Trials@uspto.gov
`571-272-7822
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` Paper 31
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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 IPR2020-00504
`Patent 10,223,631 B2
`____________
`
`
`Before TREVOR M. JEFFERSON, GEORGIANNA W. BRADEN, and
`JON M. JURGOVAN, Administrative Patent Judges.
`
`JEFFERSON, Administrative Patent Judge.
`
`
`DECISION
`Final Written Decision
`Determining All Challenged Claims Unpatentable
`35 U.S.C. § 318(a)
`
`
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`
`
`571-272-7822
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` Paper 31
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`
`
` Entered: August 11, 2021
`
`
`
`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 IPR2020-00504
`Patent 10,223,631 B2
`____________
`
`
`Before TREVOR M. JEFFERSON, GEORGIANNA W. BRADEN, and
`JON M. JURGOVAN, Administrative Patent Judges.
`
`JEFFERSON, Administrative Patent Judge.
`
`
`DECISION
`Final Written Decision
`Determining All Challenged Claims Unpatentable
`35 U.S.C. § 318(a)
`
`
`
`
`
`
`
`IPR2020-00504
`Patent 10,223,631 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 1–7, 9–13, 19, 21, and 22 (“the
`challenged claims”) of U.S. Patent No. 10,223,631 B2 (Ex. 1001, the “’631
`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 the challenged claims
`of the ’631 Patent. Paper 11 (“Dec.”).
`Following institution, Patent Owner filed its Response to the Petition.
`Paper 18 (“PO Resp.”). Petitioner filed a Reply to Patent Owner’s
`Response, and Patent Owner filed a Sur-Reply. Paper 20 (“Reply”);
`Paper 21 (“Sur-Reply”). An Oral Hearing took place on May 12, 2021. The
`Hearing Transcript is included in the record. Paper 29 (“Tr.”).
`After considering the parties’ arguments and supporting evidence, we
`determine that Petitioner has proved by a preponderance of the evidence that
`claims 1–7, 9–13, 19, 21, and 22 are unpatentable. 35 U.S.C. § 316(e)
`(2018); 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 ’631 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. 72–73. Petitioner also
`informs us of one proceeding pending before the International Trade
`2
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`IPR2020-00504
`Patent 10,223,631 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.
`According to Petitioner, an initial determination in the ITC case is expected
`on or around August 14, 2020. Id. Petitioner further informs us of
`concurrently pending inter partes review proceedings directed to the three
`other patents asserted in the above-referenced District Court and ITC cases.
`Id.
`
`Patent Owner informs us of the same pending proceedings listed
`above. Paper 6 (Patent Owner’s Mandatory Notices), 2–3.
`
`B. The ʼ631 Patent
`The ’631 Patent was filed on August 1, 2016 from a continuation filed
`July 25, 2012, issued on March 5, 2019, and is titled “Cards and Devices
`with Multifunction Magnetic Emulators and Methods for Using Same.”
`Ex. 1001, codes (22), (45), (54). The ’631 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 ’631 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 ’631 Patent states that “[t]he magnetic emulator may be, for
`example, a circuit that emits electromagnetic fields operable to electrically
`3
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`IPR2020-00504
`Patent 10,223,631 B2
`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 ’631 Patent also 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 ’631 Patent
`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
`
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`IPR2020-00504
`Patent 10,223,631 B2
`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.
`The ’631 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.
`
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`Patent 10,223,631 B2
`
`C. Illustrative Claim
`Independent claim 1 is illustrative.
`1. An apparatus comprising;
`a structure for receiving manual input;
`a dynamic magnetic stripe communication device;
`
`and
`
`a processor for controlling the dynamic magnetic
`stripe communication device,
`stripe
`wherein
`the
`dynamic magnetic
`communication device is operable to electrically couple to
`a payment terminal when the dynamic magnetic stripe
`communication device is located outside and within
`proximity of the payment terminal and to serially
`communicate first magnetic stripe track data and second
`magnetic stripe track data while electrically coupled to the
`payment terminal.
`Ex. 1001, 14:45–57.
`D. Asserted Challenges to Patentability
`We instituted inter partes review based on information presented in
`the Petition that identified claims of the ’631 Patent are challenged on the
`basis listed below. Pet. 8; Dec. 6–7, 41–42.
`
`35 U.S.C. §1
`103
`103
`
`Reference(s)/Basis
`Moullette2
`Zellner, 3 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 ’631 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 No. 7,097,108 B2, issued Aug. 29, 2006 (Ex. 1008, “Zellner”).
`6
`
`Claim(s) Challenged
`1–3, 9–10, 12–13, 19, 21
`1, 4–7, 10, 11, 22
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`Patent 10,223,631 B2
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`Reference(s)/Basis
`Doughty4
`Doughty, Zellner
`Doughty, Francini5
`
`35 U.S.C. §1
`103
`103
`103
`
`Claim(s) Challenged
`1–3, 9, 12, 19, 21–22
`4–7, 10, 11
`13
`
`
`
`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
`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
`
`
`4 U.S. Patent Application Publication No. 2006/0161789 Al, Published Jul.
`20, 2006 (Ex. 1012, “Doughty”).
`5 U.S. Patent No. 4,701,601, issued Oct. 20, 1987 (Ex. 1006, “Francini”).
`7
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`Patent 10,223,631 B2
`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. 13–14 (citing Ex. 1002 ¶ 33).
`Petitioner further argues that “[a]dditional education might supplement
`practice experience and vice-versa.” Id. at 14.
`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.
`PO Resp. 15-16 (citing Ex. 2012, 10–11). Patent Owner indicates “the
`[judge] in the ITC litigation decided that a POSITA had [an] ‘undergraduate
`8
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`Patent 10,223,631 B2
`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. 16; 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 of the types of technologies recited in the claims. Specifically, the
`other proposed definitions do not cover cellular network communications
`while our definition does. Apart from this, we do not consider our definition
`to be materially different from what the ITC adopted or parties propose here.
`And neither party contends that the outcome of this case turns on the
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`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,
`131213 (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 it’s ordinary and customary meaning.
`CCS Fitness, Inc. v. Brunswick Corp., 288 F.3d 1359, 1366 (Fed. Cir. 2002)
`(citation omitted).
`
`
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`Patent 10,223,631 B2
`Petitioner states that it does not believe any terms need be construed
`to resolve the prior art issues presented in this Petition. Pet. 14. Petitioner
`notes there were claim constructions proposed by the parties in the ITC
`proceeding. Id. at 14–16 (citing Ex. 1016, 7–10). 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, and states “[a]ll of the claims of
`the ’631 patent are patentable under these constructions.” PO Resp. 16–19;
`Ex. 2012, 27–38.
`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. The actual claim language of
`the ’631 Patent and the corresponding ITC constructions from Exhibit 2012
`are shown in the table below.
`
`
`
`
`11
`
`
`
`ITC Construction
`“a device capable of communicating
`dynamic magnetic stripe data”
`“serially communicate first
`magnetic stripe track data and
`second magnetic stripe track data
`while electrically coupled to the
`payment terminal”
`Plain language.
`
`IPR2020-00504
`Patent 10,223,631 B2
`’631 Patent Claim Terms
`“dynamic magnetic stripe
`communication device” (claim 1)
`“serially communicate first
`magnetic stripe track data and
`second magnetic stripe track data
`while electrically coupled to the
`payment terminal” (claim 1)
`“operable to electrically couple to a
`payment terminal when the dynamic
`magnetic stripe communication
`device is located outside and within
`proximity of the payment terminal
`and to serially communicate first
`magnetic stripe track data and
`second magnetic stripe track data
`while electrically coupled to the
`payment terminal”
`“within proximity of”
`“virtual payment card”
`(claims 6 and 7)
`
`Ex. 2012, 27–38; PO Resp. 16–19.
`The ITC’s constructions for the limitations above largely mirror the
`actual claim language. In other words, the ITC uses the plain and ordinary
`meaning of these claim limitations. Id. For the third limitation, the ITC
`agreed with Patent Owner that the construction for a “virtual payment card”
`is “a visual representation of a payment card.” Id. at 36. In determining this
`construction, the ITC found that Figure 12 of the ’631 Patent included
`features common to actual credit cards such as card number, name, and
`security (CVCC) code, but did not include other features actual credit cards
`would have, such as a logo, expiration date, issuer, magnetic stripe, and
`computer chip. Id. at 33–34. The ITC held that the payment card of
`12
`
`Plain and ordinary meaning
`“a visual representation of
`a payment card”
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`IPR2020-00504
`Patent 10,223,631 B2
`Figure 12 only resembles an actual credit card, and thus chose Patent
`Owner’s construction that a “virtual payment card” is “a visual
`representation of a payment card” over Petitioner’s construction of “an
`image of a payment card.” Id. We agree with the ITC that the ordinary and
`customary meaning of “virtual payment card,” when considered in light of
`the ’631 Patent, specifically, Figure 12 and corresponding description, is “a
`visual representation of a payment card.”
`We proceed to analyze the challenges applying the ordinary and
`customary meaning of the claim terms.
`
`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
`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
`
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`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
`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).
`Thus, 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.
`
`
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`D. Alleged Obviousness of Claims 1–3, 9, 10, 12, 13, 19, and 21:
`Moullette
`Petitioner provides argument that Moullette renders claims 1–3, 9, 10,
`12, 13, 19, and 21 obvious. Pet. 16–31; Ex. 1002 ¶¶ 64–87.
`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.
`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
`
`
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`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
`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. Preamble and “a structure for receiving manual input;” “a
`dynamic magnetic stripe communication device;” and “a
`processor for controlling the dynamic magnetic stripe
`communication device”
`Petitioner argues that Moullette teaches an adaptor that allows the
`consumer pod to communicate with the magnetic stripe card POS reader.
`Ex. 1007, Abstract, 4:8–10; Ex. 1002 ¶ 64. Petitioner cites Moullette’s
`adaptor that includes specialized interfaces and a keyboard for data entry.
`Ex. 1007, 5:3–17; Ex. 1002 ¶ 65. Furthermore, Petitioner argues that
`Moullette’s device “includes an inductor capable of generating a magnetic
`field of sufficient power to couple with a head of a magnetic stripe card
`16
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`reader through the housing of the reader device.” Pet. 18 (quoting Ex. 1007,
`Abstract). Moullette teaches communicating payment information to the
`magnetic card reader. Ex. 1007, 7:12–21; 6:49–7:2; Pet. 18–19. Petitioner
`asserts that Moullette’s adaptor includes “transceivers 22 in communication
`with respective interface processors 24.” Pet. 20 (quoting Ex. 1007, 4:41–
`43).
`
`Patent Owner contends Moullette fails to teach every feature of claim
`1 of the’631 Patent, but Patent Owner does not provide specific argument
`regarding most of the limitations. Nonetheless, the burden remains on
`Petitioner to demonstrate unpatentability. See Dynamic Drinkware, 800
`F.3d at 1378.
`b. “wherein the dynamic magnetic stripe communication device is
`operable to electrically couple to a payment terminal when the
`dynamic magnetic stripe communication device is located outside
`and within proximity of the payment terminal and to serially
`communicate first magnetic stripe track data and second magnetic
`stripe track data while electrically coupled to the payment
`terminal”
`Petitioner argues that Moullette teaches this limitation in describing
`an adaptor with an inductor capable of generating a magnetic field of
`sufficient power to couple with a head of a magnetic stripe card reader
`through the housing of the reader device such that the adaptor can be
`positioned external to the reader device. Pet. 21 (citing Ex. 1007, Abstract);
`see Ex. 1002 ¶¶ 70–73. Petitioner avers that Moullette depicts the device
`located outside and proximate to the payment terminal and electrically
`coupled to the magnetic read heads. Pet. 21–22; Ex. 1007, Figs. 1 and 3B;
`Ex. 1002 ¶ 70.
`
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`17
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`Patent 10,223,631 B2
`Petitioner asserts that Moullette teaches serial communication of first
`and second magnetic stripe data, showing “[o]nce module 26 has
`successfully communicated with Track 1 head 10b, the flow of current to
`through outer coil 76 is halted . . . [and] a current is then flowed through
`inner coil 74,” which generates a magnetic field that communicates data to
`the Track 2 head. Pet. 23 (quoting Ex. 1007, 6:49–7:2); see Ex. 1002 ¶¶ 72,
`73.
`Patent Owner argues claim 1 separately. PO Resp. 19–23. With
`respect to claim 1, Patent Owner argues that “Moullette does not teach ‘the
`dynamic magnetic stripe communication device . . . operable to electrically
`couple to a payment terminal when the dynamic magnetic stripe
`communication device is located outside and within proximity of the
`payment terminal.’” Patent Owner argues that Moullette does not disclose a
`standalone device, but instead discloses a system which includes a consumer
`and merchant pod portion designed for different functions. PO Resp. 19
`(citing Ex. 1007, 3:66–67, 4:8–10, Fig. 1). Patent Owner argues that
`Moullette’s adaptor that Petitioner relies on is “affixed to the external
`housing of the magnetic stripe reader, thereby becoming an integral part of
`the magnetic stripe reader.” PO Resp. 20. Patent Owner contends that
`Moullette does not teach a “dynamic magnetic stripe communication device”
`limitation or teach communication with the merchant read heads while
`located outside of the terminal. PO Resp. 19–22.
`We do not agree with Patent Owner’s contention that Moullette
`teaches a system and not a device. PO Resp. 19. Patent Owner’s arguments
`limit the term “device” to exclude a device with multiple components. Id.
`Patent Owner cites no intrinsic or extrinsic evidence to support the
`18
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`IPR2020-00504
`Patent 10,223,631 B2
`narrowing of the term “device” to exclude multiple connected components
`such as the pods in Moullette. See PO Resp. 19; Sur-Reply 2–5. On the full
`record, we agree with Petitioner’s evidence and argument that Moullette’s
`adaptor teaches the device limitation. Pet. 16–17; Reply 4. Moullette refers
`to the adaptor separate from the merchant terminal, describing its positioning
`as “near a magnetic stripe card reader” or “proximate” to the reader device’s
`housing. Ex. 1007, 2:66–3:14; see id. at code 57, 3:62–65, 4:41–60, 8:67–
`9:6. Furthermore, Moullette discusses the adaptor separately and discusses
`embodiments where the adaptor is a complete single unit. Ex. 1007, 7:47–
`49; see Ex. 1030, 812:25-813:4 (“M-Pod 26, cable 20, [and] C-Pod 16 . . .
`can be integrated creating a complete and single-piece unit”). Patent
`Owner’s declarant also admits that Moullette discloses an adaptor. Ex.
`1030, 805:3–5. Accordingly, we find that Moullette teaches the device
`limitation of claim 1.
`Patent Owner’s argument that the adaptor is affixed to the external
`housing of the reader and becomes an integral part and is not located
`“outside” of the housing is also unavailing. PO Resp. 19–21. Claim 1 states
`that the dynamic magnetic stripe communication device be “located outside
`and within proximity of the payment terminal.” Ex. 1001, claim 1. Patent
`Owner’s declarant agreed that the adaptor is external. Ex. 1030, 806:7–10
`(agreeing that adaptor “is positioned outside the conventional magnetic
`stripe reader”), 806:20–807:3 (the adaptor “can be positioned external to the
`reader device”). Furthermore, 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 adaptor is
`integral to the Moullette. See PO Resp. 19–21.
`19
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`IPR2020-00504
`Patent 10,223,631 B2
`We disagree with Patent Owner’s argument that the Moullette’s
`adaptor “must be affixed . . . at a precise location with a precise alignment in
`order to work.” PO Resp. 20–21. Patent Owner’s evidence for this
`argument lacks support from Moullette’s specification and relies on
`conclusory statements from Patent Owner’s declarant. Id.; Ex. 2042 ¶ 75;
`Ex. 1007, Fig. 3B. We do not find that the need to align the adaptor with the
`read heads undermines 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 relative to the
`reader. Ex. 1007, 3:62–65; see also Ex. 1032, 26:14–25 (testifying that the
`merchant could hold the M-Pod during a transaction). Accordingly, we do
`not agree with Patent Owner that the alignment or affixing of the adaptor
`demonstrates that “Moullette fails to teach the claimed dynamic magnetic
`stripe communication device ‘operable to electrically couple to a payment
`terminal when . . . located outside and within proximity of the payment
`terminal.’” PO Resp. 21.
`Patent Owner argues that Moullette fails to teach the processors and
`has “absolutely 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.” PO Resp. 22. We do not agree with Patent Owner’s argument
`regarding the interface processors disclosed in Moullette. Petitioner presents
`persuasive evidence that the adaptor in Moullette includes the C-Pod that
`translates the payment signals from the cell phone and dives the M-Pod
`20
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`IPR2020-00504
`Patent 10,223,631 B2
`portion via the interface processors. Ex. 2042 ¶ 40 (describing the adaptor);
`Ex. 1007, 4:8–10, 5:21–25, 5:36–38, 6:49–56; see also Ex. 1030, 739:10–
`740:11 (Mr. Zatkovich testifying that Moullette C-Pod 16 includes a
`processor and converts information from user device to magnetic emulation
`signal). Patent Owner’s argument admits 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.” PO Resp. 22
`(citing Ex. 2042 ¶ 75). Petitioner’s argument and evidence support that
`“Moullette depicts an interface processor [] that is in ‘electrical
`communication with merchant pod portion 18.” Pet. 20 (citing Ex. 1007,
`4:41–43, 5:21–25). Indeed, Patent Owner’s declarant, Mr. Zatkovich, agrees
`that data conversion beyond the inductors is necessary for the Moullette
`adaptor to function. Ex. 1032,
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