PTAB

IPR2017-00541

PayPal Inc v. Moneycat Ltd

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Petition
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1. Case Identification

2. Patent Overview

  • Title: Electronic Currency, Electronic Wallet Therefor and Electronic Payment Systems Employing Them
  • Brief Description: The ’918 patent describes a system for electronic currency transactions that uses a "Currency Issuing Authority trusted server" (CIAS) as a middleman. The CIAS receives payment instructions from a buyer and transfers electronic funds to a seller, intending to simplify electronic payments and give users more control over their money.

3. Grounds for Unpatentability

Ground 1: Claims 1-3, 7-11, 15-17, and 19-23 are obvious over Bernstein in view of Peirce

  • Prior Art Relied Upon: Bernstein (Patent 5,915,023) and Peirce ("Scalable, Secure Cash Payment for WWW Resources with the PayMe Protocol Set," World Wide Web Journal, Nov. 1995).
  • Core Argument for this Ground:
    • Prior Art Mapping: Petitioner argued that Bernstein disclosed a system for transferring "electronic cash" between parties using an intermediary, such as a financial institution or a third-party agent. However, Bernstein did not detail the specifics of the electronic cash itself. Peirce, which described the NetCash system, filled this gap by teaching a "currency server" (a CIAS) that mints, validates, deletes, and replaces electronic coins. The combination of Bernstein's intermediary-based transaction framework with Peirce's detailed electronic coin management system allegedly disclosed all limitations of the independent claims, including receiving payment instructions, accessing a user's electronic currency, manipulating it (deleting old currency), and creating new electronic currency for the recipient.
    • Motivation to Combine: A Person of Ordinary Skill in the Art (POSA) would combine these references to create a more robust and secure payment system. Petitioner asserted a POSA would have found it obvious to substitute Peirce’s specific NetCash electronic currency for the generic "electronic cash" in Bernstein. The primary motivation was to solve the well-known "double-spending" problem, which Peirce explicitly addresses by replacing used coins. Co-locating Bernstein's intermediary with Peirce's CIAS function was presented as an obvious path to improve security and efficiency by allowing the immediate exchange of coins upon receipt.
    • Expectation of Success: A POSA would have had a high expectation of success because NetCash was designed as a direct substitute for currency, and integrating it into Bernstein's established transaction flow would yield predictable results.

Ground 2: Claims 4 and 12 are obvious over Bernstein in view of Peirce and Haynes

  • Prior Art Relied Upon: Bernstein (Patent 5,915,023), Peirce (World Wide Web Journal, Nov. 1995), and Haynes (WO 97/19414).
  • Core Argument for this Ground:
    • Prior Art Mapping: This ground builds on the Bernstein/Peirce combination by adding Haynes to address the limitations in claims 4 and 12, which require using the new electronic currency to "calculate the balance" in the recipient's account. While the base combination established the transaction, Haynes provided the explicit teaching for account balance tracking. Haynes disclosed an electronic transaction system where an electronic bank debits a user's account, credits a merchant's account, and calculates the new account balances after each transaction.
    • Motivation to Combine: Petitioner contended that tracking account balances is a fundamental and long-standing economic practice. A POSA designing the Bernstein/Peirce system would have recognized that adding balance calculation was a routine and desirable feature. The motivation was to provide consumers and merchants with an accurate measure of their funds and a way to verify that transactions had completed correctly. Haynes, being in the same field of electronic payments, provided a known method for implementing this feature.

Ground 3: Claims 5, 6, 13, 14, and 18 are obvious over Bernstein in view of Peirce and Popolo

  • Prior Art Relied Upon: Bernstein (Patent 5,915,023), Peirce (World Wide Web Journal, Nov. 1995), and Popolo (Patent 5,715,402).
  • Core Argument for this Ground:
    • Prior Art Mapping: This ground adds Popolo to the base combination to address claims requiring the deduction of a "commission" or service fee from the transaction. Popolo disclosed an online auction system where the intermediary could add a service fee to the transaction, either by increasing the amount withdrawn from the buyer or by deducting it from the payment sent to the seller.
    • Motivation to Combine: Petitioner argued Popolo was analogous prior art because it addressed the pertinent problem of how a third-party intermediary in a networked transaction could generate revenue. A POSA would have been motivated to add a commission mechanism, as taught by Popolo, to the Bernstein/Peirce intermediary system. Taking a commission is a well-known business practice that provides the necessary financial incentive for a third party to offer intermediary services. Popolo provided a known set of options for implementing this business logic.

4. Key Claim Construction Positions

  • "Currency Issuing Authority trusted server" (CIAS): Petitioner proposed this term be construed as "a server that is trusted by the Currency Issuing Authority ('CIA')." This construction was noted as having been previously adopted by the Patent Trial and Appeal Board in covered business method (CBM) reviews involving related patents owned by Moneycat Ltd.

5. Arguments Regarding Discretionary Denial

  • Petitioner argued that the grounds raised in the petition were not redundant. It was asserted that the prior art references were combined in ways not applied by the Examiner during the original prosecution. Furthermore, Petitioner stated that the grounds were meaningfully distinct from a concurrently filed IPR petition and that arguments raised by the Patent Owner in prior CBM proceedings supported the non-redundancy of the new combinations presented.

6. Relief Requested

  • Petitioner requests the institution of an inter partes review and the cancellation of claims 1-23 of the ’918 patent as unpatentable.