PTAB

IPR2019-01630

Square Inc v. 4361423 Canada Inc

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Key Events
Petition
petition

1. Case Identification

2. Patent Overview

  • Title: Apparatus and Method for Commercial Transactions Using a Communication Device
  • Brief Description: The ’084 patent discloses a system for conducting mobile financial transactions. The system comprises a portable card reader that captures transaction card data, converts it into an audio signal, and transmits it via an audio jack to a mobile communication device, which then forwards the information over a network to a remote server for processing.

3. Grounds for Unpatentability

Ground 1: Claims 1-8 are obvious over Proctor in view of Morley and Hasumi

  • Prior Art Relied Upon: Proctor (Application # 2002/0091633), Morley (Patent 7,896,248), and Hasumi (Application # 2004/0059682).
  • Core Argument for this Ground:
    • Prior Art Mapping: Petitioner argued that the combination of references teaches every limitation of the challenged claims. Proctor disclosed the foundational system: a portable card reader terminal connected to a mobile phone's hands-free jack to transmit transaction data as a modulated audio signal to a remote verification facility. While Proctor described the system's function, Morley supplied the specific internal hardware implementation, teaching the use of circuitry (e.g., a microcontroller) to process data read from a card and modulate it into an analog waveform suitable for output via a headset jack. Finally, Hasumi addressed the encryption limitation by teaching a system where data read from a contactless IC card is transmitted as an encrypted analog signal to ensure security. The combination of Proctor’s overall architecture, Morley’s internal processing circuitry, and Hasumi’s encryption method renders the claims obvious.
    • Motivation to Combine: A Person of Ordinary Skill in the Art (POSITA) would have been motivated to improve Proctor’s system, which was silent on its internal circuitry, by implementing the known microprocessor-based processing techniques taught by Morley. This combination represented the application of a known technique to a known device to achieve the predictable result of a functional card reader. A POSITA would have also been motivated to incorporate Hasumi’s teachings to support contactless IC cards and add encryption, as securing wireless financial data was a well-understood need and benefit in the art.
    • Expectation of Success: Petitioner asserted that because the proposed modifications involved combining well-known, staple components for their recognized purposes (e.g., using microprocessors for signal processing, using encryption for security), a POSITA would have had a reasonable expectation of successfully creating the claimed invention.

4. Key Technical Contentions (Beyond Claim Construction)

  • Deficient Priority Claim: Petitioner dedicated a substantial portion of the petition to arguing that the ’084 patent is not entitled to the February 10, 2009, filing date of its provisional application (the “Tang Provisional”). This argument is critical because it establishes an earlier cutoff date for what constitutes prior art against the challenged claims. The argument was based on an alleged failure of the Tang Provisional to provide adequate written description support for several key claim limitations, including:
    • The specific function of “converting said encrypted analog signal to a format suitable for transmission to a hands-free jack,” which Petitioner argued was never described or suggested in the provisional.
    • The claimed “hands-free jack,” as the Tang Provisional only described and depicted a visually and technically distinct RJ-type phone jack. Petitioner argued that the patent owner had effectively disavowed support for a "hands-free jack" during prosecution of a related patent by amending claims to remove the term in response to a rejection.
    • The “encrypted analog signal,” as the Tang Provisional allegedly failed to describe the characteristics of the signal generated from a smart card reader in any detail.

5. Relief Requested

  • Petitioner requests institution of an inter partes review (IPR) and cancellation of claims 1-8 of the ’084 patent as unpatentable under 35 U.S.C. §103.