`571-272-7822
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`Paper No. 35
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`UNITED STATES PATENT AND TRADEMARK OFFICE
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`
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`___________
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`UNIFIED PATENTS INC.,
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`Petitioner,
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`v.
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`MOBILEPAY, LLC.,
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`Patent Owner.
`
`___________
`
`
`Case IPR2019-00466
`Patent 9,800,706 B2
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`___________
`
`Record of Oral Hearing
`Held: May 4, 2020
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`____________
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`
`
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`Before THU A. DANG, JENNIFER S. BISK, and
`NEIL T. POWELL, Administrative Patent Judges.
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`Case IPR2019-00466
`Patent 9,800,706 B2
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`APPEARANCES:
`
`
`ON BEHALF OF THE PETITIONR:
`
`JESSICA MARKS, ESQUIRE
`Unified Patents, Inc.
`1875 Connecticut Avenue, N.W.
`Floor 10
`Washington, D.C. 200009
`
`
`
`ON BEHALF OF PATENT OWNER:
`
`
`RAYMOND W. MORT, III, ESQUIRE
`The Mort Law Firm, PLLC
`100 Congress Avenue
`Suite 2000
`Austin, TX 78701
`
`
`The above-entitled matter came on for hearing on Monday, May 4,
`2020, commencing at 1:00 p.m., EDT, by video/by telephone.
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`P R O C E E D I N G S
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`JUDGE DANG: Good afternoon. Welcome to the Patent
`
`Trial & Appeal Board. We are here today for oral arguments in
`matter No. IPR 2019-00466, challenging patent No. 9,800,706.
`Unified Patents, Inc., is the Petitioner and Mobilepay, LLC., is
`the Patent Owner. Your panel today includes myself Judge
`Dang, Judge Jennifer Bisk and Judge Neil Powell. Let us start
`with appearances. Who do we have for Petitioner?
`
`MS. MARKS: For Petitioner, and I just want to clarify the
`record that it's Unified Patents, LLC., (indiscernible) Paper No.
`17, and for Unified Patents we have myself Jessica Marks and
`Ashraf Fawzy.
`
`JUDGE DANG: Okay. And for Patent Owner.
`
`MR. MORT: For Mobilepay it's Ray Mort.
`
`JUDGE DANG: Thank you all for joining us. I have a few
`administrative details. So let's first, please note to mute yourself
`unless you are speaking. Also please identify yourself before
`speaking. We have all the papers filed before us so when you are
`presenting please refer to your demonstratives by number so that
`we can follow along. Also there may be an audio lag so please
`observe a pause before speaking. Please note also there is a
`public line connected to this video conference so keep this in
`mind.
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`Okay. As an initial matter we will address Patent Owner's
`
`objections to Petitioner's demonstratives. The panel will
`overrule Patent Owner's objections and thus we will allow
`presentation of the demonstratives from Petitioner. Patent
`Owner, we understand your concerns about new arguments. We
`will be able to identify and disregard any new issues not argued
`in the petition as we are drafting our decision. We will make
`those determinations then.
`
`Each party will have 45 minutes in total so please indicate
`before speaking whether or not you would like to reserve any
`time. Petitioner, you have the ultimate burden to establish
`unpatentability so you will proceed first. Patent Owner, you will
`then follow. Petitioner, would you like to reserve any time?
`
`MS. MARKS: Yes. I'd like to reserve ten minutes, please.
`
`JUDGE DANG: Ten minutes. Okay. So you will have 35
`minutes to present your primary case. Let me know when you're
`ready and I'll start the clock.
`
`MS. MARKS: I'm ready, Your Honor.
`
`JUDGE DANG: Go ahead please.
`
`MS. MARKS: Thank you, Your Honors. This is Jessica
`Marks for Petitioner Unified Patents, LLC., and let's turn to slide
`4 of Petitioner's demonstratives. On slide 4 we have challenged
`claim 1 of the 706 patent which provides an overview of the
`invention. It's directed to a system for coupling a credit card
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`reader to a mobile device using the audio port of the mobile
`phone. The system comprises three elements. There's the
`hardware component with a first mechanism for receiving data
`from the credit card reader, a communication controller for
`buffering the data before it gets to the first circuit and the first
`circuit that converts the data into an audio analog signal where
`then the connector coupled to the hardware component to the
`audio port of the mobile device. Then the next two elements are
`on the mobile device. So the second mechanism receives the
`analog audio signal and converts it into binary data and the third
`mechanism that uploads that binary data to a cloud service for
`decoding.
`
`Turning to slide 5, dependent claims 2 through 4 are also
`challenged in this IPR but there's generally been no dispute over
`these claims. Basically they stand or fall with independent claim
`1 and although four additional claims were challenged in the
`petition originally, Patent Owner disclaimed the other claims so
`that only claims 1 through 4 are at issue in this proceeding.
`
`So turning to slide 6, the problem the inventors were trying
`to solve was how to connect devices to mobile phones regardless
`of hardware design limitations and regardless of manufacture,
`and there's a linking background section that goes over the
`various known ways to do this but each of these has drawbacks.
`So the solution that was proposed by the patent was to convert
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`the output from that first device into audio signals that can then
`be received via the audio port of the mobile device.
`
`Turning to slide 7, during prosecution that concept of
`transferring data via the audio port was actually found not to be
`novel. As shown in slide 7 after rejecting that third mechanism
`as not being novel, the claims were amended to make it clear that
`it was transferring audio data and that the mobile device could
`detect the presence of the connector in the audio port. That's
`what made the claims allowable.
`
`But as slide 8 shows, there's been no dispute that Tang
`receives audio signals. There's no dispute that Kinzalow teaches
`how a mobile device would detect the presence of a connector in
`an audio port and there's no dispute regarding the combination of
`the two. So there's not been a dispute over that element that
`apparently made the claims patentable.
`
`So turning to slide 12, as there's no dispute over the
`examiner's alleged point of novelty that is taught in these
`references, slide 12 shows an overview of the issues in this case.
`We'll go over the first issue. Petitioner has shown that there's no
`support in the provisional application for the correct
`interpretation of the cloud service element. So the 706 patent
`can only claim priority to its own filing data, therefore the Tang
`reference that we've used in our grounds counts as prior art.
`
`So turning to slide 13. Slide 13 is again claim 1 and we've
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`highlighted the elements relating to that last third mechanism for
`uploading the binary data. So the data is introduced in the first
`mechanism element which explains that the data's provided by
`the credit card reader so it's credit card data. Then the first
`circuit converts the data, the credit card data, into an analog
`signal so it can be transmitted to the mobile device and the
`second mechanism is converts that analog audio signal that's
`been received into binary data so now it's binary credit card data
`that the third mechanism can then upload to the binary -- upload
`that binary data to a cloud service so the cloud service can
`decode that data.
`
`Slide 14 shows the proposed constructions. Now Petitioner
`has proposed consistent with the claim language that cloud
`service should be construed as for decoding the binary data that's
`been uploaded. Patent Owner however advocates a broader
`definition covering remote devices and software that's interactive
`via a network such as the internet. Now these arguments were
`presented to the Board with the Patent Owner's preliminary
`response which was accompanied by an expert declaration and
`Petitioner was granted a reply to that preliminary response.
`After considering the support that was identified by Patent
`Owner, the Institution decision found that the cloud service as
`used in the claims is a service that is capable for decoding the
`uploaded binary data which is consistent with Unified's
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`positions.
`
`Turning to slide 16. Not only is the claim language
`consistent with these positions, the specification also supports
`these positions. Cloud service is only mentioned in one section
`of the specification and it's the section that was added to the
`specification when it was filed on May 8, 2010. As shown in the
`patent at column 12, lines 15 through 22, a cloud service could
`decode the signal so that the phone could be relatively "dumb".
`This allows the device (phonetic) that's connected to the phone
`to communicate to the cloud through the mobile phone where a
`software vendor would implement a solution on the cloud for
`decoding the data that had been transmitted from the peripheral
`device, and then the phone would be able to then upload that data
`without significant change, that is without decoding it itself and
`in the servers where the data would be decoded.
`
`Turning to slide 17. It shows the prosecution history that
`further supports this same position. The claims had previously
`stated that any peripheral device could be coupled to the mobile
`device and then the mobile device would upload the binary data
`without significant change to any server. But those claims were
`found to be unpatentable, they were rejected. So in response
`Applicant clarified that it was credit card data that was being
`sent and it wasn't just being sent to any server but it was being
`sent to a cloud service for decoding and in their response
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`Applicant explained that this has demonstrated the inventive
`technique, that by specifying that the data was going to be
`transmitted to a cloud service for decoding the meaning of the
`claims changed and showed that this employs the phone as a
`network and accessory for the peripheral device and Applicant
`cited to the added disclosure of the 706 patent, highlighting how
`the recitation of a cloud service made it clear to a POSITA that
`the phone could be relatively "dumb" so that the software vendor
`solution could decode the binary data.
`
`Now in Patent Owner's surreply, Patent Owner argues that
`the cloud service for the coding language is merely an intended
`use and it's not limiting and they cite to the Boehringer
`Ingleheim case. But in Boehringer Ingleheim the issue was with
`a term that was in the preamble of a method claim. Unlike
`Boehringer Ingleheim, here the cited limitation appears in the
`body of the claims and moreover, even for preamble solemnity
`(phonetic) nature is determined on the facts of each case in light
`of the overall form of the claims, the invention as described in
`the specification and as the illuminated in the prosecution
`history. Here the form of the claim has the element recited in
`the body, not the preamble. The invention in the specification
`indicates that the recitation of a cloud service for decoding is
`relevant to the operation of the mechanism of the mobile phone
`and this is confirmed by Applicant's own statement and the fact
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`that the element was added during prosecution to overcome the
`rejection. Accordingly, the only support for this element was in
`the information that was added to the March, 2010 filing date
`and another proper interpretation, there is no support for this
`element.
`
`Turning to slide 19. Several of Patent Owner's arguments
`rely on alleged disclosures in the provisional of various network
`servers for the cloud service. But an internet server is not
`equivalent to a cloud service. Phones communicating with
`network servers via the internet was well known at the time but a
`cloud service that allows the phone to merely be relatively
`"dumb" so that way the solution for decoding the data that's
`originally obtained from the peripheral device would then be
`provided by the cloud service, that's what the inventors had
`understood to be their invention. So in this way the disclosure
`of this functionality of the system for uploading the data to the
`cloud service was not added until the 706's filing date and as for
`uploading or downloading packets of information to the internet
`involving, for example the transmission using TCP/IP protocols,
`it's our position that those theories were correctly considered and
`rejected by the Board. Transmission of data packets is not
`decoding of the binary data within the packets and the 706 patent
`itself distinguishes between the two. It states at column 12, lines
`15 through 22 that same section that, at the end it says that the
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`data would then be uploaded without significant change and in
`that uploading process would be the TCP/IP packetization part of
`it, but it's only after it's uploaded without significant change to a
`server it's there where it would then be decoded so it's the
`decoding of that data once it's been received by the server that
`we understand to be the proper interpretation of cloud service.
`
`Now turning to slide 24. Several of Patent Owner's
`arguments rely on what a POSITA would have known, such as
`how DNS query resolves the URL to obtain an IP address or
`various other parts of POSITA knowledge to teach what is
`claimed to be a distinguishing feature of its invention. But even
`assuming that these passing references to access via the internet
`somehow discloses a cloud or some service based on POSITA
`knowledge, there's nothing that would indicate to a POSITA that
`the inventors had possession of the claimed system for uploading
`the data to a cloud service. As explained in Lockwood v.
`American Airlines, Inc., it's not sufficient for purposes of
`written description requirement of Section 112 that the
`disclosure would combine with knowledge in the art would lead
`one to speculate as to the modifications that the inventor might
`have envisioned but failed to disclose.
`
`Moreover, as shown in slide 24, a further reason a POSITA
`would not have understood the inventors to have possession of
`the claimed system for uploading to a cloud service in the
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`provisional application is because the provisional discourages
`the use of intermediary servers and internet websites because
`such use adds delay and complexity of setup.
`Accordingly, as shown on slide 25, the Board properly
`found that the provisional application failed to provide written
`description support so the 706 patent is not entitled to benefit of
`the provisional's filing date, thus the priority date of the
`challenged claims is March 8, 2010 and Tang qualifies as prior
`art.
`
`JUDGE BISK: Can I ask a quick question? This is Judge
`Bisk. So you're saying the provisional basically discourages
`from using the cloud service. Does that change in the later
`amendments or in the actual filing of the application? Is that
`discouragement still in there or how does that change?
`MS. MARKS: I believe it was in the original provisional
`application and the same background section was presented in
`the patent. What was different was -- is the application filed on
`March 8 as they added an explanation that even though it's
`discouraging in the beginning part of it, it presented the new idea
`of presenting a cloud service.
`JUDGE BISK: Okay. Thank you.
`MS. MARKS: So turning to slide 41. We'll turn to the
`next major issue in this case, the three limitations of the
`hardware component and on slide 42 there's claim 1 again with
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`the three limitations of hardware components that are actually at
`issue.
`Slide 43 shows how those elements have been met. So the
`first mechanism configured to receive data provided by the credit
`card reader. As detailed in the petition, for example on pages 27
`through 29, we cite to Tang's credit card reader controller, it's
`the controller that has MCU 50. It's our position that it
`necessarily would have to have some mechanism to receive the
`data because it does disclose that it received the data but since
`Tang does not provide details of its controller, a POSITA would
`have been motivated to turn to Inoue for implementation details
`and Inoue discloses that its controller includes a port controlling
`block that receives data at port B and the petition goes in great
`detail on how port B is a serial port similar to the one that's
`disclosed in the patent. So it's clear that that qualifies as a port.
`For the second limitation Inoue discloses a microcontroller
`with its port controlling blocks that controls the communication
`between Inoue's input/output ports and the external input device.
`So it's disclosing an input buffer and as we explained in the
`petition, using a controller with a designated input port and input
`buffer as disclosed in Inoue would make the system more
`efficient by temporarily restoring received data while processing
`previously received data simultaneously and finally for the first
`circuit element, Tang disclose MCU 50 that is explicitly
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`disclosed in converting the received analog for digital
`transaction data into an analog signal for transmission to the
`mobile phone. As noted on page 35 of the petition, Tang's MCU
`50 converts the signal into a DTM that's audio signal, and so
`there is the method of those three components to the prior art
`references.
`Turning to slide 44. Patent Owner has argued that these
`limitations require different devices, but this argument was
`rejected by the Board in the Institution decision because nothing
`in the claim language prohibits the three features from
`encompassing a single device and the language of a hardware
`component including the three limitations suggests the single
`device embodiment. Petitioners map the limitation to Tang and
`Inoue in the same way as they're presented in the 706 patent as a
`single microcontroller unit like Tang's controller with MCU 50
`with the details of the controller provided by Inoue, that is
`Inoue's disclosure of a port and a buffer.
`Turning to slide 45. Since Mobilepay's preliminary
`response it's attacked the combination of Inoue and Tang arguing
`that a POSITA would not make such a combination for a variety
`of reasons. But each of these reasons are based on a
`misunderstanding of Petitioner's combination. As the Board
`recognized, Inoue is not advocating for example the bodily
`incorporation of Inoue's exact single logic gate into Tang's
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`controller. Inoue's being used for what it would teach a
`POSITA, that a controller either would have or would have
`beneficially had a port with a buffer and when read in context it's
`clear that the petition addresses details like how Inoue's buffer
`operates as a single logic gate in the context of the proposed
`means plus function analysis for the language of mechanism
`configured to receive data. To preemptively prove that Inoue
`qualified as a serial port with a buffer should Patent Owner argue
`that means plus function analysis supplies, we presented details
`on the single logic gate and how the data enters interiorly as
`opposed to a parallel port or some other interpretation. So to
`show that this qualified as disclosing a port we included those
`details but the position has always been, that is the concept of
`the details of a controller having a port and a buffer is what we
`are or what a POSITA would be motivated to make in a
`combination.
`Moreover, this was recognized by the Board in the
`Institution decision and to the extent Patent Owner was confused
`by this they had ample opportunity to depose our expert, and as
`shown on slide 45, are some of the quotes from Exhibit 2008, the
`deposition testimony confirming that that has and continues to be
`our position.
`On Patent Owner's latest argument in its surreply, they're
`arguing that Unified is now arguing for some unknown and
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`undisclosed buffer but this argument is a red herring. You know,
`upon reviewing the Institution decision Unified attempted to help
`with the understanding of our position and we felt that the
`Board's language for interpreting it was a suitable interpretation.
`It was what we were trying to convey and so in our reply we
`incorporated some of the Board's language to explain that we're
`not advocating bodily incorporation and that there's nothing in
`either references that discredits or otherwise discourages the
`incorporation of a port and a buffer in a controller so there's no
`teaching away, but Patent Owner appears to have misunderstood
`this as some kind of new argument.
`Moreover, we note that Patent Owner's newly cited
`Koninklijke Phillips N.V. v. Google, LLC case in the surreply
`actually supports Unified's positions. While it is true that the
`Federal Circuit admonished that PTAB decision for including a
`new combination of references in the grounds they instituted,
`they noted that the Board can't institute on a ground based on a
`combination of references that wasn't presented in the petition.
`In that case the Federal Circuit also approved of the Board's
`reliance on POSITA knowledge when analyzing the ground that
`was presented in the original petition.
`Similarly in this case, the petition clearly proposes the
`ground currently before the Board. It asserts for example,
`ground 1 is Tang in view of Kinzalow and Inoue and Unified is
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`appropriately relying on the combination of Tang and Inoue in
`view of POSITA knowledge for this element.
`Turning to slide 57. The next issue is the disclosure of the
`second and third mechanisms by Tang and slide 58 shows claim 1
`again with the second and third mechanisms highlighted. These
`mechanisms are both on the mobile device. The second
`mechanism allows the mobile device to convert the analog audio
`data that is received into binary data so that way the third
`mechanism can upload that binary data to a cloud service for
`decoding.
`Slide 59 presents a visual representation of the combination
`that Petitioner is relying upon. Petitioner's position relies on a
`combination of two embodiments in Tang. In the first
`embodiment on the left illustrated with figure 2 of Tang, there's
`transaction apparatus 12 in yellow that includes credit card
`reader 38 and a controller and there is the controller with MCU
`50 that converts the data from the credit card reader to an analog
`signal before sending the data over the communications link to
`mobile phone 14. So there's the first embodiment, and then we
`proposed the combination with the second embodiment disclosed
`as illustrated with what we call Tang 2 with figures 7 and 8. In
`Tang 2 it discloses that mobile phone 14 now would include a
`controller 51 that corresponds to the second mechanism.
`The second mechanism, as shown on slide 60 which has a
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`Case IPR2019-00466
`Patent 9,800,706 B2
`
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`quote of Tang noting that the software application of the
`controller 51, that converts the received signal back to binary
`data, for example as stored on magnetic card 24. So it's clear
`that the data, it explicitly says that it's turning into binary data
`as it was stored on magnetic card 24, that's the credit card. So
`it's binary credit card data. In our arguments we've also
`presented several reasons why a person of ordinary skill in the
`art would meet this combination, for example both embodiments
`use the same mobile phone 14 so it would have been obvious that
`the two could be combined. You would have been motivated to
`transmit binary data instead of analog data of the first
`embodiment over the communications network because the
`digital transmission would be more secure when using binary
`data than when using analog data, and so that brings us to slide
`61 which is the third mechanism that's going to be configured to
`upload the binary data to the cloud service for decoding.
`Slide 62 shows figure 1 which is an overview of the Tang
`system. There it shows there's the transaction device with the
`credit card reader connected to the communications device 14
`and that transmits the data to the remote processor assembly 22
`and highlighted from our petition is the statement where we map
`in the claims being explicit that the disclosed transceiver on the
`mobile phone will transmit the data which happens to be in
`GPRS data, it's no longer the audio DTMF data, over the
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`Case IPR2019-00466
`Patent 9,800,706 B2
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`communications network to the remote processor assembly 22
`and the first part of that assembly is transaction server 18.
`Transaction server 18 that's going to decode that received data so
`that with the credit card it can be processed by the
`processor/issuer part of the remote processor assembly.
`Slide 63 explains why a POSITA would have been
`motivated to make the combination. As we stated before, for
`example transmitting the binary data to the cloud service for
`decoding would have been more secure than, for example
`transmitting the analog data that was disclosed in the first
`embodiment, and as detailed in Tang controller 51 converts the
`received audio analog signal into binary data, that's the data
`that's stored on the credit card so it's credit card data. Then it
`explicitly says in Tang that the transaction card data and
`transaction data are encoded and sent to transaction server 18 as
`GPRS data and at the remote processor assembly 22, transaction
`server 18 is the first component to receive the data and Tang
`discloses that it decodes the transaction data, reformats it and
`sends it to the processor issuer for approval. So the transaction
`server is not merely unpackaging and reassembling the packets
`of data, it's actually processing the underlying data, decoding
`that binary data, so that way the processor/issuer portion of the
`cloud service can approve the credit card transaction.
`Now contrary to Patent Owner's recent arguments,
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`Case IPR2019-00466
`Patent 9,800,706 B2
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`Petitioner has maintained the same position throughout this
`proceeding. Tang discloses a cloud service that becomes the
`binary data. The binary data is credit card data obtained from
`the credit card reader of the system and the fact that the cloud
`service is what processes the underlying binary data shows that,
`like the 706 patent, the mobile phone of Tang is relatively
`"dumb" and merely acts as a communications conduit for
`uploading the data to the cloud service for decoding.
`Accordingly, Petitioner has demonstrated that the
`challenged claims are obvious so if there are no questions,
`Petitioner will reserve the remaining time for rebuttal.
`JUDGE DANG: Okay. None for me. You have nine
`minutes and forty five seconds so that would be nineteen minutes
`forty five seconds total. Patent Owner, would you like to reserve
`any time?
`MR. MORT: I don't think I'm going to take all my time.
`I'll reserve ten minutes but I don't think I'm going to use all of it.
`JUDGE DANG: Okay, great. So 35 minutes for you also.
`You can begin any time you're ready.
`MR. MORT: Thank you, Your Honors. A couple of things
`before I get into the principle arguments. Just to respond to
`some of the points that were made. The Petitioner makes several
`claims that there's no dispute regarding, for example some of the
`dependent claims and some of the other elements and so forth, it
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`Case IPR2019-00466
`Patent 9,800,706 B2
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`appears that Petitioner has the burden flipped (phonetic). We
`don't have the burden to dispute anybody. It's the Petitioner that
`has to establish each element for each ground they're asserting
`beyond a preponderance of the evidence to the Board. We can
`stay silent on everything, so it's simply because we don't know
`and attack at full length (indiscernible) their arguments that does
`not mean that we concede that they have established that
`argument. So I just want to kind of make sure that just because
`they say something and we don't necessarily respond to it, we're
`not conceding that.
`With regard to Your Honor's question regarding whether or
`not the initial application or the provisional application
`discouraged cloud service and so forth, the exact same paragraph
`that's included in the background section for both and it doesn't
`say don't use an internet server, it says it would be awkward and
`so forth. We then identified the problems and provide solutions
`to the problems that we've identified and in particular if you go
`to slide 2 of our demonstratives, so slide 2 of our demonstratives
`is page 17 of Exhibit 1004. This is the 586 application. So this
`is describing one of the embodiments of the invention. So in this
`embodiment what is going on is a user, let's call it
`(indiscernible) on the first mobile device wants to send some
`photographs to Bob and Bob has another mobile device. Now
`we've disclosed the devices were for example iPhones. So this is
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`Case IPR2019-00466
`Patent 9,800,706 B2
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`like us wanting to send messages with multiple photos to another
`person.
`So if you look here in the middle of it it talks about that the
`first device, this is Alice's phone, would upload photographs. So
`she's uploading multiple photographs at one time to an internet
`based server. That internet based server receives those
`photographs, stores them and generates a URL, a uniform
`resource locator, and provides that back down to Alice. Alice is
`then able to send to Bob's phone directly the URL. Bob then
`uses that URL to access the photos from the internet phone
`server. So this is much -- in today's world an example of this is
`when we have production and so forth and it's too big to send by
`email so we'll upload it to Drop Box and we'll get a link to our
`folder on Drop Box and we can email it to the other person and
`say here's your link to the files. I've uploaded them, it's too
`cumbersome to send back and forth directly and then it goes to
`the file server. The other person's able to use that link to then
`access a file to download it. We call it Drop Box today, we call
`it SharePoint and so forth. It seems it's undisputed that that is a
`cloud service. It is remote from everybody. It's on the network.
`It provides a service for