Case 1:17-cv-00585«JFB-SRF Document 30 Filed 0929/17 Page 1 of 25 PagelD #: 638
`
`IN THE UNITED STATES DISTRICT COURT
`
`FOR THE DISTRICT OF DELAWARE
`
`UNIVERSAL SECURE REGISTRY LLC,
`
`Plaintiff,
`
`V.
`
`APPLE INC, VISA INC, and
`
`VISA U.S.A., INC.,
`
`Defendants.
`
`vvuwvvvvuu
`
`CA. No. 17-585 (JFB) (SRF)
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`PLAINTIFF'S ANSWERING BRIEF IN OPPOSITION TO
`
`DEFENDANTS’ MOTION TO DISMISS PLAINTIFF'S COMPLAINT
`
`MORRIS, NICHOLS, ARSIIT 8L TUNNELL LLP
`
`Jack B. Blumenfeld (#1014)
`Jeremy A. Tigan (#5239)
`1201 North Market Street
`
`PO. Box 134'?
`
`Wilmington, DE 19899-134?
`(302) 658-9200
`jblumenfeld@mnat.com
`jtigan@mnat.com
`
`Attorneys fl)? Universal Secure Regi.s‘try LLC
`
`Apple 1018
`
`OF COUNSEL:
`
`Harold Barza
`Tigran Guledjian
`Valerie Roddy
`Jordan Kaericher
`
`QUINN EMANUEL
`
`URQUI IART & SULLIVAN, LLP
`865 S Figueroa Street, 10th Floor
`Los Angeles, CA 9001?
`(213) 443—3000
`
`Sean Pak
`Brian E. Mack
`
`QUINN EMANUEL
`URQUIIART & SULLIVAN, LLP
`
`50 California Street, 22nd Floor
`
`San Francisco, CA 94111
`
`(415) 875—6600
`
`September 29, 201 7"
`
`

`

`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 09129117 Page 2 of 25 PagelD #: 639
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`TABLE OF CONTENTS
`
`Egg
`
`TABLE OF AUTHORITIES .......................................................................................................... ii
`
`I.
`
`11,
`
`III.
`
`IV.
`
`NATURE AND STAGE OF THE PROCEEDINGS .......................................................... 1
`
`SUMMARY OF ARGUMENT ........................................................................................... 1
`
`STATEMENT OF FACTS .................................................................................................. 2
`
`ARGUMENT ....................................................................................................................... 3
`
`A.
`
`The Electronic ID Device of the “813 Patent Is Patent-Eligible .............................. 3
`
`1.
`
`2.
`
`Claim 1 Of The '813 Patent Is Not Directed To An Abstract Idea ..............4
`
`Claim 1 Of The '813 Patent Provides A Technical Innovation .................... 7
`
`B.
`
`The Secure Payment and ID System ofthe '13? Patent Is Patent-Eligible............10
`
`1.
`
`2.
`
`Claim 12 Of The '13? Patent Is Not Directed To An Abstract Idea .......... 10
`
`Claim 12 Of The '13? Patent Provides A Technical Innovation ................ 12
`
`C.
`
`The Distributed Authentication System of the '826 Patent Is Patent-Eligible.......13
`
`1_
`
`2.
`
`Claim 10 Of The '826 Patent Is Not Directed To An Abstract Idea __________ l4
`
`Claim 10 Of The '826 Patent Provides A Technical Innovation ................ 16
`
`D.
`
`The Secure Registry System of the ‘539 Patent Is Patent-Eligible ........................ 17
`
`1.
`
`2.
`
`Claim 22 Of The '539 Patent Is Not Directed To An Abstract Idea .......... 1?
`
`Claim 22 Of The '539 Patent Provides A Technical Innovation ................ 19
`
`E.
`
`Defendants Motion Should Be Denied For The 107 Unaddressed Claims ........... 20
`
`

`

`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 09129117 Page 3 of 25 PagelD #: 640
`
`Cases
`
`TABLE OF AUTHORITIES
`
`Accennn'e Giobai Servs., GmbH v. Gnidewire Sofnvare,
`
`728 F.3d 1336 (Fed. Cir. 2013) ................................................................................................. 18
`
`Afliniiy Labs of Texas, LLC v. DIRECTV, LLC,
`
`838 F.3d 1253 (Fed. Cir.2016) 18
`
`Alice Corp. Pty. Ltd. v. CLS Bank Int’i,
`
`134 S. Ct. 2341 (2014) ....................................................................................................... passim
`
`Bancorp Servs.v.Su11LifeAss11rance Co.ofCa11. (US),
`
`68? F. 3d 1266 (Fed. Cir. 2012)...
`Bascom Gfob.1nter11e15'..,e1’vs Inc. 11.04.1611 Mommy11C,
`827 F.3d 1341 (Fed. Cir. 2016) ............................................................................................. 8, 16
`
`18
`
`Biiski v. Kappos,
`
`561 US. 593 (2010) ........................................................................................................ 1,11,18
`
`Bine Spike, LLC. v. Googfe, Inc,
`
`2015 WL 5260506 (N.D. Cal. Sept. 8, 2015) ........................................................................... 18
`
`bnySAFE, Inc. v. Googz'e, Inc.,
`
`765 F.3d 1350 (Fed. Cir. 2014) ....................................................................................... 8, 15, 18
`
`CaHWave Commc ’11s, LLC v. A 1'& TMobiliry, LLC,
`
`207 F. Supp. 3d 405 (D. De]. Sept. 15, 2016) ............................................................................. 9
`
`CyberSource Corp. v. Retails Decisions Inc,
`
`654 F.3d 1366 (Fed. Cir. 2011) ................................................................................................. 18
`
`DDR Hofdings; LLC v. Hotelscom,
`
`773 F.3d 1245 (Fed. Cir. 2014) ........................................................................................... 10, 16
`
`Diamond v. Diehr,
`
`450 US. 175 (1981) .............................................................................................................. 7,19
`
`Digitech Image Tech. v. Elect. For Imaging, 1116.,
`
`'158 F.3d 1344 (Fed. Cir. 2014) ........................................................................................... 6, 7, 9
`
`Enfish, LLC v. Microsofl Corp,
`
`822 F.3d 1327' (Fed. Cir. 2016) ................................................................................. 4, 5, 6, 9, 18
`
`Gotis’cnalk v. Benson,
`
`409 US. 63 (1972) ...................................................................................................................... 8
`
`Idexx Labs, Inc. v. Charies River Labs, Inc.,
`
`2016 WL 3647911 (D. Del. Jul. 1, 2016)
`
`In re Bifski,
`
`6
`
`545 F.3d 943 (Fed. Cir.2008) 8
`
`In Re 111 Communications,
`
`823 F. 3d 607 (Fed. Cir 2016)..
`..
`Intellectnai Ventures 1’ ILC v. Capitai One Bank(USA):
`792 F.3d 1363 (Fed. Cir. 2015) ................................................................................................... 8
`
`9
`
`{Werner Patents Corp. v. Aerive Nerwork, Inc,
`
`790 F.3d 1343 (Fed, Cir. 2015) ............................................................................................. 9, 12
`
`ii
`
`

`

`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 0929/17 Page 4 of 25 PageID #: 641
`
`IQS US Inc. v.
`
`€813in Labs Inc.,
`
`2017 WL 3581162 (ND. 111. Aug. 13, 2017)
`
`Jericho Sys. Corp v Axiomatics, Inc,
`
`15
`
`2015 WL 2165931 (N D. Tex. May 7, 2015)...
`Jean Bock TranS SyS., EEC v. Jack Henry & Assocs.,"Inc,
`76 F. Supp. 3d 513 (D. Del. 2014) ...................................................................................... 15, 18
`.ISDQ Mesh Techs. EEC v. Finidmesn Networks, LLC,
`
`18
`
`2016 WL 4639140 (D. Del. Sept. 6, 2016) ............................................................................... 20
`
`King Pharms., Inc. v Eon Labs, Inc,
`
`616 F. 3d 1267 (Fed. Cir. 2010)...
`.
`MAZ Encryption Technologies EEC v. BlackberryCorp. ,
`2016 WL 5661981 (D. Del. Sept. 29,2016) 5, 7,11, 17
`
`7
`
`MCRO, Inc. v. Bandai Namco Games Am. Inc,
`
`837 F.3d 1299 (Fed. Cir. 2016) ................................................................................. 5, 10, 11, 12
`
`Messaging Gateway Sointions EEC v. Ama’ocs, Inc.,
`
`2015 WL 1744343 (D. Del. April 5, 2015) ................................................................................. 6
`
`Mortgage Grader, Inc. v. First C ’noice Loan Servs. Inc.,
`
`811 F.3d 1314 (Fed. Cir. 2016) ................................................................................................... 8
`OIP Teena, Inc. v. Amazon.com, Inc,
`
`788 F.3d 1359 (Fed. Cir.2015) 8
`
`PaII'aIk Hoidings, Inc. v. Riot Games, Inc,
`
`2017 WL 2106124 (D. Del. May 15,2017) 18
`
`Parker v. Hook,
`
`437 U S 584 (1978)...
`Research Corp Iecns., Inc"v.mMicrosofi Corp ,
`627 F. 3d 859 (Fed Cir. 2010)....
`.
`Smar! Meier TecnSu Inc. v. Duke EnergyC0110.,
`2017 WL 2954916(D. Del. July11,2017) ........................................................................ 18,19
`
`8
`
`4
`
`Sonos, Inc. v. D&M Holdings Inc,
`
`2017 WL 971700 (D. Del. March 13,2017) 12
`
`Iripiay, Inc. v. WhaisApp Inc,
`
`2015 WL 1927696 (D. Del. Apr. 28, 2015) .............................................................................. 20
`
`Uilramerciai, Inc. v. Huiu, EEC,
`
`772 F.3d 709 (Fed. Cir. 2014) ..................................................................................................... 8
`
`VenicIe IP, EEC v. A T&T Mobiiity EEC,
`
`2016 WL 5662004 (D. Del. Sept. 29, 2016) ......................................................................... 9, 11
`
`Versaia Deveiopmen! Group v. SAP America, Inc,
`793 F.3d 1306 (Fed. Cir. 2015) ................................................................................................... 8
`
`Versaia Sqiware v. Net}?rain TecnS.,
`
`2015 WL 5768938 (D. Del. Sept. 30, 2015) ............................................................................. 20
`
`Walker Digiiai, EEC v. Googie, Inc.,
`
`66 F. Supp. 3d 501 (D. Del.2014) 11, 12
`
`iii
`
`

`

`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 0929/17 Page 5 of 25 PageID #: 642
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`I.
`
`NATURE AND STAGE OF THE PROCEEDINGS
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`This is the Answering Brief of Plaintiff Universal Secure Registry, LLC ("USR") in
`
`opposition to Defendants‘ Rule 12(b)(6) Motion seeking to dismiss, as invalid under 35 U.S.C.
`
`§101, all 111 claims of USR‘s four patents-in-suit (the "Asserted Patents").
`
`1].
`
`SUMMARY OF ARGUMENT
`
`l.
`
`The claims of the four Asserted Patents are directed to patent-eligible subject matter
`
`under 35 U.S.C. Section 101 ("any new and useful process, machine, manufacture, or composition
`
`of matter, or any new and useful improvement thereof") Defendants fail to Show that any of the
`
`11] claims fall within the three narrow exceptions of §101: "laws of nature, physical phenomena,
`
`and abstract ideas." Bilski v. Kappos, 561 US. 593, 601-02 (2010) ("Bilski H"). The Supreme
`
`Court has expressed its reluctance to broadly apply these three narrow judicial exceptions: "[W]e
`
`tread carefully in construing this exclusionary principle, lest it swallow all ofpatent law. . . .At some
`
`level, *all inventions. . .embody, use, reflect, rest upon, or apply laws of nature, natural phenomena,
`
`or abstract ideas.” Alice Corp. Ply. Ltd. v. CLS Bail/C Im'I, 134 S. Ct. 2347, 2354 (2014).
`
`2.
`
`Defendants argue that I!!! III claims of the Asserted Patents are invalid under
`
`§ 101, but their motion is fatally flawed. Defendants have sought to oversimplify the inventions in
`
`suit, a common error in such motions as courts have noted with increasing frequency. Section 101
`
`is inclusive, while the judicial exceptions to it are narrow. Defendants' approach flips this balance,
`
`advancing the argument that patent eligible claims that include computer components are an
`
`exception. In doing so, Defendants ignore many of the key limitations in the claims, and fail to
`
`account for how the claims might be construed in a Markman hearing. The specifications show
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`that the claimed inventions are directed to concrete and useful improvements to current electronic.
`
`payment technologies and devices, and are demonstrably valid under the analysis of A lice and its
`
`progeny. The problems addressed by the Asserted Patents are firmly rooted in technological
`
`1
`
`

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`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 0929/17 Page 6 of 25 PagelD #: 643
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`challenges associated with digital security and authentication, and so are the claimed solutions.
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`Indeed, several recent decisions in this court and in the Federal Circuit highlight the reasons why
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`highly technological inventions are valid. Further, the claims do not pre-empt the field of electronic
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`payment transactions, but instead cover very specific technologies used on specialized devices
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`(e.g., with biometric sensors), while leaving open other known or unknown technology for
`
`conducting such transactions] Finally, Defendants have not demonstrated that the four claims they
`
`have chosen to address are representative of the remaining 107 claims, as is their burden. For this
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`reason as well, their Motion should be denied.
`
`1]].
`
`STATEMENT OF FACTS
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`Electronic payment transactions using credit cards and other payment cards have become
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`commonplace. There are major risks in such transactions, however, because bad actors can steal
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`and then misuse a person's information. For example, when a person pays a merchant by credit
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`card, the account data for that card is exposed to the risk of misuse by the merchant or by someone
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`who intercepts the data as it is sent over a network to the merchant and/or the credit card company.
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`USR's patented inventions address the need for technology that allows consumers to make
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`mobile payment-card transactions conveniently and with a high-degree of security. Complaint at
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`1B 1. The claimed inventions provide an innovative and highly secure identification, authentication
`
`and transaction authorization system.2 Using inventive aspects of USR's technology, the user
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`"[T]he concern that drives" § 101 jurisprudence is "one of pre-emption." Alice, 134 S. Ct. at
`1
`2354. Yet, tellingly, Defendants do not contend that any claim in the Asserted Patents presents any
`preemption concern in any industry—in fact, the word "preemption" does not even appear in their
`motion. Defendants have made no showing that any authentication process or system, or any
`financial transaction authorization process or system, must necessarily fall within the claims of
`these patents.
`2 Before the claimed invention, customers would use their credit cards at a merchant's in-store
`point-of—sale ("POS") device, which would read the card number and other account data from the
`card. Complaint at 1129. Customers would also provide their credit card account data directly to
`
`m
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`

`

`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 0929/17 Page 7 of 25 PageID #: 644
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`device does not store or send any sensitive information, such as personal account information or
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`payment card details that, if compromised, could be used for fraudulent purposes. 10’. at 1i23.
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`Instead, each time a transaction occurs, the improved user device locally generates and sends one-
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`time use data including a cryptographic value used for authentication by the credit card company.
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`10'. USR's improved user device can also require the user to authenticate him/herself via entry of
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`biometric information (e.g., a fingerprint) andfor secret information (e.g., a PIN) before the user
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`device will carry out a payment request. 10’. If this improved user device is lost or stolen or the
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`one-time cryptographic value is intercepted, neither the user device nor the value can be used to
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`make a fraudulent purchase request. Also, the patented system avoids the problem of storing any
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`sensitive information at the merchant that can be misused in fraudulent payment requests.
`
`IV.
`
`ARGUMENT
`
`A.
`
`The Electronic ID Device of the '813 Patent ls Patent-Eligible
`
`The ‘813 patent provides improved systems, devices and methods that allow users to
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`securely authenticate their identity when using a POS device; e.g., when making a retail credit card
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`transaction.3 '813 patent, Fig. 31, 43:4-5] :55. When used in conjunction with the patent‘s Universal
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`Secure Registry ("USR"), the Electronic ID Device can both securely identify the user, and
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`separately authenticate and approve the user’s financial transaction requests made through a POS
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`device. Id, 43:4—15, Fig. 31. The USR (USR 10 in Fig. 1, USR 356 in Fig. 31) includes a secure
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`online merchants. The account data would be stored by the merchant and then sent through a card
`network, ultimately to the issuing bank for transaction approval (or disapproval). Id. These
`preexisting methods lack adequate security and are highly susceptible to fraud. Id. at 1130.
`3 The specification identifies a number of disadvantages of prior art approaches to providing
`secure access. For example, an authorization system may control access to computer networks
`using password protected accounts, but such a system is susceptible to tampering and difficult to
`maintain. '813 patent, l :64-2:15_ Or, hand-held computer devices may be used to verify identify,
`but security could be compromised if a device ends up in the wrong hands. Id, at 2:16-43.
`
`3
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`

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`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 0929/17 Page 8 of 25 PagelD #: 645
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`database that stores account (e.g., credit card) information for a plurality of users. Id, 44:39-53.
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`To prevent unauthorized use of the Electronic ID Device, a user must first authenticate
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`herself to the device to activate it for a financial transaction. The '813 patent describes multiple
`
`ways to do this, including using a biometric input (e. g., fingerprint) andr’or secret information (e.g.,
`
`a PIN). 1d, 45:55-46:45, 50:1-22, 51:7—26. Once activated, the Electronic ID Device generates
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`encrypted authentication information that is sent via the POS device to the USR for authentication
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`and approval of the requested financial transaction. 1d., 46:22-36. This encrypted authentication
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`information is not the user's credit card information (which could be intercepted and misused).
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`Instead, the Electronic ID Device first generates a non-predictable value (e.g., a random number)
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`using, for example, the user's biometric information andtor a seed (Id, 33:64-34:61, 46:46-67),
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`and then generates single-use authentication information using the non-predictable value,
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`information associated with the biometric data, and the secret information. Id, 46: 14-36, 50:56-
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`65. This encrypted authentication information is transmitted to the secure registry, where it is used
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`to determine transaction approval. 1d, 11:36-45, 12:19-44, 12:64-13:53, 48:60-49:24, 50:23-32,
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`5117-26. Defendants' cursory treatment of the '813 patent gives short-shrift to both steps of the
`
`Alice test, and is insufficient to carry their burden to Show that any claim is patent ineligible.
`
`1.
`
`Claim 1 Of The '813 Patent Is Not Directed To An Abstract Idea
`
`A patent claim does not embody an unpatentable abstract idea unless that abstractness
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`"exhibit[s] itself so manifestly as to override the broad statutory categories of eligible subject
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`matter." Research Corp. lacks, Inc. v. Mfcmsqfi Corp, 627 F.3d 859, 868 (Fed. Cir. 2010). The
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`consistent flaw running across Defendants' entire motion is that they have grossly oversimplified
`
`(and ignored) express claim language, running afoul of a host of precedent. "Describing the claims
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`at such a high level of abstraction and untethered from the language of the claims all but ensures
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`that the exceptions to § 101 swallow the rule." Enfish, LLC v. Micrcsqfi Corp, 822 F.3d 1327,
`
`4
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`

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`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 0929/17 Page 9 of 25 PagelD #: 646
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`133? (Fed. Cir. 2016). Defendants' "abstract
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`idea"
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`strawman omits the claims' express
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`requirements, "run[ning] afoul of the Federal Circuit's guidance in Enfish that courts should not
`
`'oversimplifly]T key inventive concepts or ‘downplay‘ an invention‘s benefits in conducting a step-1
`
`analysis." MAZ Encryption Techs. LLC v. Blackberry Corp, 2016 WL 5661981 at *6 (D. Del.
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`Sept. 29, 2016). "Whether at step one or step two of the Afice test,. . .a court must look to the claims
`
`as an ordered combination, without ignoring the requirements 0fthe individual steps." MCRO,
`
`inc. v. Baridai Namco Games Am. inc, 837' F.3d 1299, 1313 (Fed. Cir. 2016) (emphasis added).
`
`Defendants argue claim 1 is directed to the abstract idea of "verifying an account holder's
`
`identity with code and information related to the account holder before enabling a transaction," but
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`Defendants fail to account for the specific claim requirements. Claim 1‘s Electronic ID Device
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`includes a biometric sensor, user interface, communication interface, and processor, all working
`
`together in a specific way to generate and transmit encrypted authentication information via a POS
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`device to a secure registry. The Electronic ID Device collects biometric information from the user,
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`secret information known by the user, and account identifying information selected by the user to
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`activate the device, and to generate a non-predictable value and the encrypted authentication
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`information, '813 patent, 51 :65-52z29. None of this is captured by Defendants' proffered overbroad
`
`abstract idea. This fatal flaw permeates and undermines their entire motion.
`
`The determination of whether the claims at issue are "directed to" a patent-ineligible
`
`concept "plainly contemplates that the first step of the inquiry is a meaningful one, i.e., that a
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`substantial class of claims are nor directed to a patent-ineligible concept." Enfisir, 822 F.3d at 1335.
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`Defendants do not "tread carefully in construing this exclusionary principle" as Alice mandates.
`
`Indeed, Defendants' analysis invites trampling of USR's claims, "by looking at them generally and
`
`failing to account for the specific requirements of the claims." MCRO, 837 F.3d at 1313. Claim 1
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`requires more than simply verifying an account holder‘s identity. It is directed to an innovative
`
`S
`
`

`

`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 09/29/17 Page 10 of 25 PageID #: 647
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`device containing multiple, interrelated components that obtain specific information from the user,
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`permit device activation under appropriate authentication, and create and transmit specified
`
`authentication information in an expressed, limited manner. To increase the overall security of the
`
`system,
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`the device generates a one-time variable token (determined in part from the non-
`
`predictable value) as the authentication information that cannot be stolen and misused.
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`Far from being directed to the mere idea of transaction authentication, claim 1 of the '813
`
`patent is directed to a specific, concrete, technological solution that improves network security
`
`for mobile electronic transactions. The "level of abstraction" "in describing the claims must be
`
`consonant with the level of abstraction expressed in the claims themselves." Idexx Labs, Inc. v.
`
`Charles River Labs, Inc, 2016 WL 3647971 (D. Del. Jul. 1, 2016), at *4. Only by applying the
`
`highest possible level of abstraction could one conclude that claim 1 claims nothing more than the
`
`abstract idea of "verifying an account holder based on a code," as Defendants contend, and is
`
`therefore "directed to" this abstract idea. Viewed thr0ugh the lens of Defendants’ analysis, every
`
`claim is abstract. "If one looks at almost any patent from far enough away, it could arguably claim
`
`an abstract idea." Messaging Gateway Solutions LLC v. Amdocs, Inc, 2015 WL 1744343 (D. Del.
`
`April 5, 2015) at *5 (Noting that Alexander Graham Bell's "invention was not the concept of oral
`
`communication itself; it was a technological innovation that allowed a type of oral communication
`
`between people who could otherwise not communicate in that way.").
`
`Defendants' reliance on Digirech Image Tech. v. Elect. For Imaging, Inc, 758 F.3d 1344
`
`(Fed. Cir. 2014) is inapposite.4 First, Defendants incorrectly assert that claim 1
`
`takes existing
`
`To the extent that the 2014 Digitech decision suggests that all software inventions are
`4
`unpatentable, subsequent Federal Circuit decisions have dispelled that notion. See Iz‘nfish, 822 F.3d
`at 1339 (holding that claims not required to be defined by reference to "physical" components, for
`holding otherwise "risks resurrecting a bright-line machine-or-transformation test,...or creating a
`categorical ban on software patents, [citing Bi!skz‘]").
`
`6
`
`

`

`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 09/29/17 Page 11 of 25 PageID #: 648
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`information and organizes it into a new form. Mot. at 19. To the contrary, the invention of the '813
`
`patent gathers user information, not to organize it, but to more securely complete a transaction.
`
`Second, the Digiiech court concluded the claims were drawn to the abstract idea of "organizing
`
`information through mathematical correlations" because the claims were "not tied to a specific
`
`structure or machine."1d., at 1350. Claim 1's Electronic ID Device is tied to a "tangible machine"
`
`(a device with biometric sensor, user interface, processor, etc.) performing specific functions.
`
`Viewed in light of the patent's specification, claim 1
`
`is not directed to "basic tools of
`
`scientific and technological work," A/ice, 134 S. Ct. at 2354, nor is it directed to a "fundamental
`
`economic practice" as were the claimed inventions held to be patent-ineligible in Alice and Biiski.
`
`SeeA/ice, 134 S. Ct. at 2355—56. The inventions in Alice and Biiski covered concepts that had been
`
`"long prevalent in our system of commerce," Afice, 134 S. Ct. at 2356, but Defendants do not point
`
`to a "long prevalent" practice that carried out the specific secure authentication transaction in the
`
`same way as claim 1. Defendants have failed to analyze the character of claim 1 as a whole to
`
`determine if its focus is directed to an impermissible abstract idea. See MAZ Encryption, 2016 WL
`
`5661981 at *2 (At Al'ice step 1, "the claims are considered in their entirety to ascertain whether
`
`their character as a whale is directed to excluded subject matter") (emphasis added).
`
`2.
`
`Claim 1 Of The '813 Patent Provides A Technical Innovation
`
`Under Afice's second step,
`
`the Court "considers the elements of each claim both
`
`individually and 'as an ordered combination‘ to determine whether the additional elements
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`'transform the nature of the claim‘ into a patent-eligible application." Aiiee, 134 S. Ct. at 2355
`
`(quoting Mayo, 132 S. Ct. at 1297-8). It is improper to analyze the claim as individual limitations.
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`Diamond v. Dienr, 450 US. 175, 188-89 (1981); King Pharms., inc. v. Eon Labs, Inc, 616 F.3d
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`1267, 1277 (Fed. Cir. 2010) ("The Supreme Court has stated that a § 101 patentability analysis is
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`directed to the claim as a whole, not individual limitations"). "[l]t is irrelevant that any individual
`
`7
`
`

`

`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 09/29/17 Page 12 of 25 PageID #: 649
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`step or limitation of such processes by itself would be unpatentable under § 101." In re Bllslcz‘, 545
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`F.3d 943, 958 (Fed. Cir. 2008); Bascom Glob. lnlerner Servs., Inc. v. ATcW‘MolJllily, LLC 82'?
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`F.3d 1341, 1350 (Fed. Cir. 2016) ("The inventive concept inquiry requires more than recognizing
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`that each claim element, by itself, was known in the art")
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`Claim 1
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`is directed to specific improvements in a mobile electronic transaction
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`authentication system that allows an electronic device to remotely place transaction requests at a
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`POS device in a more secure manner. Sec. IVA, supra. Claim 1 is, therefore, unlike the claims
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`found unpatentable in Alice and Versala Dev. Group v. SAP America, Inc, 793 F.3d 1306 (Fed.
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`Cir. 2015), which added conventional computer components to well-known business practices—
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`a showing that Defendants have failed to make here. See Alice, 134 S. Ct. at 2358—60; Versara.,
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`”:93 F.3d at 1333—34 (computer performed "purely conventional" steps directed to the "abstract
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`idea of determining a price using organization and product group hierarchies").5 Claim 1 covers
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`security improvements to a specific mobile electronic transaction authentication system, and thus
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`is fundamentally distinct from claims found patent-ineligible that recited use of an abstract
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`mathematical formula on any general purpose computer,6 or a purely conventional computer
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`implementation of a mathematical formula,7 or generalized steps to be performed on a computer
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`5 See also Mortgage Grader, lnc. v. First Choice Loan Servs. lnc., 811 F.3d 1314, 1324—25 (Fed.
`Cir. 2016) (claims attaching generic computer components to perform "anonymous loan shopping"
`not patent eligible); Intellectual Ventures l LL(.' 1*. Capital One Bank (USA), 792 F.3d 1363, 1367'—
`69 (Fed. Cir. 2015) (claims adding generic computer components to conventional financial
`budgeting); OlP Techs. v. Amazon, 7'88 F .3d 1359, 1362—64 (Fed. Cir. 2015) (claims implementing
`offer-based price optimization using conventional computer activities); Ullramercz‘al, lnc. v. Hula,
`LLC, 772 F.3d 'i'09, 714-17 (Fed. Cir. 2014) (claims applying an exchange of advertising for
`copyrighted content to the Internet); buySAl'lz‘, Inc. v. Google, 1:10., 765 F.3d 1350, 1354-55 (Fed.
`Cir. 2014) (claims adding generic computer functionality to the formation of guaranteed
`contractual relationships).
`6 See Gotrschallc v. Benson, 409 U.S. 63 (1972), see also Alice, 134 S.Ct. at 2351-58.
`? See Parker v. Hook, 437 U.S. 584, 594 (1978); see also Alice, 134 S.Ct. at 2358.
`
`

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`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 09/29/17 Page 13 of 25 PagelD #: 650
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`using conventional activity, see Internet Parents (.‘orp. v. Active Network, Inc, 290 F.3d 1343,
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`1348-49 (Fed. Cir. 2015) (claims directed to abstract idea of maintaining computer state without
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`reciting specific activity used to generate that result); Digitech, 258 F.3d at 1351 (claims directed
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`to abstract idea of "organizing information through mathematical correlations" and reciting only
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`generic gathering and processing activities).8
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`Defendants argue that "there is nothing unusual about the ordered combination" in claim 1,
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`which "are arranged in the most conventional manner to facilitate access to a database." Mot. at
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`20. Defendants fail to provide any support for these statements,9 which contradict the '813 patent‘s
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`discussion of the novel aspects of the claim's ordered combination. Sec. IVA, supra. Defendants
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`mistakenly argue that
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`the claimed POS engages
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`in "ordinary point of sale encrypted
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`communications," but the specification and claim make clear that what the POS receives from the
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`claimed Electronic ID Device is encrypted authentication information generated from "the non-
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`predictable value, information associated with at least a portion of the biometric input, and the
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`secret information" obtained from the user. Like the lip-synching technology in MCRO, this claim
`
`
`
`8 Defendants argue that the invention's use of purportedly "known" computer components—a
`biometric sensor, user interface, communication interface, processor, and a secure registry—to
`provide more secure mobile transaction authentication dooms the claims under section 101, but
`there is no such general rule. See Eny‘ish, 822 F.3d at 1338 ("we are not persuaded that the
`invention's ability to run on a general-purpose computer dooms the claims") Defendants do not
`explain how the specific claim limitations of claim 1 cover a pre—existing business practice. Instead
`of addressing the language of claim 1, Defendants focus on whether the addition of conventional
`computer components to their proposed abstract idea of "verifying an account holder's identity
`using a code" would make that idea patentable. Because their abstract idea bears little resemblance
`to the actual claim language, Defendants' analysis is of no assistance.
`9 Defendants' unsubstantiated contention that selected limitations of the '813 patent require only
`"conventional" use of generic technology raises factual issues that cannot be properly resolved on
`the limited record before the Court (i.e., the Complaint and the Asserted Patents). See Vehicle JP,
`LLC v. AT&T Mobility LLC, 2016 WL 5662004 at *6 (D. Del. Sept. 29, 2016); (hHWave
`Comme’ns, LLC v. AT&TMobiLi{)/, LLC, 207 F. Supp. 3d 405, 412 (D. Del. Sept. 15, 2016) (citing
`In Re TLI (lommc'ns, 823 F.3d 607, 61 1 (Fed. Cir. 2016)).
`
`

`

`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 09/29/17 Page 14 of 25 PageID #: 651
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`is limited to mobile electronic transaction authorization techniques using specific inputs and tied
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`to specific rules, and so are "specifically designed to achieve an improved technological result in
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`conventional industry practice." M0130, 837 F.3d at 1316; DDR Hoidings, LLC v. Hoieiscom, 713
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`F.3d 1245, 125'? (Fed. Cir. 2014) ("claimed solution necessarily rooted in computer technology to
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`overcome a problem specifically arising in the realm of computer networks").
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`B.
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`The Secure Payment and ID System of the '13?1' Patent Is Patent-Eligible
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`The invention of claim 12 of the '137 patent provides an improved mobile device
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`transaction approval system that provides increased security, for example, during a point of sale
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`transaction. A person wishing to use a device for a transaction must first be authenticated by the
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`device based on secret information and biometric information provided by the person. '13? patent,
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`at 29:21-44. The device then generates authentication information, an indicator of the device's
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`biometric authentication of the user, and a time varying value that creates a one-time variable token
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`that can be sent via a merchant to a second device for transaction approval. Id, Fig, 3, 14:26-36,
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`41-53, Fig, 7, 17:66-18:34, 36:1-26, Fig. 21. Consistent with the ‘137 specification, "[s]ince the
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`Electronic ID Device generates a time variant code or otherwise generates a code that can for
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`example only be used for a single transaction, the merchant retains no information from the
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`transaction that may be fraudulently used in subsequen