Federal Reserve Bank Of BosTon v. Stambler Leon

1. Case Identification

• Patent #: 5,936,541
• Filed: July 1, 2013
• Petitioner(s): The Federal Reserve Banks
• Patent Owner(s): Leon Stambler
• Challenged Claims: 14-18, 21-23, 25, 29, 30, 33, 41-43, 47-49, and 51-54

2. Patent Overview

• Title: METHOD FOR SECURING INFORMATION RELEVANT TO A TRANSACTION
• Brief Description: The ’541 patent discloses methods for securing transaction information by using a cryptographically generated "variable authentication number" (VAN). The VAN is created by "coding" credential information and is included in a "credential" used to authenticate a party to the transaction.

3. Grounds for Unpatentability

Ground 1: Claims 14-18, 21-23, 25, 29, 30, 33, 41-43, 47-49, and 51-54 are obvious over Hellman, X.509, and Nechvatal.

• Prior Art Relied Upon: Hellman (Patent 4,200,770), X.509 (CCIT Recommendation, 1988), and Nechvatal (NIST Special Publication 800-2, Apr. 1991).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner asserted that Hellman teaches the foundational multi-party transaction system involving the exchange of information to generate a shared secret key for encrypting communications. However, Petitioner contended that Hellman lacks an explicit authentication framework. The X.509 standard was argued to supply the missing elements, disclosing a system of digital certificates ("credentials") issued by a trusted certification authority ("credential issuing entity"). These certificates contain a digital signature ("VAN") created using the authority’s private key, which serves to authenticate a party. For example, independent claim 14 requires creating a VAN by coding credential information with a secret key; Petitioner argued X.509 teaches this directly by creating a digital signature using the certification authority’s secret key.
  • Motivation to Combine: Petitioner argued a person of ordinary skill in the art (POSITA) would be motivated to combine Hellman with X.509, as expressly suggested by Nechvatal. Nechvatal analyzes both the Diffie-Hellman algorithm and the X.509 authentication framework, noting that public-key cryptosystems like Hellman provide secrecy but not party authentication. Nechvatal therefore suggests that augmenting a system like Hellman’s with a "strong authentication" framework like X.509 would be a desirable and logical improvement.
  • Expectation of Success: A POSITA would have had a reasonable expectation of success because Nechvatal described how the two systems could be "naturally integrated." The combination involves applying the well-understood authentication framework of X.509 to the well-known secure communication method of Hellman to solve a known deficiency (lack of authentication), yielding predictable results.

Ground 2: Claims 14-18, 21-23, 25, 29, 30, 33, 41-43, 47-49, and 51-54 are obvious over Hellman, X.509, Nechvatal, and Davies.

• Prior Art Relied Upon: Hellman (Patent 4,200,770), X.509 (CCIT Recommendation, 1988), Nechvatal (NIST Special Publication 800-2, Apr. 1991), and Davies (Security for Computer Networks, 1989).
• Core Argument for this Ground: This ground was presented to address a potentially narrower construction of the term "previously issued," under which the claimed "creating the VAN" step is a recreation of a VAN in a previously issued credential.
  • Prior Art Mapping: The roles of Hellman, X.509, and Nechvatal remained the same as in Ground 1. The incremental contribution of Davies was its disclosure of recreating digital signatures in the context of authenticating electronic funds transfers. Petitioner argued Davies teaches that when a party at a point-of-sale terminal needs to authenticate a transaction, it receives a digitally signed certificate. The terminal then recreates the digital signature in its own memory to verify authenticity. Petitioner contended this process of recreation directly maps onto the narrower interpretation of the claim language.
  • Motivation to Combine: The motivation to combine Hellman with an authentication framework remained. A POSITA would further combine this with the teachings of Davies to implement a robust authentication system for a specific, known application like electronic funds transfer. The expert declaration stated that all references are in similar fields of cryptographic security, and a POSITA would be motivated to augment the Hellman cryptosystem with the key management and authentication techniques taught by X.509, Nechvatal, and Davies.
  • Expectation of Success: A POSITA would expect success in adding the teachings of Davies, as it involved applying a known technique (recreating a signature for verification) to the combined Hellman/X.509 system to achieve the predictable result of robust, real-time authentication in a transactional environment.

4. Key Claim Construction Positions

• "coding": For the purposes of the petition, this term was construed as "transforming information by applying a known algorithm." Petitioner noted this construction was consistent with positions taken in related litigation and argued that the claims are obvious regardless of whether "coding" is construed broadly to include both encoding and decoding or narrowly to exclude decoding.
• "previously issued": This term was central to Petitioner's alternative grounds. The petition addressed two possible constructions without taking a final position. A broad construction would mean the credential exists at some prior point in time. A narrow construction, adopted by a district court in related litigation, would mean the credential must exist before the claimed method steps are executed. Ground 1 was argued to render the claims obvious under the broad construction, while Ground 2 (adding Davies) was argued to render the claims obvious under the narrow construction, which implies a recreation of the VAN.

5. Relief Requested

• Petitioner requested that the Patent Trial and Appeal Board institute an inter partes review and cancel claims 14-18, 21-23, 25, 29, 30, 33, 41-43, 47-49, and 51-54 of the ’541 patent as unpatentable.