PTAB

IPR2020-00502

Samsung Electronics Co Ltd v. Dynamics Inc

Key Events

Petition

petition Intelligence

Title: Cards and Devices with Multifunction Magnetic Emulators and Methods for Using Same
Brief Description: The ’100 patent relates to devices, including portable telephonic devices, that use a magnetic emulator circuit to wirelessly transmit payment card data to a conventional magnetic stripe reader. The claimed invention includes communicating this data while the device is located outside of and at a distance from the reader's read-head.

Prior Art Relied Upon: Moullette (7,114,652).
Core Argument for this Ground:
- Prior Art Mapping: Petitioner argued that Moullette discloses all limitations of the challenged claims. Moullette teaches an adaptor device comprising a circuit with inductors (an outer coil and an inner coil) controlled by an interface processor. This circuit generates magnetic fields to couple with and transmit data to the read-heads of a magnetic stripe reader. Crucially, Petitioner asserted that Moullette explicitly teaches its adaptor is "positioned external to the reader device" and generates a magnetic field of sufficient power to couple with the reader's head "through the housing of the reader device." Based on the dimensions provided in Moullette for its components (e.g., a 1/8" thick ferrite core) and the known thickness of reader housings, a POSITA would have understood this communication occurs at a distance of at least a quarter of an inch.
- Motivation to Combine (for §103 grounds): Not applicable, as this ground relies on a single reference.
- Expectation of Success (for §103 grounds): Not applicable.

Prior Art Relied Upon: Zellner (7,097,108), Moullette (7,114,652).
Core Argument for this Ground:
- Prior Art Mapping: Petitioner contended that Zellner discloses a portable electronic device, such as a PDA or cell phone, that can "emulate the magnetic stripe information that would be provided by the credit card." Zellner’s device includes a processor and a "dynamic magnetic encoder" to interface with credit card readers. Zellner further discloses features like a display, a touch-screen, and the ability to show a "full size image of a credit card" (a virtual card). While Zellner teaches the core device, Moullette provides the specific implementation details for wirelessly communicating with a magnetic stripe reader from outside its housing.
- Motivation to Combine (for §103 grounds): A POSITA would combine Moullette’s specific inductor-based external communication technology with Zellner’s portable device concept. The motivation was to enable a personal device like a cell phone to communicate directly with legacy payment terminals, thereby avoiding the need for an intermediary adaptor like the one described in Moullette.
- Expectation of Success (for §103 grounds): A POSITA would have a high expectation of success because magnetic emulation using inductors was well-known, and Moullette’s powerful external-transmission circuit was directly applicable to implementing the "dynamic magnetic encoder" generally described in Zellner.

Prior Art Relied Upon: Doughty (2006/0161789).
Core Argument for this Ground:
- Prior Art Mapping: Petitioner argued that Doughty discloses a "user device," such as a PDA or telecommunications device, that includes a magnetic field generator with an induction coil and a processor. The processor controls the coil to create a time-varying magnetic signal that emulates a programmable magnetic stripe, thereby transmitting data to a magnetic card reader. Petitioner asserted that because Doughty’s device is a PDA, it would operate outside the payment terminal. Doughty further explains its induction coil is designed to be in the "physical proximity" of the reader heads for the entire transmission period, which inherently teaches communication from a distance.
- Motivation to Combine (for §103 grounds): Not applicable, as this ground relies on a single reference.
- Expectation of Success (for §103 grounds): Not applicable.
Additional Grounds: Petitioner asserted additional obviousness challenges, including claims 9 and 11 being obvious over Moullette in view of Poidomani (2007/0034700) for teaching parallel data transmission, and various other combinations of Doughty, Zellner, Moullette, and Poidomani to challenge the full scope of claims 1-20.

Petitioner stated that no claim terms required construction to resolve the prior art issues. However, to resolve disputes in a related ITC case, the parties had proposed constructions for the following terms:
- "operable to emit an electromagnetic field and to electrically couple to, and transmit data to, a read-head located on a magnetic stripe reader": Petitioner argued this required both coupling and data transmission, while Patent Owner’s construction only required a field that couples and transmits data. Petitioner contended the prior art met either construction.
- "a virtual card": Petitioner proposed "an image of a payment card," while Patent Owner proposed "a visual representation of a card." Petitioner argued the prior art disclosed both.

Petitioner argued that the Board should not exercise its discretion to deny institution under 35 U.S.C. §325(d). Although the asserted prior art references (Doughty, Moullette, Zellner, and Poidomani) were cited in an Information Disclosure Statement (IDS) during prosecution, they were "buried" among over 340 other references. Petitioner contended that the Examiner never substantively reviewed or discussed Doughty, Moullette, or Zellner. While Poidomani was cited in one rejection, the claim was subsequently cancelled, and Poidomani was never applied to the issued claims. Therefore, the specific combinations and arguments presented in the petition were never before the Examiner, making the asserted art materially different and not cumulative of the art evaluated during prosecution.

Petitioner requests institution of an inter partes review and cancellation of claims 1-20 of the ’100 patent as unpatentable under 35 U.S.C. §103.