DYNAMICS INC.

Patent Trials and Appeals Board

Aug 10, 2021

IPR2020-00499 (P.T.A.B. Aug. 10, 2021)

Trials@uspto.gov Paper No. 63
571.272.7822 Filed: August 10, 2021

UNITED STATES PATENT AND TRADEMARK OFFICE
_______________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
_______________

SAMSUNG ELECTRONICS CO., LTD., SAMSUNG ELECTRONICS
AMERICA, INC., SAMSUNG RESEARCH AMERICA, INC.,
Petitioner,

v.

DYNAMICS INC.,
Patent Owner.
_______________

IPR2020-00499
Patent 8,827,153
_______________

Before TREVOR M. JEFFERSON, GEORGIANNA W. BRADEN, and
JON M. JURGOVAN, Administrative Patent Judges.

BRADEN, Administrative Patent Judge.

JUDGMENT
Final Written Decision
Determining No Challenged Claims Unpatentable
35 U.S.C. § 318(a)

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We have jurisdiction to hear this inter partes review under 35 U.S.C.
§ 6, and this Final Written Decision is issued pursuant to 35 U.S.C. § 318(a).
For the reasons that follow, we determine Petitioner has not shown by a
preponderance of the evidence that claims 1 and 5–8 of U.S. Patent
No. 8,827,153 B2 are unpatentable.
I. INTRODUCTION AND BACKGROUND
A. Procedural History
Samsung Electronics Co., Ltd., Samsung Electronics America, Inc.,
and Samsung Research America, Inc. (collectively “Petitioner”) filed a
Petition requesting an inter partes review of claims 1 and 5–8 of U.S. Patent
No. 8, 827,153 B2 (Ex. 1001, “the ’153 patent”). Paper 1 (“Pet.”).
Dynamics Inc. (“Patent Owner”) timely filed a Preliminary Response.
Paper 8 (“Prelim. Resp.”).
After institution of trial, Patent Owner filed a Patent Owner Response
(Paper 48, “PO Resp.”), to which Petitioner filed a Reply (Paper 51, “Pet.
Reply”). Patent Owner then filed a redacted Sur-Reply (Paper 53, “PO Sur-
Reply”).
An oral argument was held on May 12, 2021. A transcript of the oral
argument is included in the record. Paper 61 (“Tr.”).
B. Real Parties-in-Interest
Petitioner identifies itself (Samsung Electronics Co., Ltd., Samsung
Electronics America, Inc., and Samsung Research America, Inc.) as the real
parties-in-interest pursuant to 37 C.F.R. § 42.8. Pet. 62. Patent Owner
identifies only itself as the real party-in-interest pursuant to 37 C.F.R. § 42.8.
Paper 6, 1. There is no dispute regarding the identification of the real parties-
in-interest.
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C. Related Matters
Petitioner informs us of one pending district court proceeding based on
the ’153 patent that involves Petitioner, Dynamics Inc. v. Samsung Elecs.
Co., Ltd. et al., Case No. 1:19-cv-6479 (S.D.N.Y.), filed July 12, 2019, which
was stayed on September 4, 2019. Pet. 62. Petitioner also informs us of one
proceeding pending before the International Trade Commission (“ITC”), In
re Certain Mobile Devices With Multifunction Emulators, Inv. No. 337-TA-
1170 (U.S.I.T.C.), filed July 12, 2019. Id. Petitioner further informs us of
concurrently filed IPR petitions for three other patents asserted in the above-
referenced District Court and ITC cases. Id.
Patent Owner informs us of the same pending proceedings listed
above. Paper 6 (Patent Owner’s Mandatory Notice), 2–3.
D. The ’153 Patent
The ’153 patent was filed on July 17, 2012, issued on September 9,
2014, and is titled “Systems and Methods for Waveform Generation for
Dynamic Magnetic Stripe Communications Devices.” Ex. 1001, codes (22),
(45), (54).
1. Written Description
The ’153 patent relates to “[d]ynamic magnetic stripe communications
devices” capable of communicating with payment terminals for carrying out
purchase transactions without having to be in physical contact with the
payment terminals through the use of magnetic emulation, rather than using
data found on the magnetic stripe of payment cards. Ex. 1001, Abstract.
According to the ’153 patent, a dynamic magnetic communication device
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includes two main components: (a) a magnetic emulator; and (b) a waveform
generator. Id. at claim 1.
The ’153 patent discloses that a magnetic emulator is a device that
emulates the magnetic stripe of a traditional payment card. Ex. 1001,
1:22–37. By “emulating” a magnetic stripe, the magnetic stripe emulator is
capable of interfacing with a magnetic stripe reader of a payment terminal.
Id. According to the ’153 patent, the magnetic stripe emulator can be “an
inductor (e.g., a coil)” that “[c]urrent may be provided through . . . to create
an electromagnetic field operable to communicate with the read-head of a
magnetic stripe reader.” Id., 2:14–18.
The ’153 patent describes one embodiment of a card with a magnetic
stripe emulator, which is illustrated in Figure 1, reproduced below.

Figure 1 “is an illustration of a card constructed in accordance with the
principles of the present invention.” Ex. 1001, 4:40–41. The ’153 patent
discloses that card 100 may include button 149. Id. at 5:46. According to
the ’153 patent, button 149 may be used to communicate a waveform via
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waveform generator 124 through dynamic magnetic stripe communications
device 102 indicative of a user’s desire to communicate a single track of
magnetic stripe information. Ex. 1001, 5:46–50.
The ’153 patent describes another embodiment of a card with a
magnetic stripe emulator, which is illustrated in Figure 2, reproduced below.

Figure. 2 is an illustration of a card, which may include component 202 (e.g.,
an ASIC, a mixed-signal FPGA, a data acquisition microcontroller or system
on a chip), processor 218, and dynamic magnetic stripe communications
device 216. Id. at 8:21–24. Component 202 may include, for example,
memory 204, symbol processor 206, DAC 208, clock generator 210,
filter 212, amplifier 214, and waveform processor 222. Id. at 8:24–27.
The ’153 patent further discloses that waveform generator 222
retrieves data from memory and allows the device to generate waveforms
from the retrieved data to be communicated by the magnetic stripe emulator
and received by a magnetic stripe reader. Id. at Abstract, 2:18–22. The ’153
patent discloses that the format of that retrieved data is similar to the format
of data that is stored in a traditional payment card (e.g., “at least one track of
magnetic stripe data”). Id. at 2:18–22. The ’153 patent explains that the
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waveform generator “may fluctuate the amount of current travelling through
the coil such that one or more tracks of magnetic stripe data encoded within
the analog waveform may be communicated to a read-head of a magnetic
stripe reader.” Id. The ’153 patent teaches that the analog waveform is
generated from “a numeric (e.g., digital) representation of a waveform (e.g.,
an F2F encoded waveform) [that] may be stored within a memory of a card”
(id. at 2:23–25), and then provided to the magnetic emulator, which outputs a
magnetic field corresponding to the analog waveform (id. at 1:28–29,
2:14–18). According to the ’153 patent, the card may also have a digital to
analog converter (or DAC) that converts the digital waveform from the
memory into an analog waveform. Id. at 2:40–46. The ’153 patent teaches
that the analog waveform is “amplified and filtered before being provided to
a coil of a magnetic emulator,” which produces the magnetic field to be read
by the magnetic card reader. Id. at 2:44–46; see id. at 1:28–29, 2:14–18.
The ’153 patent teaches that “[d]ifferent waveforms may be recalled
from memory based upon a detected mode of operation by a processor of a
card.” Id. at 3:27–28. In one example in the ’153 patent, “a processor of a
card may detect a presence of a dual-head magnetic stripe reader and may
further detect a direction that the card is being swiped through the dual-head
magnetic stripe reader.” Id. at 3:29–32. According to the ’153 patent, “a
processor or other device on the card may recall a waveform from a memory
of the card that corresponds to a forward swipe direction and may
communicate a forward-swipe waveform when a forward swipe direction is
detected.” Id. at 3:32–36. Another example in the ’153 patent teaches that “a
processor or other device on the card may recall a waveform from a memory
of the card that corresponds to a reverse swipe direction and may
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communicate a reverse-swipe waveform when a reverse swipe direction is
detected.” Id. at 3:36–40. As per another example in the ’153 patent, “each
digital waveform stored within a memory of a card may contain the same
magnetic stripe information, but may exhibit different characteristics when
communicated to a read-head of a magnetic stripe reader.” Id. at 3:41–45.
The ’153 patent also teaches that “[e]ach digital waveform stored
within memory 204 may be indicative of the same, or different, magnetic
stripe information.” Id. at 8:63–65, Fig. 2. In one example in the ’153
patent, “a first waveform stored within memory 204 may, for example, be
representative of a first track of magnetic stripe information that may be
communicated by dynamic magnetic stripe communications device 216.” Id.
at 8:65–9:1. According to the ’153 patent, “[d]igital waveforms stored within
memory 204 may, for example, represent the same magnetic stripe
information, but may exhibit different characteristics.” Id. at 9:25–27. As
per another example in the ’153 patent, “a first waveform may define signal
characteristics that are known to be optimal based upon a particular type of
magnetic stripe reader that card 200 is being presented to.” Id. at 9:27–30.
As per another example in the ’153 patent, “processor 218 may detect that
card 200 is being presented to, for example, a dual-head magnetic stripe
reader.” Id. at 9:36–38. In addition, “processor 218 may detect a swipe
direction that card 200 is being swiped through the dual-head magnetic stripe
reader.” Id. at 9:38–40. The ’153 patent teaches that “a waveform having
symbols arranged in a forward direction may be retrieved by symbol
processor 206, converted to an analog waveform, and communicated by
dynamic magnetic stripe communications device 216 in response to a
forward direction swipe being detected by processor 218.” Id. at 9:41–45. In
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an alternate example in the ’153 patent, “a waveform having symbols
arranged in a reverse direction may be retrieved by symbol processor 206,
converted to an analog waveform, and communicated by dynamic magnetic
stripe communications device 216 in response to a reverse-direction swipe
being detected by processor 218.” Id. at 9:46–51.
Another embodiment disclosed in the ’153 patent indicates that a
dynamic magnetic communication device may take the form of a mobile
phone or personal computing device. Id. at 6:4–9, 14:20. The ’153 patent
also discloses that a dynamic magnetic communication device may store
information such as a cardholder’s name, username, card issue date, card
expiration date, and a dynamic security code as well as graphical information
such as logos and barcodes. Id. at 5:3–27.
2. Illustrative Claim
As noted above, Petitioner challenges claims 1, 5–8, with claim 1
being independent. Challenged independent claim 1 is illustrative of the
challenged claims and is reproduced below:
1. A device comprising:
a magnetic stripe emulator operable to communicate an analog
waveform encoded with at least one track of magnetic stripe data
to a magnetic stripe reader; and
a waveform generator operable to generate said analog waveform
from a digital representation of said at least one track of magnetic
stripe data,
wherein said device is operable to retrieve said digital
representation from a plurality of digital representations of said
at least one track of magnetic stripe data.
Ex. 1001, 15:14–23.
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E. Evidence of Record and Asserted Challenges to Patentability
Petitioner asserts the following challenges to patentability (see Pet. 11,
5–8):
Reference(s)/Basis 35 U.S.C. §1 Challenged Claim(s)
Gutman2, Shoemaker3 § 103(a) 1, 5–8
Lessin4, Shoemaker § 103(a) 1, 5–8
Petitioner submits the Declaration of Stephen G. Halliday, B.Sc.
(“Mr. Halliday”) in support of Petition for Inter Partes Review (Ex. 1002).
Patent Owner submits the Declaration of Ivan Zatkovich, M.S.
(“Mr. Zatkovich”) in support of Patent Owner’s Response (Ex. 2033). Both
declarants were deposed. Ex. 1032 (Zatkovich Deposition); Ex. 2030,
Ex. 2031 (Halliday Depositions). In addition, Patent Owner relies on a
deposition of Stuart Lipoff, its expert witness from the ITC litigation.
Ex. 2034. The parties submitted numerous other documents into the record.
F. Relevant Legal Standards
A claim is unpatentable under 35 U.S.C. § 103(a) if “the differences
between the subject matter sought to be patented and the prior art are such

1 The Leahy-Smith America Invents Act, Pub. L. No. 112-29, 125 Stat. 284
(September 16, 2011) (“AIA”), included revisions to 35 U.S.C. §103 that
became effective on March 16, 2013. Because the ’153 patent issued from an
application filed before March 16, 2013, we apply the pre-AIA version of the
statute.
2 U.S. Patent No. 6,206,293, issued Mar. 27, 2001 (Ex. 1005, “Gutman”).
3 U.S. Patent No. 7,690,580, issued Apr. 6, 2010 (Ex. 1010, “Shoemaker”).
4 U.S. Patent No. 4,868,376, issued Sep. 19, 1989 (Ex. 1011, “Lessin”).
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that the subject matter as a whole would have been obvious at the time the
invention was made to a person having ordinary skill in the art to which said
subject matter pertains.” KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 406
(2007). The question of obviousness is resolved on the basis of underlying
factual determinations, including: (1) the scope and content of the prior art;
(2) any differences between the claimed subject matter and the prior art;
(3) the level of skill in the art; and (4) when present, objective evidence of
nonobviousness, i.e., secondary considerations. See Graham v. John Deere
Co. of Kansas City, 383 U.S. 1, 17–18 (1966). “[I]t is error to reach a
conclusion of obviousness until all [the Graham] factors are considered.”
Apple Inc. v. Samsung Elecs. Co., 839 F.3d 1034, 1048 (Fed. Cir. 2016) (en
banc) (citations omitted). “This requirement is in recognition of the fact that
each of the Graham factors helps inform the ultimate obviousness
determination.” Id.
“To satisfy its burden of proving obviousness, a petitioner cannot
employ mere conclusory statements. The petitioner must instead articulate
specific reasoning, based on evidence of record, to support the legal
conclusion of obviousness.” In re Magnum Oil Tools Int’l, Ltd., 829 F.3d
1364, 1380 (Fed. Cir. 2016). “While the sequence of these questions might
be reordered in any particular case,” KSR Int’l Co. v. Teleflex Inc., 550 U.S.
398, 407 (2007), the U.S. Court of Appeals for the Federal Circuit has
“repeatedly emphasized that an obviousness inquiry requires examination of
all four Graham factors and that an obviousness determination can be made
only after consideration of each factor,” Nike, Inc. v. Adidas AG, 812 F.3d
1326, 1335 (Fed. Cir. 2016), overruled on other grounds by Aqua Prods.,
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Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. 2017) (en banc). The analysis below
addresses all four Graham factors.
G. Burden of Proof
“In an [inter partes review], the petitioner has the burden from the
onset to show with particularity why the patent it challenges is unpatentable.”
Harmonic Inc. v. Avid Tech., Inc., 815 F.3d 1356, 1363 (Fed. Cir. 2016)
(citing 35 U.S.C. § 312(a)(3) (requiring inter partes review petitions to
identify “with particularity . . . the evidence that supports the grounds for the
challenge to each claim”)). This burden of persuasion never shifts to Patent
Owner. See Dynamic Drinkware, LLC v. Nat’l Graphics, Inc.,
800 F.3d 1375, 1378 (Fed. Cir. 2015) (discussing the burden of proof in inter
partes review). Furthermore, Petitioner cannot satisfy its burden of proving
obviousness by employing “mere conclusory statements.” Magnum Oil
Tools, 829 F.3d at 1380.
Thus, to prevail in an inter partes review, Petitioner must explain how
the proposed combinations of prior art would have rendered the challenged
claims unpatentable. At this final stage, we determine whether a
preponderance of the evidence of record shows that the challenged claims
would have been obvious over the cited prior art. 35 U.S.C. § 316(e).
H. Level of Ordinary Skill in the Art
In determining whether an invention would have been obvious at the
time it was made, we consider the level of ordinary skill in the pertinent art at
the time of the invention. Graham, 383 U.S. at 17. “The importance of
resolving the level of ordinary skill in the art lies in the necessity of
maintaining objectivity in the obviousness inquiry.” Ryko Mfg. Co. v.
Nu-Star, Inc., 950 F.2d 714, 718 (Fed. Cir. 1991). The person of ordinary
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skill in the art is a hypothetical person who is presumed to have known the
relevant art at the time of the invention. In re GPAC, Inc., 57 F.3d 1573,
1579 (Fed. Cir. 1995). The level of ordinary skill in the art may be reflected
by the prior art of record. Okajima v. Bourdeau, 261 F.3d 1350, 1355 (Fed.
Cir. 2001). Factors that may be considered in determining the level of
ordinary skill in the art include, but are not limited to, the types of problems
encountered in the art, the sophistication of the technology, and educational
level of active workers in the field. GPAC, 57 F.3d at 1579. In a given case,
one or more factors may predominate. Id. Generally, it is easier to establish
obviousness under a higher level of ordinary skill in the art. Innovention
Toys, LLC v. MGA Entm’t, Inc., 637 F.3d 1314, 1323 (Fed. Cir. 2011) (“A
less sophisticated level of skill generally favors a determination of
nonobviousness . . . while a higher level of skill favors the reverse.”).
Petitioner argues that a person having ordinary skill in the art at the
time of the alleged invention “would have had at least a Bachelor’s degree in
Electrical Engineering, or an equivalent technical degree or equivalent work
experience, and knowledge regarding the use of magnetic fields to transmit or
otherwise convey information.” Pet. 20 (citing Ex. 1002 ¶¶ 33–34).
Petitioner further argues that “[a]dditional education might supplement
practice experience and vice-versa.” Id.
Patent Owner argues that a person having ordinary skill in the art at the
time of the alleged invention would have had “the equivalent of an
undergraduate degree in electrical engineering or computer science (or
related field) and at least three years of work experience with point of sale
systems and the use of magnetic fields to convey information.” PO Resp. 24.
According to Patent Owner, “[a]dditional industry experience in the field
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could substitute for the undergraduate degree, while additional education in
the field could substitute for industry experience.” Id.
Based on our review of the ’153 patent, the types of problems and
solutions described in the ’153 patent and cited prior art, and the testimony of
both Mr. Halliday (see Ex. 1002 ¶¶ 33–34) and Mr. Zatkovich (see Ex. 2033
¶ 17), for purposes of this Decision, we find that a person of ordinary skill in
the art at the time of the claimed invention would have had at least a
Bachelor’s degree in electrical engineering, or an equivalent technical degree
and three years of experience working with magnetic fields to transmit or
otherwise convey information, magnetic stripe cards and emulators, RFID
systems, and cellular network communications. Although we find Patent
Owner provides insufficient evidence explaining why a person of ordinary
skill in the art would have also had experience specifically with point of sale
systems and therefore do not include that additional requirement in our
finding above, we note that our analysis would be the same under either
party’s proposed level of skill in the art.
I. Claim Construction
We interpret a claim “using the same claim construction standard that
would be used to construe the claim in a civil action under 35 U.S.C. 282(b).”
37 C.F.R. § 42.100(b) (2019). Under that standard, claim terms are presumed
to have their ordinary and customary meaning, as would have been
understood by one of ordinary skill in the art, in the context of the entire
disclosure. In re Translogic Tech., Inc., 504 F.3d 1249, 1257 (Fed.
Cir. 2007). To rebut this presumption by acting as a lexicographer, the
patentee must give the term a particular meaning in the specification with
“reasonable clarity, deliberateness, and precision.” In re Paulsen, 30 F.3d
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1475, 1480 (Fed. Cir. 1994). Limitations, however, are not to be read from
the specification into the claims. In re Van Geuns, 988 F.2d 1181, 1184
(Fed. Cir. 1993). In addition, the Board may not “construe claims during [an
inter partes review] so broadly that its constructions are unreasonable under
general claim construction principles.” Microsoft Corp. v. Proxyconn, Inc.,
789 F.3d 1292, 1298 (Fed. Cir. 2015) (overruled on other grounds by Aqua
Products, 872 F.3d at 1290).
Petitioner states that it does not believe any terms need be construed to
resolve the prior art issues presented in the Petition. Pet. 20. Petitioner notes
there were claim construction issues in the ITC proceeding. Id. at 20–21
(citing Ex. 1016, 4–5). Petitioner further states the challenged claims are
rendered obvious by the cited prior art references under either party’s
proposed construction in the ITC proceeding. Id. at 21. Patent Owner does
not indicate whether it believes any terms require construction to resolve any
dispute it has with Petitioner’s position. PO Resp. 24–26. Nonetheless,
Patent Owner presents the claims constructions proposed by the parties in the
ITC and the constructions rendered by the ITC. Id. at 22–23 (citing
Ex. 2012).
Because no express construction is needed to resolve any dispute in
this proceeding, we do not construe any of the claim limitations. See, e.g.,
Nidec Motor Corp. v. Zhongshan Broad Ocean Motor Co., 868 F.3d 1005,
1017 (Fed. Cir. 2017); Vivid Techs., Inc. v. Am. Sci. & Eng’g, Inc., 200
F.3d 795, 803 (Fed. Cir. 1999) (“[O]nly those terms need be construed that
are in controversy, and only to the extent necessary to resolve the
controversy.”).
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II. ANALYSIS
A. Alleged Obviousness of Claims 1, 5‒8 of the ’153 Patent in View of
Gutman and Shoemaker
Petitioner contends claims 1, 5‒8 of the ’153 patent are unpatentable
under 35 U.S.C. § 103 as obvious in view of Gutman and Shoemaker.
Pet. 12, 25–44. Patent Owner disputes Petitioner’s contentions. PO
Resp. 26–38. For reasons that follow, we determine Petitioner has not
established by a preponderance of the evidence that the challenged claims
would have been obvious under 35 U.S.C. § 103 in view of Gutman and
Shoemaker.
1. Overview of Gutman (Ex. 1005)
Gutman is a U.S. Patent titled “Magnetically Communicative Card.”
Ex. 1005, code (54). Gutman attempts to solve certain problems associated
with conventional magnetic stripe5 cards (such as credit cards), including the
wear and tear of the magnetic card stripe, their susceptibility to fraudulent
copying, and their limited data storage capacity due to the dimensions of the
card that are governed by the ANSI6 standards. Id. at 2:9–31. Rather than
only turning to smart cards, which would render conventional magnetic card
readers “obsolete” (id. at 2:49–53), Gutman teaches a card that can
magnetically communicate data to conventional magnetic card readers
without swiping to overcome the identified problems. Id. at Abstract, 17:3–
4.

5 Certain references use the term “stripe,” while other references use “strip.”
We consider these terms interchangeable.
6 American National Standards Institute (“ANSI”) is a private non-profit
organization that oversees the development of voluntary consensus standards
for products, services, processes, systems, and personnel in the United States.
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An embodiment of Gutman is shown in Figure 2, reproduced below:

Figure 2, above, is a diagrammatic representation of a conventional magnetic
stripe card reader and an electrical block diagram of a magnetically
communicative card having three conductors. Id. at 3:1–4. In Figure 2,
magnetically communicative card 200 is inserted in slotted portion 104 of
magnetic card reader 100. Id. at 3:46–48. When this happens, conductor 204
corresponds to magnetic reading bead 103 of magnetic reading
mechanism 102 of magnetic card reader 100. Id. at 3:53–56. Conductor 204
is electrically coupled to at least one driver circuit 206 for driving electrical
signals through conductor 204. Id. at 3:57–58. Controller 208 is coupled to
driver circuit 206 for controlling the operation of driver circuit 206. Id.
at 3:59–61. Controller 208, when coupling the data signal to the driver
circuit 206, causes driver circuit 206 to electrically drive conductor 204 in
accordance with the data signal. Id. at 3:62–65. The electrically driven
conductor 204 emits an alternating polarity magnetic field about
conductor 204. Id. at 3:66–67. The alternating polarity of the magnetic field
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about conductor 204 comprises magnetic flux transitions. Id. at 4:1–3.
These magnetic flux transitions can be picked up by magnetic reading
bead 103 and detected by magnetic card reader 100 to indicate bits of
information corresponding to the data signal provided by controller 208. Id.
at 4:3–7.
One embodiment of conductor 204 on magnetically communicative
card 200 is shown in Figure 3, reproduced below.

Figure 3, above, is a simplified diagrammatic representation of a magnetic
reading head in proximity to a magnetically communicative card having one
conductor. Ex. 1005, 3:5–8. In Figure 3, card 200 is shown in close
proximity to magnetic reading bead 308. Id. at 5:43–44. As shown in
Figure 3, above, conductor 204 is wound about a ferrite core 302 in the
approximate shape of a coil. Id. at 7:15–16. Gutman discloses that controller
208 is coupled to switch circuit 316 for selectively coupling conductor 204 to
either driver circuit 304 or detector circuit 318. Id. at 5:45–48. Driver circuit
304 causes a current in conductor 204, with changes in such current
producing a magnetic field in the vicinity of the conductor. Id. at 5:48–50.
Detector circuit 318 responds to current in conductor 204, the current
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changing as a result of the conductor intercepting a changing magnetic field.
Id. at 5:51–53.
2. Overview of Shoemaker (Ex. 1010)
Shoemaker is a U.S. Patent titled “Transaction Cards Having
Dynamically Reconfigurable Data Interface and Methods for Using Same.”
Ex. 1010, code (54). Shoemaker discloses a device that can store multiple
tracks of the same or different data to address the problems associated with
conventional magnetic stripe cards, such as susceptibility to fraud and
damage. Id. at 1:63–2:67, 5:45–49, 6:49–60, 8:42–51. Specifically,
Shoemaker discloses an “[a]ctive credit card 102 [with] a logic circuit 106,
representing the electronic circuitry (such as ASIC logic, processor, clock,
volatile and/or nonvolatile memory, etc.) employed to generate data for
programming the data pattern that appears on dynamically reconfigurable
data interface 104.” Id. at 5:57–62.
One embodiment of Shoemaker’s active card 102 is shown in
Figure 1A, reproduced below.

Figure 1A, above, is a diagram of an active credit card having a dynamically
reconfigurable data interface attached to or formed on card base 120, where
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the interface is compatible with existing magnetic stripe card processing
infrastructure. Ex. 1010, 3:41–43, 4:57–59, 5:45–48. Active card 102 also
includes a logic circuit 106, representing the electronic circuitry used to
generate data for programming the data pattern that appears on dynamically
reconfigurable data interface 104. Id. at 5:56–5:62. The data pattern is
“provided to a reconfiguration controller, such as a magnetizing
controller 118, which generates the appropriate electrical signals to configure
data interface 104 such that the data that appears on dynamically
reconfigurable data interface 104 can be read by an existing magnetic stripe
card reader.” Id. at 6:4–9. The active card also includes “a magnetizing
controller” and “a logic circuit” and “[t]o accomplish a transaction, logic
circuit [] provides data to magnetizing controller [] to enable magnetizing
controller to dynamically reconfigure data interface [], thereby transmitting a
data pattern to a magnetic stripe card reader.” Id. at 6:26–30.
Shoemaker further discloses that its card can encode the same track
data (such as in a forward or reverse manner) depending on the swipe
direction. Id. at 14:65–15:6 (“For example, if a card reader expects a left-to-
right swiping direction to decode the pattern a-b-c, the swiping of the
inventive card in the right-to-left direction would trigger the swipe detector
on the left side of the card, thereby causing the magnetizing order to provide
the data pattern in the c-b-a order on the dynamically reconfigurable data
interface. In this manner, the reader will be able to decode the correct pattern
a-b-c even when the card is swiped in the right-to-left direction.”).
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3. Analysis of Gutman and Shoemaker as Applied to Challenged
Independent Claim 1
a. Preamble
Claim 1 recites “[a] device comprising.” Ex. 1001, 15:14.
Petitioner contends that “Gutman discloses a device that communicates
with a magnetic card reader.” Pet. 25 (citing Ex. 1005, Figs. 2–3 (showing
card 200), 7:48–8:18 (describing card 400 in Figure 4), 11:31–12:16
(describing card 500 in Figure 5)). To support its contention, Petitioner relies
on Gutman’s description of “card 200 with at least one conductor 204 that
emits an alternating polarity magnetic field (i.e., magnetic flux transitions)
about the conductor 204 such that the card can communicate with a magnetic
reading head 103 of a magnetic card reader 100.” Id. (citing Ex. 1005, 3:62–
4:1).
Patent Owner does not dispute Petitioner’s contentions. See generally
PO Resp. Nonetheless, the burden remains on Petitioner to demonstrate
unpatentability. See Dynamic Drinkware, 800 F.3d at 1378.
“Whether to treat a preamble term as a claim limitation is determined
on the facts of each case in light of the claim as a whole and the invention
described in the patent.” Am. Med. Sys., Inc. v. Biolitec, Inc., 618 F.3d 1354,
1358 (Fed. Cir. 2010) (internal quotation marks and citation omitted).
Regardless of whether the preamble is limiting, based on the entirety of
the trial record, we find Petitioner has shown that Gutman discloses a
“device.”
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b. a magnetic stripe emulator operable to communicate an analog
waveform encoded with at least one track of magnetic stripe data to
a magnetic stripe reader
Claim 1 recites “a magnetic stripe emulator operable to communicate
an analog waveform encoded with at least one track of magnetic stripe data
to a magnetic stripe reader.” Ex. 1001, 15:15–17.
Petitioner contends that Gutman discloses this limitation because it
uses conductor 204, which emits magnetic flux transitions representing tracks
of magnetic stripe data that can be read by magnetic card reader 100.
Pet. 26–27 (citing Ex. 1005, 3:56–4:7, 4:31–35). Petitioner argues that
“[b]ecause conductor 204 emulates a track of magnetic stripe data, no
‘swiping’ movement is necessary.” Id. (citing Ex. 1005, 17:3–4). That is,
according to Petitioner, “data can be magnetically communicated from the
card to the magnetic stripe reader independent of the swiping movements
associated with conventional magnetic stripe cards.” Id. (citing Ex. 1005,
17:10–13). Petitioner further argues that “Figure 3 of Gutman shows that the
conductor 204 of the same card 200 can be in the form of a coil.” Id. at 28
(citing Ex. 1005, Fig. 3, 7:15–16 (“In the preferred embodiment, the
conductor 204 is wound about a ferrite core 302 in the approximate shape of
a coil.”); Ex. 1001, 2:14–16 (describing that the claimed magnetic stripe
emulator can be a coil), 7:36–43 (explaining that the coil can be wound about
either a magnetic or non-magnetic material)). Therefore, Petitioner
concludes “Gutman discloses that its conductor 204 is a magnetic stripe
emulator” and is “operable to communicate a ‘data signal,’ which is encoded
with three tracks of magnetic stripe data.” Pet. 28–29 (citing Ex. 1002 ¶ 77).
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Patent Owner does not dispute Petitioner’s contentions. See generally
PO Resp. Nonetheless, the burden remains on Petitioner to demonstrate
unpatentability. See Dynamic Drinkware, 800 F.3d at 1378.
Based on the entire trial record before us, we find Petitioner has shown
that Gutman’s conductor 204 is a magnetic stripe emulator as recited by the
challenged claims.
c. a waveform generator operable to generate said analog waveform
from a digital representation of said at least one track of magnetic
stripe data
Claim 1 recites “a waveform generator operable to generate said
analog waveform from a digital representation of said at least one track of
magnetic stripe data.” Ex. 1001, 15:18–20.
Petitioner contends that Gutman discloses this limitation because it
uses driver circuit 206, which is coupled to controller 208. Pet. 31–32 (citing
Ex. 1002 ¶ 81; Ex. 1005, 3:59–61). According to Petitioner, “driver
circuit 206 is ‘for driving electrical signals through the conductor 204’ based
on the data signal from controller 208.” Id. at 32 (citing Ex. 1005, 3:56–59).
Petitioner argues that Gutman’s “data signal” discloses the claimed “at least
one track of magnetic stripe data.” Id. (citing Ex. 1005, 4:14–21; Ex. 1002
¶ 82). Petitioner further argues that although Gutman’s waveform generator
generates a digital waveform, it was well known to a person of ordinary skill
in the art that the waveform generator could drive conductor 204 using either
an analog or digital waveform. Pet. 33 (citing Ex. 1002 ¶ 83).
Patent Owner does not dispute Petitioner’s contentions. See generally
PO Resp. Nonetheless, the burden remains on Petitioner to demonstrate
unpatentability. See Dynamic Drinkware, 800 F.3d at 1378.
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Based on the entire trial record before us, we find Petitioner has shown
that Gutman’s drive circuit 206 and controller 208 are a waveform generator
as recited by the challenged claims. Additionally, we credit the testimony of
Mr. Halliday that a person of skill in the art at the time of the ’153 patent
“would have known that digital to analog conversion could be accomplished
through the addition of a single, well-known circuit—the digital to analog
converter.” See Ex. 1002 ¶¶ 83–84.
d. wherein said device is operable to retrieve said digital
representation from a plurality of digital representations of said at
least one track of magnetic stripe data
Claim 1 recites “wherein said device is operable to retrieve said digital
representation from a plurality of digital representations of said at least one
track of magnetic stripe data.” Ex. 1001, 15:21–23.
Petitioner contends that Gutman alone, or in view of Shoemaker,
discloses this limitation because Gutman discloses that its card can be swiped
like a conventional magnetic stripe card. Pet. 34 (citing Ex. 1005,
16:64–17:3). Petitioner notes that “[c]onventional magnetic stripe cards can
be swiped in both directions while conveying the same magnetic stripe data.”
Pet. 34 (citing Ex. 1002 ¶ 86). Petitioner acknowledges that “Gutman does
not expressly state that its card can be swiped in both directions to complete a
transaction,” but argues “only two possibilities exist―either Gutman’s card
works in one swipe direction or both swipe directions.” Id. at 34–35.
According to Petitioner, one of ordinary skill in the art “would have
understood that because Gutman can be swiped to emulate a conventional
magnetic stripe card, it can be swiped in both directions.” Id. at 35.
Petitioner argues that one of skill in the art “would therefore have understood
that Gutman teaches that its card can retrieve at least two representations
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(representations for forward and reverse swipe directions) of the same
magnetic stripe data.” Id.
Petitioner relies on the testimony of Mr. Halliday to support its
position. Pet. 34–35. Mr. Halliday testifies that “[c]onventional magnetic
stripe cards can be swiped in both directions while conveying the same
magnetic stripe data” and although “Gutman does not expressly state that its
card can be swiped in both directions to complete a transaction,” “only two
possible options exist―either Gutman’s card works in (1) one swipe
direction or (2) both swipe directions.” Ex. 1002 ¶ 86. According to Mr.
Halliday, “a person of skill in the art at the time of the ’153 patent would
have understood that because Gutman can be swiped to emulate a
conventional magnetic stripe card, it can be swiped in both directions.” Id.
Thus, Petitioner concludes that “a person of skill in the art at the time of the
’153 patent would therefore have understood that Gutman teaches that its
card can retrieve at least two representations (representations for forward and
reverse swipe directions) of the same magnetic stripe data.” Pet. 35 (citing
Ex. 1002 ¶ 86).
Petitioner further contends that “to the extent that Patent Owner argues
that Gutman only discloses swiping in one direction” then a person of skill in
the art “would have been motivated to modify Gutman’s card in view of
Shoemaker[’s] teachings regarding this limitation . . . to enable it to work in
both swipe directions because it would have made the card more functional
and more commercially convenient.” Pet. 35 (citing Ex. 1002 ¶ 87).
According to Petitioner, Shoemaker discloses a reconfigurable card that
communicates the same data in a forward or reverse orientation. Id. (citing
Ex. 1010, 14:54–15:6). Petitioner argues that Shoemaker’s card can encode
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track data depending on the direction the card is swiped “so that the data
stream is always provided in the expected order irrespective of the swipe
direction.” Id. (citing Ex. 1010, 14:56–65).
Patent Owner contends Gutman and Shoemaker fail, both alone and in
combination, to teach or suggest this limitation of claim 1. PO Resp. 26.
Patent Owner argues that “Gutman communicates data completely
independently of swipe direction.” PO Resp. 27 (citing Ex. 2033 ¶ 66).
According to Patent Owner, “Gutman explains that the card does not have to
be swiped through a card reader in order to successfully communicate with
the card reader.” Id. (citing Ex. 2033 ¶ 67; Ex. 1005, 16:60–63). Rather,
Patent Owner argues that “Gutman specifically promotes simply inserting the
card into a card reader rather than swiping the device.” PO Resp. 27 (citing
Ex. 2033 ¶¶ 46, 68; Ex. 1005, 16:60–63). Patent Owner further argues that
“swiping the device is entirely irrelevant to the function of Gutman’s card.”
Id. (citing Ex. 2033 ¶¶ 46, 68; Ex. 1005, 17:4–13). Contrary to Petitioner’s
assertions that Gutman stores two representations (for forward and reverse
swipe directions), Patent Owner asserts that “regardless of whether Gutman’s
card is swiped at all, it will still communicate the same data upon inserting
the card into a magnetic stripe card reader” because each “track of data is
uniquely built each and every time it is sent out.” Id. at 28 (citing Ex. 2033
¶¶ 46, 68). Patent Owner concludes that “[t]he simple fact that [Gutman]
builds each and every track it sends out makes clear that [Gutman] does not
retrieve an entire track from memory at any time.” Id. (citing Ex. 2031,
312:10–20).
Patent Owner addresses the two devices disclosed in Gutman: (1) a
magnetically communicative card that can mimic a magnet stripe card; and
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(2) an electronic wallet (“eWallet”) that stores data for multiple cards and
receives user input to select which card to use for a specific transaction. Id.
at 28–29 (Ex. 1005, Abstract, 7:48–11:30). According to Patent Owner,
neither device meets the claim limitations because “selecting a card from a
plurality of cards is not the same as selecting a digital representation from of
plurality of digital representations of at least one track of magnetic stripe
data.” Id. at 30. Additionally, Patent Owner argues that the controller on
Gutman’s device “prepares data on the fly, based on the user’s card
selection.” Id. at 29 (citing Ex. 1005, 14:19–24). Patent Owner explains that
“Gutman[’s] card can then selectively communicate the data that was
prepared on the fly to ‘magnetic card reader 100 to affect a transaction with a
particular Service provider that was selected by the user.’” Id. (citing
Ex. 1005, 15:3–5). Patent Owner concludes that nothing in Gutman suggests
retrieving from memory a digital representation from a plurality of digital
representations of at least one track of magnetic stripe data.
Patent Owner further contends that Gutman in view of Shoemaker still
does not disclose the recited limitation because Shoemaker only describes an
“active credit card provid[ing] active anti-fraud protection by dynamically
modifying the data pattern provided to merchants.” PO Resp. 30 (citing
Ex. 1010, 5:28–30). Patent Owner argues that Shoemaker teaches that data
pattern associated with swipe direction is dynamically generated “on the fly”
and is not stored and retrieved. Id. at 31–32 (citing Ex. 1010, 3:19–22).
Furthermore, according to Patent Owner, “Shoemaker does not teach that
tracks with the same account number and different profiles are simply a
different representation of the same track.” Id. at 32. To the contrary, Patent
Owner argues “Shoemaker teaches that each account/profile combination is
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different to simplify the accounting process for card issuers.” Id. Thus,
Patent Owner concludes “Shoemaker teaches away from storing track data
asserting that this approach is inherently insecure ‘because the magnetic code
pattern, being a fixed pattern that is designed to be reused from transaction to
transaction, can be easily stored and then cloned.’” Id. at 32 (citing Ex. 1010,
2:45–8).
Patent Owner supports its position with citations to Shoemaker’s
prosecution history in which Shoemaker argues that its features and
limitation were not anticipated by prior art references because “each of the
first data pattern and the second data pattern changes responsive to the swipe
direction” and “[prior art reference] Brown does not teach that data patterns
change responsive to a swipe direction.” PO Resp. 30 (citing Ex. 2021,
146–47). Patent Owner argues that Shoemaker differentiated itself from
prior art by generating forward and reverse track data on the fly, as opposed
to storing the track data in both a forward digital representation and a reverse
digital representation, for security reasons. Id.
Patent Owner’s position regarding the “dynamic” modification of
Shoemaker’s card is supported by Petitioner’s own citation to Shoemaker’s
disclosure that “its card can encode track data depending on the direction the
card is swiped ‘so that the data stream is always provided in the expected
order irrespective of the swipe direction.’” Pet. 35 (citing Ex. 1010, 14:56–
65). We do not agree with Patent Owner, however, that Shoemaker
necessarily teaches away from the use of stored track data. See PO Resp. 30–
32. “A reference may be said to teach away when a person of ordinary skill,
upon reading the reference, would be discouraged from following the path set
out in the reference, or would be led in a direction divergent from the path
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that was taken by the applicant.” In re Gurley, 27 F.3d 551, 553 (Fed. Cir.
1994). Yet, the “mere disclosure of alternative designs does not teach away.”
In re Fulton, 391 F.3d 1195, 1201 (Fed. Cir. 2004). Just because better
alternatives exist in the prior art does not mean that an inferior combination is
inapt for obviousness purposes. In re Gurley, 27 F.3d at 553; see also Baxter
Int’l, Inc. v. McGaw, Inc., 149 F.3d 1321, 1328 (Fed. Cir. 1998) (finding no
teaching away where nothing in the prior art device suggested that the
claimed invention was unlikely to work). Nothing in Shoemaker indicates
that storing the track data in both a forward digital representation and a
reverse digital representation is unlikely to work. Rather, Shoemaker
indicates a preference for using a dynamic modification of the data pattern to
increase security. Nonetheless, based on the entirety of the trial record, we
agree with Patent Owner’s assessment that the teachings of Gutman in view
of Shoemaker do not render the challenged claims obvious.
We find the Petition bases its challenge on an analysis of Gutman’s
magnetically communicative card (Pet. 34–35), which can be swiped like a
conventional magnetic stripe card (see Ex. 1005, 16:64–17:3) while
conductor 204 of Gutman’s card 200 emits magnetic flux transitions that can
be read by magnetic card reader 100 (see id. at 3:56–4:7, 4:31–35). Although
Petitioner concedes “Gutman is silent as to whether it emulates data encoded
for both the forward and reverse swipe directions” (Pet. Reply 4 (citing Pet.
34–35; Ex. 1002 ¶ 86)), Petitioner argues a person of ordinary skill in art
would have been motivated to modify Gutman’s card to work in both swipe
directions (Pet. 35 (citing Ex. 1002 ¶ 87)). Petitioner specifically argues
Gutman must be modified with Shoemaker’s teachings “to make a more
functional card that could emulate data in both the forward and reverse order
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to minimize the risk of point of sale terminals reading errors.” Pet. Reply 4
(citing Ex. 2031, 359:11–19 (testifying that if the reader/terminal receives
data in the wrong order that “may cause a problem for the terminal, yes”);
Ex. 1032, 107:13–108:3). Petitioner admits, however, that Gutman does not
recognize the problem of presenting a track in a swipe-appropriate manner in
order to be compatible with most card readers. Tr. 10:8–11:6.
Petitioner relies on testimony from Mr. Halliday to support its
contentions. Mr. Halliday testifies it would have been obvious for Gutman’s
card 200 to swipe in the forward or reverse direction and that a person of
ordinary skill in the art at the time of the ’153 patent would have stored at
least three tracks of data. See Ex. 1002 ¶¶ 78, 86. Mr. Halliday then cites to
claim 3 of Gutman, which recites that Gutman’s card “include[s] more than
one conductor and . . . each conductor mimics a read/write track of a
conventional magnetic stripe card.” See Ex. 1002 ¶ 78 (alternation in
original) (citing Ex. 1005, claim 3). But as discussed previously, Gutman
does not disclose storing track data for two directions. See Pet. 34–35; Pet.
Reply 4; see also Tr. 34:19–25 (“Judge Jurgovan: And that is to ask, does
either Gutman or Shoemaker teach storing tracks in the forward and reverse
direction for one track? Mr. Marina: No. So Shoemaker teaches on the fly
forward or reverse based on swipe direction. Gutman teaches storing one
direction. It certainly doesn’t say two directions, right?”). And neither
Petitioner nor Mr. Halliday provide sufficient persuasive evidence that the
citations to conductors on Gutman’s card represent multiple representations
of the same exact track of data.
Petitioner’s argument that a person of ordinary skill in the art swiping a
card would have recognized that “only two possibilities exist: either [the
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card] can emulate track data for one or both swipe directions” is similarly
unpersuasive (see Pet. Reply 4 (citing Pet. 34–35; Ex. 1002 ¶ 86); see
Tr. 9:9–15), because Gutman and Shoemaker both disclose other options for
providing device data to a card reader without storing tracks of data.
Specifically, Gutman teaches communicating data to a card reader by
emitting electromagnetic fields without swiping a device to communicate
with a card reader (see Ex. 1005, 16:29–56, 16:60–63, 17:4–10), while
Shoemaker uses a sensor to determine the directionality of swiping motion to
then build each individual track dynamically at the time of transmission (see
Ex. 1010, 12:28–43). Neither of these disclosures by Gutman or Shoemaker
correspond to the limitation recited in claim 1 (i.e., neither reference teaches
the recited limitation). Therefore, Petitioner’s conclusion that there are only
two possibilities for emulating data is unsupported by the evidence.
4. Rationale to Combine Gutman with Shoemaker
Petitioner contends a person of ordinary skill in the art would have had
many motivations to use the teachings of Shoemaker to modify Gutman “to
improve the compatibility of Gutman’s card with the then-existing magnetic
stripe card infrastructure by, for example, allowing it to emulate multiple
representations of the same data traditionally found on a conventional
magnetic stripe card.” Pet. 22–23 (citing Ex. 1002 ¶ 72). Petitioner argues
Gutman sought to provide a magnetically communicative card that mimicked
multiple conventional magnetic stripe cards (such as credit cards) and
Shoemaker provides further solutions to increase the Gutman card’s
functionality. Id. at 23–24 (citing Ex. 1005, 3:46–4:7, 2:61–63; Ex. 1002
¶ 73). According to Petitioner, Shoemaker can accomplish this because it
“provides a card that can emulate multiple representations of the same data
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found on conventional magnetic stripe cards.” Pet. 24 (citing Ex. 1010,
14:54–15:6).
Petitioner also contends that a person of ordinary skill in the art would
have “known that multiple profiles and bi-directional swiping were
implementation details explained in Shoemaker and would have been
motivated to use Shoemaker’s teachings to improve the functionality of
Gutman’s card and make it more commercially convenient for card users.”
Id. (citing Ex. 1002 ¶ 74). Furthermore, according to Petitioner, “because
these changes would have been routine implementation details, a [person of
ordinary skill in the art] would have had more than a reasonable expectation
of success in implementing them.” Id. at 25 (citing Ex. 1002 ¶ 74).
Patent Owner contends a person of ordinary skill in the art at the time
of the invention would not have been motivated to use the teachings of
Shoemaker to modify Gutman’s device, because “pre-stor[ing]” the
“Shoemaker profile data on the Gutman device . . . would lead to the
potential for fraud.” PO Resp. 33. Patent Owner argues it would not have
been obvious to modify Gutman with Shoemaker to include forward and
reverse digital representations, and then further modify Gutman to require
Gutman’s card to store both of those digital representations in memory. Id.
(citing Ex. 2033 ¶ 69). According to Patent Owner, “Petitioner provides no
legitimate basis that a [person of ordinary skill in the art] would have decided
that despite Gutman’s ability to communicate data to a magnetic stripe card
reader immediately upon coming into contact with the card reader, it should
defeat its own purpose and become dependent on a swipe direction.” PO
Resp. 33–34 (citing Ex. 2033 ¶ 69). In fact, Patent Owner proffers that
“since Gutman’s goal was to phase-out swiping entirely in order to minimize
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wear and tear, a [person of ordinary skill in the art] would have been
dissuaded from making Gutman dependent on swipe direction, or any manner
of swiping at all, as doing so would have defeated the purpose of Gutman’s
card, which was to be capable of interacting with a card reader without being
swiped.” Id. at 34 (citing Ex. 2033 ¶ 69).
Patent Owner asserts that Petitioner ignores the majority of Gutman’s
teachings and relies on the single fact that Gutman’s device can be swiped to
support its argument that a person of ordinary skill in the art “would have
modified Gutman’s entire architecture to accommodate this possibility.” PO
Sur-Reply 3–4 (citing Pet. Reply at 3). Patent Owner notes that the mere
possibility of a reference being modified to include a feature does not render
that feature obvious. Id. at 4.
We agree with Patent Owner that Petitioner fails to offer sufficient
explanation as to why a person of ordinary skill in the art would have
combined the teachings of Gutman and Shoemaker. Petitioner appears to
argue that a person of ordinary skill in art would have had sufficient reason to
“cure” the problems associated with pre-storing magnetic stripe information
in Gutman by using teachings described by Shoemaker to address a known
problem in the art (i.e., the need for multi-direction swipe capability to ensure
compatibility with card readers). See Tr. 10:11–13. Yet, Petitioner fails to
identify why someone reading Shoemaker would chose to apply its teachings
to Gutman in order to solve a problem already addressed in Shoemaker itself.
See id. at 12:20–15:14.
Petitioner must articulate a reason why a person of ordinary skill in
the art would have combined the prior art references. In re NuVasive, 842
F.3d 1376, 1382 (Fed. 2016); Metalcraft of Mayville, Inc. v. The Toro
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Company, 848 F.3d 1358, 1366 (Fed. Cir. 2017) (“[I]t is insufficient to
simply conclude the [prior art] combination would have been obvious
without identifying any reason why a person of skill in the art would have
made the combination.”); see Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064,
1073 (Fed. Cir. 2015) (“obviousness concerns whether a skilled artisan not
only could have made but would have been motivated to make the
combinations or modifications of prior art to arrive at the claimed
invention”). Petitioner proffers arguments that a person of ordinary skill in
the art could have combined the teachings of Gutman and Shoemaker, but
fails to explain sufficiently why they would have chosen the specific features
relied upon by Petitioner to read on the claim. See also Forest Labs., LLC v.
Sigmapharm Labs., LLC, 918 F.3d 928, 934 (Fed. Cir. 2019) (“An invention
is not obvious simply because all of the claimed limitations were known in
the prior art at the time of the invention. Instead, we ask whether there is a
reason, suggestion, or motivation in the prior art that would lead one of
ordinary skill in the art to combine the references, and that would also
suggest a reasonable likelihood of success.”) (citation omitted)). Rather, it
appears that Petitioner selects disparate parts of the prior art to combine in
order to meet the claim limitation. We understand that a person of ordinary
skill is a person of ordinary creativity, not an automaton, but “[w]ithout any
explanation as to how or why the references would be combined to arrive at
the claimed invention, we are left with only hindsight bias that KSR warns
against.” Metalcraft, 848 F.3d at 1367 (“‘[T]he obviousness analysis cannot
be confined by a formalistic conception of the words teaching, suggestion,
and motivation,’ we also recognize that we cannot allow hindsight bias to be
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the thread that stitches together prior art patches into something that is the
claimed invention.” (quoting KSR, 550 U.S. at 420–21)).
Conclusory statements alone, even those provided by a declarant, are
inadequate to demonstrate a rationale for why a person of ordinary skill in the
art would have combined the teachings from prior art references. NuVasive,
842 F.3d at 1383. Instead, Petitioner’s arguments must be supported by a
“reasoned explanation.” Id. (citing In re Lee, 277 F.3d 1338, 1342, 1345
(Fed. Cir. 2002)). For example, Petitioner states that a person of ordinary
skill in the art would have been motivated to use Shoemaker’s teachings to
improve the functionality of Gutman’s card and make it more commercially
convenient for card users.” Pet. 24–25 (citing Ex. 1002 ¶ 74). But neither
the Petition nor its declarant, explain why altering either Gutman or
Shoemaker would improve the functionality over what is expressly disclosed
in each reference. Nor does the Petitioner or the declarant explain with how
the combination of teachings would be more commercially convenient for
card users over what is disclosed originally in each reference. Petitioner
further contends that “because these changes would have been routine
implementation details, a [person of ordinary skill in the art] would have had
more than a reasonable expectation of success in implementing them.”
Pet. 25 (citing Ex. 1002 ¶ 74).
Accordingly, based on the entirety of the trial record, we find
Petitioner presents insufficient persuasive evidence to demonstrate by a
preponderance of the evidence that a person of ordinary skill in the art would
have had reason to combine the teachings of Gutman with those of
Shoemaker as articulated by Petitioner to render claims 1, 5–8 obvious under
35 U.S.C. § 103.
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5. Summary Regarding Claim 1
Based on an analysis of the entire record before us, we find Petitioner
has not demonstrated by preponderance of the evidence that Gutman’s
card 200 alone or in combination with applicable teachings from Shoemaker
would have been “operable to retrieve said digital representation from a
plurality of digital representations of said at least one track of magnetic stripe
data,” to satisfy the challenged claim limitation. Accordingly, Petitioner has
failed to show that challenged independent claim 1 would have been obvious
under 35 U.S.C. § 103 in view of Gutman and Shoemaker.
6. Analysis of Gutman and Shoemaker as Applied to Challenged
Dependent Claims 5–8
Petitioner contends dependent claims 5–8 of the ’153 patent are
unpatentable under 35 U.S.C. § 103 as being obvious in view of Gutman and
Shoemaker and provides specific arguments for each challenged claim.
Pet. 12, 37–44 (citing Ex. 1005, 1:21‒26, 3:1‒4, 4:66‒5:2, 5:2‒11, 6:50‒61,
8:4‒18, 10:27‒34, 13:64‒14:35, Fig. 2; Ex. 1010, 6:49‒53, 9:44‒64, 9:64‒67,
Fig. 1B; Ex. 1002 ¶¶ 89‒98). Patent Owner does not address specifically the
limitations of these challenged dependent claims, but nonetheless the burden
remains on Petitioner to demonstrate unpatentability. PO Resp. 37‒38; see
Dynamic Drinkware, 800 F.3d at 1378.
We have reviewed the entirety of Petitioner’s arguments and
supporting evidence regarding the challenged dependent claims. For the
same reasons discussed with regards to independent claim 1, we find
Petitioner fails to demonstrate by a preponderance of the evidence that
dependent claims 5–8 would have been obvious in view of the combined
teachings of Gutman and Shoemaker under 35 U.S.C. § 103.
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7. Objective Indicia of Nonobviousness
Patent Owner further asserts that the nonobviousness of the claims is
supported by objective indicia of nonobviousness including commercial
success, long-felt need, failure of others, and industry praise of the patented
invention, teaching away by others, and copying. PO Resp. 47–51 (citing
Exs. 2013–2020). Petitioner disagrees. Pet. 58–59. We need not reach a
conclusion on Patent Owner’s evidence regarding nonobviousness of the
claims as, regardless of the strength of that evidence, we have found already
that Petitioner has failed to meet its burden to demonstrate that the claims
would have been obvious.
B. Alleged Obviousness of Claims 1, 5–8 of the ’153 Patent in View of
Lessin and Shoemaker
Petitioner contends claims 1 and 5–8 of the ’153 patent are
unpatentable under 35 U.S.C. § 103 as obvious in view of Lessin alone or in
combination with the teachings of Shoemaker. Pet. 12, 44–54.
Patent Owner disputes Petitioner’s contentions. PO Resp. 38–51. For
reasons that follow, we determine Petitioner has failed to demonstrate by a
preponderance of the evidence that the challenged claims would have been
obvious under 35 U.S.C. § 103 in view of Lessin and Shoemaker.
1. Overview of Shoemaker (Ex. 1010)
See supra, Section II.A.2.
2. Overview of Lessin (Ex. 1011)
Lessin is a U.S. Patent titled “Intelligent Portable Interactive Personal
Data System,” and issued on September 19, 1989. Ex. 1011, codes (45),
(54). Lessin is directed to an “intelligent transaction card” that addresses
many of the known problems associated with “smart cards” in the
late 1980’s. Id. at 1:6–2:10. Lessin discloses that smart cards are
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“microprocessor based transaction cards” that can store more data than
conventional magnetic stripe cards while also providing ways to change the
data stored. Id. at 1:25–40. But as Lessin notes, smart cards at the time still
had shortfalls; for instance, they were “limited in that they [were] constructed
to perform a predetermined function” and some “prohibit[ed] any
modification of the card once the card [was] fully assembled.” Id.
at 1:42–46. To address these problems, Lessin describes a reprogrammable
intelligent card that can communicate with a magnetic card reader by
magnetic emulation. Id. at 1:61–66, 19:35–47. One embodiment of Lessin’s
intelligent card is reproduced below.

Figure 22A, above, is an illustration of a reprogrammable intelligent card
with a magnetic card interface in the card. Id. at 2:64–66. Lessin discloses
“magnetic head 1200 [also referred to as transducer 1200] embedded in the
card [] can receive and transmit magnetically encoded information.” Id.
at 19:45–47.
In another embodiment of Lessin, magnetic head 1200 “is positioned
within the card . . . such that [it] can be aligned with the head in a card
reading device such as a point of sale (POS) terminal 1210” (id. at 19:48–51),
as shown in Figure 22B, reproduced below.
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Figure 22B, above, is an illustration of a reprogrammable intelligent card
with a magnetic card interface in the card where the intelligent transaction
card is aligned with magnetic head 1200 in the reading device/point of sale
(POS) terminal 1210. Id. at 2:64–66.
In another embodiment of Lessin, the generation of a magnetic field
pattern is disclosed using the circuity shown in Figure 23, reproduced below.

Figure 23, above, illustrates the configuration of an intelligent transaction
card to a terminal interface. Id. at 2:67–68. Lessin discloses that “[s]ignals
representing the data to be communicated are output serially, emulating the
data encoded on a magnetic strip.” Id. at 19:52–54. According to Lessin,
“[t]he circuitry acts to simulate a magnetic field pattern that would exist on
the magnetic strip of a credit card.” Id. at 19:54–56. Lessin discloses that
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“the data is output serially bit by bit from microprocessor 1100 to analog
circuitry 1220 which drives an inductor 1230 that generates a magnetic field
pattern which can be read and interpreted by a conventional magnetic read
head 1240 in card reading device 1210.” Id. at 19:56–61. Lessin describes
that the analog circuitry is “[p]referably a simple digital-to-analog converter.”
Id. at 19:62–63.
3. Analysis of Lessin and Shoemaker as Applied to Challenged
Independent Claim 1
a. Preamble
Claim 1 recites “[a] device comprising.” Ex. 1001, 15:14.
Petitioner contends that Lessin discloses a device because Lessin
discloses an intelligent card that can communicate with a magnetic card
reader. Pet. 47 (citing Ex. 1011, 1:6–9, Figs. 22A, 22B). Patent Owner does
not dispute Petitioner’s contentions. See generally PO Resp. Nonetheless,
the burden remains on Petitioner to demonstrate unpatentability. See
Dynamic Drinkware, 800 F.3d at 1378. Based on the entire record,
regardless of whether the preamble is limiting, we find Petitioner has shown
that Lessin discloses a “device.”
b. a magnetic stripe emulator operable to communicate an analog
waveform encoded with at least one track of magnetic stripe data to
a magnetic stripe reader
Claim 1 recites “a magnetic stripe emulator operable to communicate
an analog waveform encoded with at least one track of magnetic stripe data
to a magnetic stripe reader.” Ex. 1001, 15:15–17.
Petitioner contends that Lessin discloses this limitation because it uses
magnetic head 1200, which “can receive and transmit magnetically encoded
information.” Pet. 49 (citing Ex. 1011, 19:45–47). Petitioner argues that
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magnetic head 1200 outputs a signal, which emulates the magnetically
encoded information on a magnetic strip, that can be read by a magnetic read
head on point of sale terminal (or card reading device) 1210. Id. (citing
Ex. 1011, 19:43–54).
Petitioner relies on the testimony of Mr. Halliday to support its
position. Mr. Halliday testifies that “Lessin discloses that its magnetic
head 1200 is operable to communicate an analog waveform encoded with
magnetic stripe data to a magnetic stripe reader.” Ex. 1002 ¶ l04.
Mr. Halliday further testifies that “the circuitry of magnetic head 1200
includes a microprocessor 1100, which outputs the magnetic stripe data to
analog circuitry 1220 which drives an inductor 1230 that generates a
magnetic field pattern which can be read and interpreted by a conventional
magnetic read head 1240 in card reading device 1210.” Ex. 1002 ¶ l04
(citing Ex. 1011, 19:54–61, Fig. 23). Petitioner then argues that analog
circuitry 1220 is “[p]referably a simple digital-to-analog converter [DAC].”
Pet. 50 (citing Ex. 1011, 19:62–63). According to Petitioner, “[t]he DAC
converts digital inputs from the microprocessor into analog waveforms in
which ‘magnetic fields can be generated in the inductor [1230] of opposite
polarity’ such that the ‘fields can then be read by a magnetic stripe card
reader.’” Id. (citing Ex. 1001, 19:61–20:17). Thus, Petitioner concludes that
regardless of if or how the term “at least one track of magnetic stripe data” is
construed, Lessin would disclose the recited claim limitation. Pet. 50–51.
Patent Owner does not dispute Petitioner’s contentions. See generally
PO Resp. Nonetheless, the burden remains on Petitioner to demonstrate
unpatentability. See Dynamic Drinkware, 800 F.3d at 1378.
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Based on the entirety of the record, we find Petitioner has shown that
Lessin’s magnetic head 1200 is a magnetic stripe emulator as recited by
challenged claim 1.
c. a waveform generator operable to generate said analog waveform
from a digital representation of said at least one track of magnetic
stripe data
Claim 1 recites “a waveform generator operable to generate said
analog waveform from a digital representation of said at least one track of
magnetic stripe data.” Ex. 1001, 15:18–20.
Petitioner contends that Lessin discloses this limitation because it uses
analog circuitry 1220, which generates an analog waveform from a digital
representation of magnetic stripe data received from microprocessor 1100.
Pet. 51–52 (citing Ex. 1011, Fig. 23; Ex. 1002 ¶ 106). According to
Petitioner, “Lessin’s card stores information that mimics data on the
magnetic stripe of a credit card (i.e., the tracks of the magnetic stripe data)”
and “Lessin demonstrates that the tracks of magnetic stripe data of the
intelligent card are provided to the analog circuitry 1220” as digital
representations under either party’s proposed construction of “digital
representation of said at least one track of magnetic stripe data.” Pet. 52–53
(citing Ex. 1011, 19:52–56, 19:62–20:17, Fig. 23; Ex. 1002 ¶ 106).
Petitioner relies on the testimony of Mr. Halliday to support its
position. Mr. Halliday testifies that a person of ordinary skill in the art
“would have understood that data provided as 1’s and 0’s are ‘digital
information’” under Patent Owner's proposed construction. Ex. 1002 ¶ 106.
Mr. Halliday further testifies that a person of ordinary skill in the art “would
have understood that 1’s and 0’s output serially from the microprocessor
1100 are represented graphically as a square wave, which is a ‘digital
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waveform’ under Petitioner’s proposed construction.” Id. (citing Ex. 1011,
19:56–58 (“the data is output serially bit by bit from microprocessor 1100 to
the analog circuitry 1220”)).
Patent Owner does not dispute Petitioner’s contentions. See generally
PO Resp. Nonetheless, the burden remains on Petitioner to demonstrate
unpatentability. See Dynamic Drinkware, 800 F.3d at 1378.
Based on the entire trial record, we find Petitioner has shown that the
serial outputs from Lessin’s microprocessor 1100 are represented graphically
as a square wave, which is a “digital waveform” as recited by challenged
claim 1. Additionally, we credit the testimony of Mr. Halliday that a person
of skill in the art at the time of the ’153 patent “would have known that
digital to analog conversion could be accomplished through the addition of a
single, well-known circuit—the digital to analog converter.” See Ex. 1002
¶¶ 83–84, 107.
d. wherein said device is operable to retrieve said digital
representation from a plurality of digital representations of said at
least one track of magnetic stripe data
Claim 1 recites “wherein said device is operable to retrieve said digital
representation from a plurality of digital representations of said at least one
track of magnetic stripe data.” Ex. 1001, 15:21–23.
Petitioner contends that Lessin in view of Shoemaker discloses this
limitation. Pet. 54. Petitioner specifically contends the evidence shows that,
in addition to the business/personal profiles embodiment, Shoemaker
discloses that its card can emulate the same track data (in forward or reverse
manner) depending on swipe direction. Pet. Reply 13, n. 5 (citing Dec. 25–
26; Ex. 1010, 14:58–15:6; Pet. 46). Petitioner argues that it would have been
obvious to a person of skill in the art at the time of the ’153 patent to
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combine Shoemaker and Lessin to improve the functionality in Lessin’s
intelligent card by allowing it to emulate multiple representations of the same
data traditionally found on a conventional magnetic stripe card. Pet. 54.
(citing Ex. 1002 ¶ 108).
Patent Owner contends Lessin fails to teach or suggest this limitation
of claim 1. PO Resp. 40–41. According to Patent Owner, “Lessin can be
used to process card transaction in conjunction with a terminal devices [sic]
(e.g., POS or ATM) and can operate independently, meaning it can process
card transaction without the need of a terminal device such as an ATM or
point of sale (POS) terminal.” PO Resp. 41 (citing Ex. 1011, 12:3–4,
21:15–19). Patent Owner argues that Lessin merely discloses that
information stored in ITC can be communicated to a terminal, but it does not
teach, suggest, or motivate a person of ordinary skill in the art to create a
device capable of retrieving from plurality of digital representations of track
data. Id. Patent Owner argues that Lessin fails to disclose a plurality of
digital representations as well as failing to disclose more than one of these
representations residing in memory at the same time. Id. Therefore, Patent
Owner concludes “Lessin [alone] does not disclose or make obvious
retrieving a digital representation from a plurality of digital representations in
memory of said at least one track of magnetic stripe data.” Id. at 41.
Patent Owner further contends that Lessin in view of Shoemaker still
does not disclose the recited limitation because Shoemaker “teaches that a
card may be swiped in a forward or reverse direction, but specifically teaches
that those directions are not stored in memory.” PO Resp. 41–42 (citing
Ex. 2033 ¶ 81). According to Patent Owner, “Shoemaker states that it would
be beneficial to not store any tracks in memory at all.” Id. at 42. Thus,
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Patent Owner argues “rather than retrieve a track of magnetic stripe data from
memory, Shoemaker teaches not storing any tracks of magnetic stripe data
at all.” Id. Patent Owner further argues that “[f]orward/reverse tracks are
generated ad hoc, and business profiles, rather than being actual tracks of
data, are merely separate and distinct data sets that are compiled into a single
track at the start of a purchase transaction.” Id. Patent Owner contends
“Shoemaker utilizes these discrete portions (reference numerals 202, 204,
206, 302, 304, 306, 504, and 502) in order to provide ‘dynamically
reconfigurable’ information, such that Shoemaker can store multiple payment
accounts, tokenization features, etc. that are compiled into a track ‘on the fly’
when a transaction begins.” PO Resp. 43 (citing Ex. 1010, 7:6–20, Figs 2, 3;
Ex. 2031, 323:12–324:16). Patent Owner indicates that “Shoemaker includes
these discrete portions as a result of the mechanism by which Shoemaker
stores data. Rather than store any tracks in memory, Shoemaker stores
various, discrete sets of data that it then compiles into a track as part of its
‘on the fly’ track building process.” Id. (citing Ex. 2033 ¶ 83; see Ex. 1010,
8:11–24).
Patent Owner supports its position with citations to Shoemaker’s
prosecution history in which Shoemaker argues that its features and
limitation were not anticipated by prior art references because “each of the
first data pattern and the second data pattern changes responsive to the swipe
direction” and “[prior art reference] Brown does not teach that data patterns
change responsive to a swipe direction.” PO Resp. 44 (citing Ex. 2021,
146–147). Patent Owner argues that Shoemaker differentiated itself from
prior art by generating forward and reverse track data on the fly, as opposed
to storing the track data in both a forward digital representation and a reverse
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digital representation, for security reasons. Id. Patent Owner then argues
that Shoemaker teaches away from the challenged limitation because
Shoemaker teaches that “the active credit card provides active anti-fraud
protection by dynamically modifying the data [pattern] provided to
[m]erchants.” Id. (citing Ex. 1010, 5:28–30).
Patent Owner’s position regarding the “dynamic” modification of
Shoemaker’s card is supported by Petitioner’s own citation to Shoemaker’s
disclosure that “its card can encode track data depending on the direction the
card is swiped ‘so that the data stream is always provided in the expected
order irrespective of the swipe direction.’” See Pet. 35 (citing Ex. 1010,
14:56–65). We do not agree with Patent Owner, however, that Shoemaker
necessarily teaches away from the use of stored track data. See PO Resp. 44.
“A reference may be said to teach away when a person of ordinary skill, upon
reading the reference, would be discouraged from following the path set out
in the reference, or would be led in a direction divergent from the path that
was taken by the applicant.” In re Gurley, 27 F.3d at 553. Yet, the “mere
disclosure of alternative designs does not teach away.” In re Fulton, 391
F.3d at 1201. Just because better alternatives exist in the prior art does not
mean that an inferior combination is inapt for obviousness purposes. In re
Gurley, 27 F.3d at 553; see also Baxter Int’l, 149 F.3d at 1328 (finding no
teaching away where nothing in the prior art device suggested that the
claimed invention was unlikely to work). Nothing in Shoemaker indicates
that storing the track data in both a forward digital representation and a
reverse digital representation is unlikely to work. Rather, Shoemaker merely
indicates a preference for using a dynamic modification of the data pattern to
increase security.
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Based on the entire trial record, however, we agree with Patent
Owner’s assessment that the combined teachings of Lessin and Shoemaker
would have failed to render claim 1 obvious. Despite Petitioner’s citations to
the personal and business profiles in Shoemaker and its argument that
Shoemaker discloses a card emulating the same track data regardless of
directionality, we find the record does not support Petitioner’s contention.
We find insufficient persuasive evidence to indicate that the personal and
business profiles in Shoemaker are the same track of magnetic strip data.
Rather, we find that Shoemaker’s business profiles are not complete tracks of
data, but are separate and distinct data sets that are compiled into a single
track at the start of a purchase transaction. See Ex. 1010, 7:6–20, Figs 2, 3
As Shoemaker discloses discrete magnetic stripe portions (reference
numerals 202, 204, 206, 302, 304, 306, 504, and 502) “represent dynamically
reconfigurable data bearing portions” that “manifest different values (e.g.,
vary from transaction to transaction) during field usage.” See id. Petitioner
fails to explain persuasively how the cited profiles read on the challenged
claim limitation because Shoemaker discloses that when its card determines
swipe direction it then represents or encodes “the data on the dynamically
reconfigurable data interface so that the data stream is always provided in the
experienced order irrespective of the swipe direction.” See Ex. 1010,
14:54–65.
4. Rationale to Combine Lessin with Shoemaker
Petitioner contends a person of ordinary skill in the art would have had
many motivations to use the teachings of Shoemaker to modify Lessin “to
improve the functionality in Lessin’s intelligent card by, for example,
allowing it to emulate multiple representations of the same data traditionally
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found on a conventional magnetic stripe card.” Pet. 44 (citing Ex. 1002
¶¶ 99–101). Petitioner argues “Lessin explicitly recognizes that a motivation
existed in the late 1980s to provide ‘smart cards’ with more functionality than
conventional magnetic stripe cards.” Id. at 44–45 (citing Ex. 1011, 1:25–30,
19:43–47, Fig. 22A). According to Petitioner, Shoemaker can accomplish
this because it “provides a card that can emulate multiple representations of
the same data found on conventional magnetic stripe cards.” Id. at 46 (citing
Ex. 1010, 14:54–15:6).
Petitioner further argues that a person of ordinary skill in the art would
have “known that the[re] are implementation details [regarding emulating
multiple representations of the same data found on a conventional magnetic
strip card] explained in Shoemaker and would have been motivated to use
Shoemaker’s teachings to improve the functionality of Lessin’s card and
make it more commercially convenient for card users—a motivation
explicitly recognized by Lessin. Pet. 46 (citing Ex. 1011, 1:54–59 (“Finally,
[prior art] cards were not designed to be ‘user friendly.’”); Ex. 1002 ¶ 101).
Furthermore, according to Petitioner, “because these changes would have
been routine implementation details, a [person of ordinary skill in the art]
would have had more than a reasonable expectation of success in
implementing them.” Id. at 25 (citing Ex. 1002 ¶ 74).
Patent Owner contends a person of ordinary skill in the art at the time
of the invention would not have combined the teachings of Shoemaker and
Lessin. PO Resp. 38–40. Patent Owner argues that Lessin’s expressly stated
motivation is to provide a user interface and operating system by which
Lessin aids a user in operating its Intelligent Transaction (“IT”) Card, thus,
Lessin teaches what it considers to be a relatively novel interface in order to
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make the IT Card more “user friendly,” rather than magnetic emulation
devices known in the art. Id. at 38 (citing Ex. 203 ¶ 77; Ex. 1011, 1:54–59).
According to Patent Owner, it would not have been readily apparent to a
person of ordinary skill in the art why Shoemaker’s forward and reverse
functionality would need to be implemented into the emulator of Lessin, a
reference which is almost entirely devoted to providing an improved user
interface. Id. at 39 (citing Ex. 2033 ¶ 77).
We have considered carefully all arguments and supporting evidence
regarding the rationale for combining the teachings of Lessin with
Shoemaker. Although we are not persuaded that Shoemaker necessarily
provides implementation detail regarding emulating multiple representations
of the same data found on a conventional magnetic strip card, we find
Petitioner provides an adequate reason that a person of skill in the art would
have combined the teachings from the cited prior art. A motivation to
combine may be found “explicitly or implicitly in market forces; design
incentives; the ‘interrelated teachings of multiple patents’; ‘any need or
problem known in the field of endeavor at the time of invention and
addressed by the patent’; and the background knowledge, creativity, and
common sense of the person of ordinary skill.” ZUP, LLC v. Nash Mfg., Inc.,
896 F.3d 1365, 1371 (Fed. Cir. 2018) (quoting Plantronics, Inc. v. Aliph,
Inc., 724 F.3d 1343, 1354 (Fed. Cir. 2013)).
Based on the record before us, Petitioner appears to bring in
Shoemaker to provide a more explicit teaching regarding multiple
representations of the same data on an individual card. See Ex. 1002 ¶ 73.
Given Lessin’s express teaching regarding an intelligent transaction card with
an operating system and memory on which to store Shoemaker’s stripe data,
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we agree with Petitioner that a person of ordinary skill would have been
motivated to turn to Shoemaker’s teachings for use with Lessin’s card.
5. Summary Regarding Claim 1
Based on the foregoing, we determine Petitioner has not shown by a
preponderance of the evidence that the teachings of Lessin and Shoemaker
would have rendered obvious the challenged claim limitation, “wherein said
device is operable to retrieve said digital representation from a plurality of
digital representations of said at least one track of magnetic stripe data” See
Ex. 1001, 15:21–23. Accordingly, we conclude Petitioner fails to
demonstrate by a preponderance of the evidence that challenged independent
claim 1 would have been obvious under 35 U.S.C. § 103 in view of the
teachings of Lessin and Shoemaker.
6. Analysis of Lessin and Shoemaker as Applied to Challenged
Dependent Claims 5–8
Petitioner contends dependent claims 5–8 of the ’153 patent are
unpatentable under 35 U.S.C. § 103 as being obvious in view of Lessin and
Shoemaker and provides specific arguments for each challenged claim.
Pet. 12, 54–68. Patent Owner does not address specifically the limitations of
these challenged dependent claims, but nonetheless the burden remains on
Petitioner to demonstrate unpatentability. PO Resp. 46‒47; see Dynamic
Drinkware, 800 F.3d at 1378.
After a thorough analysis of the entire trial record, we determine
Petitioner fails to demonstrate by a preponderance of the evidence that
dependent claims 5–8 would have been obvious in view of the combined
teachings of Lessin and Shoemaker under 35 U.S.C. § 103 for the same
reasons provided for independent claim 1.
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7. Objective Indicia of Nonobviousness
Patent Owner asserts the same evidence regarding nonobviousness of
the claims, including commercial success, long-felt need, failure of others,
and industry praise of the patented invention, teaching away by others, and
copying. PO Resp. 47–52 (citing Exs. 2013–2020). Petitioner disagrees.
Pet. 58–59. We need not reach a conclusion regarding Patent Owner’s
evidence regarding nonobviousness of the claims as we have found already
that, regardless of the strength of that evidence, Petitioner has failed to meet
its burden to demonstrate that the challenged claims would have been
obvious.
III. CONCLUSION
Based on the full trial record before us, we determine Petitioner has
failed to show by a preponderance of the evidence that claims 1 and 5–8 of
the ’153 patent would have been obvious over (1) Gutman in combination
with Shoemaker, or (2) Lessin in combination with Shoemaker.

In summary:
Claims

35 U.S.C.
§
References/
Basis
Claims
Shown
Unpatentable
Claims
Not Shown
Unpatentable
1, 5–8 103 Gutman,
Shoemaker
1, 5–8
1, 5–8 103 Lessin,
Shoemaker
1, 5–8
Overall
Outcome
1, 5–8
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IV. ORDER
In consideration of the foregoing, it is hereby:
ORDERED that Petitioner has not shown by a preponderance of the
evidence that claims 1 and 5–8 of the ’153 patent are unpatentable; and
FURTHER ORDERED that parties to the proceeding seeking judicial
review of this Final Written Decision must comply with the notice and
service requirements of 37 C.F.R. § 90.2.

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PETITIONER:

F. Christopher Mizzo
Gregory Arovas
James Marina
Alan Rabinowitz
KIRKLAND & ELLIS LLP
chris.misso@kirkland.com
greg.arovas@kirkland.com
james.marina@kirkland.com
alan.rabinwoitz@kirkland.com

PATENT OWNER:

Robert W. Morris
ECKERT SEAMANS CHERIN & MELLOTT, LLC
rwmorris@eckertseamans.com

Michael V. Messinger
SHAMI MESSINGER PLLC
mike@shamimessinger.com