CSC ServiceWorks Inc v. PayRange Inc

1. Case Identification

• Case #: IPR2023-01187
• Patent #: 10,438,208
• Filed: July 17, 2023
• Petitioner(s): CSC ServiceWorks, Inc.
• Patent Owner(s): PayRange, Inc.
• Challenged Claims: 1-20

2. Patent Overview

• Title: Systems and Methods for Interacting with Unattended Machines Using Detectable Trigger Conditions and Limited-Scope Authorization Grants
• Brief Description: The ’208 patent describes systems for authorizing mobile payments at unattended retail machines, such as vending machines. The claimed invention involves a mobile device detecting its entry into a proximity-based "authorization zone," notifying an electronic payment device on the retail machine, and then preemptively requesting authorization for funds from a remote server before a user selects an item.

3. Grounds for Unpatentability

Ground 1: Claims 1-2, 5-13, and 16-18 are obvious over Freeny in view of Kou.

• Prior Art Relied Upon: Freeny (Patent 8,958,846) and Kou (Payment Technologies for E-Commerce, a 2003 textbook).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner asserted that Freeny discloses the foundational system for proximity-based mobile payments. Freeny teaches an "Advanced Wireless Authorization Unit" (AWAU)—an electronic payment device—coupled to an automatic retail machine (e.g., a vending machine). A user's mobile device automatically transmits a "request authorization code" when it enters a predetermined proximity of the AWAU, which defines an "authorization zone." Petitioner argued that while Freeny discloses the core architecture, it does not explicitly teach preemptively obtaining a grant of funds from a remote server before item selection. This alleged deficiency is addressed by Kou, which describes a "pre-authorization" scheme for micropayments to reduce transaction costs. In Kou's system, a payment service provider (PSP), acting as a server, authorizes customer payments up to a pre-defined limit for a specific merchant before a transaction is completed.
  • Motivation to Combine: A POSITA would combine Kou's pre-authorization teachings with Freeny's proximity-based system to solve the known inefficiency and high communication costs associated with micropayments, an issue Freeny acknowledges as "airtime cost." Kou's pre-authorization scheme was presented as a direct solution to reduce such costs in systems like Freeny's, which involve mobile devices and vending machines. This combination would predictably improve the efficiency of Freeny's system.
  • Expectation of Success: A POSITA would have had a reasonable expectation of success in this combination. It involved applying a known online payment technique (Kou's pre-authorization) to a known type of system (Freeny's proximity payment system) to achieve the predictable benefit of reduced communication costs and improved transaction efficiency.

Ground 2: Claims 3-4, 14-15, and 19-20 are obvious over Freeny and Kou, further in view of Canter.

• Prior Art Relied Upon: Freeny (Patent 8,958,846), Kou (a 2003 textbook), and Canter (Application # 2013/0054016).
• Core Argument for this Ground:
  • Prior Art Mapping: This ground builds on the Freeny/Kou combination to address dependent claims requiring user personalization features. Petitioner argued that Canter teaches methods for personalizing a user's experience at an unattended retail machine. Canter discloses that a user can designate a vending machine as a "favorite" by joining a discount or loyalty program, which involves sharing a user profile from their mobile device. For a "favorite" machine, Canter teaches that the system can automatically recognize the user upon approach, constituting a proximity-based trigger that does not require user input on the mobile app. For non-favorite machines, Canter describes authenticating a user via a "virtual button" on the mobile device's user interface, which constitutes a trigger condition corresponding to a predefined gesture.
  • Motivation to Combine: A POSITA would combine Canter's personalization features with the Freeny/Kou system to enhance the user experience and improve the profitability of a widespread vending machine network, a concept contemplated by both Freeny and Canter. Implementing features like "favorite" machines and tailored user interfaces was a known method for increasing user engagement and would have been a logical and predictable improvement to the base system.
  • Expectation of Success: The combination was asserted to be predictable, as it involved integrating known user-interface and personalization techniques (from Canter) into an existing mobile payment framework (from Freeny/Kou).

4. Arguments Regarding Discretionary Denial

• Petitioner argued that discretionary denial would be inappropriate for several reasons.
• Fintiv: Denial under Fintiv is not warranted because the parallel district court case is in the early pleading stages, and Petitioner stipulated that, if IPR is instituted, it will not pursue the same grounds or any that could have reasonably been raised in the parallel litigation.
• General Plastic: Denial is inappropriate because this is not a follow-on petition. The Petitioner, CSC, is a different entity from the petitioner in a prior Post-Grant Review (PGR2021-00084) of the ’208 patent and has no significant relationship with that prior petitioner.
• §325(d): Denial is not warranted because the prior art references central to this petition (Freeny, Kou, and Canter) were not considered by the Examiner during the original prosecution of the ’208 patent.

5. Relief Requested

• Petitioner requests the institution of an inter partes review and the cancellation of claims 1-20 of the ’208 patent as unpatentable.