KioSoft Technologies LLC v. PayRange Inc

1. Case Identification

• Case #: IPR2021-00086
• Patent #: 9,659,296
• Filed: October 20, 2020
• Petitioner(s): Kiosoft Technologies, LLC; Techtrex, Inc
• Patent Owner(s): Payrange, Inc.
• Challenged Claims: 1-23

2. Patent Overview

• Title: Method and System for Presenting Representations of Payment Accepting Unit Events
• Brief Description: The ’296 patent relates to a mobile-device-to-machine payment processing system that operates over a non-persistent network connection, allowing a user to transact with a payment accepting unit, such as a vending machine, using a mobile device.

3. Grounds for Unpatentability

Ground 1: Obviousness over Athwal - Claims 1-7, 9, and 11-23 are obvious under 35 U.S.C. §103 over Athwal.

• Prior Art Relied Upon: Athwal (Application # 2003/0130902).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner argued that Athwal disclosed a system where a user's "Mobile Communication Device" (MCD), such as a mobile phone or PDA, uses specialized software to communicate wirelessly with nearby "Electronic Retail Sales" (ERS) devices, including vending machines. Athwal’s system enabled a user to search for available ERS devices, view products and prices on the MCD's user interface, select a product, and submit payment. This disclosure was alleged to teach the core limitations of the challenged claims, including executing a mobile payment application to identify a proximate vending machine, establishing a wireless connection, displaying an interface to trigger payment, and exchanging transaction-related notifications.
  • Motivation to Combine (for §103 grounds): As this ground relied on a single reference, Petitioner contended that Athwal taught all elements or, for any minor gaps, a person of ordinary skill in the art (POSITA) would have found it obvious to implement them using known design choices to achieve predictable results, such as displaying all communications on the disclosed graphical interface.
  • Expectation of Success (for §103 grounds): Petitioner asserted that any modifications to Athwal’s system would involve the use of conventional elements in a predictable manner.

Ground 2: Obviousness over Cameron - Claims 1-23 are obvious over Cameron alone.

• Prior Art Relied Upon: Cameron (Patent 8,903,737).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner asserted that Cameron disclosed a mobile payment system where a mobile phone with a wireless modem becomes the user interface for a vending machine. Cameron described that when a user walks by a vending machine, a drink list with prices would automatically appear on the phone's display. The user could then select a drink and enter a password to complete the purchase. Petitioner mapped this functionality to the claimed steps of automatically identifying a nearby machine, displaying an interface for payment, accepting user input, and completing a transaction. Cameron’s disclosure of using Bluetooth or other wireless technologies was argued to teach the claimed wireless communication.
  • Motivation to Combine (for §103 grounds): This ground was based on a single reference. Petitioner argued Cameron taught all claimed features or rendered them obvious, asserting that a POSITA would understand that implementing the disclosed system would inherently require elements like processors and memory and that displaying transaction notifications would be an obvious design choice.
  • Expectation of Success (for §103 grounds): Petitioner contended that a POSITA would have had a high expectation of success in implementing Cameron's system using well-known mobile device components and software design principles.

Ground 3: Obviousness over Athwal and Arora - Claims 8 and 10 are obvious over Athwal in view of Arora.

• Prior Art Relied Upon: Athwal (Application # 2003/0130902), Arora (Patent 9,898,884).
• Core Argument for this Ground:
  • Prior Art Mapping: This ground used Athwal as the primary reference for the base mobile payment system and added Arora to teach the specific limitations of claims 8 and 10. For claim 8, which required using an accelerometer to determine if a user is walking away and then canceling the connection, Petitioner pointed to Arora’s disclosure of using an accelerometer to detect a user's location. For claim 10, which required receiving a targeted coupon, Petitioner cited Arora’s disclosure of providing coupons to a user's mobile device.
  • Motivation to Combine (for §103 grounds): Petitioner argued a POSITA would combine Arora's features into Athwal's system to improve it. Since Athwal's system relied on short-range connections like Bluetooth, adding Arora's accelerometer would provide a more robust method to cancel transactions when a user moves out of range. Similarly, incorporating Arora's coupons into Athwal's system would be a logical and well-known business practice to achieve Athwal's goal of providing sales offers to customers.
  • Expectation of Success (for §103 grounds): Petitioner argued that incorporating known technologies like accelerometers and digital coupons into a mobile payment system was a straightforward application of conventional methods to achieve the predictable result of an enhanced user experience.
• Additional Grounds: Petitioner asserted an additional obviousness challenge for claims 8 and 10 over Cameron in view of Arora, relying on a similar motivation to add Arora's accelerometer and coupon features to Cameron's base system.

4. Key Claim Construction Positions

• "Payment Module": Petitioner contended this term should be understood as a hardware component that provides wireless capability to a vending machine for the purpose of receiving payment from a mobile device. This construction was deemed critical as it clarified that the "module" is the wireless hardware enabling the transaction, which Petitioner argued was disclosed by the prior art's description of wireless transceivers (e.g., Bluetooth chips) in vending machines.

5. Arguments Regarding Discretionary Denial

• §314(a) / Fintiv Factors: Petitioner argued against discretionary denial, asserting that the parallel district court litigation was in its early stages with no claim construction or significant discovery completed. It was also noted that the trial date of July 19, 2021 was uncertain due to court backlogs from the COVID-19 pandemic. Petitioner claimed the overlap between issues was minimal, as several challenged claims were not asserted in the litigation, and that the merits of the petition were strong.
• §325(d) Factors: Petitioner argued that denial under §325(d) would be improper because none of the asserted prior art references (Athwal, Cameron, Arora) were considered by the Patent Office during the original prosecution of the ’296 patent. Therefore, the arguments presented in the petition were not cumulative to those previously evaluated by the examiner. Petitioner contended that these new references disclosed limitations the applicant had added to overcome prior art during prosecution, suggesting the examiner erred in allowing the claims.

6. Relief Requested

• Petitioner requests institution of an inter partes review and cancellation of claims 1-23 of Patent 9,659,296 as unpatentable.