DYNAMICS INC.

Patent Trials and Appeals Board

Aug 11, 2021

IPR2020-00504 (P.T.A.B. Aug. 11, 2021)

Trials@uspto.gov Paper 31
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 IPR2020-00504
Patent 10,223,631 B2
____________

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

JEFFERSON, Administrative Patent Judge.

DECISION
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 1–7, 9–13, 19, 21, and 22 (“the
challenged claims”) of U.S. Patent No. 10,223,631 B2 (Ex. 1001, the “’631
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 the challenged claims
of the ’631 Patent. Paper 11 (“Dec.”).
Following institution, Patent Owner filed its Response to the Petition.
Paper 18 (“PO Resp.”). Petitioner filed a Reply to Patent Owner’s
Response, and Patent Owner filed a Sur-Reply. Paper 20 (“Reply”);
Paper 21 (“Sur-Reply”). An Oral Hearing took place on May 12, 2021. The
Hearing Transcript is included in the record. Paper 29 (“Tr.”).
After considering the parties’ arguments and supporting evidence, we
determine that Petitioner has proved by a preponderance of the evidence that
claims 1–7, 9–13, 19, 21, and 22 are unpatentable. 35 U.S.C. § 316(e)
(2018); 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 ’631 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. 72–73. 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.
According to Petitioner, an initial determination in the ITC case is expected
on or around August 14, 2020. Id. Petitioner further informs us of
concurrently pending inter partes review proceedings directed to the three
other patents asserted in the above-referenced District Court and ITC cases.
Id.
Patent Owner informs us of the same pending proceedings listed
above. Paper 6 (Patent Owner’s Mandatory Notices), 2–3.
B. The ʼ631 Patent
The ’631 Patent was filed on August 1, 2016 from a continuation filed
July 25, 2012, issued on March 5, 2019, and is titled “Cards and Devices
with Multifunction Magnetic Emulators and Methods for Using Same.”
Ex. 1001, codes (22), (45), (54). The ’631 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 ’631 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 ’631 Patent states that “[t]he magnetic emulator may be, for
example, a circuit that emits electromagnetic fields operable to electrically
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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 ’631 Patent also 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 ’631 Patent
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
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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.
The ’631 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.
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C. Illustrative Claim
Independent claim 1 is illustrative.
1. An apparatus comprising;
a structure for receiving manual input;
a dynamic magnetic stripe communication device;
and
a processor for controlling the dynamic magnetic
stripe communication device,
wherein the dynamic magnetic stripe
communication device is operable to electrically couple to
a payment terminal when the dynamic magnetic stripe
communication device is located outside and within
proximity of the payment terminal and to serially
communicate first magnetic stripe track data and second
magnetic stripe track data while electrically coupled to the
payment terminal.
Ex. 1001, 14:45–57.
D. Asserted Challenges to Patentability
We instituted inter partes review based on information presented in
the Petition that identified claims of the ’631 Patent are challenged on the
basis listed below. Pet. 8; Dec. 6–7, 41–42.

Reference(s)/Basis 35 U.S.C. §1 Claim(s) Challenged
Moullette2 103 1–3, 9–10, 12–13, 19, 21
Zellner, 3 Moullette 103 1, 4–7, 10, 11, 22

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 ’631 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 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
Doughty4 103 1–3, 9, 12, 19, 21–22
Doughty, Zellner 103 4–7, 10, 11
Doughty, Francini5 103 13

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
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

4 U.S. Patent Application Publication No. 2006/0161789 Al, Published Jul.
20, 2006 (Ex. 1012, “Doughty”).
5 U.S. Patent No. 4,701,601, issued Oct. 20, 1987 (Ex. 1006, “Francini”).
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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. 13–14 (citing Ex. 1002 ¶ 33).
Petitioner further argues that “[a]dditional education might supplement
practice experience and vice-versa.” Id. at 14.
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.
PO Resp. 15-16 (citing Ex. 2012, 10–11). Patent Owner indicates “the
[judge] in the ITC litigation decided that a POSITA had [an] ‘undergraduate
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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. 16; 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 of the types of technologies recited in the claims. Specifically, the
other proposed definitions do not cover cellular network communications
while our definition does. Apart from this, we do not consider our definition
to be materially different from what the ITC adopted or parties propose here.
And neither party contends that the outcome of this case turns on the
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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 it’s 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. 14. Petitioner
notes there were claim constructions proposed by the parties in the ITC
proceeding. Id. at 14–16 (citing Ex. 1016, 7–10). 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, and states “[a]ll of the claims of
the ’631 patent are patentable under these constructions.” PO Resp. 16–19;
Ex. 2012, 27–38.
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. The actual claim language of
the ’631 Patent and the corresponding ITC constructions from Exhibit 2012
are shown in the table below.
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’631 Patent Claim Terms ITC Construction
“dynamic magnetic stripe
communication device” (claim 1)
“a device capable of communicating
dynamic magnetic stripe data”
“serially communicate first
magnetic stripe track data and
second magnetic stripe track data
while electrically coupled to the
payment terminal” (claim 1)
“serially communicate first
magnetic stripe track data and
second magnetic stripe track data
while electrically coupled to the
payment terminal”
“operable to electrically couple to a
payment terminal when the dynamic
magnetic stripe communication
device is located outside and within
proximity of the payment terminal
and to serially communicate first
magnetic stripe track data and
second magnetic stripe track data
while electrically coupled to the
payment terminal”
Plain language.
“within proximity of” Plain and ordinary meaning
“virtual payment card”
(claims 6 and 7)
“a visual representation of
a payment card”

Ex. 2012, 27–38; PO Resp. 16–19.
The ITC’s constructions for the limitations above largely mirror the
actual claim language. In other words, the ITC uses the plain and ordinary
meaning of these claim limitations. Id. For the third limitation, the ITC
agreed with Patent Owner that the construction for a “virtual payment card”
is “a visual representation of a payment card.” Id. at 36. In determining this
construction, the ITC found that Figure 12 of the ’631 Patent included
features common to actual credit cards such as card number, name, and
security (CVCC) code, but did not include other features actual credit cards
would have, such as a logo, expiration date, issuer, magnetic stripe, and
computer chip. Id. at 33–34. The ITC held that the payment card of
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Figure 12 only resembles an actual credit card, and thus chose Patent
Owner’s construction that a “virtual payment card” is “a visual
representation of a payment card” over Petitioner’s construction of “an
image of a payment card.” Id. We agree with the ITC that the ordinary and
customary meaning of “virtual payment card,” when considered in light of
the ’631 Patent, specifically, Figure 12 and corresponding description, is “a
visual representation of a payment card.”
We proceed to analyze the challenges applying the ordinary and
customary meaning of the claim terms.
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
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
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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
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).
Thus, 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.
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D. Alleged Obviousness of Claims 1–3, 9, 10, 12, 13, 19, and 21:
Moullette
Petitioner provides argument that Moullette renders claims 1–3, 9, 10,
12, 13, 19, and 21 obvious. Pet. 16–31; Ex. 1002 ¶¶ 64–87.
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.
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
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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
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. Preamble and “a structure for receiving manual input;” “a
dynamic magnetic stripe communication device;” and “a
processor for controlling the dynamic magnetic stripe
communication device”
Petitioner argues that Moullette teaches an adaptor that allows the
consumer pod to communicate with the magnetic stripe card POS reader.
Ex. 1007, Abstract, 4:8–10; Ex. 1002 ¶ 64. Petitioner cites Moullette’s
adaptor that includes specialized interfaces and a keyboard for data entry.
Ex. 1007, 5:3–17; Ex. 1002 ¶ 65. Furthermore, Petitioner argues that
Moullette’s device “includes an inductor capable of generating a magnetic
field of sufficient power to couple with a head of a magnetic stripe card
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reader through the housing of the reader device.” Pet. 18 (quoting Ex. 1007,
Abstract). Moullette teaches communicating payment information to the
magnetic card reader. Ex. 1007, 7:12–21; 6:49–7:2; Pet. 18–19. Petitioner
asserts that Moullette’s adaptor includes “transceivers 22 in communication
with respective interface processors 24.” Pet. 20 (quoting Ex. 1007, 4:41–
43).
Patent Owner contends Moullette fails to teach every feature of claim
1 of the’631 Patent, but Patent Owner does not provide specific argument
regarding most of the limitations. Nonetheless, the burden remains on
Petitioner to demonstrate unpatentability. See Dynamic Drinkware, 800
F.3d at 1378.
b. “wherein the dynamic magnetic stripe communication device is
operable to electrically couple to a payment terminal when the
dynamic magnetic stripe communication device is located outside
and within proximity of the payment terminal and to serially
communicate first magnetic stripe track data and second magnetic
stripe track data while electrically coupled to the payment
terminal”
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. 21 (citing Ex. 1007, Abstract);
see Ex. 1002 ¶¶ 70–73. Petitioner avers that Moullette depicts the device
located outside and proximate to the payment terminal and electrically
coupled to the magnetic read heads. Pet. 21–22; Ex. 1007, Figs. 1 and 3B;
Ex. 1002 ¶ 70.
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Petitioner asserts that Moullette teaches serial communication of first
and second magnetic stripe data, showing “[o]nce module 26 has
successfully communicated with Track 1 head 10b, the flow of current to
through outer coil 76 is halted . . . [and] a current is then flowed through
inner coil 74,” which generates a magnetic field that communicates data to
the Track 2 head. Pet. 23 (quoting Ex. 1007, 6:49–7:2); see Ex. 1002 ¶¶ 72,
73.
Patent Owner argues claim 1 separately. PO Resp. 19–23. With
respect to claim 1, Patent Owner argues that “Moullette does not teach ‘the
dynamic magnetic stripe communication device . . . operable to electrically
couple to a payment terminal when the dynamic magnetic stripe
communication device is located outside and within proximity of the
payment terminal.’” Patent Owner argues that Moullette does not disclose a
standalone device, but instead discloses a system which includes a consumer
and merchant pod portion designed for different functions. PO Resp. 19
(citing Ex. 1007, 3:66–67, 4:8–10, Fig. 1). Patent Owner argues that
Moullette’s adaptor that Petitioner relies on is “affixed to the external
housing of the magnetic stripe reader, thereby becoming an integral part of
the magnetic stripe reader.” PO Resp. 20. Patent Owner contends that
Moullette does not teach a “dynamic magnetic stripe communication device”
limitation or teach communication with the merchant read heads while
located outside of the terminal. PO Resp. 19–22.
We do not agree with Patent Owner’s contention that Moullette
teaches a system and not a device. PO Resp. 19. Patent Owner’s arguments
limit the term “device” to exclude a device with multiple components. Id.
Patent Owner cites no intrinsic or extrinsic evidence to support the
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narrowing of the term “device” to exclude multiple connected components
such as the pods in Moullette. See PO Resp. 19; Sur-Reply 2–5. On the full
record, we agree with Petitioner’s evidence and argument that Moullette’s
adaptor teaches the device limitation. Pet. 16–17; Reply 4. Moullette refers
to the adaptor separate from the merchant terminal, describing its positioning
as “near a magnetic stripe card reader” or “proximate” to the reader device’s
housing. Ex. 1007, 2:66–3:14; see id. at code 57, 3:62–65, 4:41–60, 8:67–
9:6. Furthermore, Moullette discusses the adaptor separately and discusses
embodiments where the adaptor is a complete single unit. Ex. 1007, 7:47–
49; see Ex. 1030, 812:25-813:4 (“M-Pod 26, cable 20, [and] C-Pod 16 . . .
can be integrated creating a complete and single-piece unit”). Patent
Owner’s declarant also admits that Moullette discloses an adaptor. Ex.
1030, 805:3–5. Accordingly, we find that Moullette teaches the device
limitation of claim 1.
Patent Owner’s argument that the adaptor is affixed to the external
housing of the reader and becomes an integral part and is not located
“outside” of the housing is also unavailing. PO Resp. 19–21. Claim 1 states
that the dynamic magnetic stripe communication device be “located outside
and within proximity of the payment terminal.” Ex. 1001, claim 1. Patent
Owner’s declarant agreed that the adaptor is external. Ex. 1030, 806:7–10
(agreeing that adaptor “is positioned outside the conventional magnetic
stripe reader”), 806:20–807:3 (the adaptor “can be positioned external to the
reader device”). Furthermore, 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 adaptor is
integral to the Moullette. See PO Resp. 19–21.
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We disagree with Patent Owner’s argument that the Moullette’s
adaptor “must be affixed . . . at a precise location with a precise alignment in
order to work.” PO Resp. 20–21. Patent Owner’s evidence for this
argument lacks support from Moullette’s specification and relies on
conclusory statements from Patent Owner’s declarant. Id.; Ex. 2042 ¶ 75;
Ex. 1007, Fig. 3B. We do not find that the need to align the adaptor with the
read heads undermines 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 relative to the
reader. Ex. 1007, 3:62–65; see also Ex. 1032, 26:14–25 (testifying that the
merchant could hold the M-Pod during a transaction). Accordingly, we do
not agree with Patent Owner that the alignment or affixing of the adaptor
demonstrates that “Moullette fails to teach the claimed dynamic magnetic
stripe communication device ‘operable to electrically couple to a payment
terminal when . . . located outside and within proximity of the payment
terminal.’” PO Resp. 21.
Patent Owner argues that Moullette fails to teach the processors and
has “absolutely 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.” PO Resp. 22. We do not agree with Patent Owner’s argument
regarding the interface processors disclosed in Moullette. Petitioner presents
persuasive evidence that the adaptor in Moullette includes the C-Pod that
translates the payment signals from the cell phone and dives the M-Pod
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portion via the interface processors. Ex. 2042 ¶ 40 (describing the adaptor);
Ex. 1007, 4:8–10, 5:21–25, 5:36–38, 6:49–56; see also Ex. 1030, 739:10–
740:11 (Mr. Zatkovich testifying that Moullette C-Pod 16 includes a
processor and converts information from user device to magnetic emulation
signal). Patent Owner’s argument admits 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.” PO Resp. 22
(citing Ex. 2042 ¶ 75). Petitioner’s argument and evidence support that
“Moullette depicts an interface processor [] that is in ‘electrical
communication with merchant pod portion 18.” Pet. 20 (citing Ex. 1007,
4:41–43, 5:21–25). 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).
Petitioner further establishes that Moullette’s inductors require
electricity to communicate the information from the user device pod to the
inductors. Ex. 1032, 43:15–44:5. 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. 1030, 739:10-740:11 (agreeing
that Moullette’s signals are translated from the C-Pod to the M-Pod via a
processor); see also Ex. 1001, 5:54–57, 7:5–8 (recognizing that a processor
can drive inductors). With respect to claim 1, Petitioner provides persuasive
evidence that the interface processors allow communication from the cell
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phone payment data to the magnetic card reader. Pet. 19, 20; Ex. 1002 ¶ 67;
Ex. 1007, Fig. 1, 3:63–65.
Having reviewed the full record, we find that Moullette teaches “a
processor for controlling the circuit” used to emit and communicate with the
magnetic stripe reader.
3. Dependent Claims 2, 3, 9, 10, 12, 13, 19, and 21
Petitioner provides argument and evidence citing to Moullette and
Mr. Halliday’s testimony that Moullette teaches the limitations of dependent
claims 2, 3, 9, 10, 12, 13, 19, and 21. Pet. 23–31; Ex. 1002 ¶¶ 74–87. We
credit Petitioner’s evidence finding that Petitioner provides detailed citations
to the evidence supporting a finding that Moullette teaches the limitations of
claims 2, 3, 9, 10, 12, 13, 19, and 21.
Patent Owner challenges claims 2, 3, 9, 10, 12, 19, and 21, which all
depend from claim 1, on the same contentions addressed above with respect
to claim 1. PO Resp. 23–25. For the reasons discussed above, we find that
Moullette teaches the limitations of claims 2, 3, 9, 10, 12, 19, and 21.
With respect to claim 13, which recites “[t]he apparatus of claim 1,
wherein the first magnetic stripe track data and the second magnetic stripe
track data are the same track,” Patent Owner argues that Moullette fails to
expressly teach sending data more than once, it cannot teach the same track
data being transmitted more than once. PO Resp. 24–25; Ex. 2042 ¶ 79;
Ex. 2039, 183:21–184:1 (Mr. Halliday agreeing that Moullette does not
disclose sending data more than once).
Patent Owner’s contentions fail to address Petitioner’s argument that
Moullette identifies the need to successfully communicate data (Ex. 1007,
6:60–62), and “a POSITA would have known that it would be preferable to
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transmit data multiple times to increase reliability and the likelihood the data
is received by the payment terminal.” Pet. 28–29; Ex. 1004 ¶ 85. Petitioner
provides persuasive evidence that transmitting the same data multiple times
was well known in the art and cites an issued patent to support its
contention. Pet. 29; Ex. 1006, 7:45–54; Ex. 1002 ¶ 85. Thus, we are not
persuaded that Moullette’s lack of an express teaching for sending the data
more than once undermines Petitioner’s evidence that a person of ordinary
skill would implement a well-known technique in the art to increase
reliability and receipt of the data. See Pet. 28–29; Ex. 1006, 7:45–54;
Ex. 1002 ¶ 85.
Based on the full record before us and our discussion of Patent
Owner’s contentions with respect to claim 1 above, we find that Moullette
teaches the limitations of claim 13.
4. Objective Indicia of Nonobviousness
Patent Owner argues that its evidence of objective indicia of
nonobviousness shows that the ’631 Patent’s claims would not have been
obvious to a person of ordinary skill in the art at the time of the alleged
invention. PO Resp. 44–51; Sur-Reply 20–24. 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 20.
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,
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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))).
“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 ’631 Patent. PO Resp. 44. Patent
Owner’s evidence of this coextensiveness 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. 46 (citing Ex. 2042 ¶ 140).
However, Patent Owner’s declarant testimony does not support the sale of a
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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 ’631 Patent (Ex. 2042 ¶¶ 135–142). The claim charts
(Ex. 2035–2038; Ex. 2042 ¶ 129) mapping the ’631 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 infringes the ’631 Patent and is
coextensive with the independent claims of the ’631 Patent. PO Resp. 45–
47 (citing Ex. 2044; Ex. 2042 ¶¶ 138–142). Patent Owner admits, however,
that the Samsung features are sold in various commercially successful
products but has not shown that those products have a nexus to the ’631
Patent. PO Resp. 46. 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 fails to provide any analysis or argument
showing that Samsung product sales have any connection to the ’631 Patent
among other product features. See PO Resp. 44–45. 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 ’631 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
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attributable to the ’631 Patent. The nexus between the ’631 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 ’631 Patent is insufficient to carry its burden. See Fox
Factory, 944 F.3d at 1374.
Patent Owner’s evidence of successfully licensing to LG Electronics,
Inc. (PO Resp. 46; Sur-Reply 22–23) is also 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 ’631 Patent. Patent Owner’s arguments that the other patents listed in
the license are related to the ’631 is unavailing. Sur-Reply 22. We do not
find Patent Owner’s conclusory statements regarding the availability of
alternative products are insufficient and not persuasive. Id. at 22–23.
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 ’631 Patent. PO Resp. 48–49.
Patent Owner’s award chart lacks evidence for what the awards were for,
and fails to show a nexus to the ’631 Patent’s claims sufficient to support
industry praise. PO Resp. 48–49 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 ’631 Patent. PO Resp. 47–48, 50;
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.
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Reply 20–24. 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 ’631 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, 9, 10, 12,
13, 19, and 21 obvious would have been obvious to a person of ordinary
skill in the art at the time of the invention in view of Moullette. Pet. 16–31;
Ex. 1002 ¶¶ 64–87.
E. Alleged Obviousness of Claims 1, 4–7, 10, 11, and 22: Moullette and
Zellner
Petitioner asserts that claims 1, 4–7, 10, 11, and 22 would have been
rendered obvious by Moullette and Zellner. Pet. 31–45; Ex. 1002 ¶¶ 88–
112.
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
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.
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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.
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
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cards. Pet. 31–34; Ex. 1002 ¶¶ 88–82; 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. 31–32; 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. 32; 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. 33 (citing Ex. 1002 ¶ 91).
Patent Owner argues that the combination of Zellner and Moullette
would “eviscerate Moullette’s invention” and that “there would be no
motivation to dismantle Moullette for incorporation into Zellner.” PO
Resp. 26; Sur-Reply 17. Petitioner asserts that Zellner would use
Moullette’s coils and inductors to realize Zellner’s encoder. Pet. 31;
Ex. 1003 ¶¶ 88–92. Thus, Patent Owner’s contentions that Moullette’s
invention would be eviscerated misstates Petitioner’s proposed
modifications.
Patent Owner’s contention that Zellner’s alone dynamic magnetic
encoder (DME) would be insufficient to communicate with the read head of
a magnetic card reader misstates Zellner’s teachings and Petitioner’s ground.
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Zellner expressly states discloses that its device “can also emulate the
magnetic stripe information that would be provided by the credit card,” and
shares data via a magnetic interface that is “compatible with existing card
readers” using “[t]he dynamic magnetic encoder.” Ex. 1008, 1:60–2:2,
3:22–26, 11:50–55; Pet. 31–34. Zellner’s encoders provide magnetic stripe
information. Ex. 1008, Figs. 2–3, 7:32–39. Finally, Mr. Zatkovich also
admitted that “an encoder communicates with the read head” and that coils
can be used as encoders. Ex. 1032, 71:4–7, 72:25–73:13.
Based on the full record, we determine that Petitioner presents
persuasive and sufficient evidence and rationales demonstrating why a
person of ordinary skill in the art would have had reason to combine Zellner
and Moullette with a reasonable expectation of success.
3. Claim 1
a. Preamble and “a structure for receiving manual input;” “a
dynamic magnetic stripe communication device;” and “a
processor for controlling the dynamic magnetic stripe
communication device”
Petitioner argues that to the extent the preamble is limiting, Zellner
teaches a portable electronic device, such as a cell phone. Pet. 34; Ex. 1008,
10:63–11:13, Fig. 12. Furthermore, Zellner teaches a device that “may
provide one or more user input devices, such as one or more soft keys that
are incorporated into the flat panel display, a keypad, a full keyboard, a
voice recognition system, a biometric recognition system, and/or other user
input device.” Pet. 35 (quoting Ex. 1008, 2:44–49); Ex. 1009, Fig. 12.
Petitioner argues that Zellner in view of Moullette discloses the
dynamic magnetic encoder that teaches the recited dynamic magnetic stripe
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communication device. Pet. 35. In addition, Petitioner adds that Moullette
teaches this limitation as discussed above. Id. Finally, Petitioner adds that
Zellner discloses that “a processor 150 [] is provided,” and that
the processor may be “a microprocessor, custom processor,
controller, [etc.]” Ex. 1008, 5:54–59. Zellner teaches that “the
processor 150 is configured . . . to control the dynamic magnetic
encoder 120 to provide magnetic stripe information … in
response to user selection of the predetermined credit card via
the user input device 130.” Id., 5:59–6:1.
Pet. 36 (emphasis omitted).
b. “wherein the dynamic magnetic stripe communication device is
operable to electrically couple to a payment terminal when the
dynamic magnetic stripe communication device is located outside
and within proximity of the payment terminal and to serially
communicate first magnetic stripe track data and second magnetic
stripe track data while electrically coupled to the payment
terminal”
Petitioner argues that Zellner in view of Moullette teaches this
limitation. Pet. 37. Petitioner argues that incorporating Moullette into
Zellner’s portable device would have been understood by an ordinarily
skilled artisan to create a magnetic field to serially communicate magnetic
stripe data when coupled to a payment terminal. Id. at 37; Ex. 1002 ¶ 98.
c. Patent Owner Contentions
Patent Owner does not challenge Petitioner’s contentions regarding
the claim limitations for claims 1. See PO Resp. 25–28. Nonetheless, the
burden remains on Petitioner to demonstrate unpatentability. See Dynamic
Drinkware, 800 F.3d at 1378. Patent Owner’s arguments are directed to
Petitioner’s proffered reasons to combine Zellner and Moullette, which are
addressed above. PO Resp. 25–28.
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d. Conclusion
We agree with Petitioner’s argument and evidence that Zellner and
Moullette teach the limitations of claims 1, 4–7, 12–18, and 20. Based on
the full record, 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 to a person of ordinary skill over Zellner and Moullette.
4. Claims 4–7, 10, 11, 22
Petitioner provides argument and evidence citing to Zellner,
Moullette, and Mr. Halliday that the asserted references teach the limitations
of dependent claims 4–7, 10, 11, and 22. Pet. 37–45; Ex. 1002 ¶¶ 99–112.
Petitioner provides citations to the record mapping the limitations of claims
4–7, 10, 11, and 22 to Zellner and Moullette. Id. We find that Petitioner’s
evidence and argument persuasive, that Zellner and Moullette teach the
portable device limitations of claims 4 and 5, the display limitations of
claims 6 and 7, and the RFID receiver limitations of claims 10 and 11.
Pet. 37–43; Ex. 1002 ¶¶ 99–110.
For claims 4–7, 10, and 11, Patent Owner relies on the same
arguments presented above for claim 1. PO Resp. 28–31. For the reasons
above, we do not agree with Patent Owner’s argument. Rather, we find that
Zellner and Moullette teach the limitations of claims 4–7, 10, and 11. See
Pet. 37–45.
With respect to claim 22, which recites that “temporal pauses occur
between the serial communications of the first magnetic stripe track data and
the second magnetic stripe track data,” Patent Owner argues that Zellner
does not provide sufficient information as to how the dynamic magnetic
encoder works or what circuit is provided for the encoder to emulate a
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magnetic stripe. PO Resp. 29–31. Because neither Zellner nor Moullette
expressly discusses a temporal pause or describe the transmission of the
signal to the coils, Patent Owner argues they fail to teach the limitations of
claim 22. Id.
As discussed above, we find that Zellner teaches a device that can
“emulate the magnetic stripe information that would be provided by the
credit card,” and explains that emulation was “well known to those having
skill in the art.” Ex. 1008, 1:60–64, 5:34–39. Although Patent Owner cites
Mr. Halliday’s testimony that Zellner fails to teach the dynamic encoder
details or how the encoder works to support its contention that Zellner does
not teach the temporal pauses of claim 22, Petitioner does not rely on
Zellner’s express teaching for this limitation. PO Resp. 29–30 (citing
Ex. 2039, 107:1-6, 125:7-16, 188:6-8, 193:18-193-1; Ex. 2042 ¶ 96; Reply
13. Indeed, Petitioner does not rely on either Zellner or Moullette to
expressly teach the limitation. Reply 13. Instead, Petitioner argues that
“sending magnetic track data in bursts with temporal pauses between each
data burst was well known in the art.” Pet. 43–45; Ex. 1002 ¶ 112.
Furthermore Petitioner’s citation to a U.S. Patent No. 4,701,601 (issued in
1987) supports its contention that sending data with temporal pauses was
known in the art. Pet. 44–45; Ex. 1006, 7:48-52 (disclosing sending “a data
stream in bursts lasting 30 to 100 milliseconds” and repeating those bursts
“every second,” resulting in a temporal pause between each burst of data
communicate). Accordingly, we find Petitioner’s argument and evidence
persuasive that a person of ordinary skill in the art, would have understood
the uncertainty of placing a cell phone in range of the magnetic card reader
when it starts communicating the first magnetic stripe data and that when the
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magnetic stripe card reader stops receiving information, it returns to its
initial state and would have been motivated to include a temporal pause
between the communication of first and second magnetic stripe data to allow
the magnetic card reader to return to its initial state and be ready to receive
the second magnetic stripe data, for a successful communication. Pet. 44;
Ex. 1002 ¶ 111–112; Reply 13.
We also do not agree with Patent Owner’s argument that Moullette
teaches the opposite of a temporal pause. PO Resp. 30–31. Patent Owner
again fails to address Petitioner’s argument that Zellner’s communication of
the first and second stripe data is the motivation Petitioner cites for including
the temporal pauses. Rather, we agree with Petitioner (Reply 13) that
Moullette’s teaching regarding serial transmission without interruption
(Ex. 1008, 6:60–66) is does not criticize, discredit, or discourage
investigation into the modification Petitioner proposes. Meiresonne v.
Google, Inc., 849 F.3d 1379, 1382 (Fed. Cir. 2017) (“A reference that
‘merely expresses a general preference for an alternative invention but does
not criticize, discredit, or otherwise discourage investigation into’ the
claimed invention does not teach away.”). We find Petitioner’s evidence
and supporting reference to temporal pauses to be persuasive (Pet. 43–45;
Ex. 1003 ¶¶ 111–112).
Having reviewed the full record, we find that Zellner and Moullette
teach the limitations of claim 22.
5. Conclusion
Based on the full record, we determine that Petitioner has
demonstrated by a preponderance of the evidence that claims 1, 4–7, 10, 11,
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and 22 obvious would have been obvious to an ordinarily skill artisan in
view of Zellner and Moullette.
F. Alleged Obviousness of Claims 4–7, 10, and 11: Doughty and Zellner;
and Obviousness of Claims 13: Doughty and Francini
Petitioner provides argument and evidence that the Doughty renders
claims 1–3, 9, 12, 19, 21, and 22 obvious (Pet. 45–56; Ex. 1002
¶¶ 113–132); that Doughty and Zellner render claims 4–7, 10, and 11
obvious (Pet. 56–66; Ex. 1002 ¶¶ 133–154); and that Doughty and Francini
would have rendered claim 13 obvious (Pet. 66–68; Ex. 1002 ¶¶ 155–158).
We do not reach Petitioner’s grounds for unpatentability based on
Doughty as we have determined above that claims 1–7, 9–13, 19, 21, and 22
of the ’631 are unpatentable over (1) Moullette (claims 1–3, 9, 10, 12, 13,
19, and 21); and (2) Zellner and Moullette (claims 1, 4–7, 10, 11, and 22);.
See Part II.D and II.E; 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
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.
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G. 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. 52–55; Sur-
Reply 26. 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. CONCLUSION6
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, 9, 10, 12, 13, 19, and 21 are unpatentable under 35
U.S.C. § 103(a) as obvious over Moullette; and (2) claims 1, 4–7, 10, 11,
and 22 are unpatentable under 35 U.S.C. § 103(a) as obvious over Zellner
and Moullette. We reached no conclusion on the grounds based on
Doughty.

6 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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The table below summarizes our conclusions:
Claim(s) 35
U.S.C. §
Reference(s)/
Basis
Claims
Shown
Unpatentable
Claims
Not Shown
Unpatentable
1–3, 9, 10,
12, 13, 19,
21
103(a) Moullette 1–3, 9, 10, 12,
13, 19, 21

1, 4–7, 10,
11, 22
103(a) Zellner,
Moullette
1, 4–7, 10, 11,
22

19 103(a) Zellner,
Moullette,
Poidomani
19
1–3, 9, 12,
19, 21, 22
103(a) Doughty7
4–7, 10, 11 103(a) Doughty, Zellner
13 103(a) Doughty,
Francini

Overall
Outcome
1–7, 9–13, 19,
21, 22

V. ORDER
Accordingly, it is
ORDERED that claims 1–7, 9–13, 19, 21, and 22 of U.S. Patent No.
10,223,631 B2 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.

7 We do not reach the Doughty challenges for the reasons previously
explained.
IPR2020-00504
Patent 10,223,631 B2
38

For PETITIONER:

F. Christopher Mizzo
Gregory 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