Apple Inc v. CardWare Inc

1. Case Identification

• Case #: IPR2025-01148
• Patent #: 10,810,579
• Filed: June 20, 2025
• Petitioner(s): Apple Inc.
• Patent Owner(s): Cardware Inc.
• Challenged Claims: 1-23

2. Patent Overview

• Title: Systems and Methods for Smart Tokenizing Payment Cards and Devices
• Brief Description: The ’579 patent discloses systems for emulating a standard credit card on an electronic device. The technology involves generating limited-use payment information, such as a temporary credit card number or a dynamic cryptogram, to conduct secure transactions via Near Field Communications (NFC) or by generating a programmed magnetic field.

3. Grounds for Unpatentability

Ground 1: Obviousness over Collinge, Lin, and Phillips - Claims 1-3, 7, 10-12, 19-20, and 23 are obvious over Collinge in view of Lin and Phillips.

• Prior Art Relied Upon: Collinge (Application # 2013/0262317), Lin (WO 2010/039337), and Phillips (Application # 2009/0307132).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner argued that Collinge taught the foundational method for a mobile NFC payment transaction, including priming a device via user input (e.g., a PIN), generating a limited-use payment cryptogram (a dynamic CVC3) valid for a single transaction, and transmitting it via NFC. However, Collinge lacked specifics on the user interface for card selection and the initiation of the NFC handshake. Petitioner asserted Lin taught a POS terminal initiating the transaction by sending a payment request to the mobile device via NFC. Phillips was alleged to teach a "virtual wallet" user interface that displays images of payment cards, including card logos, iconography, and the last four digits of the account number, to allow a user to select among multiple cards.
  • Motivation to Combine: A POSITA would combine these references to create a more secure and user-friendly payment system. Combining Lin’s POS-initiated payment request would allow for verification of the transaction amount before payment and provide greater control over the session for security. Incorporating Phillips's virtual wallet interface would provide a familiar user experience, making it easier for users to select from multiple payment cards and reducing the risk of user error, a predictable improvement over Collinge's less-detailed interface.
  • Expectation of Success: A POSITA would have had a reasonable expectation of success, as combining a known virtual wallet UI and a standard NFC communication protocol with Collinge's payment system involved applying known techniques to a similar system to achieve predictable results.

Ground 2: Obviousness over Collinge, Phillips, Lin, and Kranzley - Claims 5-6 are obvious over Collinge in view of Phillips, Lin, and Kranzley.

• Prior Art Relied Upon: Collinge (Application # 2013/0262317), Phillips (Application # 2009/0307132), Lin (WO 2010/039337), and Kranzley (Application # 2010/0125509).
• Core Argument for this Ground:
  • Prior Art Mapping: This ground built upon the combination in Ground 1, adding Kranzley to teach the limitation of displaying the generated limited-use security number (i.e., the dynamic cryptogram) on the mobile device’s screen. Kranzley was cited for its teaching that a dynamic code (like a CVC) can be displayed on the device's display.
  • Motivation to Combine: Petitioner argued a POSITA would be motivated to add Kranzley's teaching to the Collinge system to increase its versatility. Displaying the dynamic code would allow the mobile device to be used in transactions where a CVC-type value must be provided to the point of sale, such as for manual entry in an online transaction, thereby expanding the usability of the mobile payment credentials.
  • Expectation of Success: The combination was presented as a predictable integration of known elements. Since Collinge’s device already generated the cryptogram and had a touchscreen, displaying that number would be a straightforward modification within the skill of a POSITA.

Ground 3: Obviousness over Collinge, Lin, Phillips, Smith, and Kranzley - Claims 4 and 21-22 are obvious over Collinge in view of Lin, Phillips, Smith, and Kranzley.

• Prior Art Relied Upon: Collinge (Application # 2013/0262317), Lin (WO 2010/039337), Phillips (Application # 2009/0307132), Smith (Application # 2010/0125508), and Kranzley (Application # 2010/0125509).

• Core Argument for this Ground:

  • Prior Art Mapping: This ground added the teachings of Smith to the prior combinations. Smith was alleged to teach using a device-specific, limited-use "mobile PAN" or "PPAN" (a device account number) in place of a card's actual Primary Account Number (PAN). This PPAN is mapped to the actual PAN by the payment network but is not the PAN itself. Petitioner argued for using Smith's PPAN as the "device account number" within Collinge's system.
  • Motivation to Combine: The primary motivation was to enhance security. Collinge’s system, which did not require a secure element, would be vulnerable if it stored the user’s actual PAN. A POSITA would have been motivated to replace the PAN in Collinge’s system with Smith's PPAN to avoid storing and transmitting the sensitive PAN, thereby reducing the risk of compromise and fraud. This was argued to be a known method for improving security in mobile payment systems.
  • Expectation of Success: Petitioner contended a POSITA would have expected success because both Collinge and Smith described MasterCard PayPass-compatible systems, and substituting one type of account identifier (PAN) with a more secure alternative (PPAN) was a known technique to achieve the predictable result of increased security.

• Additional Grounds: Petitioner asserted additional obviousness challenges based on combinations including Aabye (biometric authentication), Pisula (double-button press priming), and Fadell (fingerprint sensor integrated into a home button) to teach various user authentication and device priming methods.

4. Key Claim Construction Positions

• For the purpose of the IPR, Petitioner adopted the constructions proposed by the Patent Owner in underlying litigation for two terms:
  • "rejecting a limited-use number, by the payment processing authority, on at least one" was construed as "rejecting a limited-use number, by the payment processing authority, based on at least one".
  • "a device biometric sensing the electronic device is continuously remaining in the proximity contact of a valid user" was construed as "a device biometric sensing that the electronic device is continuously remaining in the proximity contact of a valid user".

5. Arguments Regarding Discretionary Denial

• Petitioner argued against discretionary denial under §325(d), noting that none of the asserted prior art references were cited or discussed during the original prosecution of the ’579 patent. Petitioner also reserved the right to address any discretionary denial issues raised by the Patent Owner pursuant to the Office's interim guidance.

6. Relief Requested

• Petitioner requests institution of an inter partes review and cancellation of claims 1-23 of Patent 10,810,579 as unpatentable under 35 U.S.C. §103.