Trials@uspto.gov
`571-272-7822
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`Paper 31
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` Entered: February 24, 2021
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
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`SQUARE, INC.
`Petitioner
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`v.
`
`4361423 CANADA INC.
`Patent Owner.
`____________
`
`IPR2019-01651 (Patent 9,443,239 B2)
`IPR2019-01652 (Patent 9,613,351 B2)
`IPR2019-01653 (Patent 9,818,107 B2)
`IPR2019-01654 (Patent 9,818,107 B2)
`____________
`
`Record of Oral Hearing
`Held: February 10, 2021
`____________
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`Before JAMESON LEE, ROBERT J. WEINSCHENK, and
`KEVIN C. TROCK, Administrative Patent Judges.
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`

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`IPR2019-01651 (Patent 9,443,239 B2)
`IPR2019-01652 (Patent 9,613,351 B2)
`IPR2019-01653 (Patent 9,818,107 B2)
`IPR2019-01654 (Patent 9,818,107 B2)
`
`APPEARANCES:
`
`ON BEHALF OF THE PETITIONER:
`
`
`DAVID M. TENNAT
`GRACE WANG
`White & Case
`701 Thirteenth Street, NW
` Washington, D.C. 20005-3807
`(203)626-3600
`
`
`ON BEHALF OF THE PATENT OWNER:
`
`
`NIALL A. MacLEOD, Esquire
`JASON S. JACKSON, Esquire
`Kutak Rock, LLP
`60 South Sixth Street, Suite 3400
`Minneapolis, Minnesota 55402-5004
`(612) 334-5004
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`
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`The above-entitled matter came on for hearing on Wednesday,
`February 10, 2021 commencing at 12:45 p.m. EDT, by video/by telephone.
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`IPR2019-01651 (Patent 9,443,239 B2)
`IPR2019-01652 (Patent 9,613,351 B2)
`IPR2019-01653 (Patent 9,818,107 B2)
`IPR2019-01654 (Patent 9,818,107 B2)
`
`
`P R O C E E D I N G S
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`- - - - -
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` JUDGE LEE: Good afternoon everyone. This is a consolidated oral
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`hearing for IPR 2019-01651, IPR 2019-01652, IPR 2019-01653, and IPR
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`2019-01654. The Petitioner in all three proceedings are Square, Inc., and
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`Patent Owner is 4361423 Canada Inc. The involved patents are U.S. Patent
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`9,443,239 B2, for the 1651 case, 9,613,351 B2 for the 1652 case, and
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`9,818,107 B2 for the 1653 case, and also for the 1654 case.
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`I am Judge Jameson Lee, joined by Judge Robert Weinschenk and Judge
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`Kevin Trock.
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`Before we begin we wish to thank the parties for their flexibility in
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`conducting this hearing via video today. Given this is a departure from our
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`normal practice we start by clarifying a few items. First, our primary
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`concern is the parties’ right to be heard. If at any time during the proceeding
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`you encounter technical difficulties that fundamentally undermine your
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`ability to adequately represent your client, please let us know immediately.
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`For example, like contacting the team member who provided you with
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`connection information.
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`Second, for the benefit of the judges and opposing counsel, as well as
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`the court reporter, please identify yourself when you begin your argument,
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`and speak clearly into your microphone. Please do not speak when others
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`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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`IPR2019-01651 (Patent 9,443,239 B2)
`IPR2019-01652 (Patent 9,613,351 B2)
`IPR2019-01653 (Patent 9,818,107 B2)
`IPR2019-01654 (Patent 9,818,107 B2)
`
`identifying it to provide us time to find it. This helps the preparation of an
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`accurate transcript of the hearing.
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`Finally, please mute yourself when not speaking. Please bear in mind
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`the purpose of the oral hearing is to present your case based on the
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`arguments and evidence of record. You may not introduce new evidence or
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`arguments. Each party will have 90 minutes of total argument time for all
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`four proceedings. Petitioner and Patent Owner may each reserve time for
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`rebuttal. Petitioner will go first, thereafter Patent Owner will argue its
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`opposition, and if there is any rebuttal from Petitioner we will hear it after
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`Patent Owner’s opposition. Finally, we will hear Patent Owner’s surrebuttal
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`if requested.
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`Each time counsel speaks he or she may address all four proceedings.
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`The time is not divided by proceeding unless counsel says certain
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`representation is only for a particular proceeding, we assume that it is for all
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`four proceedings if the issue is applicable. I’ll provide each party with five-
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`minute warning during open arguments and a two-minute warning during
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`rebuttal and surrebuttal.
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`Please also note that arguments raised during rebuttal or surrebuttal
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`must be in response to arguments raised by the opposing party. Neither
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`period should be used to initiate new arguments.
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`At the end of the hearing will counsel please stay on line to talk to the
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`court reporter to answer any questions the court reporter may have. At that
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`time the judges will sign off already.
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`Let’s begin with the parties’ appearance. Who is appearing on behalf
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`of Petitioner?
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`IPR2019-01651 (Patent 9,443,239 B2)
`IPR2019-01652 (Patent 9,613,351 B2)
`IPR2019-01653 (Patent 9,818,107 B2)
`IPR2019-01654 (Patent 9,818,107 B2)
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`MR. TENNAT: David Tennat and Grace Wang from White & Case
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`for Square Inc.
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`JUDGE LEE: Okay. Who’s appearing for Patent Owner?
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`MR. MacLEOD: Niall MacLeod and Jason Jackson from the law
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`offices of Kutak Rock, Your Honor.
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`JUDGE LEE: Are there any questions from the parties at this time?
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`MR. TENNAT: Not from Petitioner.
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`JUDGE LEE: Okay. Counselor for Petitioner, do you want to reserve
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`any time for your rebuttal?
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`MR. TENNAT: Yes, we’ll reserve 20 minutes for rebuttal.
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`JUDGE LEE: Okay. And Patent Owner, how much do you want to
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`reserve?
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`MR. MacLEOD: Twenty minutes, Your Honor.
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`JUDGE LEE: Ten did you say?
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`MR. MacLEOD: I said 20, Your Honor.
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`JUDGE LEE: Twenty, okay. All right. It is now 12:50. Petitioner’s
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`counsel, you may begin any time you’re ready.
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`MR. TENNAT: Can everybody, except the Judges, there we go. I’m
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`getting feedback. Okay.
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`So good morning, Your Honors. Good afternoon, Your Honors,
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`thank you for attending today, we appreciate seeing you again. I’m here to
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`present for approximately 45 minutes, and my colleague, Dr. Wang, will
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`present for 25 minutes. That will cover the main thrust of our arguments,
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`and then we will have enough for rebuttal.
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`

`

`IPR2019-01651 (Patent 9,443,239 B2)
`IPR2019-01652 (Patent 9,613,351 B2)
`IPR2019-01653 (Patent 9,818,107 B2)
`IPR2019-01654 (Patent 9,818,107 B2)
`
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`On Slide 2, I’m going to refer you to our Demonstrative Slide 2. And
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`this just gives an overview of the various hearings that we’ve had with you
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`and the hearing that we’re here today to discuss.
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`The first set, and I’ve outlined on this slide the notable differences
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`between the groups of hearings in the patent subject in the past. As Your
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`Honors know, the first group of patents, the notable feature on this patent
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`had a hands-free jack and a controller. The next group of patents had a jack
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`on the phone, it wasn’t a hands-free jack but its claims were limited to a
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`smart card embodiment and also there was a sensor in those claims that
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`required producing and converting an analog signal.
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`The patents that we’re discussing today, and I think it’s actually
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`helpful to refer to Slide 3. And I can direct the Board’s attention to the
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`middle column in blue. It just shows the common terms of the three patents
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`across the four proceedings that we’re discussing today. If they require a
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`sensor, a controller, that controller needs to do two things. It needs to
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`convert the recorded information received from the sensor, and it needs to
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`transmit that information to the communication device.
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`The third element is a communication link. That is generic, it doesn’t
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`say if it’s hardwired or wireless, it’s just a communication link to the
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`communication device such as a mobile phone.
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`Now there are some various differences between the claims. Card
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`type is one. Some claims are directed to smart cards. Or other claims such
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`as the 1653 proceeding would be directed to either a smart card or a
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`magnetic stripe card. As you know, we have mapped 1653 to the various
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`magnetic strike embodiments to the prior art. Also the output of the
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`

`

`IPR2019-01651 (Patent 9,443,239 B2)
`IPR2019-01652 (Patent 9,613,351 B2)
`IPR2019-01653 (Patent 9,818,107 B2)
`IPR2019-01654 (Patent 9,818,107 B2)
`
`convergent, depending on the patent claim, is either an encrypted signal or a
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`form as suitable for the phone.
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`And as for encryption, all the patents requiring encryption, the 239
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`patent requires encryption in the independent claims whereas the other
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`patents in the other proceedings recite encryption in the dependent claims.
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`JUDGE LEE: It’s Judge Lee. In one of the associated hearings we
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`had a few weeks ago, Patent Owner responded that controller means at least
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`a processor. So it’s processor plus, maybe plus some other components, but
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`it has to have at least a processor. Neither party expressly construed
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`controller but we are wondering if you agree with that position. Or what do
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`you think that controller is? Can we find it to be at least a processor?
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`MR. TENNAT: I think in order to meet the element, controller
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`element, and I’ll refer that was, let’s go to Slide 13 it sets out some of the
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`claim language that we’re discussing. The controller has to be coupled to
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`the center and it has to do two functions. It has to convert the recorded
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`information for this patent into an encrypted signal, and it also, it is shown
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`on this slide, but it has to transmit the recorded information to the
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`communication device. So provided that there are electronics that perform
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`those two functions in the prior art, that would satisfy the element of
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`controller. We believe it’s well within the skill of the art for disclosures in
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`the prior art if it’s electronic, so circuitry that performs those functions that
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`would satisfy the element of controller.
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`JUDGE LEE: I don’t understand. I don’t understand. You’re just
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`giving a functional definition. I don’t think you have testimony from any
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`expert that says oh, yes, this is what everyone knows a controller is. So are
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`

`

`IPR2019-01651 (Patent 9,443,239 B2)
`IPR2019-01652 (Patent 9,613,351 B2)
`IPR2019-01653 (Patent 9,818,107 B2)
`IPR2019-01654 (Patent 9,818,107 B2)
`
`you just giving me a functional definition? And if so, why should that be
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`acceptable? Then it would be a means plus function term.
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`MR. TENNAT: But we have to look to what the patent, what the
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`Tang contact disclose. And the Tang contract disclose a controller can either
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`be, I believe it was a microprocessor or a microcontroller. So in that context
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`the controller is broader than just a processor. I think a processor is a subset
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`of a type of controller. So as long as they identify the specific circuity
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`hardware component that meets those functional elements of the claim, that
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`would satisfy the claim limitation.
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`JUDGE LEE: Why? You’re not answering my question though. All
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`you’re giving is a functional definition. And if so, how is that acceptable?
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`MR. TENNAT: So it is acceptable -- I’m not giving only a functional
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`definition. As long as we identify a component, the hardware component in
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`the prior art that performs such due functions. At a minimum we would
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`have to have some type of component in the prior art. That component,
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`albeit circuitry, electronic processor, controller, provided that those two
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`things are --
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`JUDGE LEE: I know what you’re saying but you seem to be
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`avoiding the question. I mean why is that thing a controller? The circuitry is
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`generic. We don’t know what it is. It can be a black box, you know, well
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`good, give it a different name. Magic, we’ll call it Magic. And you’re going
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`to call Magic as a controller?
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`MR. TENNAT: Right. I would concede that a processor is one type
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`of a controller. I’m just hesitating a little bit because I don’t think the
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`specifications support process --
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`

`

`IPR2019-01651 (Patent 9,443,239 B2)
`IPR2019-01652 (Patent 9,613,351 B2)
`IPR2019-01653 (Patent 9,818,107 B2)
`IPR2019-01654 (Patent 9,818,107 B2)
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`JUDGE LEE: It doesn’t matter whether they support it or not, you
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`still have to take the position. You can’t attack the written description in this
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`proceeding. So I know that’s not here or there. So regardless whether they
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`have support for it, their position is it has to have at least a processor.
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`Maybe something else, you know, that’s the breadth of it. It’s not limited to
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`a processor, and that seems to be to be a pretty good definition in light of the
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`spec because both examples they gave is a processor. So I wonder why you
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`disagree with it and how can you take simply a functional definition for it.
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`If you take only a functional definition, haven’t you run afoul of our rules?
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`You’re supposed to give the claim construction according to our rules.
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`MR. TENNAT: I’m not running away from the definition of a
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`controller being at least a processor. In fact I’m agreeing with the Board that
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`it has to be, it would be some hardware components. But to the processor it
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`can be a microcontroller as well.
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`JUDGE LEE: All right. We’re short on time. Either you agree or
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`disagree. If you disagree, how are we going to write it? We say Patent
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`Owner thinks it’s at least a processor, Petitioner disagrees, Petitioner thinks
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`it’s any circuit that performs the function that satisfies controller. Is that
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`your position?
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`MR. TENNAT: No, that’s not our position.
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`JUDGE LEE: Do you agree or disagree with the Patent Owner that’s
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`at least a processor?
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`MR. TENNAT: I think a processor is an example of a controller.
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`JUDGE LEE: I know that, everyone knows that. That’s not my
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`question. Do you agree or disagree that it is at least a processor, requires a
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`

`IPR2019-01651 (Patent 9,443,239 B2)
`IPR2019-01652 (Patent 9,613,351 B2)
`IPR2019-01653 (Patent 9,818,107 B2)
`IPR2019-01654 (Patent 9,818,107 B2)
`
`processor, then maybe you have something else, or you may not. And if you
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`disagree, why? All you have left is a functional definition.
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`MR. TENNAT: So I just, the reason I’m hesitating, I want to point
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`the Board to, I apologize, I’m on the 667 patent, but there is a sentence in
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`Column 6 that reads “The controller includes a microprocessor unit or
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`microcontroller unit.” So it can be either or. So I’m comfortable with it
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`being at least a processor or a controller unit. We can even say at least a
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`microprocessor unit or a microcontroller unit. To say that it is --
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`JUDGE LEE: But it isn’t. What’s the difference between that and
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`what Patent Owner said? A processor, it can be a microcontroller, it can be
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`a controller, whatever it is, I think process or is broad and it seems like a
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`pretty good definition and I’m not understanding your position in not
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`agreeing to it and not giving us an acceptable alternative except to say that
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`anything that performs a function, as long as it’s a circuit, it’s good enough.
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`MR. TENNAT: So something you said there may clarify this and
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`help.
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`JUDGE LEE: Thank you.
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`MR. TENNAT: When you said that the processor is broad and
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`includes a microprocessor and a microcontroller, those types of units. I
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`would agree. I was just very cautious. I didn’t want to read out a particular
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`embodiment that - -
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`JUDGE LEE: Still, a processor includes a microprocessor, you know,
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`it doesn’t matter what the prefix to it. It could be a pico processor. I mean
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`just processor generally.
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`IPR2019-01651 (Patent 9,443,239 B2)
`IPR2019-01652 (Patent 9,613,351 B2)
`IPR2019-01653 (Patent 9,818,107 B2)
`IPR2019-01654 (Patent 9,818,107 B2)
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`MR. TENNAT: Yeah. In view of that, yes, I would agree that as long
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`as the hardware provides processing function, if it’s in the form of a
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`microcontroller or microprocessor I believe that would be a correct
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`interpretation of the claim.
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`JUDGE LEE: All right. Just briefly to Patent Owner’s counsel,
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`because this is important. Mr. MacLeod, are you staying with the definition
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`you gave us in the related hearing that you are satisfied that a controller is
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`something that includes at least a processor?
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`MR. MacLEOD: Yes, Your Honor, our construction of controller is
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`that it is a microprocessor or a microcontroller.
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`JUDGE LEE: No, no, no. In the last hearing you said it’s at least a
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`processor. Don’t change the definition because it’s really hard to wrangle
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`out an agreement from the other side already. You said it’s at least a
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`processor. In our view a processor is broad enough to include a
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`microprocessor. So, you know, let’s not just getting too fine on it. Do you
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`still take that position it’s at least a processor, you may or may not have
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`other components with it?
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`MR. MacLEOD: I believe we said it’s at least a microprocessor, a
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`microcontroller, but I’m not seeing a huge difference between the two, like
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`you pointed out.
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`JUDGE LEE: So you’re fine with controller being at least a
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`processor?
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`MR. MacLEOD: Yes.
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`JUDGE LEE: Yeah, because I don’t see argument in your brief
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`saying any time the reference shows a processor, I don’t see you arguing, oh,
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`

`IPR2019-01651 (Patent 9,443,239 B2)
`IPR2019-01652 (Patent 9,613,351 B2)
`IPR2019-01653 (Patent 9,818,107 B2)
`IPR2019-01654 (Patent 9,818,107 B2)
`
`but that’s not a microprocessor, so that’s not a controller. You don’t have
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`any arguments like that. So I don’t see a distinction between processor and
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`microprocessor.
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`MR. MacLEOD: I can’t think of one at the moment, Your Honor.
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`JUDGE LEE: Exactly. So the parties are in agreement that the
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`controller is at least a processor.
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`MR. MacLEOD: I believe we are.
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`JUDGE LEE: All right. Thank you. Okay, back to Petitioner. Thank
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`you. That was important. Sorry to take up the time, but it was really
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`MR. TENNAT: That’s okay. I think, as to Slide 4, I’d like to refer
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`you real quick, it’s just the grounds. I’m going to discuss Valliani, Vrotsos,
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`and Proctor. Dr. Wang will discuss the Bear grounds. We don’t have all
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`the grounds listed here because Bryant is not disputed. And so we rely on
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`our papers.
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`Your Honor, before I get into specifically the Valliani grounds, would
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`you permit the parties to submit a short briefing on the correct interpretation
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`of controller? The reason why I’m asking is because, you know, when we
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`consider interpretation we want to go back and look at the record entirety. I
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`would just request if we could have the opportunity to submit a short
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`briefing on the proper interpretation of controller.
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`JUDGE LEE: I thought we just, after that exchange you already
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`agreed to something and now you want to go back and submit additional
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`briefing. That’s an extraordinary remedy after you’ve discussed and agreed
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`to a construction. And you can’t articulate anything wrong with the other
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`IPR2019-01651 (Patent 9,443,239 B2)
`IPR2019-01652 (Patent 9,613,351 B2)
`IPR2019-01653 (Patent 9,818,107 B2)
`IPR2019-01654 (Patent 9,818,107 B2)
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`side’s proposal and you just want to go back and take additional time while
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`we suspend our deliberations to submit additional briefing.
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` I don’t know. Let me ask my colleagues, but from my standpoint that
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`is quite unreasonable. Because you can’t even articulate what you disagree
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`with the position about.
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`MR. TENNAT: Well, you know, it’s not that we disagree necessarily,
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`it’s just that we would like to have some time to go back to look at the bio
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`history as well as the arguments in the, or I should say the disclosures in the
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`patent to determine if we’re in full agreement with that construction.
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`JUDGE LEE: I need to say that this is not the first time controller
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`came up. I don’t know how many proceedings we’ve had. This is the last
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`hearing we’re going to have in this family of patents. And the Petitioner is
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`supposed to, under our rules, propose a construction for all terms that are
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`supposed to be meaningful and determinative of the proceeding. I think it’s
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`pretty surprising for the Petitioner to be asking at the 11th hour to further
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`brief the term “controller,” which appears in every single independent claim
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`and I don’t know how many patents. I am just very surprised.
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`MR. TENNAT: Right, Your Honor, I’m sorry you’re surprised. We
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`indicated that the plenary meaning would apply to controller. And, you
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`know, the reason why we would like a short briefing is just to confirm, you
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`know, we haven’t given the administrative procedures exactly, haven’t had
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`the opportunity to fully brief and I’m just a little cautious to agree to that
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`construction on the fly at the hearing without giving due consideration to the
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`full history and intrinsic evidence before we finally agree on that.
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`IPR2019-01651 (Patent 9,443,239 B2)
`IPR2019-01652 (Patent 9,613,351 B2)
`IPR2019-01653 (Patent 9,818,107 B2)
`IPR2019-01654 (Patent 9,818,107 B2)
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`At the outcome we might fully agree, but the position by the Board
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`that that is on.
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`JUDGE LEE: I’m bothered by the request for briefing. It might make
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`more sense for you to say well, Your Honors, I didn’t have that much time to
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`think about it so I might go home and come back and tell you yes, I agree or
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`no, we don’t. But why should we give you additional opportunity to come
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`up with a new construction that you never offered? So the request is let me
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`come back tomorrow or next week and confirm my agreement. I might
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`think that’s reasonable but not, oh, let me, by the way let me give you a
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`whole new briefing. And then the other side’s going to submit additional
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`briefing. You’re asking for more briefing, not let me just confirm my
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`answer.
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`MR. TENNAT: I would like the opportunity to confirm the answer or
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`if we find there is anything in the intrinsic record that might lead us to
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`disagree or fine tune the construction --
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`JUDGE LEE: That’s additional briefing. You should either agree or
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`you say you don’t agree and the record has no reason why you disagree.
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`Because it’s the 11th hour. Anyway my colleagues are telling me to move
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`on because we can’t waste all the time on this question. So we’ll take that
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`question under advisement, we’ll let you know whether you can get
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`additional briefing.
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`Since you’re going to be talking about Valliani, let me ask you, is it
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`enough Valliani encrypts only the PIN. Is that enough to meet the claim
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`limitation of encrypting recorded information from the smart card?
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`IPR2019-01651 (Patent 9,443,239 B2)
`IPR2019-01652 (Patent 9,613,351 B2)
`IPR2019-01653 (Patent 9,818,107 B2)
`IPR2019-01654 (Patent 9,818,107 B2)
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`MR. TENNAT: Thank you for the question, Your Honor. It’s a very
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`good question. The simple answer is yes, that’s enough. And this was the
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`argument that’s prevalent in Patent Owner’s brief, which I believe this is the
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`reason why you’re asking the question.
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`I’ll direct you to -- let me answer the question by saying what Valliani
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`discloses in terms of the smart card. I’m on Slide 7, and the depiction on
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`Slide 7 shows Valliani’s smart card. It’s a card 230, he calls it a smart card
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`restoring data in the memory 225. The data that is stored in the memory is
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`described at Column 7, Line 62.
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`JUDGE LEE: What page and line?
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`MR. TENNAT: I’m sorry, this is, I was actually reading from
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`Valliani. So I’m Slide 7, but I was directing Your Honor to a passage from
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`Valliani.
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`JUDGE LEE: Okay.
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`MR. TENNAT: And at Line 61 or 62 that’s sentence indicate that the
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`memory 225 makes for a lot of data, including preferably encrypted end
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`data. So when Villiani reads encrypted PIN data off the phone at the same
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`time. Now I will refer you back.
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`JUDGE LEE: What column are you in? What column?
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`MR. TENNAT: Column 7. That encrypted PIN data is Column 7,
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`Line 65.
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`JUDGE LEE: Okay.
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`MR. TENNAT: So I want to refer you back to Slide 5. And this is a
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`nice picture of the embodiment that we talked about right now. It’s Figure
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`7. And you can see from the picture of the smart card, which is outlined in
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`IPR2019-01651 (Patent 9,443,239 B2)
`IPR2019-01652 (Patent 9,613,351 B2)
`IPR2019-01653 (Patent 9,818,107 B2)
`IPR2019-01654 (Patent 9,818,107 B2)
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`green, is inserted into the reader. That reader reads the data off the smart
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`card, which is described in the passage I just quoted to you. The data that
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`comes off includes re-encrypted data.
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`The only thing the claim requires is that there is recorded information
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`on the smart card, on the IC of the smart card rather. And Valliani says that
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`part of that recorded data is the encrypted PIN information.
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`JUDGE TROCK: Counsel, this is Judge Trock. I see your reference
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`there in Valliani with respect to smart cards, but what we do with the claims
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`that don’t involve smart cards? For example, let me direct you to Valliani
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`Column 6, starting in Line 26, 27. Valliani states “As noted, card owner’s
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`PIN is not stored, encrypted or otherwise, in magnetic stripes, but may be
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`stored in memory.” If we have a claim that does not use a smart card, is the
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`argument you’re currently making effective or valid?
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`MR. TENNAT: Well we have a different argument for that, and
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`that’s applicable to the magnetic stripe or the magnetic stripe embodiment
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`where you just read. So if data is on the magnetic stripe of the card and that
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`data is read, then Valliani also discloses that as well. And I can direct your
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`attention, Your Honor, to Slide 21 of our Demonstratives.
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`And this is specific for this Claim, Patent Owner’s 7, claims 1 and 22.
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`And the element here requires the controller to be coupled to the sensor for
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`reading the transaction card information, which is the passage you just read.
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`So it reads it read from the magnetic stripe and for conversion into a format
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`suitable for transmission to the communication device.
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`IPR2019-01651 (Patent 9,443,239 B2)
`IPR2019-01652 (Patent 9,613,351 B2)
`IPR2019-01653 (Patent 9,818,107 B2)
`IPR2019-01654 (Patent 9,818,107 B2)
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`JUDGE TROCK: That’s fine for the independent claim, but when we
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`get down to Claim 3 where we now have encryption, how do you square
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`that?
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`MR. TENNAT: Right, Your Honor, good question. So this is on
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`Slide 24. For encryption, when we get down to Claim 3, and also I think it’s
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`Claim 24 too, we rely on Vrotsos. So Valliani doesn’t expressly disclose
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`that the data coming off the magstripe is encrypted, although it does have
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`broad statements on Slide 24 Valliani indicates there would be additional
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`software in the card reader module that can perform data encryption.
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`JUDGE LEE: There’s another misreading there. It doesn’t say
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`additional software in module, that’s talking about the entire terminal. And
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`then there’s elsewhere text saying it’s software 35 and/or 45 that’s in the
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`wireless communication device. And it’s executed by CPU 20. I think, you
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`know, you misread the disclosure. I don’t think that additional software is
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`inside Module 200. If you look up the rest of that paragraph, it’s talking
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`about the entire terminal, which includes the wireless communication device
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`and the Module 200, so it’s iffy where that is. But if you read elsewhere in
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`the disclosure it’s talking about software inside the memory of the wireless
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`device and executed by CPU 20. So you have to tell us, it’s up to you to
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`prove that that software is inside the Module 200. You simply concluded
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`that it is.
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`MR. TENNAT: So actually that’s why we’re relying on Vrotsos,
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`Your Honor. So Valliani recognizes that Vrotsos --
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`JUDGE LEE: Look, I’m sorry, I can’t follow you at all because you
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`keep shifting your position. You know, before I asked the question you say,
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`IPR2019-01651 (Patent 9,443,239 B2)
`IPR2019-01652 (Patent 9,613,351 B2)
`IPR2019-01653 (Patent 9,818,107 B2)
`IPR2019-01654 (Patent 9,818,107 B2)
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`oh, Module 200 has the software. And when I tell you no, no, no, Module
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`200 doesn’t have the software and then you shift and you go oh, for that
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`limitation we rely on Vrotsos. You know, if we catch you on something you
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`either agree or disagree and say yes, I’m sorry I misread it, and then we can
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`drop that. Not just shift your position and go somewhere else and leaving us
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`in limbo as to your original position. You know, that’s why I kind of feel
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`the whole presentation is messy here. Because I can never get you to focus
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`on one thing.
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`MR. TENNAT: Well, Your Honor --
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`JUDGE LEE: Do you agree, do you agree that you misread the
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`disclosure. Additional software you have not shown resides in Module 200.
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`If you admit that then we can move on and see if Vrotsos supplies the
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`missing feature. But if you don’t admit it I want to know why.
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`MR. TENNAT: I don’t admit it, and let me tell you why. Referring
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`to Column 3 of Villiani, Line 4. It indicates that alternative embodiments
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`provide the module with the various things. And then it says that digital
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`software can also provide data encryption and decoding signature capture,
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`associate other transactions. So the signature capture is actually on the
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`module side. And so we were reading that sentence together, those two
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`sentences together to refer to that digital software fitting on the module.
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`But I think it’s not important entirely that where that encryption is
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`occurring. The fact that Valliani recognizes that it would be important to
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`encrypt data is helpful, that’s what leads one of ordinary skill in the art to
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`Vrotsos. So we understand that can be an abstract only in embodiment of
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`Figure 2. There’s no express disclosure of encrypting the data from the
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`IPR2019-01651 (Patent 9,443,239 B2)
`IPR2019-01652 (Patent 9,613,351 B2)
`IPR2019-01653 (Patent 9,818,107 B2)
`IPR2019-01654 (Patent 9,818,107 B2)
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`magstripe. But broadly speaking, I agree, broadly speaking Valliani just
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`refers to being an encryption.
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`That leads us to Vrotsos. So if one of the ordinary skill of the art, and
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`I want to step back. If one of ordinary skill in the art, I think it’s helpful just
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`for the record to note that, you know, one of ordinary skill in the art has two
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`years of experience, as you know, in four things; embedded systems, mobile
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`communications, electronic payment, and encryption. So where to encrypt
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`the data, at what point in the system to encrypt the data would certainly be
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`within level of one of ordinary skill. But not to the extent that Valliani
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`doesn’t tell you in the magstripe embodiment. An