PTAB

IPR2023-01186

CSC ServiceWorks Inc v. PayRange Inc

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Petition
petition

1. Case Identification

2. Patent Overview

  • Title: Mobile-Device-to-Machine Payment Systems
  • Brief Description: The ’045 patent describes systems and methods for facilitating cashless payments to a machine, such as a vending machine, using a mobile device. The system uses an adapter module on the machine that communicates with the mobile device via a short-range, non-persistent connection (e.g., Bluetooth), while the mobile device communicates with a remote payment server via a long-range connection (e.g., cellular).

3. Grounds for Unpatentability

Ground 1: Claims 1 and 18 are anticipated by or obvious over Low

  • Prior Art Relied Upon: Low (Patent 10,201,501).
  • Core Argument for this Ground:
    • Prior Art Mapping: Petitioner argued that Low discloses every element of independent claims 1 and 18. Low describes a system for wireless electronic payments to non-Internet connected machines using a user device like a smartphone. This system includes an "electronic payment module" (the claimed "adapter module") on a vending machine that communicates with the user device via short-range technology (e.g., Bluetooth). The user device then forwards an authorization request to a remote "payment provider server" using long-range technology. The server sends an authorization grant back to the user device, which forwards it to the payment module to dispense a product. Petitioner contended this process maps directly to the system and method steps recited in claims 1 and 18, respectively.

Ground 2: Claims 2-3 and 19-20 are obvious over Low in view of Skowronek

  • Prior Art Relied Upon: Low (Patent 10,201,501), Skowronek (Application # 2009/0106160).
  • Core Argument for this Ground:
    • Prior Art Mapping: Petitioner asserted that Low teaches the base system of claim 1, and Skowronek provides the motivation to add the security features recited in the dependent claims. Skowronek teaches a system for contactless payments where transaction information is encrypted for transmission between an unattended retail device, a mobile device, and a merchant processor. Critically, Skowronek taught that the encrypted packet of information could be undecipherable to the intermediary mobile device to prevent tampering. This combination, Petitioner argued, rendered obvious the limitations of using "security technology" to create a "secured authorization request" and "secured authorization grant" that are "undecipherable to the mobile device."
    • Motivation to Combine: A Person of Ordinary Skill in the Art (POSITA), starting with Low's system, would have been motivated to improve its security. While Low mentioned encryption, it lacked detail. A POSITA would have looked to analogous art like Skowronek for known techniques to secure payment information in a similar mobile-device-intermediated transaction system.
    • Expectation of Success: A POSITA would have had a high expectation of success because combining Skowronek’s well-understood encryption methods with Low's similar payment architecture was the application of a known technique to improve a known system, yielding the predictable result of enhanced security.

Ground 3: Claims 4-6 and 21-23 are obvious over Low in view of Freeny

  • Prior Art Relied Upon: Low (Patent 10,201,501), Freeny (Patent 8,958,846).

  • Core Argument for this Ground:

    • Prior Art Mapping: Petitioner argued that Freeny's teachings on proximity-based transactions would have made it obvious to modify Low's system. Freeny discloses activating services on a "proximity service unit" (e.g., a vending machine) based on a mobile device's distance. Freeny explicitly teaches using a "first proximity distance" to create an "authorization zone" where an authorization request is initiated, and a closer "second proximity distance" to create a "payment zone" where the transaction is approved. Petitioner contended this combination rendered obvious the limitations of an adapter module surrounded by payment and authorization zones and a "hands-free mode" where product dispensation occurs without user interaction with the mobile device.
    • Motivation to Combine: A POSITA would have been motivated to combine Freeny with Low to improve user convenience, a stated goal of Low. Since Low already identified machines based on proximity, implementing Freeny's automated, proximity-triggered transaction steps would have been a natural and obvious way to reduce the number of user interactions required.
    • Expectation of Success: A POSITA would have reasonably expected success in implementing Freeny's proximity-based methods in Low's system. Both patents address electronic payments for machines like vending machines, and applying proximity triggers to automate payment authorization is a straightforward modification to enhance user convenience.

  • Additional Grounds: Petitioner asserted additional obviousness challenges based on combinations of Low, Skowronek, Freeny, and Wilson (Patent 7,455,223), which teaches using a standard Multi-Drop Bus (MDB) interface for an in-line dongle adapter.

4. Arguments Regarding Discretionary Denial

  • Petitioner argued that discretionary denial under §314(a) based on the Fintiv factors would be inappropriate. The petition was filed only three months after the complaint in the parallel district court litigation, which was still in the pleading stage with no scheduling order entered. Petitioner contended that a Final Written Decision (FWD) from the PTAB would issue approximately one year before the anticipated trial date in the District of Delaware. Furthermore, Petitioner asserted that the presiding judge has a history of granting stays pending IPR and that Petitioner stipulated it would not pursue the same grounds or any grounds that could have reasonably been raised in the petition in the parallel district court proceeding if the IPR is instituted.

5. Relief Requested

  • Petitioner requests institution of an inter partes review and cancellation of claims 1-26 of the ’045 patent as unpatentable.