Askeladden LLC v. AuthWallet LLC

1. Case Identification

• Case #: IPR2021-00005
• Patent #: 8,280,776
• Filed: October 1, 2020
• Petitioner(s): Askeladden L.L.C.
• Patent Owner(s): AuthWallet LLC
• Challenged Claims: 1-29

2. Patent Overview

• Title: System and Method for Using a Rules Module to Process Financial Transaction Data
• Brief Description: The ’776 patent discloses a transaction processing service that functions as an intermediary between transaction acquirers and issuing institutions. The service uses a rules module to apply predefined conditions to financial transaction data, enabling actions like sending transaction notifications to a user's mobile device for verification.

3. Grounds for Unpatentability

Ground 1: Anticipation over Hogg - Claims 1-3, 5, 7-14, 16-19, 20-23, 25, and 27-29 are unpatentable under 35 U.S.C. §102(b) as anticipated by Hogg.

• Prior Art Relied Upon: Hogg (Application # 2007/0119919).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner argued that Hogg, which describes a system for user-selected fraud detection rules, discloses every element of the challenged claims. Hogg’s system receives an authorization request containing a purchaser identifier (card number), transaction amount, and point-of-purchase information. The system determines a processing rule (“fraud indicator rules”) based on the purchaser identifier. When a rule is satisfied (a condition is met), an associated action is executed, which includes generating and transmitting a transaction indication message (an SMS message) to the purchaser's mobile device. This message contains information about the transaction and specifies a required response (confirmation), thus mapping to the limitations of independent claims 1, 11, and 21.
  • Key Aspects: Petitioner contended that Hogg’s disclosure of a “fraud check module” that obtains and applies “fraud indicator rules” to transaction parameters directly corresponds to the ’776 patent’s claimed method of determining, evaluating, and executing a processing rule.

Ground 2: Obviousness over Hogg in view of Giordano - Claims 4, 15, 24, and 27 are obvious over Hogg.

• Prior Art Relied Upon: Hogg (Application # 2007/0119919), Giordano (Application # 2006/0178986).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner asserted that while Hogg provides the foundational rule-based transaction processing system, Giordano teaches selecting an alternate payment instrument when an initial transaction is denied. Specifically, Giordano describes a system that helps users manage multiple payment methods and can automatically select an alternate payment option based on user preferences to avoid the embarrassment of a declined transaction. Combining Giordano’s teachings with Hogg’s system would result in a process where, if a transaction exceeds a certain amount (a condition taught by Hogg), the system executes an action of selecting an alternate payment instrument for authorization, as claimed.
  • Motivation to Combine: A POSITA would combine Hogg and Giordano to improve the user experience of Hogg’s system. Adding the ability to automatically select a different payment method upon denial is a known and desirable feature in the field of payment processing. Giordano explicitly highlights the benefit of avoiding customer embarrassment, providing a clear motivation to integrate this functionality into a transaction processing system like Hogg’s.
  • Expectation of Success: Petitioner argued that since both Hogg and Giordano operate in the same field of financial transaction processing and address analogous problems, a POSITA would have found it straightforward to integrate Giordano's rule-based payment selection into Hogg's existing rule-based framework with a reasonable expectation of success.

Ground 3: Obviousness over Hogg in view of Heffez - Claim 6 is obvious over Hogg.

• Prior Art Relied Upon: Hogg (Application # 2007/0119919), Heffez (Application # 2006/0237531).

• Core Argument for this Ground:

  • Prior Art Mapping: Petitioner argued that Hogg’s method could be modified with the teachings of Heffez to meet the limitations of claim 6. Claim 6 requires evaluating a processing rule by determining whether the purchaser's location differs from the point-of-purchase location. Heffez explicitly teaches a fraud detection method that compares the location of a point-of-sale (POS) terminal with the most recent cached location of the user's mobile phone. If the locations do not match in geographical proximity, an alert is generated.
  • Motivation to Combine: A POSITA would be motivated to incorporate Heffez’s location-comparison technique into Hogg’s fraud detection system to enhance its capabilities. This addition would allow the system to detect fraudulent transactions where a stolen card is used at a location different from the cardholder's actual location, a well-known fraud scenario. The ’776 patent itself concedes that using location as a transaction characteristic for fraud detection was known in the art.
  • Expectation of Success: Adding a location-based rule, as taught by Heffez, to the existing rule-based architecture of Hogg would have been a simple and predictable modification for a POSITA.

• Additional Grounds: Petitioner asserted an alternative obviousness challenge for claims 7, 20, and 28 over Hogg in view of admitted prior art in the ’776 patent regarding token presence detection. Petitioner also asserted an obviousness challenge for claim 26 over Hogg in view of Wehr (Application # 2006/0271431), which teaches applying processing rules only during specific, active time intervals.

4. Key Claim Construction Positions

• "Determining" / "Determine": Petitioner argued this term should be construed according to its plain and ordinary meaning of "identifying" or "ascertaining." This construction is central to how the system selects a processing rule to apply to a transaction.
• "Token": Petitioner asserted that the patentee acted as their own lexicographer, expressly defining "token" in the specification as a generic term for various means of providing identifying information, such as a magnetic stripe, RFID tag, or barcode. This construction is key to the arguments for claim 7.
• "Load": For claim 12, Petitioner proposed that "load" should be construed in the computer context to mean "to retrieve from storage (e.g., memory)." This is relevant to how the system accesses the processing rule corresponding to the purchaser identifier.

5. Relief Requested

• Petitioner requests institution of an inter partes review (IPR) and cancellation of claims 1-29 of the ’776 patent as unpatentable.