PTAB

IPR2019-01629

Square Inc v. 4361423 Canada Inc

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Petition
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1. Case Identification

2. Patent Overview

  • Title: Apparatus and Method for Commercial Transactions Using a Communication Device
  • Brief Description: The ’084 patent relates to a system for transferring credit card information in a mobile environment. It discloses a card reader that provides data from a transaction card to a mobile phone, which then transmits the information over a network to a transaction server for processing.

3. Grounds for Unpatentability

Ground 1: Obviousness over Proctor, Vrotsos, and Hasumi - Claims 1-8 are obvious over Proctor in view of Vrotsos and Hasumi under 35 U.S.C. §103.

  • Prior Art Relied Upon: Proctor (Application # 2002/0091633), Vrotsos (Application # 2005/0236480), and Hasumi (Application # 2004/0059682).
  • Core Argument for this Ground:
    • Prior Art Mapping: Petitioner argued that Proctor disclosed the core system of the challenged claims: a portable card reader terminal that connects to a mobile phone’s hands-free jack. Proctor's terminal reads a credit card (magnetic stripe or memory chip), converts the data into a "modulated tonal pattern" (an analog audio signal), and transmits this signal through the jack to the phone for relay to a remote verification server. To the extent Proctor was silent on specific internal circuitry, Petitioner asserted that Vrotsos supplied the teaching of using a processor within a reader attachment to control operations and, critically, to encrypt card information before transmission. To address smart card limitations, Petitioner argued Hasumi taught the use of contactless Integrated Circuit (IC) cards that transmit information as an encrypted analog signal, a known alternative to the memory chip card disclosed in Proctor.
    • Motivation to Combine: A Person of Ordinary Skill in the Art (POSITA) would combine Proctor with Vrotsos to add well-known processor control and essential security features like encryption, which were standard for financial transactions. A POSITA would combine Proctor’s system with the teachings of Hasumi to provide the known commercial benefit of supporting contactless payment, which was a well-established and desirable alternative card technology.
    • Expectation of Success: Petitioner contended that a POSITA would have a reasonable expectation of success. The proposed modifications involved implementing staple components (processors) and applying conventional techniques (encryption, contactless reading) to a known system to achieve predictable results.

Ground 2: Obviousness over Bear, Landman, and Colnot - Claims 1-8 are obvious over Bear in view of Landman and Colnot under §103.

  • Prior Art Relied Upon: Bear (Application # 2006/0032905), Landman (WO 01/86599), and Colnot (Application # 2007/0067833).
  • Core Argument for this Ground:
    • Prior Art Mapping: Petitioner asserted that Bear disclosed a base system where a smart card device reads a card and transmits data to a cellular phone using "audio tones" via an "ear-phone-speaker interface" for processing by a remote server. Petitioner argued that Landman supplemented Bear's general disclosure by explicitly teaching the use of contactless smart cards containing an integrated circuit and an internal encryption/decryption unit to secure the transmitted data. Furthermore, Petitioner argued Colnot supplemented Bear’s generic "ear-phone-speaker interface" by teaching a specific, common hardware implementation: a smart card device with a standard tip/ring/sleeve (TRS) plug designed to connect to a mobile host's hands-free/headset jack and transmit a modulated sound signal.
    • Motivation to Combine: A POSITA would combine Bear with Landman to incorporate the known security benefits of encryption and the consumer convenience of contactless technology into Bear's transaction system. A POSITA would also have been motivated to implement Colnot's standard TRS plug interface into Bear's system to improve its compatibility and usefulness, making it interoperable with a wide range of existing consumer devices that featured standard hands-free jacks.
    • Expectation of Success: Petitioner argued that success was expected, as implementing contactless readers, data encryption, and standard TRS plug interfaces were all well-documented technologies. A POSITA would have found it a matter of routine experimentation to integrate these known elements to achieve the claimed system.

4. Relief Requested

  • Petitioner requests institution of an inter partes review (IPR) and cancellation of claims 1-8 of Patent 9,269,084 as unpatentable.