10b); Ex. 1002 ¶ 68. Petitioner
further asserts that a person of ordinary skill in the art would have
understood from “the dimensions of Moullette’s device and magnetic card
readers at the time of the alleged invention, that the distance between
Moullette’s inductor element 72 and the read-head of the magnetic stripe
reader would have been at least a quarter of an inch.” Ex. 1002 ¶ 69. For
example, Petitioner argues that
Moullette describes that “core 72” has “a thickness of about
1/8”,” and is contained within the M-Pod module 26, which is
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larger in size than core 72. Ex. 1007, 5:41–44, Fig. 3B. A
POSITA would also have understood that the card reader
housing (such as element 2 in Figure 3B above) would have had
a thickness of at least a quarter of an inch. Ex. 1002 ¶ 69. Thus,
the circuit of Moullette’s adaptor communicates with the read-
head of the magnetic card reader while outside the card reader
and at least a quarter of an inch from the read-head. Id.
Pet. 22.
Patent Owner does not challenge Petitioner’s argument and evidence
regarding the proximity of the Moullette device beyond the integral unit and
device arguments discussed above. Having reviewed the full record, we find
that Moullette teaches the wherein location limitations of claim 1.
3. Claims 2, 3, 8, and 10
Claim 2 recites that the device of claim 1 “is thicker than a payment
card.” Claim 3 further limits the device of claim 1 is wireless
communication device. Claims 8 and 10 limit the circuit of claim 1 to be
operable to emit a second electromagnetic field (claim 8) and to be operable
to serially transmit the data. Petitioner provides persuasive argument and
evidence that Moullette teaches the limitations of dependent claims 2, 3, 8,
and 10. Pet. 23–28; Ex. 1002 ¶¶ 69–74. Petitioner provides persuasive
citations to Moullette and testimony that shows Moullette teaches the
limitations of these dependent claims. Id.
Patent Owner relies on the arguments addressed above for claim 1
with respect to claims 2, 3, 8, and 10. PO Resp. 25–26
Having reviewed the full record, we find that Moullette teaches the
wherein limitations of dependent claims 2, 3, 8, and 10.
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4. Objective Indicia of Nonobviousness
Patent Owner argues that its evidence of objective indicia of
nonobviousness shows that the ’100 Patent’s claims would not have be
obvious to a person of ordinary skill in the art at the time of the alleged
invention. PO Resp.57–64; Sur-Reply 22–25. Petitioner contends that
“[Patent Owner] bears the burden to come forward with any evidence of
secondary considerations, yet fails to show a nexus between its claimed
invention and any of its purported secondary considerations evidence.”
Reply 22.
For objective indicia of nonobviousness to be accorded substantial
weight, its proponent must establish a nexus between the evidence and the
merits of the claimed invention. Lectrosonics, Inc. v. Zaxcom, Inc.,
IPR2018-01129, Paper 33 at 32 (PTAB January 24, 2020) (precedential,
designated April 14, 2020) (citing ClassCo, Inc., v. Apple, Inc., 838 F.3d
1214, 1220 (Fed. Cir. 2016)). “[T]here is no nexus unless the evidence
presented is ‘reasonably commensurate with the scope of the claims.’”
ClassCo, 838 F.3d at 1220 (quoting Rambus Inc. v. Rea, 731 F.3d 1248,
1257 (Fed. Cir. 2013)). The nexus also must be attributable to some aspect
of the claim that is not already in the prior art. In re Kao, 639 F.3d 1057,
1068–69 (Fed. Cir. 2011). A patentee is entitled to a presumption of nexus
“when the patentee shows that the asserted objective evidence is tied to a
specific product and that product ‘embodies the claimed features, and is
coextensive with them.’” Fox Factory, Inc. v. SRAM, LLC, 944 F.3d 1366,
1373 (Fed. Cir. 2019) (quoting Polaris Indus., Inc. v. Arctic Cat, Inc., 882
F.3d 1056, 1072 (Fed. Cir. 2018) (quoting Brown & Williamson Tobacco
Corp. v. Philip Morris Inc., 229 F.3d 1120, 1130 (Fed. Cir. 2000))).
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“Although we do not require the patent [owner] to prove perfect
correspondence to meet the coextensiveness requirement, what we do
require is that the patent[owner] demonstrate that the product is essentially
the claimed invention.” Fox Factory, 944 F.3d at 1374.
Patent Owner contends that four products produced by the Patent
Owner, Dynamics, and one product produced by Petitioner, Samsung Pay,
are all coextensive with the claims of the ’100 Patent. PO Resp. 57. Patent
Owner’s evidence of this co-extensiveness is insufficient.
With respect to Dynamics’s products, Patent Owner asserts that
“Dynamics has sold a significant number of payment cards that employed
magnetic stripe emulation of payment cards since it began offering its
payment cards for sale in 2011.” PO Resp. 59 (citing Ex. 2042 ¶ 140).
However, Patent Owner’s declarant testimony does not support the sale of a
significant number of payment cards. Id. Indeed, Patent Owner fails to
show any commercial sales to support it conclusory allegation.
Furthermore, Patent Owner has not persuasively shown that cards it sells are
coextensive with the ’100 Patent a Petitioner’s testimony (Ex. 2042 ¶¶ 135–
142). The claim charts (Ex. 2035–2038; Ex. 2042 ¶ 137) mapping the ’100
Patent to the Dynamics products are improper incorporation by reference of
a declaration into a brief. See PO Resp. 58; 37 C.F.R. § 42.6(a)(3); see also
Eli Lilly and Co. v. Teva Pharms. Int’l GmbH, No. IPR2018-01424, Paper
80 at 104 (PTAB Feb. 18, 2020) (finding reference to claim charts in
declaration to support secondary consideration was improper incorporation).
With respect to the Samsung Pay products, Patent Owner relies on
claim charts from related litigation and conclusory testimony to support its
contention that the Samsung Pay application is coextensive with the
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independent claims of the ’100 Patent. PO Resp. 58–60; Ex. 2044; Ex. 2042
¶¶ 138–142. Patent Owner admits, however, that the Samsung features are
sold in various commercially successful products—smart phones and
watches—but has not shown that those products have a nexus to the ’100
Patent. Id. at 59. In addition to improperly incorporating by reference the
Samsung Pay product claim charts (PO Resp. 58–59; 37 C.F.R.
§ 42.6(a)(3)), Patent Owner makes no attempt to indicate what portion of
commercial success that Petitioner’s devices may have is attributable to
features claimed in the ’100 Patent relative to those not covered by the
patent. Consequently, we have no basis to assess how much commercial
success of Petitioner’s devices is attributable to the ’100 Patent. The nexus
between the ’100 Patent and the commercial success must be due to features
that are not in the prior art. See Kao, 639 F.3d at 1068–69. Patent Owner’s
evidence of commercial success and a nexus to the ’100 Patent is
insufficient to carry its burden. See Fox Factory, 944 F.3d at 1374.
Patent Owner’s evidence of successfully licensing the ’100 Patent to
LG Electronics, Inc. (PO Resp. 59) also is unpersuasive. The only
unredacted patent listed in the license agreement is U.S. Patent 8,827,153,
which is not the patent at issue here. Ex. 2013, 10. Consequently, the
license agreement is ineffective to show commercial success relating to
the ’100 Patent.
Patent Owner’s remaining evidence of non-obviousness is equally
unavailing. Patent Owner fails to establish a nexus between the chart of
awards and the claimed invention of the ’100 Patent. PO Resp. 61–63.
Patent Owner’s award chart lacks evidence for what the awards were for,
and fails to show a nexus to the ’100 Patent’s claims sufficient to support
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industry praise. PO Resp. 61–63; Ex. 2042 ¶ 145. Similarly, Patent
Owner’s evidence of copying and the failure of others relies on unsupported
and conclusory testimony from the Zatkovich declaration that fails to show a
nexus between the evidence and the ’100 Patent. PO Resp. 59–61, 63;
Ex. 2042 ¶ 141, 142, 147.
Having reviewed the full record, we agree with Petitioners’ arguments
regarding Patent Owner’s allegations of objective indicia of nonobviousness.
Reply 22–25. We find that Patent Owner, on the full record, has not
persuasively established a nexus showing that industry praise for or
commercial success of Dynamics’ or Samsung’s products are attributable to
the claimed features of the ’100 Patent. Patent Owner also has not provided
sufficient and persuasive evidence of copying, long-felt need, failure of
others, or licensing. Accordingly, Patent Owner’s evidence of objective
indicia of nonobviousness is insufficient to establish non-obviousness of the
claimed invention.
5. Conclusion
Based on the full record, we determine that Petitioner has
demonstrated by a preponderance of the evidence that claims 1–3, 8, and 10
would have been obvious over Moullette to a person of ordinary skill in the
art at the time of the invention.
E. Alleged Obviousness of Claims 9 and 11: Moullette and Poidomani
Petitioner argues that Moullette and Poidomani would have rendered
claims 9 and 11 obvious to a person of ordinary skill in the art under 35
U.S.C. § 103. Pet. 25–29; see Ex. 1002 ¶¶ 75–81.
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1. Overview of Poidomani (Ex. 1009)
Poidomani is published U.S. patent titled “Electronic Cards and
Methods for Making Same” published Feb. 15, 2007. Ex. 1009, code (54).
The device disclosed in Poidomani “includes a digital processor, an
electrochemical battery and a communications port.” Id. at Abstract, ¶¶ 78,
86. Poidomani describes a device with “a swipe emulating broadcaster
system” that includes a coil, where “the coil provides a dynamic magnetic
field which emulates the swiping of a magnetic stripe transaction card.”
Ex. 1009 ¶ 35. Poidomani discloses that “[t]he non-contact communications
port [is] included as an alternative to or in addition to” the magnetic stripe
emulator. Id. ¶ 86. Poidomani discloses that the magnetic stripe emulator of
Poidomani includes a broadcaster which is “one or more inductive coils”
that operates upon “activation” of “one or more sensors . . . used to signal to
general process that the physical act of swiping the card body through a
legacy reader has commenced.” Id. ¶¶ 81, 98.
2. Reason to Combine
Petitioner asserts that Moullette’s two inductors that generate
independent electromagnetic fields would have provided a person of skill in
the art with reason to combine such fields with Poidomani’s teachings
regarding multiple inductive coils emitting electromagnetic fields in parallel
and using cancellation to avoid interference. Pet. 25–27; Ex. 1002 ¶ 76; see
Ex. 1009 ¶¶ 35, 100; Ex. 1007, 2:51–55, 3:15–25. Thus, “[a] POSITA
would have been motivated to incorporate Poidomani’s teaching of emitting
at least two electromagnetic fields in parallel into Moullette’s device such
that Moullette’s two electromagnetic fields are emitted in parallel.” Pet. 26;
Ex. 1002 ¶ 77. Petitioner asserts that a skilled artisan “would have
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understood that the benefits of parallel electromagnetic field emissions
included the possibility of completing transactions faster by transmitting two
tracks at the same time, rather than one after the other.” Pet. 27; Ex. 1002
¶ 77. Petitioner’s declarant attests that Moullette and Poidomani share
“similarities in function, design, and purpose” such that “a POSITA would
have expected that modifying Moullette to perform parallel electromagnetic
field transmission, as taught in Poidomani, would have been within a
POSITA’s skill, and . . . would have expected to be successful modifying
Moullette in this way.” Id.
Patent Owner argues that Petitioner’s rational to combine ignored the
purpose of serial transmission taught in Moullette. PO Resp. 26–28. Patent
Owner argues that because Moullette specifically describes serial
transmission and makes no mention of a need for faster transmission, there is
no reason to add parallel transmission to the Moullette scheme. PO Resp.
27–28; Ex. 2042 ¶ 81; Ex. 2039, 99:3–11 (Mr. Halliday acknowledging that
faster transactions is not expressly mentioned in Moullette). Patent Owner’s
arguments fail to address persuasively Petitioner’s proposed motivation to
combine based on adding Poidomani’s parallel transmission to Moullette,
but not replacing serial transmission. Pet. 26–27. Contrary to Patent
Owner’s contentions (PO Resp. 27; Sur-Reply 13), Moullette need not
expressly provide motivation for faster transactions. See Alza Corp. v.
Mylan Labs., Inc., 464 F.3d 1286, 1290 (Fed. Cir. 2006) (“A suggestion,
teaching, or motivation to combine the relevant prior art teachings does not
have to be found explicitly in the prior art.”) (citations omitted, emphasis
omitted); Unwired Planet, LLC v. Google Inc., 841 F.3d 995, 1002–03 (Fed.
Cir. 2016) (patent challenger “does not need to show that there was a known
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problem with the prior art system in order to articulate the required rational
underpinning for the proposed combination”). Here, we credit Petitioner’s
testimony that the addition of parallel to Moullette’s serial transaction would
allow for both functions to coexist and allow for faster transactions. Pet. 25–
27; Ex. 1002 ¶¶ 75–77.
Having considered the parties’ arguments and evidence regarding the
rationale for combining the teachings of Moullette and Poidomani, we find
Petitioner provides adequate reasoning that a person of skill in the art would
have had reason to combine Moullette and Poidomani with reasonable
expectation of success.
3. Claim 9: “device of claim 1, wherein the circuit is operable to emit
a second electromagnetic field in parallel with the electromagnetic
field.”
Petitioner argues that Moullette as discussed above teaches the
limitations of claim 1 and the first and second magnetic fields. Pet. 27;
Ex. 1002 ¶¶ 78, 79. In the proposed combination of Moullette and
Poidomani, Petitioner cites Poidomani’s teachings of a
“broadcaster 68” that includes “[f]our exemplary coils . . . a
‘track one’ coil 128, a ‘track two’ coil 130, a ‘track one
cancellation’ coil 132 and a ‘track two cancellation coil 134.’”
Ex. 1009, [0099], Fig. 5. Each “coil provides a dynamic
magnetic field which emulates the swiping of a magnetic stripe
transaction card past a read head of a card reader.” Id., [0035].
Pet. 27. Petitioner asserts that Poidomani teaches that the cancellation coil is
used to cancel cross talk as the electromagnetic fields are emitted together.
Id. at 28. Thus, Petitioner argues the combination of Poidomani and
Moullette teach the limitations of claim 9. Id. at 27–28. Patent Owner does
not specifically address Petitioner’s contentions. See generally PO Resp.
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4. Claim 11: “wherein the circuit is operable to transmit the data in
a parallel operation.”
Petitioner argues that a person of skill in the art would know that
Moullette teaches a device with two magnetic fields and that in combination
with Poidomani teaches a device capable of transmitting data in parallel.
Pet. 28–29; Ex. 1002 ¶¶ 80–82. Based on the emulation of swiping a card
past a card reader, a person of skill in the art would understand that the first
and second coils in Poidomani are simultaneously transmitting the data to
the stripe reader. Id. Patent Owner does not specifically address Petitioner’s
contentions. See generally PO Resp.
5. Conclusion
We find that Petitioner has shown that Moullette and Poidomani teach
the limitations of claims 9 and 11. Pet. 26–29; Ex. 1002 ¶ 77. Based on the
full record including weighing Patent Owner’s evidence of objective indicia
of nonobviousness in § II.D.4, we determine that Petitioner has
demonstrated by a preponderance of the evidence that claims 9 and 11
would have been obvious over Moullette and Poidomani to a person of
ordinary skill in the art at the time of the invention.
F. Alleged Obviousness of Claims 1, 4–7, 12–18, and 20: Zellner and
Moullette
Petitioner asserts that claims 1, 4–7, 12–18, and 20 would have been
rendered obvious by Moullette and Zellner. Pet. 29–43; Ex. 1002 ¶¶ 83–
109.
1. Overview of Zellner (Ex. 1008)
Zellner is a U.S. patent titled “Multiple Function Electronic Cards.”
Ex. 1008, code (54). Zellner’s electronic card includes first and second
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opposing faces, and is similar in dimensions to a standard credit card. Id.,
code (57). A flat panel display extends over the first face of the card, and a
dynamic magnetic encoder is provided on the second face of the card. Id.
The dynamic magnetic encoder provides magnetic stripe information for a
selected credit card. Id.
Zellner’s Figure 6 is shown below.

Zellner’s Figure 6 shows an electronic card including display(s) 110/160,
dynamic magnetic encoder (DME) 120, input device 130, and processor 150.
Id. at 7:42–46. The electronic card further includes short range wireless
transceiver 610 for Bluetooth, WiFi or other communications. Id. at 7:46–
50. The electronic card also includes Radio Frequency ID (RFID)
receiver 620, RFID transmitter 630, and cellular transceiver 640. Id.
at 7:50–53. Zellner further discloses a PDA, cell phone or other portable
electronic device, which “may be combined with any or all of the
embodiments” described earlier in the reference. Id. at 11:6–8.
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2. Reason to Combine
Petitioner provides articulated rationale and reasoning to incorporate
Moullette into Zellner’s device so personal communication devices, such as
cell phones, can communicate with payment terminals via a device that
emulates magnetic fields generated by traditional magnetic stripe payment
cards. Pet. 29–31; Ex. 1002 ¶¶ 83–87; Ex. 1007, 2:42–47, 2:51–65;
Ex. 1008, 1:6–9, 5:34–39. Petitioner cites Zellner’s portable electronic
device with processor, display, RF, RFID, and cellular systems, and dynamic
magnetic encoder capable of displaying credit card images and emulating a
credit card’s magnetic stripe information to existing card readers via
magnetic or radio interface. Pet. 30–31; Ex. 1008, Abstract, 5:34–39, 9:51,
11:50–55. Moullette similarly teaches inductors that generate a first and
second magnetic field capable of coupling with a magnetic stripe reader
from the outside of a reader device. Pet. 31; Ex. 1007, Abstract, 3:15–25.
Petitioner argues that it would have been obvious to an ordinarily skilled
artisan “to modify Zellner’s dynamic magnetic encoder (to the extent
necessary) to include Moullette’s inductors to ensure that Zellner’s device
could communicate with payment terminals using both radio frequency
interaction, such as RFID, and magnetic stripe emulation using magnetic
fields.” Pet. 31 (citing Ex. 1002 ¶ 86).
Patent Owner contends that there is no reason to combine Zellner and
Moullette because Zellner’s dynamic magnetic encoder (DME) is not
designed to communicate with a card reader. PO Resp. 29–32; Ex. 2042
¶¶ 55, 86. Instead, Patent Owner contends Zellner does not disclose
including an encoder in the cell phone of Zellner and fails to disclose how to
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implement the emulator of Moullette on a cell phone. PO Resp. 30;
Ex. 2042 ¶¶ 86–87.
Petitioner argues that Zellner teaches sharing credit card information
through a magnetic interface such that it is compatible with existing card
readers. Reply 10; Ex. 1008, 1:60–2:2, 3:22–26, 11:50–55; Pet. 17–19.
Furthermore, Petitioner argues that the distinction between encoders and
emulators that Patent Owner asserts is not warranted, as Petitioner’s
declarant admits that an “encoder communicates with the read head” as does
a magnetic emulator. Reply 10; Ex. 1032, 70:21–71:7. Patent Owner’s
evidence that a person of ordinary skill in the art would not have
incorporated Moullette into Zellner relies on the testimony of Mr. Zatkovich
(Ex. 2042 ¶¶ 55, 87, 88) and a European Patent Application (Ex. 2047 ¶¶ 7,
8), to support the distinction between magnetic encoders and emulators.
Reply 29–30. We are not persuaded by this evidence and credit Petitioner’s
argument and evidence (Pet. 17–19; Reply 10) that Zellner teaches
electronic cards that interface with known card readers through a magnetic
interface. Ex. 1008, 3:22–26; 11:10–13.
Patent Owner contends that Zellner “does not disclose including an
encoder in a cell phone” or explain how it would work, or its structural
features and capabilities. PO Resp. 30–31; Ex. 1008, 1:64–2:2, 5:35–39. We
are not persuaded by Patent Owner’s arguments. As Petitioner responds,
prior art publications and patents are presumed to be enabled. Reply 10–11
(citing Sandoz Inc. v. Pharmacyclics LLC, IPR2019–00865, Paper 29 at 13
(PTAB Sept. 24, 2020)); see Microsoft Corp. v. Parallel Networks
Licensing, LLC, 715 F. App’x 1013, 1021 (Fed. Cir. 2017). Furthermore,
Zellner expressly states that a PDA or mobile device “may be combined
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with any or all of the embodiments” described earlier in Zellner, which
include the encoder embodiment. Ex. 1008, 11:6–8, Fig. 12; Pet., 12–14,
29–32. In addition, Petitioner argues that “Zellner provide at least as much
implementation detail as the ’100 Patent, which only says its Figure 12 “may
be, for example, a portable telephonic device, portable media player, or any
type of electronic device.” Reply 10–11. Indeed, the ’100 Patent expressly
states it “does not provide implementation details because a POSITA ‘will
appreciate that the functionality of a card may be provided on a personal
device,’ such as a ‘portable telephonic device.’” Id. (citing Ex 1001, 12:32–
37).
Patent Owner’s arguments regarding the whether the combination of
Zellner with Moullette is enabled is not persuasive. “Even if a reference
discloses an inoperative device, it is prior art for all that it teaches.”
Beckman Instruments, Inc. v. LKB Produkter AB, 892 F.2d 1547, 1551 (Fed.
Cir. 1989). Thus even “a non-enabling reference may qualify as prior art for
the purpose of determining obviousness under 35 U.S.C. 103.” Symbol
Techs. Inc. v. Opticon Inc., 935 F.2d 1569, 1578 (Fed. Cir. 1991). In
addition, Patent Owner does not identify specifically the missing teachings
that a person of ordinary skills in the art would undermine Petitioner’s
rationales to combine Moullette and Zellner. Pet. 29–31; Ex. 1002 ¶¶ 83–
87; Ex. 1007, 2:42–47, 2:51–65; Ex. 1008, 1:6–9, 5:34–39. With respect to
Zellner’s disclosure, we do not agree with Patent Owner that Zellner is silent
on magnetic encoders or their features. PO Resp. 31. Zellner expressly
discusses devices that can “emulate the magnetic stripe information that
would be provided by the credit card,” and explains that emulation was
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“well known to those having skill in the art.” Ex. 1008, 1:60–64, 5:34–39;
see Reply 11–12.
We also do not agree with Patent Owner’s contention that the
combination of Moullette’s features into Zellner would eviscerate or
dismantle Moullette’s invention. PO Resp. 32. Petitioner’s proposed
modification incorporates Moullette’s well known use of inductors to
perform emulation as a design choice into Zellner. See Ex. 1002 ¶¶ 82–87;
PO Resp. 30 (describing inductor use in emulation as a design choice);
Ex. 1032 ¶¶ 83–87 (describing using coils as encoders). A person of
ordinary skill as discussed in Part II.A. is a person of ordinary creativity, not
an automaton. KSR, 550 U.S. at 420–21. Here, Patent Owner’s argument
that such a person of ordinary skill would not know what to do with
Zellner’s teachings is not persuasive in light of the well-known design
choices within the field. See Ex. 1002 ¶¶ 82–87; Ex. 1032, 73:8–13 (noting
that could can be used as encoders); PO Resp. 30 (describing inductor use in
emulation as a design choice); Ex. 1032 ¶¶ 83–87 (describing using coils as
encoders).
Based on the full record, we determine that Petitioner presents
persuasive and sufficient evidence and rationales to combine Zellner and
Moullette and Zellner with a reasonable expectation of success.
3. Claims 1 and 12
a. Claim 1: Preamble and “a circuit operable to emit an
electromagnetic field and to electrically couple to, and transmit
data to, a read-head located on a magnetic stripe reader,” and “a
processor for controlling the circuit”
Petitioner argues Zellner discloses a portable package device.
Pet. 32–33; Ex. 1008, 10:63–11:13, Fig. 12. Furthermore, Zellner’s
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dynamic magnetic encoder emulates credit card strip information in
combination with Moullette’s inductors allowing communication with
legacy card reader terminals. Pet. 33–34; Ex. 1002 ¶¶ 88, 89. Finally,
Zellner discloses a processor 150 configured to control the dynamic
magnetic encoder that provides magnetic stripe information. Pet. 34–35;
Ex. 1008, Fig. 1C, 5:54–61; Ex. 1002 ¶ 90.
b. Claim 1: “wherein the circuit is operable to communicate the data
to the read-head while located outside of the magnetic stripe
reader at a distance of at least a quarter of an inch from the read-
head.”
Petitioner argues that Zellner and Moullette teach this limitation, as
Zellner teaches sharing credit card information with a requesting purchase
system through a radio or magnetic interface while at a distance (Ex. 1008,
3:22–26; Ex. 1002 ¶ 91) and together Moullette and Zellner teach “the
dimensions of personal communication devices, such as a cell phone, and
magnetic card readers at the time of the alleged invention [such] that the
distance between Zellner’s dynamic magnetic encoder circuit and the read-
head of the magnetic stripe reader” would have been within the scope of the
claim. Pet. 36; Ex. 1002 ¶ 92.
c. Claim 12
Petitioner argues that Zellner and Moullette teach the limitations of
claim 12 for the reasons discussed above with respect to claim 1. Pet. 40–
41; see Pet. 6 (comparing claims 1 and 12). Petitioner relies on Zellner to
the teach the “portable telephonic device” of claim 12. Id. at 38–40.
d. Patent Owner Contentions
Patent Owner argues claim 1 and 12 separately. PO Resp. 29–33, 37–
38. Patent Owner argues that Zellner and Moullette fail to teach the claimed
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circuit and that Zellner only discusses physical swiping of cards. PO Resp.
31. We find that Zellner discloses that its encoder can “emulate a
conventional magnetic stripe.” Ex. 1008, 5:35–39. Zellner’s device
emulates magnetic stripe data by through magnetic interface” and is
“compatible with existing card readers” using “[t]he dynamic magnetic
encoder,” and can be used at card readers for automatic transactions.
Ex. 1008, 1:60–2:2, 3:22–26, 11:50–55; Pet., 17–19. Patent Owner’s
declarant admitted that “an encoder communicates with the read head.”
Ex. 1032, 71:4–7. On the full record, we are not persuaded that Zellner’s
teaching of encoders differs from emulators based on the full record.
For claim 12, Patent Owner also relies on the same arguments
presented for claim 1, and further asserts that Moullette does not teach the
portable telephonic device of claim 12. PO Resp. 37–38; Ex. 2042 ¶ 93.
Patent Owner then asserts that Moullette describes an adaptor, but does not
disclose a portable device or teach assigning its adaptor to the mobile device
as part of its system. PO Resp. 34–35; Ex. 2042 ¶¶ 89–91. Patent Owner
argues that portions of Moullette, such as the M-pod, serve no purpose in the
portable telephone of Zellner. Id.
We are not persuaded by Patent Owner’s arguments, as they argue the
references separately, and fail to address the combination of Zellner
incorporating Moullette features that Petitioner proposes. Pet. 33–36; PO
Resp. 33–36. Furthermore, Zellner is not limited to physical magnetic stripe
reading or contact by actual swiping, but indicates that proximity to the
reader allows for a reader to receive credit card information through a radio,
magnetic, or other interface. Ex. 1008, 3:22–26; Ex. 1002 ¶ 91. Patent
Owner argues the references separately rather than in combination and does
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not persuasively address Petitioner’s combination. In addition, Petitioner
asserts that Zellner teaches the portable telephonic device and incorporates
Moullette’s inductor teachings. Pet. 38–40.

e. Conclusion Claims 1 and 12
We agree with Petitioner’s argument and evidence, and we find that
Zellner and Moullette teach the limitations of independent claims 1 and 12.
Based on the full record, we determine that Petitioner has demonstrated by a
preponderance of the evidence that claims 1 and 12 would have been
obvious over Zellner and Moullette.
4. Claims 4–7, 13–18, and 20
Petitioner provides argument and evidence citing to Zellner,
Moullette, and Mr. Halliday that the asserted references teach the limitations
of dependent claims 4–7, 13–18, and 20. Pet. 36–40, 41–43; Ex. 1002
¶¶ 93–99, 104–109. Petitioner provides detailed citation and argument that
Zellner and Moullette teach the portable device limitations (claims 4, 5, 14,
and 15); the touch display and graphical interface limitations (claims 6, 7,
13, 16, 17); and the second magnetic field and serial transmission in a
portable device limitations (claims 18 and 20). Pet. 36–40, 41–43.
With respect to claims 4 and 5, Patent Owner argues that the Zellner
does not disclose communicating to read head of a magnetic stripe reader.
PO Resp. 33; Ex. 2042 ¶ 89. We disagree, finding that Zellner expressly
describes communicating via a magnetic interface and combining Zellner’s
cell phone with other disclosed embodiments. Ex. 1008, 10:63–11:21, 3:22–
26. Similarly, Patent Owner’s argument that turning the system of Moullette
into a portable device has no role in the system of Moullette fails to address
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Petitioner’s proposed combination that incorporates Moullette into Zellner.
Pet. 36–43. We find that Zellner teaches the portable device limitations of
claims 4 and 5.
With respect to the touch display and graphical interface limitations of
claims 6 and 7, Patent Owner’s argument focuses on the use of a display or
touch sensitive display in the merchant system of the Moullette device. PO
Resp. 36–37; Ex. 2042 ¶ 92. Patent Owner’s argument again fails to address
Petitioner’s combination incorporating Moullette into Zellner’s mobile
device and not attempting to recast Moullette as a mobile device. See Pet.
37–38; Reply 14. We find that Zellner and Moullette teach the claimed
display and touch sensitive display recited in claims 6 and 7.
For the remaining claims 13–18 and 20, Patent Owner argues that
Zellner and Moullette fail to teach these limitations for the same reasons
addressed above for claim 12. For the reasons above, we find that Zellner
and Moullette teach the limitations of claims 13–18 and 20.
5. Conclusion
We find that Zellner and Moullette teach the limitations of claims 1,
4–7, 12–18, and 20. Based on the full record including weighing Patent
Owner’s evidence of objective indicia of nonobviousness in § II.D.4,, we
determine that Petitioner has demonstrated by a preponderance of the
evidence that claims 1, 4–7, 12–18, and 20 would have been obvious over
Zellner and Moullette to a person of ordinary skill in the art at the time of
the invention.
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G. Alleged Obviousness of Claim 19: Zellner, Moullette, and Poidomani
Petitioner argues that Zellner, Moullette, and Poidomani would have
rendered claim 19 obvious to a person of ordinary skill in the art under 35
U.S.C. § 103. Pet. 44–45; see Ex. 1002 ¶¶ 111–112. Claim 19 depends
from claim 12 and recites that a “second circuit [is] operable to emit a
second electromagnetic field in parallel with the electromagnetic field.”
Petitioner provides sufficient and persuasive rationale to combine
Zellner and Moullette, as discussed above, and argues that a person of
ordinary skill in the art would have had reason to incorporate the teachings
of Moullette as modified by Poidomani into Zellner’s device. Pet. 44;
Ex. 1002 ¶¶ 111–112. Petitioner notes that Zellner describes the dynamic
magnetic encoder is a known technique with the skills of an ordinarily
skilled artisan and that Moullette and Poidomani provide such teachings. Id.
Petitioner also asserts that the combination of Zellner, Moullette, and
Poidomani teach the simultaneous electromagnetic fields that provide
magnetic stripe data in dependent claim 19 for the same reasons described
above for claims 9 and 11. Pet. 45; Ex. 1002 ¶ 113.
Patent Owner’s arguments raise the same motivation to combine
arguments regarding faster transactions and device communication
flexibility addressed above in Part II.E.2 with respect to Moullette and
Poidomani. See PO Resp. 26–29, 38–39. For the same reasons discussed
above, we find that Petitioner provides sufficient evidence and argument that
showing that a person of ordinary skill in the art would have had reason to
combine Zellner, Moullette, and Poidomani with a reasonable expectation of
success.
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Based on the full record including weighing Patent Owner’s evidence
of objective indicia of nonobviousness in § II.D.4, we determine that
Petitioner has demonstrated by a preponderance of the evidence that
dependent claim 19 would have been obvious in view of Zellner, Moullette,
and Poidomani.
H. Alleged Obviousness Claims based on Doughty
Petitioner provides argument the Doughty renders claims 1–3, 8,
and 10 obvious. Pet. 45–51; Ex. 1002 ¶¶ 114–123. Petitioner argues that
Doughty and Poidomani would have rendered claims 9 and 11 obvious
(Pet. 51–54; Ex. 1002 ¶¶ 124–128); Doughty and Zellner would have
rendered claims 4–7, 12–17, and 20 obvious (Pet. 54–65; Ex. 1002 ¶¶ 129–
160); and Doughty, Zellner, and Poidomani would have rendered claim 19
obvious (Pet. 65–67; Ex. 1002 ¶¶ 161–164).
We do not reach Petitioner’s grounds for unpatentability based
Doughty as we have determined above that claims 1–20 of the ’100 are
unpatentable over (1) Moulette (claims 1–3, 8, 10); (2) Moullette and
Poidomani (claims 9 and 11); (3) Zellner and Moullette (claims 1, 4–7, 12–
18, 20 ); and (4) Zellner, Moullette, and Poidomani (claim 9). See Part II.D,
II.E, II.F, and II.G; SAS Inst. Inc. v. Iancu, 138 S. Ct. 1348, 1359 (2018)
(holding a petitioner “is entitled to a final written decision addressing all of
the claims it has challenged”); Boston Sci. Scimed, Inc. v. Cook Grp. Inc.,
809 F. App'x 984, 990 (Fed. Cir. Apr. 30, 2020) (non-precedential)
(recognizing that the “Board need not address issues that are not necessary
to the resolution of the proceeding” and, thus, agreeing that the Board has
“discretion to decline to decide additional instituted grounds once the
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petitioner has prevailed on all its challenged claims”). Accordingly, further
review of Petitioner’s grounds based on Doughty would not change our final
decision in this case.
I. Constitutional Arguments
Patent Owner contends that Administrative Patent Judges are
unconstitutionally appointed principal officers, and that this proceeding
should be dismissed or stayed for this reason. PO Resp. 66–68; Sur-
Reply 26–27. We do not reach Patent Owner’s Constitutional challenge
because the Supreme Court resolved this issue in United States v. Arthrex,
Inc., 141 S. Ct. 1970, 1986–87, 1997 (2021).
IV. CONCLUSION8
For the reasons given, based on the arguments and evidence of record,
Petitioner has met its burden to prove by a preponderance of the evidence
that (1) claims 1–3, 8, 10 are unpatentable under 35 U.S.C. § 103(a) as
obvious over Moullette; (2) claims 9 and 11 are unpatentable under 35
U.S.C. § 103(a) as obvious over Moullette and Poidomani; (3) claims 1, 4–7,
12–18, 20 10 are unpatentable under 35 U.S.C. § 103(a) as obvious over
Zellner and Moullette; and (4) claim 9 is unpatentable under 35 U.S.C.

8 Should Patent Owner wish to pursue amendment of the challenged claims
in a reissue or reexamination proceeding subsequent to the issuance of this
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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§ 103(a) as obvious over Zellner, Moullette, and Poidomani. We reached no
conclusion on the four grounds based on Doughty. Boston Sci. Scimed, Inc.
v. Cook Grp. Inc., 809 F. App’x 984, 990 (Fed. Cir. Apr. 30, 2020) (non-
precedential).
The table below summarizes our conclusions:
Claim(s) 35 U.S.C. §
Reference(s)/
Basis
Claims Shown
Unpatentable
Claims
Not Shown
Unpatentable
1–3, 8, 10 103(a) Moullette 1–3, 8, 10
9, 11 103(a) Moullette,
Poidomani
9, 11
1, 4–7, 12–
18, 20
103(a) Zellner,
Moullette
1, 4–7, 12–18,
20

19 103(a) Zellner,
Moullette,
Poidomani
19
1–3, 8, 10 103(a) Doughty9
9, 11 103(a) Doughty,
Poidomani

4–7, 12–
18, 20
103(a) Doughty, Zellner
19 103(a) Doughty, Zellner,
Poidomani

Overall
Outcome
1–20

9 We do not reach the Doughty challenges for the reasons previously
explained.
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V. ORDER
Accordingly, it is:
ORDERED that claims 1–20 of the ’100 Patent are determined to be
unpatentable; and
FURTHER ORDERED that, because this is a final written decision,
parties to this proceeding seeking judicial review of our Decision must
comply with the notice and service requirements of 37 C.F.R. § 90.2.

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For PETITIONER:

F. Christopher Mizzo
Gregory S. Arovas
James Marina
Alan Rabinowitz
KIRKLAND & ELLIS LLP
Chris.mizzo@kirkland.com
Greg.arovas@kirkland.com
James.marina@kirkland.com
Alan.rabinowitz@kirkland.com

For PATENT OWNER:

Robert Morris
ECKERT SEAMANS CHERIN & MELLOTT, LLC
rwmorris@eckertseamans.com

Michael Messinger
SHAMI MESSINGER PLLC
mike@shamimessinger.com