EBAY INC.v.Moneycat Ltd.

Patent Trial and Appeal Board

Sep 23, 2015

12539141 (P.T.A.B. Sep. 23, 2015)

Trials@uspto.gov Paper 51
571-272-7822 Entered: September 23, 2015

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

EBAY INC.,
Petitioner,

v.

MONEYCAT LTD.,
Patent Owner.
____________

Case CBM2014-00093
Patent 8,195,578 B2
____________

Before BRYAN F. MOORE, MIRIAM L. QUINN, and
MINN CHUNG, Administrative Patent Judges.

CHUNG, Administrative Patent Judge.

FINAL WRITTEN DECISION
35 U.S.C. § 328(a) and 37 C.F.R. § 42.73

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I. BACKGROUND
Petitioner eBay Inc. (“Petitioner”) filed a Petition (Paper 1) and a
Replacement Petition (Paper 4, “Petition” or “Pet.”) requesting a covered
business method patent review of claims 1–23 of U.S. Patent No. 8,195,578
B2 (Ex. 1001
1
, “the ’578 patent”) pursuant to Section 18(a) of the Leahy-
Smith America Invents Act (“AIA”).
2
MoneyCat Ltd. (“Patent Owner”)
filed a Preliminary Response (Paper 8, “Prelim. Resp.”). Taking into
account Patent Owner’s preliminary response, the Board determined that the
information presented in the Petition demonstrated it was more likely than
not that claims 1–3, 5–11, and 13–23 are unpatentable. Pursuant to 35
U.S.C. § 324, the Board instituted a covered business method patent review
on September 24, 2014 as 1–3, 5–11, and 13–23 (the “instituted claims”) of
the ’578 patent. Paper 14 (“Dec. to Inst.”). Subsequent to institution, Patent
Owner filed a Request for Rehearing (Paper 16, “Req. Reh’g”) seeking
reversal of the Board’s Decision to Institute, which was denied (Paper 23,
“Reh’g Dec.”). Thereafter, Patent Owner filed a Patent Owner’s Response
(Paper 24, “PO Resp.”), and Petitioner filed a Reply (Paper 32, “Pet.
Reply”).
Subsequently, Patent Owner filed a Motion to Exclude (Paper 42, “PO
Mot. to Exclude”) certain prior-art evidence and Declarations of Clifford
Neuman in their entirety. Petitioner filed an Opposition (Paper 44, “Pet.

1
All citations to Petitioner’s Exhibits in this Decision refer to corrected
Exhibits filed in response to the Notice of Filing Date Accorded to Petition.
See Paper 6.
2
Pub. L. 112-29, 125 Stat. 284, 329 (2011).
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Exclude Opp.”), and Patent Owner filed a Reply (Paper 47, “PO Exclude
Reply”). Patent Owner also filed a Motion for Observation (Paper 41,
“Obs.”) on certain cross-examination testimony of B. Clifford Neuman,
Ph.D. Petitioner filed a Response (Paper 46, “Obs. Resp.”).
A combined oral hearing in this proceeding and related Cases
CBM2014-00091 and CBM2014-00092 was held on June 5, 2015. A
transcript of the hearing is included in the record as Paper 50 (“Tr.”).
The Board has jurisdiction under 35 U.S.C. § 6(c). This Final Written
Decision is issued pursuant to 35 U.S.C. § 328(a) and 37 C.F.R. § 42.73.
For the reasons that follow, we determine that Petitioner has shown by a
preponderance of the evidence that claims 1–3, 5–11, and 13–23 of the ’578
patent are unpatentable.
A. Related Proceedings
Petitioner indicates that the ’578 patent has been asserted against
PayPal Inc., a privy of Petitioner, in the following patent infringement case:
MoneyCat, Ltd. v. PayPal, Inc., No. 1:13-cv-01358 (D. Del. filed July 30,
2013). See Pet. 4, 11; Paper 10. U.S. Patent Nos. 8,051,011 B2 (“the ’011
patent”) and 7,590,602 B1 (“the ’602 patent”) are also the subject of
instituted trial proceedings eBay Inc. v. MoneyCat Ltd., Cases CBM2014-
00091 and CBM2014-00092, respectively. The ’011 patent and the ’578
patent issued from respectively a divisional and a continuation application of
the application that resulted in the ’602 patent.
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B. The ’578Patent
The ’578 patent describes a method and system for electronic
currency transactions. See Ex. 1001
3
, Abstract. The subject matter claimed
in the ’578 patent relates to an approach to electronic currency transaction
that utilizes a server in the middle, connected to the parties to the transaction
over a network. See id. at Abstract, col. 5, ll. 64–67, col. 15, l. 60–col. 16,
l. 37, Figure 7. The claimed invention purports to “eliminat[e] the problem
of electronic theft of electronic currency, in systems employing an isolation
server to effect currency transactions.” Id. at col. 5, ll. 65–67.
Figures 6 and 7 of the ’578 patent are shown below:

Figure 6 illustrates a sum of electronic money, and Figure 7 schematically
represents an electronic currency transaction claimed in the ’578 patent. See
id. at col. 12, ll. 60–64.

3
Exhibit 1001 contains the ’578 patent and one ex parte reexamination
certificates concerning the ’578 patent. All citations to Exhibit 1001 in this
Decision refer to the ’578 patent unless otherwise specified.
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As depicted in Figure 6, each data packet P1, P2, . . . Pi corresponds
to an amount of electronic money. See id. at col. 14, ll. 33–39. Each packet
Pi contains three components: a unique identifier UINi, which identifies
packet Pi among all such data packets issued by a Currency Issuing
Authority (“CIA”); the monetary value associated with packet Pi; and
authentication data ADi to confirm that packet Pi was generated by the CIA.
See id. at col. 13, ll. 17–22, col. 14, ll. 49–54, Fig. 6.
As illustrated in Figure 7, user 1 interacts with provider 2 via the
Internet (broken arrows) to effect a payment of electronic currency to
provider 2. See id. at col. 15, ll. 60–col. 16, l. 1. User 1 has data packets Pi
stored in an active data packet area of a data storage area accessible by a
CIA server (“CIAS”). See id. at col. 14, l. 57– col. 15, l. 26. When user 1
and provider 2 decide upon a transaction, user 1 instructs the CIAS to effect
payment to provider 2 of the required sum on behalf of user 1. See id. at
col. 15, ll. 62–col. 16, 1. 1. In response, the CIAS accesses the active data
packet area of user 1 to copy to a local memory of the CIA one or more data
packets Pi corresponding to the indicated sum, and delete or deactivate the
packets Pi from the active data packet area. See id. at col. 16, ll. 10–16. The
CIAS verifies the authentication data ADi of the packets Pi, and checks the
identifiers UINi of the packets Pi against a database of previous transactions,
to verify the packets Pi have not previously been used to effect payment.
See id. at col. 16, ll. 24–28. If the CIAS verification is successful, the CIAS
invalidates the packets Pi provided by user 1, and issues a new set of packets
Pi for the same value to provider 2. See id. at col. 16, ll. 28–37.
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Admitted Prior Art NetCash System
In a section titled “BACKGROUND OF THE INVENTION,” the
’578 patent discusses several systems for carrying out electronic payment
transactions that were known prior to the filing of the ’578 patent. See id. at
col. 1, ll. 22–27, col. 1, l. 55–col. 4, l. 39. One such prior art system is
“NetCash.” Id. at col. 2, l. 47. Petitioner relies on the NetCash admitted
prior art as a basis for asserting four grounds of unpatentability. See, e.g.,
Pet. 12–14, 38, 50, 52, 65. In our discussions below, consistent with the
Decision to Institute (Dec. to Inst. 4), we will refer to the disclosure of
admitted prior art at column 2, line 47 through column 3, line 39 and Figure
2 of the ’578 patent as “the APA NetCash System.”
C. Illustrative Claim
Of the challenged claims, claims 1 and 9 are the independent claims.
All other challenged claims depend from claims 1 or 9. Claim 1 is
illustrative of the challenged claims and is reproduced below:
1. A method for effecting currency transactions between a
first user and a second user over a network wherein said
currency is money-representing data packets, the method
comprising the following steps:
A) a Currency Issuing Authority trusted server (CIAS)
receives payment instructions from said first user to transfer a
first monetary sum to said second user, wherein the CIAS is
programmed to receive payment instructions from said first
user only over a network connection between said first user and
a Currency Issuing Authority (CIA);
B) the CIAS accesses one or more money-representing
data packets in a first active data packets area located in a first
data storage area associated with said first user, each of said
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money-representing data packets comprising information on its
value, wherein each of said money-representing data packets
and said information on its value are both created by said CIA;
C) the CIAS manipulates the money-representing data
packets located in said first active data packets area to withdraw
a second monetary sum therefrom and (i) deletes one or more
money-representing data packets in the first active data packets
area that equals the second monetary sum or (ii) marks one or
more money-representing data packets in the first active data
packets area that equals the second monetary sum as spent; and
D) the CIAS creates one or more new money-
representing data packets corresponding to a third monetary
sum.
Ex. 1001, Reexam Cert., col. 1, l. 21–col. 2, l. 7.
D. Instituted Grounds of Unpatentability
The Board instituted the instant covered business method patent
review based on the following grounds of unpatentability:
Claims Challenged Statutory Basis Ground
1–3, 7–11, 15–17, and
19–23
§ 103(a) Teramura
4
and the APA NetCash
System
5, 6, 13, 14, and 18 § 103(a) Teramura, the APA NetCash
System, and Popolo
5

1–3, 7–11, 15–17, and
19–22
§ 103(a) Bernstein
6
and the APA NetCash
System

4
Ex. 1007, CA 2,221,399 (June 11, 2002).
5
Ex. 1009, US 5,715,402 (Feb. 3, 1998).
6
Ex. 1006, US 5,915,023 (June 22, 1999).
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Claims Challenged Statutory Basis Ground
5 and 13 § 103(a) Bernstein, the APA NetCash
System, and Popolo

II. ANALYSIS
A. Claim Construction
In a covered business method patent review, claim terms are given
their broadest reasonable interpretation in light of the specification of the
patent in which they appear. 37 C.F.R. § 42.300(b); see also In re Cuozzo
Speed Techs., LLC, 793 F.3d 1268, 1276–79 (Fed. Cir. 2015) (In considering
the broadest reasonable interpretation standard for post-grant review
proceedings, the Federal Circuit determined that “Congress implicitly
approved the broadest reasonable interpretation standard in enacting the
AIA,” and “the standard was properly adopted by PTO regulation.”), reh’g
en banc denied, 793 F.3d 1297 (Fed. Cir. 2015). Under the broadest
reasonable interpretation standard, and absent any special definitions, claims
terms are given their ordinary and customary meaning, as would be
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).
“Currency Issuing Authority Trusted Server”
The term “Currency Issuing Authority trusted server” is included in
all claims of the ’578 patent. See Pet. 12. Petitioner proposes that the term
“should be interpreted as a server trusted to make transactions using data
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packets issued from a particular CIA.” Id. Patent Owner had argued that
Petitioner’s proposal does not comport with the broadest reasonable
construction standard. Prelim. Resp. 24–25. In the Decision to Institute, we
adopted Patent Owner’s construction of the term “Currency Issuing
Authority trusted server” to mean a “server that is trusted by the Currency
Issuing Authority” under the broadest reasonable interpretation standard.
Dec. to Inst. 7 (citing Ex. 1001, col. 7, ll. 4–13, col. 12, ll. 2–8). In the
Patent Owner’s Response and the Petitioner’s Reply, the parties do not
dispute the construction of this term or any other terms. We see no reason,
therefore, to revise the claim construction adopted in our Decision to
Institute. Accordingly, we construe the term “Currency Issuing Authority
trusted server” to mean “a server that is trusted by the Currency Issuing
Authority.”
We see no need to construe expressly any other claim terms for
purposes of this Decision. See, e.g., Vivid Techs., Inc. v. Am. Sci. & Eng’g,
Inc., 200 F.3d 795, 803 (Fed. Cir. 1999) (only those terms that are in
controversy need to be construed, and only to the extent necessary to resolve
the controversy).
B. Whether the ’578 Patent is a Covered Business Method Patent
The Board determined, in the Decision to Institute, that the ’578
patent is a covered business method patent as defined in Section 18(d)(1) of
the AIA and 37 C.F.R. § 42.301(a). Dec. to Inst. 8–11. As discussed in the
Decision to Institute, the definition of “covered business method patent” in
Section 18(d)(1) of the AIA excludes patents for “technological inventions.”
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Patent Owner asserts that the ’578 patent is not a covered business method
patent because it is a patent for a “technological invention.” PO Resp. 79–
80.
In determining whether a patent is for a technological invention, we
consider “whether the claimed subject matter as a whole recites a
technological feature that is novel and unobvious over the prior art; and
solves a technical problem using a technical solution.” 37 C.F.R.
§ 42.301(b). The following claim drafting techniques, for example, typically
do not render a patent a “technological invention”:
(a) Mere recitation of known technologies, such as
computer hardware, communication or computer networks,
software, memory, computer-readable storage medium,
scanners, display devices or databases, or specialized machines,
such as an ATM or point of sale device.
(b) Reciting the use of known prior art technology to
accomplish a process or method, even if that process or method
is novel and non-obvious.
(c) Combining prior art structures to achieve the normal,
expected, or predictable result of that combination.
Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,763–64 (Aug.
14, 2012).
Petitioner asserts, citing the legislative history of the AIA, that
“[a]bstract business concepts and their implementation, whether in
computers or otherwise,” are not included in the definition of “technological
inventions,” and, therefore, even if the ’578 patent’s brokering system were
novel, this is not a “technological” feature. Pet. 8 (internal quotation marks
omitted) (citing Ex. 1004, 634 (quoting 157 Cong. Rec. S1364, S1379 (daily
ed. Mar. 8, 2011) (statement of Sen. Kyl))). Petitioner further asserts that
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the ’578 patent claims do not solve a technical problem using a technical
solution because “introducing an age-old brokering concept to network
transactions is neither technological nor novel.” Id. Petitioner argues that
the problems identified by the inventor of the ’578 patent were that “prior art
systems required direct interaction between the seller and buyer . . . and that
prior art systems involved complicated encryption key agreement processes
between the buyer and the seller.” Id. at 8–9 (citing Ex. 1001, col. 4, ll. 13–
16). Petitioner asserts that the solution described in the ’578 patent is to
restructure the sequence of events in the transaction so that the electronic
currency of the prior art is exchanged indirectly through the CIAS, rather
than directly between the buyer and seller, eliminating the need for the buyer
and seller to interact directly or exchange encryption keys. Id. at 9.
Petitioner asserts that this rearrangement simply mirrors a traditional
brokered transaction and that adopting a traditional brokerage format is not a
technical solution. Id. Petitioner also discusses each limitation of claim 1
and argues each limitation was known in the prior art, providing detailed
explanations and citations to the known prior art discussed in the ’578
patent. Id. at 9–10.
Patent Owner argues that the challenged claims include a novel and
unobvious technical feature—that is, a CIAS issues new data packets to a
second user upon receiving payment instructions from a first user such that
“the first user’s data packets are not provided to the second user.” See PO
Resp. 79. Patent Owner argues this is a novel and unobvious technical
feature because it solves security problems. See id. Patent Owner further
asserts that the technical problem addressed by the ’578 patent is “to cause
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value associated with electronic data (data packets) of a first user to be
transferred to a second user in a convenient, reliable and secure manner,
while minimizing theft and forgery.” Id. at 79–80. Patent Owner asserts
that the technical solution to this problem is “to provide an intermediary
server between the first user (the sender) and the second user (the
recipient),” which “enables the transfer of value to take effect, without
physically transferring the first user’s data packets to the second user and
without requiring the use of complex encryption techniques.” Id. at 80
(emphasis added).
We are persuaded by Petitioner’s argument that the subject matter of
claim 1 does not recite a technological feature that is novel and unobvious
over the prior art. In the Decision to Institute, the Board analyzed, taking
into account Petitioner’s and Patent Owner’s arguments, the steps recited in
claim 1 relating to the operation of the CIAS and concluded that, even if the
claimed process were novel and non-obvious, it does not render the ’578
patent a “technological invention.” Dec. to Inst. 9–10 (citing 77 Fed. Reg. at
48,764 (claim drafting technique “(b)”)). We see nothing in Patent Owner’s
arguments in the Patent Owner’s Response that would justify altering this
conclusion. Patent Owner asserts that the Board did not address previously
the claimed feature that “the data packets of the first user are accessed and
deactivated and never reach the second user [and] the second user receives
new data packets.” PO Resp. 2. Similar to the discussion in the Decision to
Institute (see Dec. to Inst. 9–10), accessing, deleting, and issuing data
packets are known prior art methods of managing and manipulating digital
data (see, e.g., Ex. 1001, col. 2, l. 47–col. 4, l. 6). Thus, even if the claimed
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method, as a whole, is novel and non-obvious, reciting the use of known
prior art technology to accomplish that method does not render the ’578
patent a “technological invention” under AIA § 18(d)(1) and 37 C.F.R. §
42.301. See 77 Fed. Reg. at 48,763–64.
We also are persuaded by Petitioner’s explanation that the claimed
subject matter does not solve a technical problem using a technical solution.
We note that Petitioner and Patent Owner appear to agree that the solution of
the ’578 patent is to provide an “intermediary server” between the first user
and the second user to restructure the transaction in the prior art so that
electronic currency is exchanged indirectly through the intermediary server,
i.e., CIAS, rather than directly between the users. We agree with Petitioner
that this rearrangement is not a “technical solution” because it adopts a
traditional brokered transaction approach and applies it to the electronic
currency transaction of the prior art.
Accordingly, we are persuaded that Petitioner has met its burden of
demonstrating that the ’578 patent is a covered business method patent under
AIA § 18(d)(1) and is eligible for review under the transitional covered
business method patent program.
C. Whether a Covered Business Method Patent Review Can Be
Based on the APA NetCash System
Patent Owner asserts that “admitted prior art,” as a category, does not
fall within AIA § 18(a)(1)(C) and, therefore, cannot form the basis of an
unpatentability ground in this proceeding. See PO Resp. 34–35, Prelim.
Resp. 18–19, Req. Reh’g 10–13. For the reasons described below, we
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conclude that the Petitioner’s challenges in this proceeding can be based
properly on the APA NetCash System under AIA § 18(a)(1)(C)(i).
Section 18(a)(1)(C) of the AIA provides “[a] petitioner in a
transitional proceeding who challenges the validity of 1 or more claims in a
covered business method patent on a ground raised under [the pre-AIA
version of] section 102 or 103 of title 35, United States Code . . . may
support such ground only on the basis of—(i) prior art that is described by
section 102(a) of such title . . . ” (emphasis added). The pre-AIA version of
35 U.S.C. § 102(a) states “[a] person shall be entitled to a patent unless—
(a) the invention was known or used by others in this country, or patented or
described in a printed publication in this or a foreign country, before the
invention thereof by the applicant for patent” (emphases added). The ’578
patent states that the APA NetCash System is a “prior art system . . .
described” in two articles by Gennady Medvinsky and B. Clifford Neuman
published in 1993 and “developed at the Information Sciences Institute of
the University of Southern California.” Ex. 1001, col. 2, ll. 47–56
(emphases added). In the Decision to Institute and the Decision on Request
for Rehearing, the Board determined preliminarily that those statements
constitute an admission that the APA NetCash System described in the ’578
patent is a prior art system under § 102(a) as known by others in the United
States and as described in a printed publication. Dec. to Inst. 13, Reh’g Dec.
4.
Patent Owner asserts that the portion of the ’578 patent cited by the
Board is “at most an admission that the cited articles by Medvinsky et al. are
§ 102(a) references and that NetCash is a ‘framework’ for electronic cash
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developed at the University of Southern California.” PO Resp. 35. Patent
Owner further argues that the Petition is not based on the Medvinsky
publications or the “framework,” but, rather, is based on the description of
the APA NetCash System in the ’578 patent, “which can only be considered
non-102 ‘admitted prior art’ at best.” Id. Patent Owner does not describe
the admissions made in the ’578 patent accurately. The ’578 patent’s
admission described in the Board’s decisions includes two related, but
independent components: (1) an admission regarding the prior art status of
the APA NetCash System—i.e., it is a prior art system under § 102(a) as
described in the Medvinsky-Neuman publications and as known or used by
others in this country; and (2) an admission regarding the teachings of the
APA NetCash System—i.e., the teachings of the APA NetCash System are
described in column 2, line 47 through column 3, line 39 and Figure 2 of the
’578 patent. Patent Owner does not explain how relying on admission (2)—
i.e., the ’578 patent’s representation that the teachings of the APA NetCash
System are described in the patent—renders the APA NetCash System non-
102(a) prior art, essentially erasing admission (1) that the APA NetCash
System is prior art under § 102(a). Absent countervailing considerations, the
public is entitled to rely on the patentee’s representations made on the face
of the ’578 patent as admissions regarding the NetCash prior art for purposes
of patentability challenges, including using the ’578 patent’s description of
the APA NetCash System as evidence of the teachings of the NetCash prior
art. In Application of Nomiya, 509 F.2d 566 (CCPA 1975), when the
appellants’ application included two figures, Figures 1 and 2, that were
labeled as “prior art” and described as such in the specification, the court
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held “[w]e see no reason why appellants’ representations in their application
should not be accepted at face value as admissions that Figs. 1 and 2 may be
considered ‘prior art’ for any purpose, including use as evidence of
obviousness under [Section] 103.” Id. at 570–71 (emphasis added).
Patent Owner also asserts that the Federal Circuit “has long
recognized that ‘admitted prior art’ is not prior art ‘described by section
102(a)’ or any other portion of 102/103” and “described prior art created by
admission as a separate and distinct class of prior art from § 102 prior art.”
Prelim. Resp. 18, Req. Reh’g 11, PO Resp. 35 (citing Riverwood Int’l Corp.
v. R.A. Jones & Co., Inc., 324 F.3d 1346, 1354 (Fed. Cir. 2003); In re Fout,
675 F.2d 297 (CCPA 1982)). In other words, Patent Owner asserts that,
under the Federal Circuit’s case law, all “admitted prior art” is categorically
excluded from the class of § 102 prior art.
The cases cited by Patent Owner, however, do not support Patent
Owner’s contention. In Riverwood Int’l Corp., the issue was whether the
patent, which was admitted as prior art, constituted prior art under 103(a)
and 102(e) when the prior art patent was issued to the same inventor or
inventive entity as the challenged patent. The court held “[w]hile . . . a
reference can become prior art by admission, that doctrine is inapplicable
when the subject matter at issue is the inventor’s own work.” Riverwood
Int’l Corp., 324 F.3d at 1354 (emphasis added). In Fout, the issue was
whether the prior invention described in the preamble of a Jepson claim
constituted prior art under § 103 when the appellants admitted they had
actual knowledge of the prior invention. See Fout, 675 F.2d at 300.
Although the appellants argued that “[t]he preamble of appellants’ own
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claims cannot properly be used as a reference against them,” the court held
that “[t]his court has recognized that section 102 is not the only source of
section 103 prior art” and that “[v]alid prior art may be created by the
admissions of the parties.” Id. The court in Riverwood Int’l Corp. made
essentially the same statement, citing Fout. See Riverwood Int’l Corp., 324
F.3d at 1354 (citing Fout, 675 F.2d at 300). Although these cases may stand
for the proposition that some prior art created by party admission may not
qualify as § 102 prior art, these cases did not hold all prior art created by
admissions of the parties are non-102 prior art. In other words, contrary to
Patent Owner’s contention, these cases did not conclude all prior art created
by admission must be excluded from the category of § 102 prior art. More
importantly, none of these cases held that prior art expressly admitted in a
patent to be known or used by others in the U.S. or described in a
publication is not available as 102(a) prior art to the patent; nor did the cases
hold that the description of the admitted prior art included in the patent
cannot be relied upon as evidence of the teachings of the admitted prior art.
Therefore, Patent Owner’s arguments, including its reliance on
Riverwood Int’l Corp. and Fout, are unpersuasive. Accordingly, we
conclude this proceeding for a covered business method review can be based
properly on the APA NetCash System prior art under AIA § 18(a)(1)(C)(i).
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D. Whether Teramura Is Prior Art
Petitioner asserts that Teramura (Ex. 1007) is prior art to the ’578
patent under 35 U.S.C. § 102(b)
7
because it bears an “Open to Public Insp.”
date of May 21, 1998. See Pet. 21. In response to Patent Owner’s objection
that Exhibit 1007 is not a copy of the application “laid open” in the
Canadian Patent Office on May 21, 1998 (see Req. Reh’g 4–9), Petitioner
has filed a certified copy of the application file history that includes the
Teramura laid-open application (see Paper 19, 2; Ex. 1015, 2–3, 89).
Patent Owner asserts that Exhibit 1007 is a copy of a Canadian patent
issued and published on June 11, 2002, and, hence is not prior art to the ’578
patent, which has an earlier foreign priority filing date of August 26, 1999.
See PO Resp. 28–29, Prelim. Resp. 23. Patent Owner further argues the
Petition fails because it is based on Exhibit 1007, not on “a related
application file . . . laid open in 1998.” PO Resp. 28. Patent Owner asserts
that Petitioner “did not rely on Ex. 1007 as evidence of what was in a
different document,” namely the Teramura laid-open application, but, rather,
“wrongly asserted that Ex. 1007 itself had been published in May 21, 1998.”
Id. at 29 (citing Pet. iii, 27). Patent Owner argues the Board should not
“substitute a different theory (that Ex. 1007 is evidence of the alleged
publication of a different document in 1998) for the theory Petitioner

7
The section of the AIA that modified 35 U.S.C. § 102 went into effect on
March 18, 2013. Because the application for the ’578 patent was filed
before that date, we refer to the pre-AIA version of § 102 throughout the
present decision.
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included in its petition (that Ex. 1007 itself was published in 1998).” Id. We
are not persuaded by Patent Owner’s arguments.
Patent Owner does not dispute Exhibit 1007 on its face shows two
different dates: June 11, 2002 as the “Issue Date”; and May 21, 1998 as the
“Open to Public Insp.” date. See Ex. 1007, cover page; see also
PO Resp. 28 (“While the Teramura Patent cover page suggests that a
related application file was laid open in 1998, that document is not
mentioned or relied upon in the Petition.”) (emphasis added). Based on this
undisputed evidence, we understand Petitioner’s statement that Exhibit 1007
was “published on May 21, 1998” (Pet. 21) to be a contention that the
disclosure of Exhibit 1007 was “laid open to public inspection” on May 21,
1998.
Furthermore, Patent Owner’s formulation of the issue—whether
Exhibit 1007 itself qualifies as prior art under §§ 102(a) or (b)—is inexact.
See PO Resp. 27–29. Rather, the issue under §§ 102(a) and (b) is whether
the invention claimed by the ’578 patent was “described in a printed
publication in this or a foreign country” before the relevant dates.
The issue, then, is whether the disclosure of Ex. 1007 relied upon by
Petitioner is any different from the disclosure that was laid open in the
Canadian Patent Office on May 21, 1998. In its Request for Rehearing,
Patent Owner argued that it is “severely disadvantaged” because it has not
seen the laid open application, which may not have in fact contained the
subject matter disclosed in Exhibit 1007, or may have included additional
subject matter detrimental to Petitioner’s arguments concerning the potential
unpatentability of the ’578 patent. See Req. Reh’g 7–8. Now, having
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received Exhibit 1015 produced by Petitioner in response to Patent Owner’s
objections, Patent Owner does not contend the disclosure in Exhibit 1015 is
any different from the disclosure in Exhibit 1007. Nor does Patent Owner
contend Exhibit 1015 fails to corroborate the representation on the face of
Exhibit 1007 that the Teramura disclosure was laid open to the public on
May 21, 1998. Instead, Patent Owner contends that it does not have the
burden to show the disclosure contained in Exhibit 1015 is different from the
disclosure of Exhibit 1007. Rather, Patent Owner contends that Petitioner
bears the burden to demonstrate that the disclosures are the same and the
disclosure included in Exhibit 1007 was in fact laid open on May 21, 1998.
See PO Resp. 30–32.
As discussed above, Petitioner asserts that Exhibit 1015 is a certified
copy of the Teramura application file history, which includes a copy of the
Teramura application laid open to the public on May 21, 1998. See
Paper 19, 2; Pet. Exclude Opp. 3 (citing Ex. 1015, 2–3, 89–130). Patent
Owner argues that Exhibit 1015 is “merely a copy of the Teramura file
history as it exists today,” and “is not sufficient evidence of what existed
(and was ‘laid-open’) on May 21, 1998” because “[o]ld documents could
have recently been added, for proper or improper purposes.” PO Resp. 31–
32. Patent Owner also argues that there is no evidence of what specific
documents or pages were part of the allegedly “laid open” file in 1998, and
that “[w]ithout a copy of the file – as laid open in 1998 – there is no
evidence on this issue.” Id. at 30–31 (emphasis added). Patent Owner
asserts that “Petitioner bears this burden and it is not appropriate to shift the
burden to Patent Owner to attempt to prove a negative.” Id. at 31.
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Petitioner asserts that Exhibit 1015 corroborates the laid-open date of
the Teramura application and that Patent Owner has offered no evidence to
suggest that the certified records of the Canadian Patent Office cannot be
trusted. Pet. Exclude Opp. 2–4. Petitioner further argues that absolute
certainty regarding the instant Teramura was laid open is not the proper
evidentiary standard, but, rather, Petitioner need only present evidence
sufficient to show that it was more likely than not that Teramura was laid
open to the public on May 21, 1998. Id. at 4 (citing 37 C.F.R. § 42.1(d)).
We agree with Petitioner that a preponderance of evidence is the proper
evidentiary standard and also agree that Exhibit 1015 corroborates
Teramura’s laid-open date under that standard.
Furthermore, we are not persuaded by Patent Owner’s arguments that
Petitioner has not met its burden, because we find no evidence that the
disclosure contained in Exhibit 1015 is different from the disclosure of
Exhibit 1007. See Tr. 48:5–49:6. Patent Owner’s argument that
Exhibit 1015 is “merely a copy of the Teramura file history as it exists
today” and not a copy of the file “as it existed when . . . laid-open on May
21, 1998” (PO Resp. 31–32) is unpersuasive. Patent Owner’s argument is
unsupported by facts, as there is no evidence that Exhibit 1015 is different
from what was laid open in 1998, and Patent Owner does not explain why
the certified records of the Canadian Patent Office cannot be trusted.
Accordingly, we are persuaded that Petitioner has shown, by a
preponderance of evidence, that the Teramura disclosure was laid open for
public inspection on May 21, 1998, as confirmed by Exhibit 1015.
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In connection with the argument above, Patent Owner also asserts that
there is insufficient evidence that the Teramura laid-open application was
publicly accessible prior to the critical date of the ’578 patent. See PO Resp.
32. According to Patent Owner, “[t]he Petition contains no information or
evidence that prior to the ’578 Patent effective date, the application was
properly classified, indexed or that a ‘road map’ to its existence was
available.” Id. at 33 (citing Bruckelmyer v. Ground Heaters, Inc., 445 F.3d
1374, 1378–79 (Fed. Cir. 2006)). Patent Owner further argues that the
parties and the court in Bruckelmyer agreed that the Canadian application at
issue “was not formally indexed.” PO Exclude Reply 4 (internal quotation
marks omitted) (citing Bruckelmyer, 445 F.3d at 1378). Petitioner asserts
Exhibit 1015 demonstrates that the Teramura application was classified and
indexed, and, therefore, was sufficiently accessible to those of ordinary skill
when it was laid open to the public on May 21, 1998. Pet. Exclude Opp. 3
(citing Ex. 1015, 2–3, 89–130).
Whether a document qualifies as a “printed publication” that is
“available to the public” for the purposes of 35 U.S.C. § 102 is a question of
law based on underlying findings of fact. In re Enhanced Sec. Research,
LLC, 739 F.3d 1347, 1354 (Fed. Cir. 2014) (citing In re Hall, 781 F.2d 897,
899 (Fed.Cir.1986)). The Federal Circuit “has interpreted § 102 broadly,
explaining that even relatively obscure documents qualify as prior art so
long as the public has a means of accessing them.” Id. (citing Hall, 781 F.2d
at 899).
Our leading case on public accessibility is In re Hall, 781 F.2d
897 (Fed. Cir. 1986). In Hall we concluded that “a single
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cataloged thesis in one university library” constitutes “sufficient
accessibility to those interested in the art exercising reasonable
diligence.” Id. at 900. Thereafter, in Constant v. Advanced
Micro–Devices, Inc., we explained that “[a]ccessibility goes to
the issue of whether interested members of the relevant public
could obtain the information if they wanted to.” 848 F.2d 1560,
1569 (Fed. Cir. 1988). Therefore, “[i]f accessibility is proved,
there is no requirement to show that particular members of the
public actually received the information.” Id.
Enhanced Sec. Research, LLC, 739 F.3d at 1354. The determination of
whether a document is a “printed publication” under 35 U.S.C. § 102
involves a case-by-case inquiry into the facts and circumstances surrounding
its disclosure to members of the public. In re Klopfenstein, 380 F.3d 1345,
1350 (Fed. Cir. 2004).
In this case, we are persuaded that Petitioner has shown by a
preponderance of the evidence that the Teramura laid-open application was
publicly accessible prior to August 26, 1999, the foreign priority filing date
for the ’578 patent. To the extent that Patent Owner relies on Bruckelmyer
to show Canadian laid-open applications, such as the Teramura application,
are not “formally indexed,” Patent Owner’s argument is not persuasive
because the application at issue in Bruckelmyer was not laid open for public
inspection. First, the Canadian patent applications filed prior to October 1,
1989 were not open to public inspection. See Manual of Patent Office
Practice (“MOPOP”) § 2.01.01 (Canadian Intellectual Property Office, 1998
ed.), available at https://www.ic.gc.ca/eic/site/cipointernet-
internetopic.nsf/eng/wr01566.html#itm2_01_01. Second, the prior art patent
at issue in Bruckelmyer issued December 6, 1983. Bruckelmyer 445 F.3d at
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1376. Hence, the application for the patent was filed before October 1,
1989, and, therefore, was not laid open for public inspection, unlike the
Teramura application at issue in this case. Thus, Bruckelmyer has no
bearing on the issue of whether Canadian laid-open applications, such as the
Teramura application, are “formally indexed.” Based on the evidence and
arguments provided by Petitioner, we are persuaded that the “interested
members of the relevant public” could have obtained the Teramura
application “if they wanted to” after the application was laid open to public
inspection in the Canadian Patent Office on May 21, 1998. See Enhanced
Sec. Research, LLC, 739 F.3d at 1354 (quoting Constant v. Advanced
Micro–Devices, Inc., 848 F.2d at 1569) (internal quotation marks omitted).
As reflected in the certified application file history, the Canadian Intellectual
Property Office classified the Teramura application and indexed it. See
Exhibit 1015, 3, 89 (showing classification according to the International
Patent Classification (IPC) codes), 89 (showing indexing according to the
International Identification (INID) codes). Accordingly, there is sufficient
evidence to conclude that the Teramura application was publicly accessible
prior to August 26, 1999, the foreign priority filing date for the ’578 patent.
Patent Owner further argues Exhibit 1007 is inadmissible and not
competent evidence because it fails to satisfy the Best Evidence Rule. PO
Resp. 29–30 (citing Fed. R. Evid. 1002); PO Mot. to Exclude 7–8. For the
reasons discussed below in Section II.I, we are not persuaded by Patent
Owner’s argument. Accordingly, we are persuaded that Petitioner has
shown, by a preponderance of evidence, that the Teramura disclosure was
part of a printed publication before the foreign priority filing date for the
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’578 patent, and, therefore, constitutes prior art to the ’578 patent under
§§ 102(a) and (b).
E. Obviousness over Teramura and the APA NetCash System
Petitioner asserts that claims 1–4, 7–12, 15–17, and 19–23 are
unpatentable under 35 U.S.C. § 103(a) over the combination of Teramura
and the APA NetCash System. Pet. 38–50. Upon review of all of the
parties’ papers and supporting evidence discussed in those papers, we are
persuaded that Petitioner has demonstrated, by a preponderance of evidence,
that claims 1–3, 7–11, 15–17, and 19–23 are unpatentable under 35 U.S.C.
§ 103(a) over the combination of Teramura and the APA NetCash System.
1. Relevant Principles of Law
A claim is unpatentable under § 103(a) if the differences between the
claimed subject matter and the prior art are such 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 the 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) where in evidence, so-called secondary considerations.
Graham v. John Deere Co., 383 U.S. 1, 17–18 (1966).
For an obviousness analysis, prior art references must be “considered
together with the knowledge of one of ordinary skill in the pertinent art.” In
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re Paulsen, 30 F.3d 1475, 1480 (Fed. Cir. 1994) (quoting In re Samour, 571
F.2d 559, 562 (CCPA 1978)). Moreover, “it is proper to take into account
not only specific teachings of the reference but also the inferences which one
skilled in the art would reasonably be expected to draw therefrom.” In re
Preda, 401 F.2d 825, 826 (CCPA 1968). That is because an obviousness
analysis “need not seek out precise teachings directed to the specific subject
matter of the challenged claim, for a court can take account of the inferences
and creative steps that a person of ordinary skill in the art would employ.”
KSR, 550 U.S. at 418; see Translogic Tech., Inc., 504 F.3d. at 1259. We
analyze this asserted ground based on obviousness with the principles
identified above in mind.
2. Level of Ordinary Skill in the Art
In determining the level of one with ordinary skill in the art, various
factors may be considered, including “type of problems encountered in the
art; prior art solutions to those problems; rapidity with which innovations are
made; sophistication of the technology; and educational level of active
workers in the field.” In re GPAC Inc., 57 F.3d 1573, 1579 (Fed. Cir. 1995)
(citing Custom Accessories, Inc. v. Jeffrey-Allan Indus., Inc., 807 F.2d 955,
962 (Fed. Cir. 1986)). In addition, we are guided by the level of ordinary
skill in the art reflected by the prior art of record. See Okajima v. Bourdeau,
261 F.3d. 1350, 1355 (Fed. Cir. 2001); GPAC, 57 F.3d at 1579; In re
Oelrich, 579 F.2d 86, 91 (CCPA 1978). In a given case, one or more factors
may predominate. GPAC, 57 F.3d at 1579.
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The “BACKGROUND OF THE INVENTION” section of the ’578
patent describes various prior art systems for electronic payments and
electronic currency transactions. Although many of the known prior art
systems described in the ’578 patent are direct payment systems, the ’578
patent also describes the “Millicent” system, which utilizes a “two-step”
process involving “trusted brokers,” which mediate electronic payment
transactions between a buyer and a seller (or merchant) using electronic
currency called “scrip.” See Ex. 1001, col. 2, ll. 18–25. In addition, the
’578 patent discusses the security problems as an overriding concern for
electronic payment transactions using electronic currency. See, e.g., id. at
col. 1, ll. 30–32, col. 1, ll. 45–48 (“While purchases made over the Internet
are by no means the sole use for the electronic cash, they probably are the
most problematic, mainly because of security problems.”) (emphasis added),
col. 1, ll. 40–42.
Petitioner’s declarant, Dr. Neuman, testifies that the prior art
discussed in his declaration demonstrates that a person of ordinary skill in
the art, at the time the ’578 patent was filed, was aware of various aspects of
electronic commerce. Ex. 1010 (“Neuman Decl.”) ¶ 7. The features of the
relevant prior art discussed by Dr. Neuman—such as PayWord, Millicent,
Bernstein, Teramura, and Simon—include middleman transactions to
increase transaction confidence or trustworthiness. Id. at ¶¶ 14–20, 31, 32.
8

8
Patent Owner asserts that “Petitioner fails to advance any expert opinion or
other testimony” on the issue of the level of ordinary skill in the art. PO
Resp. 15. Although Patent Owner argued in its Preliminary Response that
the Neuman Declaration should be excluded or accorded no weight (Prelim.
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Patent Owner’s declarant, Dr. Tygar, testifies that, at the time the
’578 patent was filed, “a person of ordinary skill in the art would have
possessed a bachelor’s degree in computer science or in engineering with
exposure to computer science or its equivalent.” Ex. 2012 (“Tygar Decl.”)
¶ 15. Due to the specific nature of the technology and problems at issue, the
general education level of a person of ordinary skill, such as a bachelor’s
degree in computer science or its equivalent, does not provide much
guidance in this proceeding. See GPAC, 57 F.3d at 1579 (“In a given case,
every factor may not be present, and one or more factors may
predominate.”) (internal citation omitted). Dr. Tygar’s testimony also
focuses on the prior art systems that require direct interaction between a
payor and a payee, and does not address the middleman systems or features
discussed by Dr. Neuman, other than to argue the lack of motivation to
combine the middleman systems with the APA NetCash System, argument
which does not rely on the level of ordinary skill in the art. Ex. 2012 ¶¶ 18–
34.
On this record, we find that a person of ordinary skill in the art, at the
time of the invention of the ’578 patent, would have been familiar with
various conventional systems for electronic payments and electronic
currency transactions, including two-step transaction systems that employ
intermediary “broker servers” that can be trusted, and would have

Resp. 24–27), the Board declined to do so for purposes of institution of trial.
Dec. to Inst. 11. Therefore, Patent Owner is not justified to presume Dr.
Neuman’s testimony is not part of the record in this proceeding and
conclude it does not exist for the purposes of trial in this case.
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understood the security problems to be an important issue in existing
systems. In addition, the level of ordinary skill is relatively high and would
require knowledge specific to electronic currency and electronic payment
transactions. See Ex. 1001, col. 1, ll. 49–54 (“The problem of payments
over the Internet is . . . a complicated one, because the use of credit cards
over the Internet is unsafe, and because in many transactions the buyer does
not wish to provide details of himself, or of his bank account.”) (emphases
added).
3. Teramura Disclosure Overview
Teramura describes a method and system for electronic trading that
employs a broker server to send electronic money in two steps, including
“sending of electronic money from the terminal of the consumer to the
broker server and sending of electronic money from the broker server to the
server of the merchant.” Ex. 1007, Abstract. Figure 1 of Teramura is
reproduced below.

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Figure 1 depicts a system including consumer terminal 10, merchant server
20, and broker server 30, which are connected over a communication
network. See id. at 8:3–10. According to Teramura, “unjust transactions,”
such as theft and fraud may be a particular problem with electronic currency.
See id. at Abstract, 3:2–18. To address this problem, Teramura describes a
transaction approach in which broker server 30 temporarily stores electronic
money received from consumer terminal 10, and sends the electronic money
to merchant server 20 when a predetermined settlement condition is brought
into existence. See id. at Abstract.
Figure 4 of Teramura is shown below.

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Figure 4, together with Figures 5, 6, and 7, depicts the flow of transaction
disclosed in Teramura. When the buyer is ready to purchase an item, the
buyer transmits an ordering message 4101 to broker server 30 through the
communication network. See id. at 15:24–27, Fig. 4 (step 5001). The
ordering message includes the details of the transaction and the electronic
money with which the buyer intends to pay the merchant. See id. at 11:1–6,
Figs. 2A and 2B. Upon receipt of the ordering message, broker server 30
generates data items representing the transaction in its memory—the broker
information and trading and ordering information. See id. at 10:24–26,
11:6–11, 17:15–18. These data items are depicted in Figures 2A and 2B.
See id. at 9:25–26, 10:27–28. The broker server then transmits an ordering
notification to the merchant. See id. at 17:18–21, Fig. 5 (step 6003). The
merchant confirms the ordering notification (see id. at 21:2–12, Fig. 7 (step
8002)) and attempts to transmit the goods to the buyer (see id. at 21:19–22,
Fig. 7 (step 8003)). After transmitting the ordered goods, the merchant waits
for the buyer to acknowledge receipt of the goods. See id. at 22:10–14,
Fig. 7 (step 8004). If the buyer acknowledges receipt, the receipt is
transferred to the broker and the broker releases the funds to the merchant.
See id. at 22:15–17, 22:23–23:13.
4. The APA NetCash System Disclosure Overview
As discussed above, column 2, line 47 through column 3, line 39 and
Figure 2 of the ’578 patent describe the APA NetCash System. According
to the ’578 patent, the APA NetCash System includes buyers, merchants,
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and currency servers, which mint electronic coins. See Ex. 1001, col. 2,
ll. 61–62, col. 3, l. 3. Figure 2 of the ’578 patent is reproduced below.

Figure 2 describes how a buyer uses NetCash coins to purchase items from a
merchant. Id. at col. 3, ll. 33–34. Each electronic coin includes the name of
the server that issued the coin, the server’s network address, the expiry date
of the coin, the coin’s serial number, and the value of the coin. Id. at col. 3,
ll. 3–12. The currency server keeps track of the serial numbers of all
outstanding coins in a database—if a coin’s serial number is found in the
database, it has not been spent and is valid. Id. at col. 3, ll. 14–19. When
the currency server checks a coin, the coin’s serial number is deleted form
the database and a new coin is issued to replace the deleted coin. See id. at
col. 3, ll. 19–21. Thus, double spending can be prevented by checking a
coin’s serial number with the currency server at the time of purchase (or
exchange). Id. at col. 3, ll. 15–17, Fig. 2.
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5. Claim 1
a. Whether the Combination of Teramura and the APA NetCash System
Teaches Every Limitation of Claim 1
As set forth in Section I.C above, claim 1 includes limitations A), B),
C), and D). Petitioner has shown that the combination of Teramura and the
APA NetCash System teaches every limitation of claim 1. Pet. 38–43. In
particular, Petitioner explains that Teramura teaches an intermediary broker
that manages currency transactions between a first user (a buyer) and a
second user (a seller). See id. at 42. Petitioner also identifies the currency
server of the APA NetCash System to teach a CIA and a CIAS. See id. at
40–42. Petitioner proposes to combine the teachings of Teramura and the
APA NetCash System such that Teramura’s broker can serve as both an
intermediary as well as the currency server of the APA NetCash System,
“[c]o-locating the currency server with the intermediary” that handles the
currency transactions using the electronic currency of the APA NetCash
System. Id. at 41. Petitioner provides explanations, with citations to the
relevant portions of Teramura and the APA NetCash System, how this
combination teaches each limitation of claim 1, including a claim chart that
maps each limitation of claim 1 to the teachings of the combination of
Teramura and the APA NetCash System. See id. at 38–43.
Patent Owner disputes Petitioner’s assertions for every limitation of
claim 1. PO Resp. 36–52. We discuss the issues presented by Patent
Owner’s arguments, grouping similar arguments and issues together.
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Patent Owner’s Arguments Against Individual Teachings of Teramura or the
APA NetCash System
Patent Owner argues nearly all limitations of claim 1 are not obvious
because either Teramura or the APA NetCash System, when treated
individually, does not disclose the claim limitations. For example, Patent
Owner asserts Teramura does not teach the following limitations because
Teramura does not disclose a CIA or CIAS: “A) a Currency Issuing
Authority trusted server (CIAS) receives payment instructions from said first
user to transfer a first monetary sum to said second user, wherein the CIAS
is programmed to receive payment instructions from said first user only over
a network connection between said first user and a Currency Issuing
Authority (CIA); B) the CIAS accesses one or more money-representing
data packets in a first active data packets area located in a first data storage
area associated with said first user, each of said money-representing data
packets comprising information on its value, wherein each of said money-
representing data packets and said information on its value are both created
by said CIA.” See PO Resp. 42–44. Similarly, Patent Owner argues that
Teramura does not teach the claimed “data packets” because the broker
information of Teramura does not constitute “data packets.” Id. 45–46.
Patent Owner’s arguments are not persuasive because they focus on
Teramura individually whereas Petitioner relies on the combination of
Teramura and the APA NetCash System to teach these limitations. See Pet.
40–42. Nonobviousness cannot be established by attacking the references
individually when the unpatentability challenge is based on a combination of
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prior art disclosures. See In re Merck & Co. Inc., 800 F.2d 1091, 1097 (Fed.
Cir. 1986).
In a similar vein, Patent Owner asserts that the APA NetCash System,
when treated individually, fails to teach several limitations because “in
NetCash APA, sums are transferred directly between a buyer and a
merchant. See PO Resp. 44 (citing Ex. 1001, Fig. 2). According to Patent
Owner, the second user then has the option to exchange the coin with a
currency server for a new coin. Id. at 47 (citing Ex. 1001, col. 3, ll. 17–18).
Thus, Patent Owner asserts that the APA NetCash System does not teach
“B) the CIAS accesses one or more money-representing data packets in a
first active data packets area located in a first data storage area associated
with said first user” because “[i]n NetCash APA, the currency server accepts
coins only from the second user,” and never accesses the first user’s (i.e.,
the buyer’s) data packets. See id. at 44–45 (citing Ex. 1001, Fig. 2).
Similarly, Patent Owner argues that the APA NetCash System does not
teach “A) a Currency Issuing Authority trusted server (CIAS) receives
payment instructions from said first user to transfer a first monetary sum to
said second user” because, in the NetCash prior art, the buyer transfers the
coins directly to the merchant. See id. at 43–44 (citing Ex. 1001, Fig 2).
In its Reply, Petitioner responds that Patent Owner’s arguments are
improper because they treat the APA NetCash System individually rather
than in combination with Teramura. Pet. Reply 4–5. As discussed above,
Petitioner’s proposed combination is to “co-locate” the APA NetCash
System’s currency server with Teramura’s intermediary broker server to
provide middleman transactions using the APA NetCash System’s electronic
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currency. See Pet. 41. In response to Patent Owner’s arguments, Petitioner
explains that, citing the testimony of Dr. Neuman, when the proposed
combination is considered as a whole, “Teramura . . . provide[s] the first and
second user, mediating a transaction through a middleman that receives
payment instructions from the first user to transfer a monetary sum to the
second user,” and the middleman is integrated with a CIAS, which is
disclosed by the APA NetCash System. Pet. Reply 4 (citing Ex. 1013
¶¶ 37–42, 79–84; Ex. 1010 ¶¶ 120, 182–83). According to Petitioner,
[i]n the proposed combination, the buyer instructs the integrated
middleman/CIAS to make payment to the seller, which is what
is required by the limitation – “a Currency Issuing Authority
trusted server (CIAS) receives payment instructions from said
first user to transfer a first monetary sum to said second user.”
Id. (citing Ex. 1013 ¶¶ 37–42, 79–84; Ex. 1010 ¶¶ 123–26, 186–91).
Similarly, Petitioner argues that the proposed combination teaches limitation
“B) the CIAS accesses one or more money-representing data packets in a
first active data packets . . . associated with said first user” because “[t]he
middleman in the combination is the APA currency server and the money is
the APA NetCash coins, which comprise information on their value as
taught in the APA” and “[t]he middleman server accesses the coins in a
financial account or designated escrow that is associated with the first user
(i.e., the buyer).” Id. at 5 (citing Ex. 1013 ¶¶ 43–45, 85–89; Ex. 1010
¶¶ 127–29, 192–94).
We agree with Petitioner that Patent Owner’s arguments fail because
they attack the APA NetCash System individually when Petitioner’s
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unpatentability challenge is based on a combination of Teramura and the
APA NetCash System.
Patent Owner’s Arguments Against the Combined Teachings of Teramura
and the APA NetCash System
Patent Owner makes two arguments directed to the combination of
Teramura and the APA NetCash System. The first one is that, when the
buyer deposits NetCash coins with the broker, they become broker’s coins.
Thus, Patent Owner argues, when the NetCash coins are deleted and
exchanged for new coins within the currency server, the broker’s coins are
deleted, not the first user’s coins. See PO Resp. 51. Therefore, Patent
Owner asserts that the proposed combination does not teach “C) the CIAS
. . . (i) deletes one or more money-representing data packets in the first
active data packets area” as recited in claim 1. See id. at 46, 51.
Petitioner responds that the broker is holding the first user’s (or the
buyer’s) coins on behalf of the first user (or the buyer). See Pet. Reply. 6.
According to Petitioner, there is no suggestion in Teramura that the
middleman can spend the buyer’s money for the middleman’s own purposes.
Id. (citing Ex. 1013 ¶¶ 49, 93). Petitioner argues Teramura specifically
contemplates that the broker server must return money to the buyer if the
buyer makes a claim against the merchant and the merchant is unable to
prove that the goods have been sent. Id. (citing Ex. 1007, 18:25–27, 19:7–
20:23, Figs. 3–6; Ex. 1013 ¶ 49). Thus, Petitioner argues, when the co-
located currency server of the proposed combination deletes the data
packets, the currency server is deleting the first user’s data packets, not the
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middleman’s or the broker’s data packets. We are persuaded by Petitioner’s
arguments as supported by the record before us.
Secondly, Patent Owner argues that claim 1 requires “the CIAS to
delete or mark as spent the first user’s money-representing data packets
and create new money-representing data packets in a currency
transaction between a first user and second user.” PO Resp. 48. In other
words, “the data packets of the first user are accessed and deleted/marked as
spent and never reach the second user; instead, the second user receives new
data packets.” Id. at 2. Patent Owner asserts that “Petitioner and the Board
did not address this issue previously.” Id. Patent Owner asserts that the
combination of Teramura and the APA NetCash System does not teach these
limitations because, when a first user (i.e., a buyer) deposits a coin with the
middleman broker, Teramura “simply forwards the same electronic money
as-is” to the second user (i.e., the seller/merchant) (id. at 46) and the
currency server deletes the coin when the second user exchanges it for a new
coin (see id. at 47). Hence, similar to the discussion above, the second
user’s coins, as opposed to the first user’s coins required by the claim, are
deleted. See id.
In its Reply, Petitioner responds that the middleman with a co-located
currency server would first check the coins received from the first user to
verify that they are authentic and valid—i.e., they have not been previously
used or spent. See Pet. Reply 8 (citing Ex. 1001, col. 3, ll. 14–21 (describing
the feature of the APA NetCash System that prevents “double spending”).
Citing the testimony of Dr. Neuman, Petitioner asserts that this means that
the middleman generates new coins by “exchanging the old coins internally”
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with the currency issuing authority and transfers them to the merchant (i.e.,
second user). Id. at 9 (emphasis added) (citing Ex. 1013 ¶¶ 5, 7).
As discussed above, the APA NetCash System teaches that “[w]hen
the coin is checked the serial number is then removed from the database.
The coin is then replaced with a new coin (coin exchange).” Ex. 1001,
col. 3, ll. 19–21. In other words, checking a coin with the currency server of
the APA NetCash System results in a coin exchange. Thus, the difference
between the parties’ positions appears to be when to check the coin received
from the first user or the buyer. Patent Owner would have the broker merely
forward the coin to the second user or the merchant, leaving it up to the
second user to check the coin at a later time. Petitioner, on the other hand,
would have the broker check the coin first with the co-located currency
server. Petitioner argues, citing the testimony from Dr. Neuman, that its
approach is more desirable due to increased security and because “the
logical place, really the only place, to include coin replacement is at the
middleman.” See Pet. Reply 8, 11 (citing Ex. 1013 ¶ 16).
We are persuaded by Petitioner’s arguments that the combination of
Teramura and the APA NetCash System, as proposed by Petitioner—i.e., the
broker checking the coin received from the buyer with the co-located
currency server and, upon verification, replacing it with a new coin, which is
then forwarded to the merchant—teaches deleting the first user’s data
packets and issuing new data packets to the second user. The issue of
whether, as Patent Owner contends, the combination of Teramura and the
APA NetCash System must forward the coin received from the first user to
the second user without checking it with the co-located currency server, as
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opposed to checking the coin first upon receipt as Petitioner contends,
relates more closely to the issue of the motivations to combine, which we
address in the Reasons to Combine section below.
Patent Owner asserts that Petitioner’s response is a “new theory”
raised improperly in a reply. In its Motion for Observation, Patent Owner
points to deposition testimony from Dr. Neuman allegedly admitting that
this “second theory”—i.e., the middleman with an internal coin exchange
function—was not described in the Petition. See Obs. 1–3 (Obs. Nos. A.1–
A.4). Petitioner responds that Dr. Neuman explained during the deposition
that the discussion in his Reply Declaration and the Petitioner’s Reply of this
“second theory” were made in rebuttal to Patent Owner’s arguments raised
first in the Patent Owner Response. See Obs. Resp. 1–3 (Resp. Nos. A.1–
A.4) (citing Ex. 2026, 39:9–21, 44:10–17). In a telephone conference held
on March 30, 2015 upon request by Patent Owner, Patent Owner argued that
Petitioner’s Reply contained the same “new theory” that was not included in
the Petition. See Paper 37, 10:20–12:1
9
. We agree with Petitioner that this
“new” theory was presented to rebut Patent Owner’s arguments raised first
in the Patent Owner Response. Indeed, as discussed above, Patent Owner
stated in its Patent Owner Response “[t]he Petitioner and the Board did not
address this issue previously” when making the arguments to which
Petitioner’s response describing a middleman with an internal coin exchange
function is directed. PO Resp. 2 (emphasis added). Therefore, Petitioner’s
response is an argument raised properly as part of the Petitioner’s Reply.

9
Paper 37 is a transcript of the March 30, 2015 telephone conference,
arranged and filed by Patent Owner.
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Furthermore, as discussed above, the Petition described Petitioner’s
proposed combination of Teramura and the APA NetCash System to
“co-locate” the APA NetCash System’s currency server with Teramura’s
intermediary broker to provide middleman transactions using the APA
NetCash System’s electronic currency. See Pet. 41. Hence, Petitioner’s
response in its Petitioner Reply can be fairly characterized as describing
further Petitioner’s proposed combination—i.e., when to check the coin
received from the buyer—in response, and in rebuttal to, arguments raised
by Patent Owner in the Patent Owner Response.
Patent Owner also points to deposition testimony from Dr. Neuman
that he does not recall the Teramura broker server including coin
replacement, and argues, therefore, any replacement of the currency in
Teramura would have to be performed outside of the broker server. Obs. 5–
6. Petitioner responds that the cited testimony is irrelevant to Petitioner’s
argument because it is directed to the teaching of Teramura individually
without regard to the combination of Teramura and the APA NetCash
System. Obs. Resp. 5–6. We agree with Petitioner that Patent Owner’s
arguments and observations in its Motion for Observation do not rebut
Petitioner’s assertions regarding the proposed combination because Patent
Owner’s statements are directed to Teramura individually.
Accordingly, on this record, we find that Petitioner has demonstrated,
by a preponderance of evidence, that the proposed combination of Teramura
and the APA NetCash System teaches every limitation of claim 1.
b. Reasons to Combine Teramura and the APA NetCash System
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If all elements of a claim are found in the prior art, as is the case here,
the fact-finder must further consider the factual questions of whether a
person of ordinary skill in the art would be motivated to combine those
references, and whether in making that combination, a person of ordinary
skill would have had a reasonable expectation of success. Dome Patent L.P.
v. Lee, No. 2014-1673, 2015 WL 5155181, at *6 (Fed. Cir. Sept. 3, 2015).
Although “there must be some articulated reasoning with some rational
underpinning to support the legal conclusion of obviousness,” KSR, 550 U.S.
at 418 (quoting In re Kahn, 441 F.3d 977, 988 (Fed. Cir. 2006)), “[t]he
obviousness analysis cannot be confined by a formalistic conception of the
words teaching, suggestion, and motivation, or by overemphasis on the
importance of published articles and the explicit content of issued patents.”
Id. at 419. Rather, courts must take an “expansive and flexible approach” to
the question of obviousness. Dome Patent L.P., 2015 WL 5155181, at *6
(quoting KSR, 550 U.S. at 415) (internal quotation marks omitted).
Petitioner argues that Teramura provides the teaching that
conventional electronic currency can be used in its system. Pet. 40–41
(citing Ex. 1007, 2:3–18). Hence, Petitioner asserts that it would have been
well within the knowledge of a person of ordinary skill in the art to adapt
Teramura such that Teramura’s broker received the electronic currency of
the APA NetCash System. Id. at 41. Citing the testimonies of Drs. Neuman
and Tygar, Petitioner asserts that it was well-known in the prior art that
electronic currency was usable in middleman based currency transactions.
Pet. Reply 7–8 (citing Ex. 1010 ¶ 34; Ex. 1013 ¶ 4; Ex. 1012, 36:21–37:1,
40:19–41:5, 42:20–43:2; Ex. 2012 ¶ 19). Petitioner further argues that
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Teramura teaches that its escrow middleman system provides an additional
improvement in electronic currency transactions by using a trusted
middleman to insulate the parties from the risk that the buyer or seller may
“run out” on the transaction without completing their half of the bargain.
Id. at 8 (citing Ex. 1007, 3:2–14; Ex. 1010 ¶ 116; Ex. 1013 ¶ 12).
Petitioner also asserts that it would also have been obvious to one of
ordinary skill in the art that Teramura’s broker can serve as both an
intermediary as well as the currency server of the APA NetCash System,
“[c]o-locating the currency server with the intermediary” that handles the
currency transactions. Pet. 41. Petitioner asserts that a person of ordinary
skill in the art would have been motivated to make the proposed
combination because such a combination would result in increased security
and efficiency. Id. Petitioner further asserts that co-locating the currency
server with the intermediary would provide “an option for users to leave
their electronic data packets with the intermediary server to hold on behalf
of the user, protecting the user from loss due to the loss, destruction, or theft
of the data storage device on which the user would otherwise maintain his
data packets.” Id. In addition, Petitioner asserts that Simon provides a clear
teaching that an intermediary for monetary transactions can also issue
electronic currency. Id. (citing Ex. 1008, col. 8, ll. 5–57, Fig. 6).
Citing the testimony of Drs. Neuman and Tygar, Petitioner further
asserts that a person of ordinary skill in the art would have been motivated to
include an internal coin replacement function in a middleman system that
adopts the currency server and the electronic currency of the APA NetCash
System because the APA NetCash System solved the double spending
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problem of electronic currency by using a third party, i.e., the currency
server, to exchange used or spent currency with new currency. See Pet.
Reply 8 (citing Ex. 1001, col. 3, ll. 14–21; Ex. 1012, 26:20–27:8; Ex. 1013
¶ 16). Dr. Neuman testifies that “[s]wapping the coins after the transaction,
the only other option, heightens the risk that the buyer double spends the
coin while the coin is sitting with the middleman.” Ex. 1013 ¶ 16.
Petitioner asserts that Dr. Tygar acknowledged that the risk of double
spending goes up with time. Pet. Reply 8 (citing Ex. 1012, 73:17–18).
Thus, Petitioner argues, “[b]ecause the electronic currency may sit idly at the
middleman for some time, the logical place, really the only place, to include
coin replacement is at the middleman.” Id. (citing Ex. 1013 ¶ 16).
According to Petitioner, “this exact solution, i.e., a middleman with currency
swapping functionality,” is disclosed by Simon. Id. (citing Ex. 1008, col. 8,
ll. 5–64, Fig. 6; Ex. 1010 ¶¶ 45–48, 120, 183; Ex. 1013 ¶ 28).
Patent Owner asserts that neither Teramura nor the APA NetCash
System discloses or suggests any problem that would motivate a person of
ordinary skill in the art to modify Teramura in view of the APA NetCash
System or vice versa. PO Resp. 21–22 (citing Ex. 2013, 171:16–172:6,
173:7–174:4). Patent Owner further asserts “generic motivations,” such as
those offered by Petitioner, i.e., to achieve benefits in security or efficiency
(see Pet. 44, 58), are legally insufficient. PO Resp. 22–23 (citing In re
Laskowski, 871 F.3d 115, 117 (Fed. Cir. 1989)). The Laskowski case Patent
Owner relies on, however, predates the Supreme Court’s landmark KSR
decision. Contrary to Patent Owner’s contention, “[i]t is well settled that,
even where references do not explicitly convey a motivation to combine,
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‘any need or problem known in the field of endeavor at the time of invention
and addressed by the patent can provide a reason for combining the elements
in the manner claimed.’” ABT Sys., LLC v. Emerson Elec. Co., No. 2014-
1618, 2015 WL 4924160, at *9 (Fed. Cir. Aug. 19, 2015) (emphasis added)
(quoting KSR, 550 U.S. at 420). Further, when “the combination of
references results in a product or process that is more desirable, for example
because it is stronger, cheaper, cleaner, faster, lighter, smaller, more durable,
or more efficient . . . there exists in these situations a motivation to combine
prior art references even absent any hint of suggestion in the references
themselves.” DyStar Textilfarben GmbH & Co. Deutschland KG v. C.H.
Patrick Co., 464 F.3d 1356, 1368 (Fed. Cir. 2006) (emphasis added). “In
such situations, the proper question is whether the ordinary artisan possesses
knowledge and skills rendering him capable of combining the prior art
references.” Id. “As KSR established, the knowledge of such an artisan is
part of the store of public knowledge that must be consulted when
considering whether a claimed invention would have been obvious.”
Randall Mfg. v. Rea, 733 F.3d 1355, 1362 (Fed. Cir. 2013).
As discussed above, we determined that a person of ordinary skill in
the art, at the time of the invention of the ’578 patent, would have been
familiar with various conventional systems for electronic payments and
electronic currency transactions, including two-step transaction systems that
employ trusted intermediary “broker servers,” and would have understood
the security problems to be an important issue in existing systems. In view
of this knowledge of a person of ordinary skill and her awareness of the
security issues, and in further view of the fact that, as discussed above,
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Teramura addresses the problems of theft and fraud in electronic currency
transaction (see Ex. 1007, Abstract, 3:2–18) by using a trusted intermediary
broker to send electronic money in two steps, we are persuaded by
Petitioner’s arguments that a person of ordinary skill in the art would have
been motivated to combine Teramura with the APA NetCash System to
improve the security of the electronic currency transaction of the APA
NetCash System.
We are also persuaded by Petitioner’s argument that a person of
ordinary skill in the art would have been guided by Simon and motivated to
co-locate the currency server of the APA NetCash System with Teramura’s
intermediary broker to further increase the security of the combined system.
In addition, we credit the testimony of Dr. Neuman, and are persuaded that a
person of ordinary skill would have been motivated by the double-spending
problem addressed in the APA NetCash System and Simon’s teaching of
currency swapping at the middleman to recognize that, in a combined
system where the currency server and the intermediary broker are co-
located, the middleman is a preferred location to place the coin exchange
function. That is, a person of ordinary skill in the art would have found an
internal coin exchange function at the middleman desirable. As discussed
above, this means that an ordinary artisan would have found it desirable to
have the broker check the coins received from the buyer with the co-located
currency server, and, upon verification, replace them with new coins to be
sent to the seller, as opposed to forwarding the coins “as-is” to the seller
without checking them.
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Patent Owner asserts that the double-spending motivation is a new
argument raised improperly in Petitioner’s Reply. See Paper 37, 12:18–13:1.
This motivation, however, is introduced in connection with the internal
placement of the coin exchange function, which, as discussed previously,
was put forward by Petitioner in response and in rebuttal to the new
argument raised in the Patent Owner Response. Thus, the double-spending
motivation cannot be viewed as a new argument raised improperly in a
reply. Patent Owner’s argument regarding Petitioner’s reliance on Simon to
provide the motivation for the internal coin exchange function (see Paper 37,
13:12–13; Obs. 6–7; PO Mot. to Exclude 10–11) is similarly unpersuasive.
Patent Owner also asserts that Simon cannot be relied upon to provide
a motivation to combine in this proceeding because the Board did not
institute any grounds of review based on it and none of the instituted
grounds combine Teramura with APA NetCash System and Simon. PO
Resp. 41. Patent Owner argues that Simon is not relevant to any issues in
this proceeding because there is no instituted ground based on Simon. PO
Mot. to Exclude 10. Patent Owner’s arguments are unpersuasive because
the fact that the Board exercised its discretion to decline to institute based on
Simon does not by itself render Simon irrelevant for all other purposes in
this proceeding. As discussed above, the Petition relied on Simon to show
the level of ordinary skill as well as a motivation to combine. Patent Owner
does not explain why these issues become irrelevant merely because Simon
is not the basis of a ground of unpatentability at trial. Contrary to Patent
Owner’s contention, prior art references are highly relevant to both of these
issues, regardless of whether the references are relied upon to disclose or
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teach the features of the challenged claims. See Randall Mfg., 733 F.3d at
1362–63 (“One form of evidence to provide such a foundation [for what one
of ordinary skill in the relevant art would have known], perhaps the most
reliable because not litigation-generated, is documentary evidence consisting
of prior art in the area.”); GPAC, 57 F.3d at 1579.
Patent Owner further argues that Simon does not provide a motivation
to co-locate the currency server and the intermediary broker because in
Simon, the user, not an intermediary (the bank in Simon), issues the
electronic currency. See PO Resp. 41 (citing Ex. 1008, Fig. 1, col. 5); Obs.
7. Petitioner responds, citing the testimony of Dr. Neuman, that the coins in
Simon do not become valid coins or hold any value until they are certified
by the bank. Obs. Resp. 7 (citing Ex. 2026, 60:17–61:4); Ex. 1013 ¶ 28
(citing Ex. 1008, col. 5, l. 66–col. 6, l. 8). We credit Dr. Neuman’s
testimony and are persuaded by Petitioner’s argument that Simon would
have provided a motivation to co-locate the currency server with the
intermediary broker and place the internal coin exchange function at the
middleman.
Patent Owner also asserts that the proposed combination would result
in a fundamental modification of the APA NetCash System as a direct
payment system. See PO Resp. 19; Obs. 1–2; Ex. 2012 ¶ 48. Petitioner
argues that Patent Owner misapprehends the combination proposed by
Petitioner and that, as explained by Dr. Neuman, no or few changes are
necessary to the APA NetCash System. Pet. Reply 9 (citing Ex. 1013 ¶ 5);
Obs. Resp. 1 (citing Ex. 2026, 39:6–9; Ex. 1013 ¶ 5). Citing the testimony
of Dr. Neuman, Petitioner asserts that a person of ordinary skill in the art
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would have recognized that the proposed combination with the internal coin
exchange function at the middleman would have been no more than adding
the functionality of currency exchange to the middleman server. Pet. Reply
9 (citing Ex. 1013 ¶¶ 5, 7).
The issue for the question of obviousness is not whether the proposed
modification would amount to a “fundamental change” in some way, but,
rather, whether, in making the proposed combination, a person of ordinary
skill would have had a reasonable expectation of success. See Dome Patent
L.P., 2015 WL 5155181, at *6. We credit Dr. Neuman’s testimony and are
persuaded that, in making the proposed combination of Teramura and the
APA NetCash System, a person of ordinary skill in the art would have had a
reasonable expectation of success, because it would have involved relatively
few changes, all of which were well-known to ordinary artisans.
Patent Owner further argues that the proposed combination would
have rendered each system “unsatisfactory for its original purpose
10
, and
change[d] the principle of operation.” PO Resp. 42 (citing Ex. 2012 ¶¶ 48,
98). Patent Owner asserts that a “key goal” of the APA NetCash System
was providing anonymity and the combination would have destroyed the
anonymous nature of the system. Id. at 19–20 (citing Ex. 2013, 70:16–22,
73:11–74:4, 77:25–78:2, 151:15–21); Ex. 2012 ¶ 49; Obs. 8–9. Petitioner

10
Patent Owner cites the Examiner statement that rendering a system
“unsatisfactory for its original purpose” is evidence of non-obviousness. See
PO Resp. 11. However, we find that this is not a correct statement; the
correct standard is whether the combination would “render[ ] [the invention]
inoperable for its intended purpose. In re Gordon, 733 F.2d 900, 902
(Fed.Cir.1984) (emphasis added).
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disputes Patent Owner’s contentions, e.g., the APA NetCash System
provides anonymity by using network addresses, which can be adapted for a
middleman system using the same principle. Pet. Reply 10; see also Obs.
Resp. 8–10 (responding to various arguments from Patent Owner regarding
anonymity and explaining why they are unpersuasive). We have reviewed
the arguments and evidence from Patent Owner and Petitioner and find
Patent Owner’s arguments unpersuasive. We do not agree with Patent
Owner that providing anonymity is the “principle of operation” of the APA
NetCash System, rather than simply one of the goals of the system. See In
re Mouttet, 686 F.3d 1322, 1331–32 (Fed. Cir. 2012).
Patent Owner asserts that Teramura teaches using the electronic
currency described in WO91/16691 and Petitioner provides no motivation as
to why a person of ordinary skill would use the electronic currency of the
APA NetCash System instead. PO Resp. 36. Petitioner argues that, while
Teramura points to the electronic currency of WO 91/16691 as an example
electronic currency that was known in the prior art, Teramura does not limit
its system to this electronic currency, and none of its teachings depends upon
any particular characteristics of this specific currency or on any particular
type of electronic currency. Pet. Reply 12 (citing Ex. 1013 ¶ 27; Ex. 1010
¶ 118). We are persuaded by Petitioner’s argument. Because of the benefits
of using a trusted intermediary system, a person of ordinary skill in the art
would have been motivated to pursue combining Teramura with various
types of electronic currency. This, however, does not take away from the
ordinary artisan’s motivation for the proposed combination with the APA
NetCash System in any way.
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We have reviewed the remainder of Patent Owner’s arguments
regarding the rationale to combine (see, e.g., PO Resp. 20 (offline feature of
NetCash inconsistent with the proposed combination, negative effect on
scalability and redundancy; smaller customer base for the combination);
Obs. 5 (no one was actually doing the combination at the time of the
invention)) and find them unpersuasive. Accordingly, we find Petitioner has
shown that, at the time of the invention of the ’578 patent, a person of
ordinary skill in the art would have been motivated to combine Teramura
with the APA NetCash System as proposed by Petitioner, and that, in
making that combination, a person of ordinary skill would have had a
reasonable expectation of success.
c. Conclusion
Upon considering all of the evidence of record, we determine that
Petitioner has demonstrated, by a preponderance of evidence, claim 1 would
have been obvious under 35 U.S.C. § 103(a) based on the combination of
Teramura and the APA NetCash system.
6. Claim 9
Claim 9 is a system claim which recites limitations similar to claim 1,
and Petitioner presents for claim 9 essentially the same material as claim 1.
See Pet. 45–47. Patent Owner also relies on its arguments for claim 1 to
argue the patentability of claim 9. See PO Resp. 52. Therefore, for the same
reasons discussed above with respect to claim 1, we determine that
Petitioner has demonstrated, by a preponderance of evidence, claim 9 would
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have been obvious under 35 U.S.C. § 103(a) based on the combination of
Teramura and the APA NetCash System.
7. Claims 2, 3, 7, 8, 10, 15–17, and 19–23
For our analysis of claims 2, 3, 7, 8, 10, 15–17, and 19–23, which
depend from claims 1 or 9, we apply our findings and conclusions regarding
claims 1 and 9 discussed above. Hence, we understand Petitioner’s
contentions regarding these dependent claims to be based on the proposed
combination of Teramura and the APA NetCash System as discussed above.
Thus, we interpret Petitioner’s argument and evidence with the
understanding that the Teramura’s broker server is co-located with the
currency server of the APA NetCash System and that an internal coin
exchange function included in the co-located intermediary broker.
Patent Owner’s arguments on these claims are similar to its arguments
discussed above that treat the prior art individually without regard to the
teachings of the proposed combination, which we found to be unpersuasive.
Considering claim 2 as an example, the claim depends directly from claim 1
and further recites “E) the CIAS transmits the new money-representing data
packets to a second data storage area associated with the second user.”
Patent Owner argues that claim 2 is not unpatentable because Teramura does
not disclose transmitting “new money-representing data packets” to a data
storage area associated with a second user. Rather, the same data packets of
the first user are merely forwarded by the escrow agent to the seller. PO
Resp. 52. Patent Owner’s argument is unpersuasive because it attacks the
prior art references individually. As discussed above, in the proposed
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combination, the co-located currency server with an internal coin exchange
function would issue new coins to the second user.
Similarly, Patent Owner asserts that the APA NetCash System does
not disclose the recited limitation of claim 3 because the APA NetCash
System does not teach that new money representing data packets are used to
create a record of a sum “to be paid to the second user.” Patent Owner
argues that, by the time the coin reaches the currency server in the APA
NetCash system, “the value is already paid” to the second user (i.e., the
merchant). Id. at 53–54. Patent Owner also argues that claim 7 is not
unpatentable because Teramura does not disclose a CIA, and claim 10 is not
unpatentable because Teramura does not teach “data packets.” Id. at 54.
These are essentially the same or similar arguments attacking the prior art
references individually discussed above with respect to claim 1. Patent
Owner does not respond specifically to Petitioner’s challenge to claims 8,
15–17, and 19–23 beyond Patent Owner’s arguments advanced with respect
to their parent claims, i.e., claims 1, 2, 9, or 10.
We have reviewed the arguments and evidence presented by
Petitioner (see, e.g., Pet. 40–41, 43–50) and, upon considering all of the
evidence of record, we determine that Petitioner has demonstrated, by a
preponderance of evidence, claims 2, 3, 7, 8, 10, 15–17, and 19–23 would
have been obvious under 35 U.S.C. § 103(a) based on the combination of
Teramura and the APA NetCash System.
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F. Obviousness over Teramura, the APA NetCash System, and Popolo
Petitioner asserts that claims 5, 6, 13, 14, and 18 are unpatentable
under 35 U.S.C. § 103(a) over the combination of Teramura, the APA
NetCash System, and Popolo. Pet. 50–52. These claims depend from
claims 1 or 9 and further require that a commission is paid to the CIA, in
various ways, as part of the currency transaction recited in the parent
independent claims. See Ex. 1001, col. 23, ll. 27–35, col. 24, ll. 20–28, 36–
37. According to Petitioner, in view of Popolo, it would have been obvious
to add a commission to the proposed combination of Teramura and the APA
NetCash System to provide the middleman a revenue stream for its services.
See Pet. 50–51. Petitioner also presents claim charts for claims 5, 6, 13, 14,
and 18. Id. at 51–52.
Popolo discloses an interactive online system for matching buyers and
sellers of spot metals such as steel. See Ex. 1009, Title, col. 1, ll. 4–11, 46–
52. A seller posts an “asking price” on the system for the sale of metal to
potential buyers. See id. at col. 9, ll. 20–50, Fig. 7. The asking price may
either reflect separate entries for “asking total value” and “fee,” or roll the
fee into a single asking price. See id. at col. 9, ll. 29–50. The fee is
calculated “based on the seller[’]s current month-to-date postings activity on
the system.” Id. at col. 9, ll. 42–43.
Patent Owner asserts that Popolo is non-analogous art because it is
directed to an online listing service for spot metals, not the exchange of
currency for payment, and, therefore, cannot be combined with Teramura
and the APA NetCash System. PO Resp. 54–56. We are persuaded that
Popolo is analogous art.
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A reference qualifies as prior art for an obviousness determination
under § 103 only when it is analogous to the claimed invention. In re Bigio,
381 F.3d 1320, 1325 (Fed. Cir. 2004); In re Clay, 966 F.2d 656, 658 (Fed.
Cir. 1992). A reference is considered analogous prior art: (1) if the reference
is from the same field of endeavor as the claimed subjected matter,
regardless of the problem addressed, or (2) if “the reference [] is reasonably
pertinent to the particular problem with which the inventor is involved,”
even though the reference is not within the field of the inventor’s endeavor.
Bigio, 381 F.3d at 1325. To show a reference is reasonably pertinent, a
challenger must show that the reference “logically would have commended
itself” to an inventor’s attention in considering the problem addressed by the
challenged patent. In re ICON Health & Fitness, Inc., 496 F.3d 1374, 1379–
80 (Fed. Cir. 2007) (quoting Clay, 966 F.2d at 659).
In the Decision to Institute, the Board stated that, although the Board
appreciates the claimed invention relates to electronic currency transactions,
whereas Popolo concerns sale of metal, an inventor seeking to design a
networked method of effecting payment through a third party (as claimed)
would have reasonably considered the problem of how third party
intermediaries in other networked transactions (such as the transactions
described in Popolo) made money. Dec. to Inst. 22.
Petitioner’s declarant, Dr. Neuman, testifies that “the problem faced
by the inventor was specifically how a third-party involved in facilitating a
financial transaction could make money.” Ex. 1013 ¶ 68. According to Dr.
Neuman, Popolo “facilitat[es] the transaction by offering its services
(specifically, providing a listing service).” Id. Dr. Neuman further testifies
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“[a] person of ordinary skill in the art attempting to address this problem
would have looked to prior art examples of third parties facilitating a
transaction, such as Popolo.” Id. Dr. Neuman also testifies that the concept
of charging a commission was well-known in the art. Id. (citing Ex. 1010
¶¶ 21–24, 167–75).
Patent Owner argues that Popolo does not charge money for
performing a networked transaction, but, rather, charges money for listing an
item in an auction. PO Resp. 56; see also Ex. 2012 ¶ 87 (Dr. Tygar makes
essentially the same point). Patent Owner’s argument is not persuasive
because it is not directed to the problem addressed by the claims, i.e., how a
third party mediating transactions could make money. Rather, it is directed
to whether the third party charges money for networked transactions.
Neither Patent Owner nor Dr. Tygar disputes the Board’s formulation of the
problem addressed by claims 5, 6, 13, 14, and 18.
Thus, in the absence of Patent Owner’s proposed definition of the
problem addressed by the claims, we credit Dr. Neuman’s testimony and are
persuaded that Popolo is analogous art because it would have logically
commended itself to an inventor’s attention in considering the problem of
how a third-party involved in facilitating a financial transaction could make
money.
Patent Owner further asserts that Popolo does not teach or suggest that
a CIAS charges a commission when performing a payment of electronic
money over a network. PO Resp. 55–56. Patent Owner also asserts that
Popolo’s auction listing fee does not teach or suggest a CIAS automatically
charging (and deducting) a commission during the electronic currency
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transfer itself. Id. at 56. These arguments are not persuasive because they
treat Popolo individually, not in combination with Teramura and the APA
NetCash as proposed by Petitioner.
Patent Owner asserts that Popolo in combination with Teramura and
the APA NetCash still does not teach the recited limitations of claims 5, 6,
13, 14, and 18 because the claims require “a commission be added or
subtracted to a sum by the CIAS, and the CIAS manipulates more money-
representing data packets than it creates new money-representing data
packets.” Id. at 56–57. According to Patent Owner, “[t]he claimed manner
of assessing a commission as a part of a single transaction is a particularly
elegant manner of charging a commission that ensures the CIAS collects its
commission while saving resources that would be required if the
commission is charged in a separate commission transaction.” Id. at 57. But
this is exactly what would happen when Popolo is included in the proposed
combination of Teramura and the APA NetCash System discussed above
where the internal coin exchange mechanism is included in the middleman
with the co-located currency server. Indeed, Dr. Neuman testifies that “a
person of ordinary skill in the art would have been motivated to add a
commission to the combination of Teramura and the Admitted Prior Art
based on the teaching of a commission in Popolo” and that “[t]his
combination would render obvious claims 5, 6, 13, 14, and 18.” Ex. 1013
¶ 68.
We credit Dr. Neuman’s testimony, and, upon considering all of the
evidence of record, determine that Petitioner has demonstrated, by a
preponderance of evidence, claims 5, 6, 13, 14, and 18 would have been
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obvious under 35 U.S.C. § 103(a) based on the combination of Teramura,
the APA NetCash System, and Popolo.
G. Obviousness over Bernstein and the APA NetCash System
Petitioner asserts claims 1–3, 7–11, 15–17, and 19–22 are
unpatentable under 35 U.S.C. § 103(a) over the combination of Bernstein
and the APA NetCash System. Pet. 52–65.
Upon review of all of the parties’ papers and supporting evidence
discussed in those papers, we are persuaded that Petitioner has
demonstrated, by a preponderance of evidence, that claims 1–3, 7–11, 15–
17, and 19–22 are unpatentable under 35 U.S.C. § 103(a) over the
combination of Bernstein and the APA NetCash System.
1. Bernstein Disclosure Overview
Bernstein describes a portable purchasing device. Figure 1 of
Bernstein is shown below:

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Figure 1 is a block diagram of portable purchasing device 10. See Ex. 1006,
col. 4, ll. 65–67, col. 5, ll. 15–16. Purchasing device 10 has at least three
modes of making a payment. In a “direct value transfer,” purchasing device
10 communicates with a vendor cashbox using transceiver 22 to transfer
electronic cash from cash memory 18 of purchasing device 10 to the vendor
cashbox, without the assistance of a financial institution. See id. at col. 3,
ll. 31–63, col. 5, ll. 20–32. In the second mode, purchasing device 10 again
communicates directly with the vendor cashbox, but rather than using cash
memory 18, device 10 uses the communication facilities of the vendor
cashbox to contact a financial institution account of the authorized user of
the purchasing device to pay the vendor. See id. at col. 3, l. 64–col. 4, l. 4,
col. 4, ll. 13–26, col. 8, l. 17–col. 9, l. 40.
The third mode is illustrated in Figure 5, reproduced below:

Figure 5 shows a system using purchasing device 10. See id. at col. 5, ll. 8–
9. Referring to Figure 5, transferring user 200 uses device 10 to
communicate with recipient 202 over phone line 208. See id. at col. 11,
ll. 32–41, col. 4, ll. 14–15. The parties agree upon a monetary amount to be
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transferred from user 200 to recipient 202. See id. at col. 11, ll. 3–17,
col. 11, l. 42–col. 12, l. 12. User 200 then sends a transaction summary to
third party clearing agent 204 of user 200 over phone line 210. See id. at
col. 11, ll. 17–22, col. 12, ll. 13–20. Recipient 202 does the same over
phone line 212. See id. at col. 11, ll. 17–22, col. 12, l. 59–col. 13, l. 14.
Agent 204 compares the two transaction summaries and, if they match,
issues payment to recipient 202. See id. at col. 13, ll. 14–31.
2. Claim 1
a. Whether the Combination of Bernstein and the APA NetCash System
Teaches Every Limitation of Claim 1
Petitioner has shown that the combination of Bernstein and the APA
NetCash System teaches every limitation of claim 1. Pet. 52–58.
Petitioner’s theory basically parallels the theory for the proposed
combination of Teramura and the APA NetCash System discussed above
except that the financial institution of Bernstein plays the role of the
intermediary in this combination. For example, Petitioner asserts that it
would have been well within the knowledge of a person of ordinary skill in
the art to adapt Bernstein’s financial institution to include the currency and
currency issuing capability of the APA NetCash System. Id. at 54–55.
Similar to the Teramura-NetCash combination, the currency server is co-
located with the intermediary—i.e., the financial institution of Bernstein. Id.
at 55. In addition, the internal coin exchange function is placed at the
intermediary, i.e., the financial institution, since the Petitioner’s discussion
in its Reply regarding the structure of the proposed combination and the
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middleman transaction applies equally to Teramura and Bernstein. See Pet.
Reply 7–9.
Patent Owner argues that Petitioner “relies upon a grab bag of features
from the second and third distinct payment modes in Bernstein,” relying on
features of different modes for different limitations. PO Resp. 59 (citing Pet.
56–58). This is not improper because Petitioner’s challenge is based on
obviousness grounds. Unlike anticipation, the obviousness analysis does not
require all of the teachings to come from the same embodiment. See Net
MoneyIN, Inc. v. VeriSign, Inc., 545 F.3d 1359, 1371 (Fed. Cir. 2008)
(holding that anticipation requires the presence in a single prior art
disclosure of all elements of a claimed invention arranged as in the claim
and that any deviation invokes the question of obviousness).
Patent Owner further asserts that, of the three alternative modes of
effecting payment described in Bernstein, only the first mode uses electronic
currency. Patent Owner argues that the second and third modes relied upon
by Petitioner do not concern electronic currency. PO Resp. 60. Patent
Owner’s argument is not persuasive because “[c]ombining the teachings of
references does not involve an ability to combine their specific structures.”
Application of Nievelt, 482 F.2d 965, 968 (CCPA 1973).
Patent Owner makes several arguments attacking the prior art
individually without regard to the proposed combination. See, e.g., PO
Resp. 67 (Bernstein does not disclose CIA or CIAS, or sending to any server
instructions to pay a sum of electronic currency to a second user), 70
(Bernstein uses direct payment; Bernstein does not teach data associated
with the first user). These arguments are unpersuasive for the same reasons
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discussed above with respect to the combination of Teramura and the APA
NetCash System. Patent Owner also raises again the argument regarding
deleting the first user’s data packets and issuing new data packets to the
second user. See id. 71–76. As discussed above, Petitioner’s internal coin
exchange argument was presented in response to this argument. Patent
Owner also makes the argument that the NetCash coin belongs to
Bernstein’s financial institution when the buyer sends the coin to the
intermediary broker, which we found unpersuasive as discussed above. See
id. at 74–75. Thus, for the same reasons discussed above with respect to the
Teramura-NetCash combination, we are not persuaded by Patent Owner’s
arguments disputing the teachings of the combination of Bernstein and the
APA NetCash System as proposed by Petitioner.
Accordingly, on this record, we find that Petitioner has demonstrated,
by a preponderance of evidence, that the proposed combination of Bernstein
and the APA NetCash System teaches every limitation of claim 1.
b. Reasons to Combine Bernstein and the APA NetCash System
Petitioner argues the same motivation to combine as the combination
based on Teramura—i.e., Simon and the desire for increased security and
efficiency would have motivated a person of ordinary skill to combine
Bernstein and the APA NetCash System. See Pet. 55. Our discussion above
regarding the motivation to combine based on the knowledge of a person of
ordinary skill and Simon is applicable here, including the motivation for an
internal coin exchange function at the middleman based on the double
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spending problem addressed in the APA NetCash System and Simon’s
teaching of currency swapping at the middleman (see Pet. Reply 8).
Patent Owner argues that Bernstein teaches away from the proposed
combination because Bernstein excludes its own bank intermediaries from
involvement in an electronic currency transaction. PO Resp. 65. According
to Patent Owner, the financial institution or third party agent in Bernstein is
only invoked to perform a cash or credit transaction using traditional money,
not using electronic currency. Id. (citing Ex. 2013, 145:7–12; Ex. 1006,
col. 3, ll. 64–67).
Citing the testimony of Dr. Neuman, Petitioner asserts that the
accounts that fund the intermediary transactions disclosed in Bernstein can
be either conventional or electronic cash. Pet. Reply 12–13 (citing Ex. 1013
¶¶ 69, 77; Ex. 1010 ¶¶ 181, 192). Petitioner argues, contrary to Patent
Owner’s assertion, that Bernstein never disclaims the use of electronic cash
in these accounts. Id. at 12. We credit Dr. Neuman’s testimony, and are
persuaded that Bernstein does not teach away from the proposed
combination.
Patent Owner further argues that a person of ordinary skill would not
have been motivated to combine Bernstein with the APA NetCash System
because the proposed combination would have frustrated the net settlement
operations at Bernstein’s bank. See PO Resp. 21 (citing Ex. 1202 ¶ 102;
Ex. 2013, 184:17–185:12, 186:8–17). Petitioner asserts, citing the testimony
of Drs. Neuman and Tygar, that a person of ordinary skill would have
understood that the recipient in Bernstein need not be a bank, and, therefore,
was not necessarily engaged in net settlement. Pet. Reply 13–14 (citing Ex.
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1013 ¶ 73; Ex. 1012, 116:9–23). We are persuaded by Petitioner’s
argument. Moreover, Patent Owner’s argument is not persuasive because, as
discussed above, “[c]ombining the teachings of references does not involve
an ability to combine their specific structures.” Nievelt, 482 F.2d at 968.
Accordingly, based on the foregoing, we find Petitioner has shown
that, at the time of the invention of the ’578 patent, a person of ordinary skill
in the art would have been motivated to combine Bernstein with the APA
NetCash System as proposed by Petitioner, and that, in making that
combination, a person of ordinary skill would have had a reasonable
expectation of success.
c. Conclusion
Upon considering all of the evidence of record, we determine that
Petitioner has demonstrated, by a preponderance of evidence, claim 1 would
have been obvious under 35 U.S.C. § 103(a) based on the combination of
Bernstein and the APA NetCash System.
3. Claim 9
Claim 9 is a system claim which recites limitations similar to claim 1,
and Petitioner presents for claim 9 essentially the same material as claim 1.
See Pet. 59–62. Patent Owner also relies on its arguments for claim 1 to
argue the patentability of claim 9. See PO Resp. 76. Therefore, for the same
reasons discussed above with respect to claim 1, we determine that
Petitioner has demonstrated, by a preponderance of evidence, that claim 9
would have been obvious under 35 U.S.C. § 103(a) based on the
combination of Bernstein and the APA NetCash System.
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4. Claims 2, 3, 7, 8, 10, 11, 15–17, and 19–22
Similar to our analysis of the ground based on the combination of
Teramura and the APA NetCash System, we apply our findings and
conclusions regarding independent claims 1 and 9 discussed above to our
analysis of these claims, which depend from claims 1 or 9. Thus, we
interpret Petitioner’s argument and evidence with the understanding that the
Bernstein’s intermediary is co-located with the currency server of the APA
NetCash System and that the internal coin exchange function included in the
middleman.
Patent Owner’s arguments for these claims are similar to its
arguments in the ground based on the combination of Teramura and the
APA NetCash System that treat the prior art individually without regard to
the teachings of the proposed combination, which we found to be
unpersuasive. See PO Resp. 76–78. We find Patent Owner’s arguments
similarly unpersuasive here.
We have reviewed the arguments and evidence presented by
Petitioner (see, e.g., Pet. 58–59, 62–64) and, upon considering all of the
evidence of record, we determine that Petitioner has demonstrated, by a
preponderance of evidence, claims 2, 3, 7, 8, 10, 11, 15–17, and 19–22
would have been obvious under 35 U.S.C. § 103(a) based on the
combination of Bernstein and the APA NetCash system.
H. Obviousness over Bernstein, the APA NetCash System, and Popolo
Petitioner asserts that claims 5 and 13 are unpatentable under
35 U.S.C. § 103(a) over the combination of Bernstein, the APA NetCash
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System, and Popolo. Pet. 65–66.
Patent Owner relies on the same argument it advanced to argue the
patentability of these claims in the ground based on the combination of
Teramura, the APA NetCash system, and Popolo. PO Resp. 78.
Accordingly, for the reasons similar to those discussed in the ground
based on the combination of Teramura, the APA NetCash System, and
Popolo, upon considering all of the evidence of record, we determine that
Petitioner has demonstrated, by a preponderance of evidence, claims 5 and
13 would have been obvious under 35 U.S.C. § 103(a) based on the
combination of Bernstein, the APA NetCash System, and Popolo.
I. Patent Owner’s Motion to Exclude
Patent Owner moves to exclude Exhibit 1007 (Teramura), the APA
NetCash System, Exhibit 1008 (Simon), Exhibit 1010 (Neuman
Declaration), and Exhibit 1013 (Neuman Reply Declaration). As the
movant, Patent Owner bears the burden of proof to establish that it is entitled
to the relief requested—namely, that the material sought to be excluded is
inadmissible under the Federal Rules of Evidence. See 37 C.F.R.
§§ 42.20(c), 42.62(a). For the reasons discussed below, Patent Owner’s
Motion to Exclude is DENIED.
1. Ex. 1007 (Teramura)
Patent Owner moves to exclude Exhibit 1007, which is a copy of
Canadian Patent No. 2,221,399, issued June 11, 2002. Patent Owner repeats
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and supplements its argument in its Patent Owner Response that Exhibit
1007 is not prior art under § 102(b). See PO Mot. to Exclude 2–7.
Arguing that Exhibit 1007 is not prior art under 35 U.S.C. § 102(b) is
a challenge to the sufficiency or weight to be given to the document. Such
argument is not proper in a motion to exclude, which is a challenge to the
admissibility of evidence, not a challenge to sufficiency. See 77 Fed. Reg. at
48,767 (A motion to exclude may not be used to challenge the sufficiency of
the evidence to prove a particular fact.). Accordingly, we will not consider
Patent Owner’s arguments regarding the prior art status of Exhibit 1007 in
this Motion to Exclude.
Best Evidence Rule
Patent Owner appears to argue that Exhibit 1007 fails to satisfy the
Best Evidence Rule, Federal Rules of Evidence (“FRE”) 1002, because it is
“neither an original nor a duplicate of the allegedly laid-open application.”
PO Mot. to Exclude 7. Petitioner, however, represents that Exhibit 1007 is a
copy or a duplicate of Canadian Patent No. 2,221,399. See Pet. iii; Paper 45,
1. Patent Owner does not appear to dispute that fact. Furthermore, as
discussed above, Petitioner has filed a certified copy of Teramura file history
as Exhibit 1015, which includes the Teramura laid-open application. See
Paper 19, 2; Pet. Exclude Opp. 3 (citing Ex. 1015, 2–3, 89–130). Patent
Owner does not dispute Exhibit 1015 is a certified copy of Teramura file
history; nor does it dispute Exhibit 1015 includes a copy of the Teramura
application. See PO Mot. to Exclude 7–8. Patent Owner appears to argue
“[w]ithout a copy of the file – as laid open in 1998 – there is no evidence on
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this issue” (id. (emphasis added), PO Resp. 30–31) because Exhibit 1015 is
“merely a copy of the Teramura file history as it exists today,” and “is not
sufficient evidence of what existed (and was ‘laid-open’) on May 21, 1998”
(PO Resp. 31–32). Patent Owner’s argument is, at best, a challenge to the
sufficiency or weight to be given to Exhibit 1015, not a challenge to the
admissibility of Exhibit 1007. Hence, Patent Owner has not articulated why
the Best Evidence Rule is applicable at all to Exhibit 1007. Moreover, as
discussed above, a challenge to the sufficiency or weight of evidence is not
proper in a motion to exclude.
Authentication
Patent Owner argues that Exhibit 1007 is not an authenticated copy of
“the allegedly laid open application.” PO Mot. to Exclude 8. But Patent
Owner does not deny Exhibit 1007 is a copy of Canadian Patent No.
2,221,399. Nor does Patent Owner dispute Exhibit 1015 is a certified copy
of the Teramura application file history. Thus, Patent Owner has not
articulated why authentication is at issue here. Petitioner argues that
Exhibit 1007 is self-authenticating under FRE 902(5). Pet. Exclude Opp. 7.
We agree with Petitioner.
Therefore, Patent Owner has not carried its burden to show Exhibit
1007 is inadmissible under the Federal Rules of Evidence. Accordingly,
Patent Owner’s Motion to Exclude Exhibit 1007 is DENIED.
2. The APA NetCash System
Patent Owner repeats its argument in the Patent Owner Response that
the APA NetCash System falls outside AIA § 18(a)(1)(C) and cannot form
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the basis of an unpatentability ground in a cover method review proceeding.
PO Mot. to Exclude 9. As explained above, such an argument is a challenge
to the sufficiency or weight to be given to the document. Such argument is
not proper in a motion to exclude, which is a challenge to the admissibility
of evidence, not a challenge to sufficiency. Accordingly, Patent Owner’s
Motion to Exclude the APA NetCash System is DENIED.
3. Ex. 1008 (Simon)
Patent Owner repeats its argument in the Patent Owner Response that
Simon is irrelevant to this proceeding because the Board declined to institute
on any grounds based on Simon. Id. at 10–11. Such argument is a challenge
to the sufficiency or weight to be given to the document, and, therefore, not
proper in a motion to exclude. Accordingly, Patent Owner’s Motion to
Exclude Simon is DENIED.
4. Ex. 1010 (Neuman Declaration)
Patent Owner moves to exclude paragraphs 1–125 of the Neuman
Declaration and eight appendices to the Neuman Declaration because the
Petition does not rely upon or refer to them. Id. at 12–14. According to
Patent Owner, the Petitioner’s Reply cited twenty-seven paragraphs of the
Neuman declaration. Such argument is a challenge to the sufficiency or
weight to be given to the document, which we are able to assess without
excluding it. Accordingly, Patent Owner’s Motion to Exclude the Neuman
Declaration is DENIED.
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5. Ex. 1013 (Neuman Reply Declaration)
Patent Owner moves to exclude the Neuman Reply Declaration in its
entirety because the Petitioner Reply cited only to certain paragraphs in the
document. Id. at 14. Although Patent Owner argues the uncited paragraphs
are prejudicial to it, Patent Owner does not explain what is the nature of the
prejudice it will suffer and why. Id. Patent Owner also argues that because,
at the deposition of Dr. Neuman, the parties stipulated to confine the scope
of the deposition to those portions in Exhibit 1013 cited in the Petitioner
Reply, the uncited paragraphs are prejudicial and irrelevant to this
proceeding. Id. at 15. Patent Owner’s argument is at best a challenge to the
sufficiency or weight to be given to the document, which is not proper in a
motion to exclude.
Patent Owner also argues that many of the theories included in the
Neuman Reply Declaration were presented for the first time in the Petitioner
Reply as Patent Owner identified during the March 30, 2015 telephone
conference. Id. at 15. Although a Motion to Exclude may raise issues
related to admissibility of evidence, it is not a mechanism to argue that a
Reply contains new arguments. Liberty Mutual Ins. Co. v. Progressive
Casualty Ins. Co., Case CBM2013-00004, slip op. at 62 (PTAB Mar. 13,
2014).
Nonetheless, as discuss above, we find that the arguments in the
Petitioner’s Reply identified by Patent Owner as new arguments are
arguments presented in response and in rebuttal to arguments first raised in
the Patent Owner Response, and, therefore, are properly raised as part of the
Petitioner’s Reply.
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Accordingly, Patent Owner’s Motion to Exclude the Neuman Reply
Declaration is DENIED.
J. Motion for Observation
Patent Owner’s observations are directed to the cross-examination
testimony of Dr. Neuman (Ex. 2026), who was cross-examined after
Petitioner filed its Petitioner Reply. We have considered Patent Owner’s
observations and Petitioner’s responses in rendering our decision, and have
accorded the testimony the appropriate weight as explained above. See Obs.
1–12; Obs. Resp. 1–13.
III. CONCLUSION
Petitioner has met its burden of proof, by a preponderance of the
evidence, in showing that claims 1–3, 5–11, and 13–23 of the ’578 patent are
unpatentable based on the following grounds of unpatentability:
A. Claims 1–3, 7–11, 15–17, and 19–23 under 35 U.S.C. § 103(a) as
obvious over Teramura and the APA NetCash System;
B. Claims 5, 6, 13, 14, and 18 under 35 U.S.C. § 103(a) as obvious
over Teramura, the APA NetCash System, and Popolo;
C. Claims 1–3, 7–11, 15–17, and 19–22 under 35 U.S.C. § 103(a) as
obvious over Bernstein and the APA NetCash System; and
D. Claims 5 and 13 under 35 U.S.C. § 103(a) as obvious over
Bernstein, the APA NetCash System, and Popolo.
IV. ORDER
In consideration of the foregoing, it is hereby:
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ORDERED that claims 1–3, 5–11, and 13–23 of the ’578 patent are
unpatentable; and
FURTHER ORDERED that Patent Owner’s Motion to Exclude is
denied.
This is a Final Decision. Parties to the proceeding seeking judicial
review of the decision must comply with the notice and service requirements
of 37 C.F.R. § 90.2.

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For PETITIONER:

Scott A. McKeown
Greg Gardella
OBLON SPIVAK, McCLELLAND,
MAIER & NEUSTADT, L.L.P.
cpdocketmckeown@oblon.com
cpdocketgardella@oblon.com

For PATENT OWNER:

Howard N. Wisnia
MINTZ LEVIN
PTOhwisnia@mintz.com

Kevin D. McCarthy
David L. Principe
ROACH BROWN McCARTHY & GRUBER, P.C.
kdmccarthy@roachbrown.com
bcreola@roachbrown.com