PTAB

IPR2023-00921

Askeladden LLC v. OHVA Inc

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1. Case Identification

2. Patent Overview

  • Title: Methods and Apparatus for Enabling Secure Network-Based Transactions
  • Brief Description: The ’286 patent discloses a system for processing financial transactions using a portable card reader that connects to a smart telephone’s microphone port. The card reader transmits transaction data as an analog audio signal, which the smart telephone converts to digital data and sends to an internet-connected server to complete the transaction.

3. Key Technical Contentions (Beyond Claim Construction)

  • Priority Date Dispute: A central contention of the petition is that the ’286 patent is not entitled to the priority date of its parent applications and is limited to its March 3, 2015, filing date. Petitioner argued that the key claim limitations related to a "smart telephone" executing coded instructions for data conversion and server communication constitute new matter not supported by the specifications of the earlier applications. The prosecution history, including the Examiner's determination that the application was a continuation-in-part, was cited as evidence for this position, which makes the asserted prior art references available.

4. Grounds for Unpatentability

Ground 1: Obviousness over Cho, Aaron, and Carpenter - Claim 1

  • Prior Art Relied Upon: Cho (Patent 9,330,385), Aaron (Application # 2013/0185208), and Carpenter (Application # 2013/0124606).
  • Core Argument for this Ground:
    • Prior Art Mapping: Petitioner argued that Cho taught the core apparatus of claim 1: a card reader that accepts transaction data and connects to a smart telephone’s microphone port to transmit that data as an analog audio signal. Cho further disclosed that the smart telephone uses software executed by a processor to receive the analog signal, convert it to digital data, and communicate with a payment server to execute a transaction. Aaron was cited to provide additional, conventional detail on how a mobile device communicates with a payment service system over the internet to process and authorize transactions. Carpenter was used to teach the claimed limitation of "coded instructions stored in a non-transitory medium of a first Internet-connected server," arguing that Carpenter showed the well-known architecture of mobile applications being stored on and downloaded from server-based app stores.
    • Motivation to Combine: A POSITA would combine Cho and Aaron to implement the high-level server communication described in Cho using the conventional, detailed methods for internet-based payment processing taught by Aaron. A POSITA would then have been motivated to incorporate the teachings of Carpenter because both Cho and Aaron rely on a software application on the smart telephone, and Carpenter taught the standard, ubiquitous method for distributing such applications: making them available for download from a server-based app store.
    • Expectation of Success: Petitioner asserted a high expectation of success, as the combination involved integrating known solutions (Aaron's transaction processing and Carpenter's app distribution) with a known system (Cho's card reader) to achieve the predictable result of a functional mobile payment system.

Ground 2: Obviousness over Cho, Aaron, Carpenter, and de Geer - Claim 2

  • Prior Art Relied Upon: Cho (Patent 9,330,385), Aaron (Application # 2013/0185208), Carpenter (Application # 2013/0124606), and de Geer (Application # 2014/0008432).

  • Core Argument for this Ground:

    • Prior Art Mapping: This ground challenged dependent claim 2, which added the limitation of retrieving and using a card verification code (CVV). Petitioner argued that de Geer explicitly taught that information read from a payment card’s magnetic stripe includes discretionary data such as a CVV (also known as CVC, CSC, etc.). This data is read during a transaction to enhance security.
    • Motivation to Combine: A POSITA would combine de Geer with the base combination of Cho, Aaron, and Carpenter for the simple and known purpose of improving security. Since reading CVV data was a standard technique for authenticating credit cards, it would have been an obvious modification to include this capability in the card reader system of the primary combination to make it more robust and commercially viable.
    • Expectation of Success: The expectation of success was argued to be high because incorporating CVV data into the transaction stream was a routine and well-understood practice in the field of electronic payments.

  • Additional Grounds: Petitioner asserted that method claims 3 and 4 are obvious for substantially the same reasons as apparatus claims 1 and 2, respectively. Ground 3 alleged claim 3 is obvious over Cho and Aaron (omitting Carpenter as claim 3 does not recite instructions stored on a server). Ground 4 alleged claim 4 is obvious over Cho, Aaron, and de Geer (again omitting Carpenter).

5. Arguments Regarding Discretionary Denial

  • §325(d) Arguments: Petitioner argued against denial under 35 U.S.C. §325(d), stating that none of the asserted prior art references (Cho, Aaron, Carpenter, or de Geer) were previously considered by the Examiner during the prosecution of the ’286 patent.
  • §314(a) / Fintiv Arguments: Petitioner contended that discretionary denial under Fintiv would be inappropriate. The petition asserted that all Fintiv factors favor institution, highlighting that: (1) parallel litigations are in a very early stage with no trial dates set; (2) Petitioner is not a party to any of the parallel cases and has not coordinated with any defendants; and (3) the petition presents a particularly strong, compelling case for unpatentability on the merits, which, under the Director's Fintiv Guidance, weighs heavily in favor of institution.

6. Relief Requested

  • Petitioner requests the institution of an inter partes review and the cancellation of claims 1-4 of the ’286 patent as unpatentable.