Trials@uspto.gov
`571-272-7822
`
`
`Paper No. 34
`
`
`UNITED STATE PATENT AND TRADEMARK OFFICE
`__________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`__________
`
`SQUARE, INC.,
`Petitioner,
`
`v.
`
`4361423 CANADA INC.,
`Patent Owner.
`
`__________
`
`IPR2019-01625 (Patent 8,286,875 B2)
`IPR2019-01627 (Patent 8,281,998 B2)
`IPR2019-01629 (Patent 9,269,084 B2)
`
`__________
`
`Record of Oral Hearing
`Held: January 27, 2021
`__________
`
`Before JAMESON LEE, ROBERT J. WEINSCHENK, and
`KEVIN C. TROCK, Administrative Patent Judges.
`
`
`
`
`
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`571-272-7822
`
`
`Paper No. 34
`
`
`UNITED STATE PATENT AND TRADEMARK OFFICE
`__________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`__________
`
`SQUARE, INC.,
`Petitioner,
`
`v.
`
`4361423 CANADA INC.,
`Patent Owner.
`
`__________
`
`IPR2019-01625 (Patent 8,286,875 B2)
`IPR2019-01627 (Patent 8,281,998 B2)
`IPR2019-01629 (Patent 9,269,084 B2)
`
`__________
`
`Record of Oral Hearing
`Held: January 27, 2021
`__________
`
`Before JAMESON LEE, ROBERT J. WEINSCHENK, and
`KEVIN C. TROCK, Administrative Patent Judges.
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`
`
`
`
`
`
`
`
`
`
`
`IPR 2019-01625 (Patent 8,286,875 B2)
`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
`
`
`APPEARANCES:
`
`ON BEHALF OF THE PETITIONER:
`
`
`SCOTT McKEOWN, ESQ.
`Ropes and Gray LLP
`800 Boylston Street
`Boston, Massachusetts 02199-3600
`(202) 508-4740
`scott.mckeown@ropesgray.com
`
`
`
`ON BEHALF OF THE PATENT OWNER:
`
`
`NIALL MACLEOD, ESQ.
`JASON S. JACKSON, ESQ.
`Kutak Rock LLP
`60 South Sixth Street, Suite 3400
`Minneapolis, Minnesota 55402-4018
`(612) 334-5004 (MacLeod)
`(303) 292-7798 (Jackson)
`niall.macleod@kutakrock.com
`jason.jackson@kutakrock.com
`
`
`
`The above-entitled matter came on for hearing on Wednesday, January
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`27, 2021, commencing at 2:00 p.m. EST, by video/by telephone.
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`IPR 2019-01625 (Patent 8,286,875 B2)
`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
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`P-R-O-C-E-E-D-I-N-G-S
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`2:00 p.m.
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`JUDGE LEE: Good afternoon, everyone. This is a consolidated
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`oral hearing for IPR 2019-01625, IPR 2019-01627, and IPR 2019-01629.
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`The Petitioner in all three proceedings is Square Inc., and the Patent
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`Owner in all three proceedings is 4361423 Canada Inc. The involved
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`patents are U.S. Patent 8,286,875 B2, for the 1625 proceeding, Patent
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`8,281,998 B2 for the 1627 proceeding, and Patent 9,269,084 B2 for the 1629
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`proceeding.
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`I am Judge Jameson Lee, joined by Judge Robert Weinschenk and
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`Judge Kevin Trock.
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`Before we begin, we wish to thank you for your
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`flexibility in conducting this hearing via video today. Given this is a
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`departure from our normal practice, we start by clarifying a few items.
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`First, our primary concern is your right to be heard. If at any time
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`during the proceeding -- during the hearing, you encounter technical
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`difficulties that fundamentally undermine your ability to adequately
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`represent your client, please let us know immediately, for example, by
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`contacting the team member who provided you with connection information.
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`Second, for the benefit of the judges and opposing counsel, as well
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`as the court reporter, please identify yourself when you begin your argument
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`IPR 2019-01625 (Patent 8,286,875 B2)
`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
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`and speak clearly into your microphone. Please do not speak when others,
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`such as the judges, are speaking.
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`Third, we have the entire record, including demonstratives. When
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`referring to demonstratives, papers, or exhibits, please do so clearly and
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`explicitly by slide or paper number. Please also pause a few seconds after
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`identifying it to provide us time to find it. This helps the presentation of an
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`accurate transcript of the hearing.
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`Finally, please mute yourself when not speaking.
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`Please bear in mind the purpose of the oral hearing is to present your
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`case, based on the arguments and evidence of record. You may not
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`introduce new evidence or arguments.
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`Each party will have 90 minutes of total argument time for all three
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`proceedings. Petitioner and Patent Owner may each reserve time for
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`rebuttal. Petition will go first in its case. Thereafter, Patent Owner will
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`argue its opposition. And if there's any rebuttal from Petitioner, we will
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`hear it after Patent Owner's opposition. Finally, we will hear Patent
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`Owner's rebuttal, if requested.
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`Each time counsel speaks, he or she may address all three
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`proceedings. The time is not divided by proceedings.
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`We realize that the specification of the three involved patents are
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`essentially the same and there are overlapping prior art references, so we are
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`IPR 2019-01625 (Patent 8,286,875 B2)
`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
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`going to assume that the representations pertain to all three patent
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`specifications and the common prior art, unless counsel specifically tells us
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`otherwise and gives us the reason why.
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`I will provide you with a five-minute warning during each opening
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`argument and a two-minute warning during each rebuttal and sur-rebuttal.
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`Please also note that the arguments raised during rebuttal and sur-
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`rebuttal must be in response to arguments raised by the opposing party.
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`Neither period should be used to initiate new arguments.
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`I have a couple more preliminaries and that is, at the end of the
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`hearing, will counsel please stay online just a few more minutes to talk to the
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`court reporter, because the court reporter may have some clarification he or
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`she needs to make with counsel. The Panel will sign off, but counsel,
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`please stay online and see if the court reporter has any questions for you.
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`And, finally, Patent Owner -- we would like Patent Owner, after the
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`hearing, to please submit another copy of the Patent Owner response in IPR
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`2019-01627, because the original copy that's filed has no paper numbers.
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`We would like to work with a copy with paper numbers, so please
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`file another one that's exactly the same as the original, but only with paper
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`numbers inserted. We don't want different pagination, different texting of
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`any kind, just insert the paper numbers on the pre-existing pages. And you
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`can title it Corrected Patent Owner Response.
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`5
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`IPR 2019-01625 (Patent 8,286,875 B2)
`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
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`MR. MACLEOD: We will take care of that, Your Honor.
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`JUDGE LEE: Now, I'm ready to get the appearances from counsel,
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`starting with Petitioner, please.
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`Oh, this is Judge Lee, I cannot hear clearly who's speaking and I
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`cannot see anyone who's speaking. I think Petitioner's counsel should be
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`introducing themselves right now.
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`MR. ROGERS: Sorry to interrupt, judge. It looks -- I'm getting an
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`IM from Scott McKeown and I think he's having some computer issues.
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`Scott, this is Allan, can you hear us?
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`MR. McKEOWN: I'm having connectivity issues, Your Honors, if
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`you can hear me, I'm just going to dial in because I haven't heard any of the
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`conversation thus far, if you can hear me.
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`JUDGE LEE: Is that counsel for Petitioner that just spoke?
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`MR. McKEOWN: Sorry, this is Scott McKeown.
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`(Audio interference.)
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`MR. ROGERS: Okay. It looks like he's going to try to dial in with
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`another line.
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`Hello, Scott, can you hear us now?
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`MR. McKEOWN: Yes, sorry about that, some internet issues here
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`in the District today.
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`6
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`IPR 2019-01625 (Patent 8,286,875 B2)
`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
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`JUDGE LEE: Okay. I can hear you, it's Judge Lee, but I can't see
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`you on-screen, but we'll proceed like this, is that okay?
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`MR. McKEOWN: Yeah, that's fine. I tried, but this is the best we
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`can do, I guess.
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`JUDGE LEE: Okay. We were just wondering when did we lose
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`you, how far into my introduction? What was the --
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`MR. McKEOWN: I got --
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`JUDGE LEE: -- last thing you heard?
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`MR. McKEOWN: I heard nothing, other than some choppy -- I
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`basically got none of the content. So, again, apologies.
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`JUDGE LEE: Well, okay. We don't have too much time today. I
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`will just tell you the main important things here and that is, the specification
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`of the three cases are essentially the same. So, when you're up and
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`speaking, we're going to assume that everything you say pertains to all three
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`specs, unless you tell us that's different. And the same thing applies to the
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`common prior art, so you don't have to repeat yourself for three cases.
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`And that each time you're up, you have the entire time for all three
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`cases, the hearing is not divided up by proceeding. And I --
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`MR. McKEOWN: Okay.
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`7
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`IPR 2019-01625 (Patent 8,286,875 B2)
`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
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`JUDGE LEE: -- will give you a five-minute advance warning in
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`each primary session up and then, two-minute warning for rebuttal and sur-
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`rebuttal.
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`And, finally, if you have technical difficulties, please tell the
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`technical staff as soon as possible, because we don't want this to
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`fundamentally undermine your right to be heard.
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`Those are the essential points.
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`MR. McKEOWN: Okay, thank you, Your Honor.
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`JUDGE LEE: Yeah. We also asked Patent Owner to file another
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`copy of the Patent Owner response that's exactly the same as the one already
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`filed, but with page numbers. The one we have is without page numbers
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`and we like to have a copy that has page numbers we can work with. All
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`right.
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`MR. McKEOWN: Very good.
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`JUDGE LEE: All right. Counsel for Petitioner, go ahead and
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`introduce you and your colleagues, please.
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`MR. McKEOWN: Hello, this is Scott McKeown of Ropes and
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`Gray for Petitioner, Square Incorporated.
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`JUDGE LEE: Okay. And counsel for Patent Owner?
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`IPR 2019-01625 (Patent 8,286,875 B2)
`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
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`MR. MACLEOD: Yes, Your Honor. This is Niall MacLeod for
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`Patent Owner. And with me today is my partner Jason Jackson also from
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`Kutak Rock.
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`JUDGE LEE: Wonderful. So, each party has 90 minutes total
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`argument time. Would either side want to reserve some for rebuttal and
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`sur-rebuttal?
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`MR. McKEOWN: Petitioner will reserve 30 minutes, Your Honor.
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`JUDGE LEE: Thank you.
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`MR. MACLEOD: Patent Owner would reserve 20 minutes, please,
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`Your Honor.
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`JUDGE LEE: All right. Any time you're ready, Mr. McKeown,
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`you can begin. It's 2:13 right now.
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`MR. McKEOWN: Thank you. Good afternoon, good morning to
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`those of you on the West Coast. As I said, Scott McKeown of Ropes and
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`Gray for Square Incorporated.
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`A couple housekeeping issues. I'll be referring to the Petitioner
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`demonstratives, probably the petition of the '875, '084, both of those patents,
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`and then, finally, we may get into the Patent Owner demonstratives, just so
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`their documents are available. If I should forget to reference what page
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`number I'm on, by all means, interrupt me so that the record is clear.
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`IPR 2019-01625 (Patent 8,286,875 B2)
`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
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`Also, I'd like to point out the grounds that we're discussing today do
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`not get into written description or intervening art the way that some other of
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`these proceedings do, but since I am counsel on all of those, I just want to
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`make clear that when I talk about certain claim considerations that I'm not
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`conceding that written description support, but instead just addressing the
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`grounds that predate the provisional, in any event, so I just want to put that
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`on the record.
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`And then, for the court reporter, as I get to some of these references,
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`I'll spell them out for your benefit. Hopefully, I'll remember to do that.
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`And if I say anything that's unclear, please interrupt me and I'll repeat it.
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`So, with those housekeeping issues out of the way, let's just get into
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`the Petitioner demonstratives, and I'll start with Slide 2, which is, as the
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`panel has recognized, lists all three of these related patents. I'm referring to
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`them as the Tang patents, Tang being the first named inventor.
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`I will discuss generally the '875 and the '998 together, as their claim
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`sets are substantially overlapping, as all of these patents are, but those two
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`are very close. And I've highlighted on the right-hand side of this slide
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`some of the -- not all of the differences, but at least some of the ones that I
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`believe we'll be focusing on here today.
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`10
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`IPR 2019-01625 (Patent 8,286,875 B2)
`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
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`And then, finally, the '084 patent, which is a little bit different from
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`the other two, at least in terms of the input interface, whether it's a magstripe
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`card or a smart card or a contactless smart card.
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`So, generally, two classifications that I'll be addressing today, the
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`'875 and '998 being the first, and the '084 being the second group of claims,
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`so to speak.
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`With that, I'll go to Slide 3 of the Petitioner's demonstratives. And
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`you can see, on the right-hand side, we have Claim 1 of the '875 patent,
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`along with the two architectures that are described in all of these patents.
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`And I'll just explain them at a general level before talking about the claim
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`language.
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`And you'll see that in Figure 2, we have what is on the left-hand side
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`referred to as a point of sale or POS device. This is the typical point of sale
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`terminal that you would see in a business for swiping a credit card through
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`that slot, 39.
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`And then, that credit card data is provided on the link, which is
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`identified as 30, to the mobile phone, identified as 14, which then transmits
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`that information out over a mobile network.
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`Of note here, the connection or the link here, 30, requires a specific
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`format of signal, that being an audio format, and the mobile phone requiring
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`a specific physical connector, which is identified as a hands-free jack.
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`IPR 2019-01625 (Patent 8,286,875 B2)
`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
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`So, that, at a high level, is the architecture of Figure 2. Figure 7 is
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`varying only with respect to the point of sale terminal, where 38 is just a
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`simple card reader with no functionality other than to provide the raw credit
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`card signal onto line 30.
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`JUDGE LEE: Mr. McKeown --
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`MR. McKEOWN: So, with that, I'll flip over --
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`JUDGE LEE: -- it's Judge Lee. What is the described controller in
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`the Patent Owners patent?
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`MR. McKEOWN: The described controller in the patents, I don't
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`know that they identify, for example, a particular manufacturer, but I believe
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`they refer to it as, and I'm looking at Column 6, the controller is a
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`microprocesser, MPU, microcontroller, MCU. I believe that is as detailed
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`as they get.
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`JUDGE LEE: Okay. So, I ask because as far as I can tell, there's
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`not a modem, right? I didn't find a description of a modem that's a part of
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`that controller. It looks like it's just described as a processor of some sort --
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`MR. McKEOWN: That's correct, Your Honor.
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`JUDGE LEE: -- that outputs the audio.
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`MR. McKEOWN: That's correct, Your Honor. The modem in a
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`point of sale terminal would be separate circuitry.
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`IPR 2019-01625 (Patent 8,286,875 B2)
`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
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`JUDGE LEE: Yeah. So, he doesn't describe the modem as a
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`controller, all right. We don't have a lot of time today, so I'll go straight
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`into a lot of the questions that we have.
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`What I'm finding, when reading all the papers, is that, I feel as
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`though we've been asked by Petitioner to fill in a lot of the gaps. Now, you
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`may disagree, but I'd like to ask you about them so you can tell us whether,
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`yes, there are some gaps to be filled or there are not. And if there are gaps
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`to be filled, maybe you can say, well, they're not so large that you should
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`lose on that basis.
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`So, one quick question I have is, when you combine the Vrotsos
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`controller and you say --
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`MR. McKEOWN: Right.
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`JUDGE LEE: -- you want to include that into Proctor, I don't get
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`from your petition what's the resulting configuration? Like, does it replace
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`the modem or is the modem in Proctor still there? Or is the Vrotsos
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`controller, when moved into Proctor, has an output that's connected to the
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`Proctor modem?
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`Like, I don't know what's the resulting configuration, I can't figure it
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`out, it doesn't seem like the petition tells us. So, that seems like a gap to
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`me. Can you respond to that?
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`MR. McKEOWN: Sure.
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`IPR 2019-01625 (Patent 8,286,875 B2)
`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
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`JUDGE LEE: Tell me what I'm missing or, yes, indeed, you didn't
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`tell us that?
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`MR. McKEOWN: Sure, my pleasure. So, just to be clear, we're
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`talking about the Proctor grounds. And Proctor -- and I'll give you a
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`citation for this, so this is at -- well, it's a paragraph, actually, since it's a
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`publication.
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`So, I'm looking at paragraph 10 of Proctor and it reads, the converter
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`includes the connector 34, which connects to a conventional credit card
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`verificational -- verification terminal.
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`And what Proctor explains is inside that terminal, it's very minimal,
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`he explains it as circuitry, including a modem, which of course a point of
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`sale terminal includes.
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`And so, to get to your specific question, when we explained the
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`Proctor reference, what we said is, well, it's a conventional point of sale
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`terminal.
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`And to the extent it doesn't explicitly tell you that the circuitry
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`includes a processor, Vrotsos shows that it's known in the art to, of course,
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`use a processor, which is an essential building block of any electronic
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`circuit, which is on page 23 of our petition.
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`And if you could indulge me for a second, I'll reference my slide 4,
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`which I would submit is probably the most important page in this record
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`IPR 2019-01625 (Patent 8,286,875 B2)
`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
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`because it cuts through all of these issues that are not gaps at all. In fact,
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`they're admitted, and perhaps that's why it's a little bit -- the record is not as
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`clear, because these are not things that we expected to be argued.
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`That is, when you have a point of sale terminal and you say it's
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`conventional, and going to slide 4, and right around, I want to say it's --
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`looks like -- I don't have the line numbers here, but in the yellow highlight
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`there, that first full paragraph, these point of sale devices include a
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`processor.
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`So, Proctor describes a conventional point of sale terminal. The
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`Patent Owner tells us that there's a processor in there. What we've said in
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`our grounds is, Proctor is written for one of skill in the art, it just generally
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`refers to circuitry and it focuses more on the modem because that's what it's
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`describing, communications, the controller is not really important.
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`And so, how do we know that there's a processor in Proctor? Well,
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`we know that because Vrotsos, in the same exact context, uses a processor
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`and we know that from the record, because the Patent Owner has already
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`told us that conventional point of sale terminals include a processor.
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`So, yes, you're correct, there is a lot of briefing on the importance of
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`the controller and how a controller can't be a modem, but I would submit
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`that that is a strawman argument.
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`IPR 2019-01625 (Patent 8,286,875 B2)
`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
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`When you look at our petition, we are pointing to the circuitry,
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`which includes a modem, but what we're saying here -- and what is also
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`explained in that yellow highlight on slide 4 -- is that the point of sale
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`devices include a processor to receive and process information from a
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`transaction card.
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`So, we know it's there and we --
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`JUDGE LEE: But -- I'm sorry, but I don't recall this line of
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`argument in your petition, though. You seem to tell us, Proctor expressly
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`describes the terminal as essentially a modem, it doesn't refer to including a
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`processor.
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`So, when you rely on Proctor, I don't recall all the arguments you're
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`telling us now, that, hey, if you look at Patent Owner's patent, point of sale
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`terminals are supposed to include a processor and, therefore, we're going to
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`assume Proctor's terminal includes such a processor.
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`I really don't recall reading anything of that sort. Rather --
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`MR. McKEOWN: Well, I would --
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`JUDGE LEE: -- what I recall is, you saying, well, we think the
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`modem and whatever is there constitutes a processor. But to the extent it
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`does not, Vrotsos has a processor and it would have been obvious to take
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`that processor from Vrotsos and put it -- and include it in Proctor's terminal.
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`That's what I recall.
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`IPR 2019-01625 (Patent 8,286,875 B2)
`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
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`MR. McKEOWN: Well, let me reference you directly to the claim
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`chart. So, on page 25 of the '875 petition, what we say is Proctor discloses
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`a controller, paren, conventional credit card verification circuitry, which
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`includes a modem.
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`And I want to make that clear, Proctor does not describe its terminal
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`as essentially a modem, it says it includes circuitry that is essentially a
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`modem, in addition to the conventional credit card verification circuitry.
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`And we confirmed this with the Patent Owner's expert, that a
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`conventional credit card verification terminal, a POS, just as explained in the
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`background, includes a processor for doing these things.
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`So, this isn't the case where we're taking a controller from another
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`reference and combining it. What we're saying is, the circuitry is not
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`described in detail, but it's known to use processors in this context.
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`And on page 23, we say, indeed, a person of skill in the art would
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`have recognized that controllers and processors were staple components of
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`electronic devices and, you know, et cetera, it goes on from there, in terms
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`of what --
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`JUDGE LEE: Okay. Which case number is that, the petition
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`you're reading from, which case number?
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`MR. McKEOWN: This is the '875 petition, so 1625 proceeding.
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`JUDGE LEE: Okay. So, okay, I --
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`IPR 2019-01625 (Patent 8,286,875 B2)
`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
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`MR. McKEOWN: And also --
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`JUDGE LEE: -- understand. So and you're only referring to
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`Vrotsos as, what, a further example? So, you don't really need it? So --
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`MR. McKEOWN: Right, exactly.
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`JUDGE LEE: -- I don't understand it.
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`MR. McKEOWN: So, instead of saying, look, the Proctor is a point
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`of sale terminal and it's, of course, inherent that there's a processor in there
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`in that described circuitry, what we've said is, Proctor includes this
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`verification circuitry and to the extent you need an explicit teaching of a
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`processor being used in this context, here it is.
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`And then, on page 23, as I said, we also say -- and this is backed up
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`by our declarant -- is that controllers and processors, certainly that's not the
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`invention here, and that's why I highlight the background of the invention,
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`which states that these point of sale terminals include a processor.
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`There can be no dispute where there's an admission in the record.
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`JUDGE LEE: Okay. So, I understand you have a similar argument
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`in the other two cases as well, 27 and 29? You just read --
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`MR. McKEOWN: That's correct.
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`JUDGE LEE: -- from the 25, but you have similar arguments there?
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`All right. So, let's assume we go that route, but you still don't meet the
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`IPR 2019-01625 (Patent 8,286,875 B2)
`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
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`claim, though, because the claim requires the controller to output the analog
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`audio signal.
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`So, according to what you just told me, the terminal includes a
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`processor, which is not explicitly described, but let's assume it's there, right?
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`But the output is from the modem and the modem is not a part of the
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`processor. So, you still don't have a controller that outputs analog audio
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`that's suitable for transmission to the hands-free jack of a wireless
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`communication device.
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`MR. McKEOWN: Well, I want to be clear, which particular ground
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`are you referencing when you say the --
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`JUDGE LEE: Proctor --
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`MR. McKEOWN: -- output is coming --
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`JUDGE LEE: -- plus Vrotsos.
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`MR. McKEOWN: Okay.
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`JUDGE LEE: And claim 1 --
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`MR. McKEOWN: Well, this --
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`JUDGE LEE: -- of 1627, it requires the controller to output analog
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`audio suitable for transmission to the hands-free jack of a wireless
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`communication device.
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`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
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`MR. McKEOWN: Sure. And let me make sure I understand the
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`specific claim language you're talking about. So, I'm going back to
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`Petitioner's slide 3.
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`Are you talking about the language where it says that the controller
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`converts the card information into said analog audio format signal and
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`transmits?
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`JUDGE LEE: Yeah, you can look at that. So, yeah, the output of
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`the controller has to be analog audio suitable for transmission to the hands-
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`free jack.
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`And you don't have that, even based on what you told us today,
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`because the output in your combination still comes from the modem, not
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`from whatever controller or processor that's inside the terminal.
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`MR. McKEOWN: Well, let me tackle that question second, but I
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`want to just make sure when you say that the controller doesn't provide the
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`output, I'll agree with you that the claim states that the controller transmits,
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`but I want to be sure I understand if you're saying the controller must
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`directly transmit it without any intermediate circuitry?
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`JUDGE LEE: Well, just look at your slide, it says a controller for
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`converting the captured card info into a signal having an analog audio
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`format that is suitable for transmission. So, that obviously is coming from
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`the modem.
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`IPR 2019-01625 (Patent 8,286,875 B2)
`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
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`MR. McKEOWN: Well, let's go to slide 5 and we can get into the
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`specifics. In some cases it may come from the modem, in some cases it
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`may not. But let me start with, before I get to Proctor, just quickly, the
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`Eisner ground, because I think it helps highlight some of these issues.
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`So, the way that Eisner works -- and I'm looking at the lower left-
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`hand corner of slide number 5 of the Petitioner's grounds -- is we have a
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`point of sale terminal, just like we do on the Tang patents above, and what is
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`unique about Eisner is you'll see -- I believe it's block 38 -- there's a DTMF
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`generator.
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`So, what Eisner is doing is it's taking a magnetic stripe, it's reading --
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`JUDGE LEE: I'm sorry --
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`MR. McKEOWN: -- that credit card --
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`JUDGE LEE: -- I have to interrupt you. That's nothing to do with
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`Eisner, I'm talking about the ground that's primarily based on Proctor.
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`MR. McKEOWN: Okay. We can -- let's talk about Proctor.
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`JUDGE LEE: And, essentially --
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`MR. McKEOWN: So, there's --
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`JUDGE LEE: -- you don't really use Vrotsos for anything, because
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`you're saying Proctor's terminal 36 already has the controller. But I'm
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`pointing out to you that Proctor's controller, the way you have it, does not
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`output an analog audio signal. And if you --
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`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
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`MR. McKEOWN: Well, let's --
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`JUDGE LEE: -- and if you use Vrotsos' controller, it doesn't do that
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`either. So, it seems to support Patent Owner's position.
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`MR. McKEOWN: Well, I'll disagree with that and let me explain
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`Proctor in a little more detail.
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`So, looking at Proctor, you've got a conventional point of sale
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`terminal -- at least in the figure that's illustrated here on slide number -- and
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`it receives the credit card data and it provides that credit card data at least --
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`and we're talking about the specific embodiment in the figure on the screen,
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`it outputs what is called audible stream of tones.
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`So, the controller in that point of sale terminal is transmitting an
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`audible stream of tones. Now, whether or not --
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`JUDGE LEE: No, no, no --
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`MR. McKEOWN: -- it goes through the modem --
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`JUDGE LEE: -- I have to stop you right there. No, I can't agree
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`with that, because you haven't told us why. It says it's essentially a modem,
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`so we have to assume it's a modem, it's coming from the modem. You can't
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`just replace modem with controller, just -- even if we agree with you that
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`somewhere in there is a controller.
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`MR. McKEOWN: Right, Your Honor. And that's why I asked if
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`you were interpreting the language for the controller to -- when a controller
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`IPR 2019-01625 (Patent 8,286,875 B2)
`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
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`is in a device and it's sending out a signal on a line, the controller is usually
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`getting that signal from somewhere, in this case it would be the modem.
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`But it is the controller that is managing the transmission. And the
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`claim doesn't require, for example, the controller to manufacture the signal
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`and transmit it directly.
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`What we're explaining in our grounds is that, of course a point of
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`sale terminal includes a processor, a point of sale terminal -- at least a
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`conventional one -- will include a modem. So, that modem operates based
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`upon the management of the controller and the modem signal is put out on a
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`line. That's how --
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`JUDGE WEINSCHENK: Mr. McKeown?
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`MR. McKEOWN: -- modems operate.
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`JUDGE WEINSCHENK: Mr. McKeown --
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`MR. McKEOWN: Yes?
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`JUDGE WEINSCHENK: -- this is Judge Weinschenk. I wonder if
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`I can rephrase it.
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`So, the claim says that we need a controller for converting. So, in
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`the claim, the controller has to do the converting and the converting is into
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`an analog audio format. What in Proctor does the converting? It certainly
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`seems like it's the modem, not the controller. I think that's the issue. Is the
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`modem doing the converting or is the controller doing the converting?
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`IPR 2019-01625 (Patent 8,286,875 B2)
`IPR 2019-01627 (Patent 8,281,998 B2)
`IPR 2019-01629 (Patent 9,269,084 B2)
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`MR. McKEOWN: And the answer to that, Your Honor, is it
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`depends on the embodiment, and I'll explain the three embodiments in a
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`second.
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`But I also want to highlight here, yes, the claims recite that the
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`controller does the converting, but -- and this is a theme you'll see a lot in
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`the briefing -- the '875 patent isn't spec
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