Trials@uspto.gov
`571-272-7822
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` Paper 55
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` Entered: August 11, 2021
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`SAMSUNG ELECTRONICS CO., LTD., SAMSUNG ELECTRONICS
`AMERICA, INC., SAMSUNG RESEARCH AMERICA, INC.,
`Petitioner,
`
`v.
`
`DYNAMICS, INC.,
`Patent Owner.
`_______________
`
`Case IPR2020-00502
`Patent 10,032,100 B2
`____________
`
`
`Before TREVOR M. JEFFERSON, GEORGIANNA W. BRADEN, and
`JON M. JURGOVAN, Administrative Patent Judges.
`
`JEFFERSON, Administrative Patent Judge.
`
`
`JUDGMENT
`Final Written Decision
`Determining All Challenged Claims Unpatentable
`35 U.S.C. § 318(a)
`
`
`
`

`

`IPR2020-00502
`Patent 10,032,100 B2
`
`I.
`INTRODUCTION
`Petitioner, Samsung Electronics Co., Ltd., Samsung Electronics
`America, Inc., and Samsung Research America, Inc., filed a Petition
`requesting inter partes review of claims 1–20 of U.S. Patent No. 10,032,100
`B2 (Ex. 1001, the “’100 Patent”). Paper 1 (“Petition” or “Pet.”). Patent
`Owner, Dynamics Inc., filed a Preliminary Response to the Petition. Paper 8
`(“Prelim. Resp.”). On August 12, 2020, we instituted inter partes review of
`claims 1–20 of the ’100 Patent. Paper 34 (“Dec.”).
`Following institution, Patent Owner filed its Response to the Petition.
`Paper 41 (“PO Resp.”). On January 29, 2021, Petitioner filed a Reply to
`Patent Owner’s Response, and on March 9, 2021, Patent Owner filed a Sur-
`Reply. Paper 44 (“Reply”); Paper 45 (“Sur-Reply”).
`An Oral Hearing took place on May 12, 2021. The Hearing
`Transcript is included in the record. Paper 53 (“Tr.”).
`After considering the parties’ arguments and supporting evidence, we
`determine that Petitioner has proved by a preponderance of the evidence that
`claims 1–16 are unpatentable. 35 U.S.C. § 316(e); 37 C.F.R. § 42.1(d)
`(2019).
`
`II. BACKGROUND
`
`A. Related Proceedings
`Petitioner informs us of one pending district court proceedings based
`on the ’100 Patent that involves Petitioner, Dynamics Inc. v. Samsung Elecs.
`Co., Ltd. et al., Case No. 1:19-cv-6479 (S.D.N.Y.), filed July 12, 2019,
`which was stayed on September 4, 2019. Pet. 71–72. Petitioner also
`informs us of one proceeding pending before the International Trade
`2
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`

`

`IPR2020-00502
`Patent 10,032,100 B2
`Commission (“ITC”), In re Certain Mobile Devices With Multifunction
`Emulators, Inv. No. 337-TA-1170 (U.S.I.T.C.), filed July 12, 2019. Id.
`Patent Owner informs us of the same pending proceedings listed
`above. Paper 6 (Patent Owner’s Mandatory Notices), 2–3.
`
`B. The ʼ100 Patent
`The ’100 Patent was filed on April 25, 2016, issued on July 24, 2018,
`from a continuation filed July 25, 2012, and is titled “Cards and Devices
`with Multifunction Magnetic Emulators and Methods for Using Same.”
`Ex. 1001, codes (22), (45), (54). The ’100 Patent relates to
`A payment card (e.g., credit and/or debit card) is provided with
`a magnetic emulator operable of communicating information to
`a magnetic stripe reader. Information used in validating a
`financial transaction is encrypted. . . . Such dynamic information
`may be communicated using such an emulator such that a card
`may be swiped
`through a magnetic stripe reader—yet
`communicate different information based on time. An emulator
`may receive information as well as communicate information to
`a variety of receivers (e.g., an RFID receiver).
`Ex. 1001, Abstract. The ’100 Patent discloses “[a] card is provided, such as
`a credit card or security card, that may transmit information to a magnetic
`stripe reader via a magnetic emulator.” Id. at 1:28–36.
`The ’100 Patent states that “[t]he magnetic emulator may be, for
`example, a circuit that emits electromagnetic fields operable to electrically
`couple with a read-head of a magnetic stripe reader such that data may be
`transmitted from the circuit to the magnetic stripe reader.” Id. at 1:30–34.
`The ’100 Patent further states that the magnetic emulator may also “be
`operated to electrically couple, and transmit data to, a device using a Radio
`Frequency Identification (RFID) protocol.” Id. at 2:9–16. The ’100 Patent
`3
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`IPR2020-00502
`Patent 10,032,100 B2
`specification further states that the magnetic emulator may be swiped
`through a magnetic stripe reader to communicate data, “placed outside and
`within the proximity of (e.g., 0.25 inches) the read-head.” See id. at 2:2–6,
`4:29–33.
`Figure 7 shows the electrical coupling between a card and a reader of
`the invention.
`
`
`Figure 7 depicts “cards 720 and 730 as well as magnetic stripe reader 710.
`Read-head housing 711 may be included on a wall of a trough of magnetic
`stripe reader 710.” Id. at 8:24–27. Card 720 shows emulator 721 that
`provides electromagnetic field 791 capable of transmitting through the
`housing of the magnetic stripe reader 710, thus card 720 may be outside of
`the reader and operable to communicate through the outer wall of a
`thickness of a quarter inch or more. Id. at 8:29–39.
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`IPR2020-00502
`Patent 10,032,100 B2
`The ’100 Patent describes that the invention could be implemented in
`devices other than cards, such as “a portable telephonic device, portable
`media player, or any type of electronic device.” Id. at 2:48–51, 12:32–34.
`Figure 12 shows a personal electric device in accordance with the invention.
`Id. at 3:35–37.
`
`
`Figure 12 shows personal electronic device 1200, with user inputs 1240,
`display 1210, and virtual card 1220. Id. at 12:37–40. “Personal electronic
`device 1200 may communicate to a card reader such as . . . an RFID reader.”
`Id. at 12:45–46.
`
`C. Illustrative Claims
`Claims 1 and 12 are independent and illustrative.
`1. A device comprising:
`a circuit operable to emit an electromagnetic field
`and to electrically couple to, and transmit data to, a read-
`head located on a magnetic stripe reader; and
`a processor for controlling the circuit,
`
`
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`IPR2020-00502
`Patent 10,032,100 B2
`wherein the circuit is operable to communicate the
`data to the read-head while located outside of the magnetic
`stripe reader at a distance of at least a quarter of an inch
`from the read-head.
`
`12. A portable telephonic device comprising:
`a circuit operable to emit an electromagnetic field
`and to electrically couple to, and transmit data to, a read-
`head located on a magnetic stripe reader; and
`a processor for controlling the circuit, wherein the
`circuit is operable to communicate the data to the read-
`head while located outside of the magnetic stripe reader.
`
`
`Ex. 1001, 14:45–53, 15:8–14.
`D. Instituted Grounds of Unpatentability and Evidence of Record
`We instituted inter partes review based on information presented in
`the Petition that challenged the claims of the ’100 Patent on the grounds
`listed below. Pet. 9; Dec. 7, 44.
`
`
`35 U.S.C. §1
`103
`103
`103
`
`Claim(s) Challenged
`1–3, 8, 10
`9, 11
`1, 4–7, 12–18, 20
`
`Reference(s)/Basis
`Moullette2
`Moullette, Poidomani3
`Zellner,4 Moullette
`
`1 The Leahy-Smith America Invents Act, Pub. L. No. 112-29, 125 Stat. 284
`(September 16, 2011) (“AIA”), included revisions to 35 U.S.C. §103 that
`became effective on March 16, 2013. Because the ’100 Patent issued from
`an application filed before March 16, 2013, we apply the pre-AIA version of
`the statute.
`2 U.S. Patent No. 7,114,652 B2, issued Oct. 3, 2006 (Ex. 1007, “Moullette”).
`3 U.S. Patent Application Publication No. 2007/0034700 A1, Published Feb.
`15, 2007 (Ex. 1009, “Poidomani”).
`4 U.S. Patent No. 7,097,108 B2, issued Aug. 29, 2006 (Ex. 1008,
`“Zellner”).
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`IPR2020-00502
`Patent 10,032,100 B2
`
`Reference(s)/Basis
`Zellner, Moullette,
`Poidomani
`Doughty5
`Doughty, Poidomani
`Doughty, Zellner
`Doughty, Zellner,
`Poidomani
`
`35 U.S.C. §1
`
`Claim(s) Challenged
`
`103
`103
`103
`103
`103
`
`19
`1–3, 8, 10
`9, 11
`4–7, 12–18, 20
`19
`
`
`Petitioner supports its challenges with the Declaration of Stephen G.
`Halliday, Ph.D. (Ex. 1002). In support of its contentions, Patent Owner
`relies on a Declaration of Ivan Zatkovich (Ex. 2042). See, e.g., PO Resp. 2.
`The parties also submit the depositions of Halliday and Zatkovich. Ex. 1032
`(Zatkovich Deposition); Ex. 2039, Ex. 2040 (Halliday Depositions). Patent
`Owner relies on a deposition of Stuart Lipoff, its expert witness from the
`related ITC litigation (Ex. 2041). Petitioner supports its evidence with the
`trial transcript from the ITC action providing Mr. Zatkovich’s testimony
`before the ITC regarding the patent at issue (Ex. 1030).
`
`III. ANALYSIS
`
`A. Level of Ordinary Skill in the Art
`In determining whether an invention would have been obvious at the
`time it was made, we consider the level of ordinary skill in the pertinent art
`at the time of the invention. Graham v. John Deere Co., 383 U.S. 1, 17
`(1966). “The importance of resolving the level of ordinary skill in the art
`
`
`5 U.S. Patent Application Publication No. 2006/0161789 Al, Published Jul.
`20, 2006 (Ex. 1012, “Doughty”).
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`lies in the necessity of maintaining objectivity in the obviousness inquiry.”
`Ryko Mfg. Co. v. Nu-Star, Inc., 950 F.2d 714, 718 (Fed. Cir. 1991). Factors
`pertinent to a determination of the level of ordinary skill in the art include
`“(1) the educational level of the inventor; (2) type of problems encountered
`in the art; (3) prior art solutions to those problems; (4) rapidity with which
`innovations are made; (5) sophistication of the technology; and (6)
`educational level of active workers in the field.” Envtl. Designs, Ltd. v.
`Union Oil Co. of Cal., 713 F.2d 693, 696–697 (Fed. Cir. 1983) (citing
`Orthopedic Equip. Co. v. All Orthopedic Appliances, Inc., 707 F.2d 1376,
`1381–82 (Fed. Cir. 1983)). “Not all such factors may be present in every
`case, and one or more of these or other factors may predominate in a
`particular case.” Id.
`Petitioner argues that a person having ordinary skill in the art at the
`time of the alleged invention “would have had at least a Bachelor’s degree in
`Electrical Engineering, or an equivalent technical degree or equivalent work
`experience, and knowledge regarding the use of magnetic fields to transmit
`or otherwise convey information.” Pet. 15 (citing Ex. 1002 ¶¶ 33).
`Petitioner further argues that “[a]dditional education might supplement
`practice experience and vice-versa.” Id.
`In the ITC litigation, Patent Owner proposed that a person of ordinary
`skill in the art (“POSITA”) would have
`“at least two years of experience with point of sale systems and
`financial transactions,” and “at least a Bachelor’s degree in
`Electrical Engineering, or an equivalent technical degree or
`equivalent work experience, and knowledge regarding the use of
`magnetic fields to transmit or otherwise convey information,”
`while superior education would compensate for a deficiency in
`experience, and vice-versa.
`
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`IPR2020-00502
`Patent 10,032,100 B2
`PO Resp. 17 (citing Ex. 2012, 10–11). Patent Owner indicates “the ALJ in
`the ITC litigation decided that a POSITA had [an] ‘undergraduate degree in
`computer science, electrical engineering, or the equivalent (including
`computer engineering) and at least three years of experience with point of
`sale systems and the use of magnetic fields to convey information.’” PO
`Resp. 17; See Ex. 2012, 6–7 (ITC Claim Construction).
`To establish the level of ordinary skill in the art, we look to various
`factors including “the types of problems encountered in the art; prior art
`solutions to those problems; rapidity with which innovations are made;
`sophistication of the technology; and education level of active workers in the
`field.” In re GPAC, 57 F.3d 1573, 1579 (Fed. Cir. 1995) (citing Custom
`Accessories, Inc. v. Jeffrey-Allan Indus., Inc., 807 F.2d 955, 962 (Fed. Cir.
`1986)). Problems encountered in the art are identified in the background
`sections of Doughty, Moullette, and Zellner. See Ex. 1012 ¶ 7; Ex. 1008,
`1:13–42; Ex. 1007, 2:38–47; see Pet. 10–14; Ex. 1002 ¶¶ 59–62.
`Considering these factors, for purposes of this decision, we determine
`that a person of ordinary skill in the art at the time of the invention would
`have had a bachelor’s degree in computer science, electrical engineering,
`computer engineering, or equivalent, and three years of experience working
`with payment device technologies including magnetic stripe cards and
`emulators, card readers, RFID, and cellular network communications for
`payment transactions. While this definition is in some respects more
`specific than the other proposed definitions, we think it is better tailored to
`cover all types of technologies recited in the claims. Specifically, the other
`proposed definitions do not cover cellular network while our definition does.
`Apart from this, we do not consider our definition to be materially different
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`IPR2020-00502
`Patent 10,032,100 B2
`from what the ITC adopted or parties propose here. And neither party
`contends that the outcome of this case turns on the definition of the level of
`ordinary skill in the art. See generally Pet. and PO Resp. Accordingly, we
`apply this level of ordinary skill in the art in our obviousness analysis.
`
`B. Claim Interpretation
`In an inter partes review for a petition filed on or after November 13,
`2018, a claim “shall be construed using the same claim construction standard
`that would be used to construe the claim in a civil action under
`35 U.S.C. 282(b).” 37 C.F.R. § 42.100(b) (2019); see Changes to the Claim
`Construction Standard for Interpreting Claims in Trial Proceedings Before
`the Patent Trial and Appeal Board, 83 Fed. Reg. 51,340 (Oct. 11, 2018)
`(amending 37 C.F.R. § 42.100(b) effective November 13, 2018). In
`applying this claim construction standard, we are guided by the principle
`that the words of a claim “are generally given their ordinary and customary
`meaning,” as understood by a person of ordinary skill in the art in question
`at the time of the invention. Phillips v. AWH Corp., 415 F.3d 1303,
`131213 (Fed. Cir. 2005) (en banc) (citation omitted). “In determining the
`meaning of the disputed claim limitation, we look principally to the intrinsic
`evidence of record, examining the claim language itself, the written
`description, and the prosecution history, if in evidence.” DePuy Spine, Inc.
`v. Medtronic Sofamor Danek, Inc., 469 F.3d 1005, 1014 (Fed. Cir. 2006)
`(citing Phillips, 415 F.3d at 1312–17). There is a “heavy presumption,”
`however, that a claim term carries its ordinary and customary meaning. CCS
`Fitness, Inc. v. Brunswick Corp., 288 F.3d 1359, 1366 (Fed. Cir. 2002)
`(citation omitted).
`
`
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`IPR2020-00502
`Patent 10,032,100 B2
`Petitioner states that it does not believe any terms need be construed
`to resolve the prior art issues presented in this Petition. Pet. 15. Petitioner
`notes there were claim constructions proposed by the parties in the ITC
`proceeding. Id. at 15–16 (citing Ex. 1016, 6). Petitioner further states these
`terms need not be construed because they are disclosed by the prior art under
`either party’s proposed construction. Id. at 16.
`Patent Owner indicates certain terms were construed in the ITC
`litigation in a claim construction order dated January 31, 2020, and states
`“[a]ll of the claims of the ’100 patent are patentable under these
`constructions.” PO Resp. 17–18; Ex. 2012, 34–36.
`Neither Petitioner nor Patent Owner offer any claim construction in
`this proceeding. Consequently, there is no dispute regarding the claim
`language that we need to resolve, and we proceed by applying the ordinary
`and customary meaning of the claim terms consistent with their use in the
`specification and prosecution history. Our use of the ordinary and customary
`meaning of the claim terms is consistent with the ITC’s claim construction
`of “virtual card” (claims 6, 7, 16, and 17)) as “a visual representation of a
`payment card.” Ex. 2012, 40–41; PO Resp. 17–18.
`
`C. Principles of Law
`A patent claim is unpatentable under 35 U.S.C. § 103(a) if the
`differences between the claimed subject matter and the prior art are “such
`that the subject matter as a whole would have been obvious at the time the
`invention was made to a person having ordinary skill in the art to which said
`subject matter pertains.” KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 406
`(2007). The question of obviousness is resolved on the basis of underlying
`
`
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`IPR2020-00502
`Patent 10,032,100 B2
`factual determinations, including (1) the scope and content of the prior art;
`(2) any differences between the claimed subject matter and the prior art;
`(3) the level of skill in the art; and (4) objective evidence of nonobviousness,
`i.e., secondary considerations. Graham v. John Deere Co., 383 U.S. 1, 17–
`18 (1966).
`The Supreme Court has made clear that we apply “an expansive and
`flexible approach” to the question of obviousness. KSR, 550 U.S. at 415.
`Whether a patent claiming the combination of prior art elements would have
`been obvious is determined by whether the improvement is more than the
`predictable use of prior art elements according to their established functions.
`KSR, 550 U.S. at 417. Reaching this conclusion, however, requires more
`than a mere showing that the prior art includes separate references covering
`each separate limitation in a claim under examination. Unigene Labs., Inc.
`v. Apotex, Inc., 655 F.3d 1352, 1360 (Fed. Cir. 2011). Rather, obviousness
`requires the additional showing that a person of ordinary skill at the time of
`the invention would have selected and combined those prior art elements in
`the normal course of research and development to yield the claimed
`invention. Id.
`“In an [inter partes review], the petitioner has the burden from the
`onset to show with particularity why the patent it challenges is
`unpatentable.” Harmonic Inc. v. Avid Tech., Inc., 815 F.3d 1356, 1363 (Fed.
`Cir. 2016) (citing 35 U.S.C. § 312(a)(3) (requiring inter partes review
`petitions to identify “with particularity . . . the evidence that supports the
`grounds for the challenge to each claim”)). This burden of persuasion never
`shifts to Patent Owner. See Dynamic Drinkware, LLC v. Nat’l Graphics,
`Inc., 800 F.3d 1375, 1378 (Fed. Cir. 2015) (discussing the burden of proof in
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`IPR2020-00502
`Patent 10,032,100 B2
`inter partes review). Furthermore, Petitioner cannot satisfy its burden of
`proving obviousness by employing “mere conclusory statements.” In re
`Magnum Oil Tools Int’l, Ltd., 829 F.3d 1364, 1380 (Fed. Cir. 2016). To
`prevail in an inter partes review, Petitioner must explain by a preponderance
`of the evidence how the proposed prior art or combinations of prior art
`would have rendered the challenged claims unpatentable.
`
`D. Alleged Obviousness of Claims 1–3, 8, and 10: Moullette
`Petitioner provides argument that Moullette renders claims 1–3, 8,
`and 10 obvious. Pet. 17–25; Ex. 1002 ¶¶ 64–74.6
`1. Overview of Moullette (Ex. 1007)
`Moullette is a patent titled “External Adaptor for Magnetic Stripe
`Card Reader.” Ex. 1007, code (54). Moullette discloses an adaptor for use
`with a conventional magnetic stripe card point of sale reader that receives
`information from a contact or wireless source. Id. at Abstract.
`
`
`6 Patent Owner argues that we should dismiss this ground as improper
`because Petitioner asserts that the challenged claims are obvious over the
`single reference Moullette (Pet. 17–67), when Petitioner’s declarant asserts
`that Moullette discloses each element of the challenged claims and thus the
`asserted ground should have been anticipation. PO Resp. 64–65 (citing
`Cohesive Techs., Inc. v. Waters Corp., 543 F.3d 1351, 1364 (Fed. Cir.
`2008)). We decline Patent Owner’s request to dismiss this grounds, as the
`Petitioner is the master of the petition, and we will not rely on a position not
`articulated to dismiss a petition. See SAS Inst., Inc. v. Iancu, 138 S.Ct. 1348,
`1355 (2018); see Sirona Dental Sys. GmbH v. Institut Strautmann AG, 892
`F.3d 1349, 1356 (Fed. Cir. 2018); cf. In re Magnum Oil Tools Int'l, Ltd., 829
`F.3d 1364, 1381 (Fed. Cir. 2016). (“[T]he Board must base its decision on
`arguments that were advanced by a party, and to which the opposing party
`was given a chance to respond.”).
`
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`IPR2020-00502
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`Figure 1, below, illustrates “a simplified schematic view of an adaptor
`system in accordance with one embodiment” that allows for magnetic
`emulation outside of the reader. Id. at 3:66–4:1.
`
`
`Moullette describes an adaptor that “allows a conventional magnetic stripe
`card POS reader to receive information from contact-based or wireless
`sources.” Id. at 2:51–55. Figure 1 shows conventional point-of-sale (POS)
`magnetic stripe card reader 2, with display 4, keypad 6, and magnetic card
`swipe slot 8. Id. at 4:1–3. Magneto-inductive readers 10a and 10b receive
`signals from Track One 43 or Track Two 45 of magnetic stripe card 44. Id.
`at 4:3–7. Figure 1 shows consumer pod portion 16 in electrical
`communication with merchant pod portion 18 through cable 20, where the
`consumer interacts bringing an RF proximity chip card 97, mobile personal
`device, or other RF or IR transceiver device in proximity to a wireless
`transceiver 22 to communicate information. Id. at 4:8–15. Consumer pod
`
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`Patent 10,032,100 B2
`portion 16 is positioned at a location convenient for a customer, who may
`interact with adaptor 14 using personal trusted device (PTD) 99 (shown as a
`wireless telephone in Figure 1) by bringing PTD 99 in proximity to wireless
`transceiver 22 of adaptor 14. Id. at 4:10–15, 4:46–49. Merchant pod
`portion 18 is affixed beneath the external housing of reader device 2 and
`communicates with its reader heads 10a, 10b. Id. at 5:21–31.
`2. Claim 1
`a. “a device,”“a circuit operable to emit an electromagnetic field
`and to electrically couple to, and transmit data to, a read-head
`located on a magnetic stripe reader,” and “circuit is operable to
`communicate while located outside the magnetic stripe reader”
`Petitioner argues that Moullette teaches the claim 1 preamble for “a
`device comprising” via the adaptor that allows the consumer pod to
`communicate with the magnetic stripe card POS reader. Pet. 17–18;
`Ex. 1007, Abstract, 4:8–10; Ex. 1002 ¶ 64.
`Petitioner further asserts that Moullette discloses the “circuit operable
`to emit an electromagnetic field and to electrically couple” limitation
`describing that current flows to generate a magnetic field, which activates
`the card, and communicates to the magnetic track readers. Pet. 18–19; Ex.
`1007, 6:49–56, 6:60–66; Ex. 1002 ¶¶ 65, 66. Petitioner argues that Figure 1
`of Moullette discloses transceivers 22 shown in communication with
`interface processor 24. Pet. 19–20; Ex. 1002 ¶ 67. Module 26 in Figure 1 of
`Moullette communicates with the card reader, teaching that “a circuit that
`can emit an electromagnetic field, can couple with a magnetic stripe card
`reader read-head, and can communicate with (i.e., transmit data to) the read
`head [of the card reader]” Pet. 19 (citing Ex. 1002 ¶ 65).
`
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`Patent Owner argues that the preamble reciting “a device” is limiting
`(Sur-Reply 3–4) and that Moullette does not teach a device but instead
`teaches a “system,” which includes multiple portions with different
`functions (PO Resp. 19; Ex. 2043 2 ¶ 74). Specifically, Patent Owner
`asserts that the adaptor in Moullette is affixed to the housing of the reader,
`becoming an integral part of the magnetic stripe system. PO Resp. 20 (citing
`Ex. 2042 ¶ 75; Ex. 1007, 2:43–46, 3:60–62). Asserting that the Moullette
`adaptor must be affixed to a particular location to function properly, Patent
`Owner argues that
`Moullette does not disclose a standalone device but, rather, a
`system in which the Moullette component is an integral part of
`the reader upon being affixed to the reader. Id. EX. 1007 5:22–
`32.
` Moullette discloses “an adaptor system” including
`“consumer pod (C-Pod) portion 16 in electrical communication
`with merchant pod (M-Pod) portion 18 through cable 20 . . . EX.
`1007, Fig. 1.
`PO Resp. 21. Patent Owner argues that Moullette fails to teach the “circuit
`is operable to communicate while located outside the magnetic stripe reader”
`limitation of claim 1 (which also appears in claim 12). Pet. 20. In sum, the
`affixed adaptor fails to teach the preamble “device” and the location
`limitation because it is affixed to the external housing as shown in Figures
`3A and 4A of Moullette. PO Resp. 21–22.
`We are not persuaded by Patent Owner’s arguments. PO Resp. 19–
`20; Sur-Reply 4–7. As Petitioner argues, and we agree, “Moullette
`consistently describes it as a device separate from the merchant’s reader, and
`discloses embodiments where the adaptor is positioned ‘near’ or ‘proximate’
`to the reader’s housing, as [Patent Owner’s] expert admits.” Reply 2 (citing
`Ex. 1007, 2:42–47, 2:66–3:6, 8:67–9:6, 7:44–49; Ex. 1030, 832:20–25).
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`Patent Owner’s argument is not commensurate in scope with the claim
`language that the circuit be located “outside located outside of the magnetic
`stripe reader,” and provides a specific distance in claim 1. See Ex. 1001,
`14:45–53, 15:8–14 (claim 12 requiring “outside” the reader but without
`specifying the distance outside). Furthermore, Patent Owner’s declarant
`agrees that Moullette teaches positioning the adaptor outside of the reader.
`See Ex. 1030, 806:7–10, 832:20–25 (Mr. Zatkovich agreeing that the adaptor
`is outside of the reader).
`Neither claim 1 nor the ’100 Patent specification address the method
`or manner of locating the circuit “outside” the reader. We find that
`Moullette’s adaptor that is disclosed as being “proximate to the housing of a
`magnetic stripe reader device,” “positioned near a magnetic stripe reader,”
`and “positioned external to the reader device” teaches the recited claim
`limitation for a “circuit . . . located outside the magnetic stripe reader.”
`Ex. 1007, 2:62–3:6, 8:67–9:6; see also Ex. 1007, Figs 1, 3B (showing the
`adaptor external to the terminal reader device). We also find that
`Moullette’s teaching is not limited to specific affixed positions. See Ex.
`1007, 2:66–3:6 (positioned near the reader).
`Moullette’s teaching that the adaptor “may be affixed to the reader
`device” (Ex. 1007, 5:29–31 (emphasis added)) is permissive and undermines
`Patent Owner’s argument that the Moullette adaptor is an “integral” part of
`the magnetic stripe system and is not a device as recited in claim 1. PO
`Resp. 20. We find that Moullette teaches external positioning to allow
`aligned communication “through the housing” to the head of the magnetic
`stripe reader but does not otherwise limit the external position. Ex. 1007,
`3:62–65. Indeed, Moullette teaches a separate fully integrated unit lending
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`Patent 10,032,100 B2
`further supporting Petitioner’s argument that the externally placed adaptor
`embodiment differs from a fully integrated unit. See Ex. 1007, 7:44–49
`(noting that the adaptor could be integrated into a single-piece unit). We
`credit Petitioner’s argument and evidence that Moullette teaches the device
`of claim 1.
`Patent Owner contentions that the device of the claim 1 preamble is a
`limiting feature that excludes Moullette’s “system” is unpersuasive. Sur-
`Reply 2–4. Patent Owner asserts in the Sur-Reply that a device in the
`claim 1 preamble should be construed to mean “a device,” as distinguished
`from a system or apparatus. Sur-Reply 3. Patent Owner argues in the Sur-
`Reply that the preamble of claim 1 recites essential structure, constitutes a
`limitation based on antecedent basis, and differentiates the scope of devices
`in claim 1 from claim 12. Id. at 2–4. Patent Owner improperly raised these
`preamble arguments for the first time in its Sur-Reply brief.7 Although these
`arguments are new and need not be considered, we find them unavailing.
`Patent Owner erroneously asserts that the “device” in the claim 1 preamble
`is used in the body of the claim and provides an antecedent basis for the
`
`
`7 Our Scheduling Order and Practice Guide each make clear that Patent
`Owner must set forth all substantive arguments for patentability in the
`Response, and may not raise new arguments in the Sur-Reply. See Paper 35,
`9 (“Patent Owner is cautioned that any arguments for patentability not raised
`in the response may be deemed waived.”); Patent Trial and Appeal Board
`Consolidated Trial Practice Guide (Nov. 2019) (“Consolidated TPG”),7 74
`(“[A] reply or sur-reply may only respond to arguments raised in the
`preceding brief. . . . ‘Respond’ . . . does not mean proceed in a new
`direction with a new approach as compared to positions taken in a prior
`filing. . . . [A] reply or sur-reply that raises a new issue or belatedly presents
`evidence may not be considered.”).
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`IPR2020-00502
`Patent 10,032,100 B2
`subsequent use. Sur-Reply 4. The preamble term “device,” however, does
`not appear in the body of claim 1 or in related claim 12. We also do not find
`persuasive support in the claims or Specification for Patent Owner’s
`arguments that “device” should be construed negatively to exclude systems
`or apparatuses. Notwithstanding our disagreement with Patent Owner’s
`contentions, we need not resolve whether the preamble is limiting because
`we find Petitioner’s evidence shows that Moullette teaches a device as
`recited in claim 1’s preamble.
`b. “a processor for controlling the circuit”
`Petitioner argues that Figure 1 of Moullette discloses transceivers 22
`shown in communication with interface processor 24. Pet. 19–20; Ex. 1002
`¶ 67. Module 26 in Figure 1 of Moullette communicates with the card
`reader, teaching that “a circuit that can emit an electromagnetic field, can
`couple with a magnetic stripe card reader read-head, and can communicate
`with (i.e., transmit data to) the readhead [of the card reader].” Pet. 19 (citing
`Ex. 1002 ¶ 65). Patent Owner asserts that the processor Petitioner cites for
`teaching the “processor for controlling the circuit” limitation is misleading.
`PO Resp. 23–24. Patent Owner argues that
`Moullette makes clear that interface processors 24 process
`interface communications, such as
`infrared bidirectional
`communications (Id., 4:44-46), Bluetooth (Id., 4:52-56), cellular
`communications (Id., 4:56-60), etc. There is nothing in the
`specification to suggest that Moullette includes a processor that
`controls the dynamic magnetic stripe communication device, nor
`is there even the slightest suggestion that any of those specialized
`processors would, somehow, also be a “processor for controlling
`the dynamic magnetic stripe communication device” required by
`claim 1.
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`IPR2020-00502
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`PO resp. 23–24. Patent Owner then argues that “a separate processor that is
`not shown, taught, or suggested anywhere in Moullette would be required to
`control the dynamic magnetic stripe communication device.” Id. at 24.
`We find that Petitioner’s argument and evidence support that
`“Moullette’s C-Pod, which translates the payment signal received from
`cellphone 99 and drives the M-Pod under control of the interface processors
`(all in real time) is part of the magnetic stripe emulating circuit.” Reply 6
`(citing Ex. 1007, Fig. 1). Indeed, Petitioner cites the full “‘adaptor 14,
`[which] comprises consumer pod (C-Pod) portion 16 in electrical
`communication with merchant pod (M-Pod) portion 18 through cable 20’”
`as teaching the device. Pet. 17 (quoting Ex. 1007, 4:8–10). The C-Pod
`portion is in electrical communication with interface processors 24. Pet. 19–
`20; Ex. 1007, 4:41–43; Ex. 1002 ¶ 67. Petitioner provides persuasive
`evidence that Moullette teaches that Moullette’s C-Pod translates payment
`signals from the cell phone and drives the M-Pod inductors. Pet. 19–20;
`Ex. 1002 ¶ 67; Ex. 1007, Fig. 1, 3:63–65 (stating that C-Pod transceivers
`communicate with interface processors); Ex. 1032, 51:5–9, 52:9–24
`(agreeing that Moullette signals are t