PTAB

IPR2019-00931

PayPal Inc v. IOEngine LLC

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Key Events
Petition
petition

1. Case Identification

2. Patent Overview

  • Title: Apparatus, Method and System for a Tunneling Client Access Point
  • Brief Description: The ’703 patent discloses a portable device, referred to as a “tunneling client access point” (TCAP), such as a USB drive. This device connects to a terminal (e.g., a laptop) to establish communications with remote servers over a network, effectively creating a portable, secure computing environment.

3. Grounds for Unpatentability

Ground 1: Obviousness over DiGiorgio and Burger - Claims 55-65, 67-72, 74-75, 77-78, 81-87, 89-90, 92-98, 100-101, 103-114, 116-121, 123-124, and 126-129 are obvious over DiGiorgio in view of Burger.

  • Prior Art Relied Upon: DiGiorgio (Patent 6,385,729) and Burger (Application # 2002/0099665).
  • Core Argument for this Ground:
    • Prior Art Mapping: Petitioner argued that DiGiorgio and Burger collectively disclose all elements of the challenged claims. DiGiorgio taught a secure token system (e.g., a smart card) that connects to a host computer to access a remote Internet Service Provider (ISP) server via a two-way challenge-response authentication. Burger taught a portable "pocket vault" device that connects to a host computer via modern interfaces like USB or Bluetooth to authenticate a user (e.g., via fingerprint) and communicate with network servers. The combination of DiGiorgio's authentication architecture with Burger's more advanced portable device and interface technology allegedly rendered the claimed invention obvious.
    • Motivation to Combine: A POSITA would combine these references because they are in the same field of art—interfacing portable devices with computers for secure network access. Specific motivations included:
      • Incorporating Burger’s modern USB and Bluetooth interfaces into DiGiorgio’s system to provide wider compatibility and greater portability, a known market advantage.
      • Using Burger’s method of displaying user prompts (e.g., for a PIN) on the terminal’s main display, which offered a more user-friendly and conventional experience than implied by DiGiorgio.
      • The systems were naturally compatible, as both were designed to work with industry-standard smartcards (ISO-7816).
    • Expectation of Success: A POSITA would have had a high expectation of success because the combination relied on integrating components using well-established, proven industry standards for both hardware interfaces (USB) and smart card protocols.

Ground 2: Obviousness over DiGiorgio, Burger, and Shmueli - Claim 79 is obvious over DiGiorgio in view of Burger and further in view of Shmueli.

  • Prior Art Relied Upon: DiGiorgio (Patent 6,385,729), Burger (Application # 2002/0099665), and Shmueli (Application # 2002/0147912).
  • Core Argument for this Ground:
    • Prior Art Mapping: This ground specifically addressed claim 79, which requires providing the terminal processor with access to program code stored on the portable device. While DiGiorgio and Burger taught the overall system, Petitioner argued Shmueli was needed to explicitly teach this "plug-and-play" functionality. Shmueli disclosed a USB key containing software (e.g., Java applets) that is automatically executed by the host terminal's processor upon connection. This supplied the missing element of the terminal executing code provided by and stored on the portable device.
    • Motivation to Combine: A POSITA would combine Shmueli’s plug-and-play capability with the DiGiorgio/Burger system to enhance portability. This would allow the secure device to function on any generic terminal, even one without pre-installed drivers or APIs, by carrying the necessary software with it.
    • Expectation of Success: Success was expected because Java was a well-known platform-independent language and USB auto-run functionality was a common feature at the time.

Ground 3: Obviousness over DiGiorgio, Burger, and Cannata - Claims 66 and 115 are obvious over DiGiorgio in view of Burger and further in view of Cannata.

  • Prior Art Relied Upon: DiGiorgio (Patent 6,385,729), Burger (Application # 2002/0099665), and Cannata (Patent 6,917,962).
  • Core Argument for this Ground:
    • Prior Art Mapping: This ground targeted claims requiring the transmission of a "live data feed." The ’703 patent specification identified a "stock ticker" as an example of such a feed. The primary combination of DiGiorgio and Burger taught secure access to network resources but did not explicitly disclose a live data feed. Cannata was introduced because it disclosed a system that displays current stock prices on a terminal, directly teaching the claimed live data feed.
    • Motivation to Combine: A POSITA would combine Cannata's teachings with the DiGiorgio/Burger system because accessing live financial data was precisely the type of secure online application that the portable devices of DiGiorgio and Burger were designed to enable.
    • Expectation of Success: A POSITA would have readily expected success in integrating a live data feature into a secure access system, as this was a straightforward application of known network technologies.

4. Key Claim Construction Positions

  • "[first/second/third] program code": Petitioner argued that these numbered "program code" limitations should not be construed to require separate and distinct blocks of code. Instead, a POSITA would understand them as shorthand for referring to specific functions. Therefore, a single executable file, routine, or block of code in the prior art could perform more than one of the recited functions and thus satisfy multiple claim limitations simultaneously. This interpretation was central to Petitioner's obviousness arguments, as the prior art often described a single software module performing several related functions claimed separately in the ’703 patent.

5. Arguments Regarding Discretionary Denial

  • Petitioner argued that discretionary denial would be inappropriate. The petition was filed close to the statutory bar date because the Patent Owner initially asserted 96 claims in district court, and Petitioner acted diligently once the asserted claims were narrowed to a manageable number.
  • Petitioner further contended that its petition was "starkly different" from an IPR filed by another party (Ingenico), as Petitioner's grounds relied on USB and card reader prior art, while the other party's relied on digital camera art.
  • Finally, it was argued that the co-pending district court case was in its early stages, with a Markman hearing still five months away and trial not scheduled for more than a year, ensuring that an IPR would resolve validity issues efficiently and well before trial.

6. Relief Requested

  • Petitioner requests institution of an inter partes review (IPR) and cancellation of claims 55-72, 74-75, 77-79, 81-87, 89-90, 92-98, 100-101, 103-121, 123-124, and 126-129 of the ’703 patent as unpatentable.