UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE PATENT TRIAL AND APPEAL BOARD. SECUREBUY, LLC Petitioner

Transcription

1 UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE THE PATENT TRIAL AND APPEAL BOARD SECUREBUY, LLC Petitioner V. CARDINALCOMMERCE CORPORATION Patent Owner Case No. U.S. PRELIMINARY PATENT OWNER RESPONSE TO PETITION FOR COVERED BUSINESS METHOD PATENT REVIEW

2 i I. INTRODUCTION... 1 II. BACKGROUND... 1 III. OVERVIEW OF THE 002 PATENT... 2 IV. THE 002 PATENT PROSECUTION HISTORY... 4 V. SUMMARY OF ARGUMENT... 5 VI. CLAIM CONSTRUCTION A. Authentication Protocol B. Authentication Determination C. Connection Layer D. Plug-in Layer E. Distribution Layer VII. RESPONSE TO GROUND 1: CLAIMS 1 14 OF THE 002 PATENT ARE DIRECTED TO PATENTABLE SUBJECT MATTER A. 35 U.S.C B. The 002 Patent Claims Are Directed To A Technical Solution To A Technical Problem C. Petitioner s Attempt to Define the Claims of the 002 Patent as an Abstract Idea Is Baseless VIII. RESPONSE TO GROUND 2: THE CLAIMS OF THE 002 PATENT ARE PATENTABLE UNDER 35 U.S.C. 102(a) A. Claims 1, 2, 4, 5, 9, 13 and 14 of the 002 Patent Are Not Anticipated by Weller General Description of Weller Weller Does Not Disclose A Plurality of Authentication Protocols as Recited in the 002 Patent Claims...35

3 3. Weller Does Not Disclose Determining or Selecting the Authentication Protocol as Recited in the 002 Patent Claims Weller Does Not Disclose the Third-Party Server or Universal Platform Server Recited in the 002 Patent Claims...40 B. The Absent Claim Limitations are Not Inherent in Weller C. The Chatterjee Expert Declaration Does Not Save Petitioner s Anticipation Arguments IX. RESPONSE TO GROUND 3: CLAIMS 1 11, 13 and 14 OF THE 002 PATENT ARE NOT INVALID UNDER 35 U.S.C. 103(a) A. Claims 1 11, 13 and 14 of the 002 Patent Are Not Invalid Under 35 U.S.C. 103(a) over Weller in View of Swain The Scope and Content of Weller and Swain The Combination of Weller in view of Swain Does Not Disclose Each and Every Limitation of any Claims of the 002 Patent One of Ordinary Skill Would Not Have Combined or Modified Weller in view of Swain in the Way Suggested by the Claims...62 B. Claims 1, 10 and 17 Are Not Obvious over the Admitted Prior Art in view of Kay The Scope and Content of the Admitted Art and Kay The Combination of the Admitted Prior Art in View of Kay Does Not Disclose Each and Every Limitation of Claims 1, 5 and 14 of the 002 Patent One of Ordinary Skill in the Art Would Not Have Combined or Modified the Alleged Prior Art References as Recited by the Claims...71 ii

4 C. Claim 1 of the 002 Patent Is Not Obvious Over the Admitted Prior Art in view of Gudgin The Scope and Content of the Admitted Prior Art and Gudgin The Combination of the Background Prior Art in View of Gudgin Does Not Disclose Each Limitation of Claim One of Ordinary Skill in the Art Would Not Have Combined or Modified the Alleged Prior Art Reference With Gudgin as Recited in Claim X. CONCLUSION iii

5 TABLE OF AUTHORITIES Cases ActiveVideo Networks, Inc. v. Verizon Comm ns, Inc., 694 F.3d 1312 (Fed. Cir. 2012)...49 Alexsam, Inc. v. IDT Corp., 715 F.3d 1336 (Fed. Cir. 2013)...67 Apple Inc. v. Sightsound Tech., LLC, CBM , Doc. 17 (P.T.A.B. Oct. 8, 2013)... 20, 26, 31 Application of Ratti, 270 F.2d 810 (C.C.P.A. 1959)... 66, 74 August Tech. Corp. v. Camtek, Ltd., 655 F.3d 1278 (Fed. Cir. 2011)... 59, 61 Bilski v. Kappos, 130 S. Ct (2010)... 18, 19 Broadcom Corp. v. Emulex Corp., 732 F.3d 1325 (Fed. Cir. 2013)... 59, 61 Diamond v. Diehr, 450 U.S. 175 (1981)... 19, 31 Ecolochem, Inc. v. S. Cal. Edison Co., 227 F.3d 1361 (Fed. Cir. 2000)... 76, 80 In re Abbott Diabetes Care Inc., 696 F.3d 1142 (Fed. Cir. 2012)...12 In re Bilski, 545 F.3d 943 (Fed. Cir. 2008)...19 In re Fritch, 972 F.2d 1260 (Fed. Cir. 1992)... 67, 76 In re Gordon, 733 F.2d 900 (Fed. Cir. 1984)... 66, 74 iv

6 In re Gurley, 27 F.3d 551 (Fed. Cir. 1994)...58 In re Lowry, 32 F.3d 1579 (Fed. Cir. 1994)...51 In re NTP, Inc., 654 F.3d 1279 (Fed. Cir. 2011)...12 In re Omeprazole Patent Lit., 483 F.3d 1364 (Fed. Cir. 2007)... 46, 48 In re Robertson, 169 F.3d 743 (Fed. Cir. 1999)...45 KSR Int l Co. v. Teleflex Inc., 550 U.S. 398 (2007)... 50, 51 Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct (2012)...19 Mintz v. Dietz & Watson, Inc., 679 F.3d 1372 (Fed. Cir. 2012)... 76, 80 Motorola Mobility, LLC v. Int l Trade Comm n, 737 F.3d 1345 (Fed. Cir. 2013)... 46, 48 Oakley, Inc. v. Sunglass Hut Int l, 316 F.3d 1331 (Fed. Cir. 2003)...49 Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005)...12 Research Corp. Techs., Inc. v. Microsoft Corp., 627 F.3d 859 (Fed. Cir. 2010)... 20, 24, 27, 28 Richardson v. Suzuki Motor Co., 868 F.2d 1226 (Fed. Cir. 1989)...34 Santarus, Inc. v. Par Pharm., Inc., 694 F.3d 1344 (Fed. Cir. 2012)...58 v

7 SAP America, Inc. v. Versata Development Group, Inc., CBM (P.T.A.B. June 11, 2013)...18 Scripps Clinic & Research Found. v. Genentech, Inc., 927 F.2d 1565 (Fed. Cir. 1991)...34 SiRF Tech., Inc. v. Int l Trade Comm n, 601 F.3d 1319 (Fed. Cir. 2010)...25 St. Jude Med., Inc. v. Access Closure, Inc., 729 F.3d 1369 (Fed. Cir. 2013)... 51, 59, 61 Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., 655 F.3d 1364 (Fed. Cir. 2011)...52 Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335 (Fed. Cir. 2013)... passim Verdegaal Bros. v. Union Oil Co. of Cal., 814 F.2d 628 (Fed. Cir. 1987)...34 W.L. Gore & Assoc., Inc. v. Garlock, Inc., 721 F.2d 1540 (Fed. Cir. 1983)... 51, 58, 67, 76 Statutes 35 U.S.C U.S.C. 103(a) U.S.C. 325(d)...68 Rules 37 C.F.R (a); (a) Fed. Reg , MPEP vi

8 I. INTRODUCTION Pursuant to 37 C.F.R (a) and (a), Patent Owner CardinalCommerce Corporation ( Cardinal ) submits this Preliminary Response to the Corrected Petition (Paper No. 5) (the Petition ) filed by SecureBuy, LLC ( SecureBuy or Petitioner ) requesting covered business method review of claims 1 14 of U.S. (the 002 Patent, Ex. 1001). Cardinal respectfully requests that the Patent Trial and Appeal Board (the Board ) deny institution because Petitioner fails to establish that any claim is more likely than not to be found invalid. II. BACKGROUND Cardinal is the owner of the 002 Patent. It is an industry leader in payment authentication for e-commerce and mobile commerce. One of Cardinal s premier offerings is the Cardinal Centinel platform, which practices claims of the 002 Patent. The platform facilitates payment authentication for transactions between consumers and thousands of merchants and merchant service providers involving various payment brands, such as Visa and MasterCard.. Cardinal has processed almost two billion transactions using its patented technology. On November 1, 2013, SecureBuy filed two declaratory judgment actions against Cardinal concerning the 002 Patent, one in the District of Delaware, 13- cv-1792 (LPS), and one in the Southern District of Mississippi, 13-cv-417. On

9 November 12, 2013, Cardinal filed a counterclaim in the District of Delaware action against SecureBuy for infringement of the 002 Patent. III. OVERVIEW OF THE 002 PATENT The 002 Patent is entitled Universal Merchant Platform for Payment Authentication and generally relates to a novel system for facilitating the authentication of a consumer during the processing of an Internet transaction. 002 Patent at 4: The 002 Patent discloses that the use of standard cards in connection with e-commerce presents certain difficulties, including difficulties concerning the authentication or positive identification of the cardholder. Id. at 1: To authenticate a consumer, a merchant s payment processing system must communicate with a credit/debit card issuer or its agent using issuer-specific authentication protocols. A prior-art payment processing solution described in the Background of the 002 Patent required a merchant to install software ( plug-ins ) on its system for each payment brand and authentication initiative that it supported. Id. at 2:1 43, 2: That solution, however, was burdensome for merchants because supporting plug-ins required substantial storage space and computing power and required frequent maintenance. Id. at 2:48 3:4. The 002 Patent overcame those problems by removing the need for merchants to install a plug-in in their local environment. Instead, the 002 Patent 2

10 3 discloses that plug-ins are installed and maintained on a third party s centralized processing system/server(s) that determines and selects the appropriate authentication protocol to use for a particular transaction based on payment information received for that transaction. Id. at 4: One implementation of the invention uses a thin-client (i.e., small-in-size) software application installed on the merchant s server. This application allows the merchant to communicate with the third-party centralized processing system and use the various payment authentication initiatives that the system supported. Id. at 6: Specifically, the thin-client communicates data elements (e.g., card number, account number or name, and transaction amount) between the merchant s website and the centralized payment processing system. See id. at 5:22 51, Figs The centralized system contains logic for payment authentication. Id. Thus, using the thin-client allows the merchant to participate in various payment authentication initiatives (e.g., Verified by Visa, MCS Amex SafeKey, and PayPal) without any significant reprogramming of the merchant s server or its website. 002 Patent at 6: The claims of the 002 Patent are directed to specific solutions to the problems in the prior-art systems. In particular, claims 1 14 are directed to systems and methods for authenticating a consumer for an e-commerce transaction using one of a plurality of authentication protocols supported by a universal

11 platform server that includes specific software layers or steps for performing particular functions. IV. THE 002 PATENT PROSECUTION HISTORY The 002 Patent issued from U.S. Patent Application Serial No. 10/459,849, filed on June 12, It claims priority to Provisional Application No. 60/386,345, filed on June 12, On November 4, 2004, the Examiner issued a non-final office action rejecting claims 1 4, 7, 9, 10 and 15 as anticipated by U.S. Patent No. 6,560,581; claims 5 6 and 8 as obvious in view of that patent; and claims 1 3, 10 and 14 as anticipated by applicant s Background of Invention section. On March 21, 2005, Applicants responded by cancelling claims 1 2 and 15, amending claims 3 4, 7 11 and adding new claims 16 and 17. 3/21/2005 Amendment at 2 6. Applicants amended the distribution layer limitation recited in application claim 11, issued claim 1, to recite how an authentication program is determined based on payment information. Id. at 3 4. On August 15, 2005, the applicants submitted a letter to the Patent Office explaining the importance and commercial success of the invention: Notably, the present application relates to an important invention embodied in commercially successful software products, services and technology that are currently being made available by the assignee of record CardinalCommerce Corporation. Moreover, the commercial significance and uniqueness of the invention is 4

12 validated by the wide acceptance and recognition that CardinalCommerce s technology is receiving in the payment processing industry, e.g., by industry leaders that have adopted 5 and/or backed their technology. CardinalCommerce s partners and customers include: over 100 issuing banks; over 35 acquirers and/or merchant service providers... 8/15/2005 Letter at 2 3. Thereafter, the 002 Patent issued on May 23, V. SUMMARY OF ARGUMENT A trial should not be instituted because the Petitioner has failed to establish that any claim of the 002 Patent is more likely than not invalid. Petitioner trivializes the patented inventions by characterizing them as [t]he use of a separate, non-merchant platform for authentication. Pet. at 4; Napsky Decl. (Ex. 1008) 17 ( [T]he claims are directed toward providing the plug-ins on a platform of a third party instead of on the platform of the merchant.). In doing so, Petitioner disregards meaningful claim limitations directed to specific functionality (either in the form of structural components or method steps) that must be performed by or included in a universal platform server. Each of Petitioner s submitted grounds thus falls flat. With Ground 1, Petitioner wrongly asserts that the 002 Patent claims are invalid under 35 U.S.C. 101 because the claim[s] preempt all manner of third party authentication. Pet. at 24. Instead, the claims expressly recite systems

13 wherein a third-party server or universal platform server, has a specific layered software architecture to support a transaction conducted between a consumer and a merchant according to one of a plurality of different authentication protocols supported by the server or platform, and determines the prescribed authentication protocol from a plurality of authentication protocols based on received payment information, and uses that authentication protocol to communicate with an issuer or service organization (e.g., Visa) to obtain an authentication determination about a consumer. Petitioner s suggestion that the claims preempt[] all manner of third party authentication of a cardholder and are directed to an abstract idea (Pet. at 27) ignores the specific, meaningful claim limitations. Moreover, the universal platform server is integral to the functionality recited in the 002 Patent claims, which are directed to methods and systems that are technological improvements over the prior art. Thus, the claims are directed to patentable subject matter. With Ground 2, Petitioner incorrectly asserts that certain claims are invalid as anticipated by Weller (Ex. 1006). 1 Similar to the systems disclosed in the Background, Weller discloses only a single merchant plug-in located on a 1 If the Board institutes trial based in any part on Weller, then Cardinal intends to introduce evidence showing that, under 37 C.F.R , Weller is not prior art. 6

14 7 merchant s server. Instead of addressing whether Weller discloses every claim limitation, Petitioner focuses on whether Weller discloses the abstract idea of thirdparty authentication. However, Weller does not disclose the claimed plurality of different authentication protocols. Thus, Weller also fails to disclose both the claimed determining and selecting of an authentication protocol from a plurality of different authentication protocols. Nor does it disclose a universal platform server or system with the recited layered software architecture. Chief among Petitioner s failures is its argument that Weller s disclosure of various authentication methods is synonymous with the recited plurality of authentication protocols. The claimed authentication protocol encompasses rules for formatting and routing messages between entities used to authenticate a party. Further, Petitioner fails to establish that Weller discloses determining or selecting an authentication method from among a plurality of authentication methods as required by the claims. Petitioner also simply disregards the specific layered software architecture of claim 1 including the various functions that are required to be performed by each software layer and the particular arrangement of those software layers. Indeed, Petitioner at least tacitly concedes that Weller fails to disclose every limitation recited in the claims by arguing that Weller inherently discloses numerous limitations. Pet. at That argument also fails because Petitioner does not establish that any limitations are necessarily disclosed in

15 Weller. Therefore, Weller does not anticipate any of the 002 Patent claims. With Ground 3, Petitioner argues that certain 002 Patent claims are invalid as obvious in view of three separate proposed combinations of alleged prior art references. Lacking any legitimate reason to make those proposed combinations, Petitioner improperly uses the claimed invention as a roadmap to selectively cull disclosures from the prior art to allegedly piece together the claim limitations. For example, Swain and Kay disclose servers for performing various functions, but Petitioner informed by twelve years of seeing the payment authentication industry develop, not to mention the 002 Patent improperly strips the disclosed servers of their intended purposes disregarding the teachings of the references and reconstitutes those servers to perform different functions namely, those claimed in the 002 Patent. 2 Such blatant hindsight reconstruction is improper. First, Petitioner asserts that claims 1 11, 13 and 14 of the 002 Patent are 2 If the Board institutes on Ground 3, Cardinal intends to introduce evidence that persons of ordinary skill in the art at the time of the invention (1) were moving away from the claimed inventions and (2) would have been discouraged from making the proposed combinations and modifications, and (3) that there are factors evidencing non-obviousness, such as (a) the failure of others, (b) industry recognition of the patented technology, (c) commercial success and (d) skepticism. 8

16 invalid as obvious over Weller in view of Swain (Ex. 1005). 3 However, the proposed combination fails to disclose every limitation of any of those claims. And other than the problem recognized by the inventors about installing plug-ins in a merchant s system, Petitioner fails to identify any defect, problem or concern with the system described in Weller that would have led one of ordinary skill in the art at the time of the invention to modify that system. Without a legitimate reason to do so, it would not have been apparent to one of ordinary skill to modify the Weller system to achieve the systems and methods claimed in the 002 Patent. Moreover, Petitioner fails to explain why one of ordinary skill would have ignored the affirmative teaching in Swain about using a common unifying interface, which would have led such person to adopt a common authentication protocol and taught away from a plurality of authentication protocols as required by the 002 Patent claims. Further, Petitioner fails to explain why one of ordinary skill would have positioned the Swain merchant wallet server between the merchant and issuer in the Weller PAS architecture. Doing so would improperly prevent the Swain merchant wallet server from performing one of its intended purposes allowing a cardholder to authenticate a merchant before a cardholder s information is sent to 3 If the Board institutes trial based on Swain, Cardinal intends to introduce evidence showing that, under 37 C.F.R , Swain is not prior art. 9

17 the merchant. Petitioner s second proposed obviousness combination is equally unsupported. Petitioner asserts that claims 1, 2, 4-8, 10, 13, and 14 are obvious over the admitted prior art in the 002 Patent in view of Kay (Ex. 1007). Kay discloses a front-end proxy server that communicates using a single communication protocol, not a plurality of communication protocols. The frontend proxy server acts as a single entry point to a website and is connected to one or more back-end web servers in a localized environment. Using the Kay front-end proxy server as the entry point to different back-end authentication systems of different issuing banks or service organizations while remaining true to the teaching of Kay that the server acts as a single entry point to a website would require a different front-end proxy server for each issuing bank or service organization supported. That would result in a plurality of servers each equipped to format and route messages to accommodate a single protocol to communicate with a single issuer or service organization, not one server with a distribution layer for communicating with multiple issuers according to a plurality of authentication protocols, as required by claim 1, or a universal platform server as required by claims 5 and 14. Instead, using the patent as a guide, Petitioner disregards the purpose of the Kay front-end proxy server and its use in a localized environment and argues that 10

18 one of ordinary skill in the art would have modified the prior-art system disclosed in the 002 Patent to achieve the claimed invention because the prior art system was ready for improvement. However, in coming to that determination, Petitioner improperly relies on the inventors teachings about problems in the prior art and fails to identify any evidence that one of ordinary skill in the art at the time of the invention knew of or would have recognized such a need. Petitioner s third and final obviousness combination also fails. It involves combining the prior art disclosed in the patent with Gudgin (Ex. 1010). Petitioner argues that one of ordinary skill could have used SOAP to communicate with a third-party server embodying the system of claim 1. That argument is based on a misunderstanding of SOAP s functionality, the false premise that such a server existed in the prior art and a disregard of the specific layered software architecture of claim 1. In sum, the Board should deny to institute review because Petitioner fails to establish that any claim of the 002 Patent is more likely than not invalid,. VI. CLAIM CONSTRUCTION For purposes of this Preliminary Response, Cardinal does not dispute the broadest reasonable interpretation of the means-plus-function limitations identified by Petitioner. Below are Cardinal s proposals for other claim terms Petitioner identified for construction. As discussed below, each of Cardinal s proposed 11

19 constructions is consistent the specification, while Petitioner s proposals improperly narrow the claims. Therefore, the Board should adopt Cardinal s proposals. Phillips v. AWH Corp., 415 F.3d 1303, 1315 (Fed. Cir. 2005) ( [T]he specification is always highly relevant to the claim construction analysis. Usually, it is dispositive; it is the single best guide to the meaning of a disputed term. ); In re Abbott Diabetes Care Inc., 696 F.3d 1142, (Fed. Cir. 2012) (rejecting Board s construction as inconsistent with specification); In re NTP, Inc., 654 F.3d 1279, (Fed. Cir. 2011) (same). A. Authentication Protocol Term Cardinal s Proposal Petitioner s Proposal authentication protocol A prescribed set of rules, including those for formatting and routing messages, governing the transmission of messages over a communications network to verify that a consumer is likely who he/she claims to be A process used to authenticate a cardholder Cardinal s proposal is consistent with the use of the term authentication protocol in the claims and the specification. For example, claim 5 expressly recognizes that the rules for formatting and routing are part of the authentication protocol. See, e.g., Claim 5 ( formatting messages and routing the formatted 12

20 13 messages over the communications network in accordance with one or more mandates of the selected authentication protocol ). So too does the specification: [A] transaction processing service provider (TPSP) 70 formats and routes various messages and takes other defined actions on behalf of the merchant 60 in accordance with authentication protocols prescribed by the payment processing network to which the payment instrument being used for the transaction belongs. 002 Patent at 5: The specification also discloses that the plug-in component 232 formats and routes messages in accordance with the authentication protocols prescribed for the determined type of payment instrument or method being used. Id. at 10: Petitioner s proposal ignores those clear teachings. Without support or explanation, Petitioner asserts that a method used to authenticate a consumer, such as a username and password, is an authentication protocol. See Pet. at 37. But how a person is authenticated, e.g., using passwords, is different from the protocol used to communicate with the entity that performs the authentication. Only the latter is disclosed and claimed in the 002 Patent. Petitioner s proposal also improperly attempts to limit the claims to the authentication of a cardholder. To be sure, the specification states that use of standard cards in connection with e-commerce presents certain difficulties, including difficulties concerning authentication or positive identification of the

21 cardholder. 002 Patent at 1: But the balance of the specification uses the term authentication to refer to consumers in any type of transaction, not just those involving cards. See id. at 4:63 65( to authenticate users ), 9:47 50 (the disclosed system provides a method for authenticating a consumer ). B. Authentication Determination Term Cardinal s Proposal Petitioner s Proposal authentication determination An indication of whether a consumer has been authenticated Verifying the card holder is authorized to make the expenditure Cardinal s proposal is entirely consistent with the specification. See, e.g., 002 Patent at Abstract, 3:25 29, 5:45 51, 11:1 11:10 ( the operative plug-in component 232 optionally formats and routes a second message to the merchant such that the consumer/cardholder is redirected to the issuing entity for completing authentication therewith, whereupon the authentication determination is made. A response containing the authentication determination made by the issuing entity is then returned in accordance with routing instructions... ). Petitioner s proposal is incorrect because it speaks in terms of authorization to make an expenditure, which is different from authentication. Authorization concerns approval to complete a transaction. Barron s Dictionary of Banking Terms at 31 (4th Ed. 14

22 2000) (defining authorization as issuance of approval to complete a transaction or pay funds, for example a bank card authorization or payment authorization ) (Ex. 2001). In contrast, authentication is the positive identification of a cardholder or the process by which to verify that a consumer is likely who he/she claims to be. 002 Patent at 1:34 38, 4:63 65, 9: Even where a consumer is authenticated, he/she may not be authorized to complete a transaction because of spending limits or the like. C. Connection Layer Term Cardinal s Proposal Petitioner s Proposal connection layer An software layer interface used to communicate with external resources Software for communicating over a network Cardinal s proposal is consistent with the ordinary meaning of the term and supported by the specification s disclosure that MAPS 200 contains two layers for communicating with external resources external connection layer 240 and the connectivity layer 210. Id. at 7: The external connection layer 240 provides a generic interface that is used by the MAPS 200 to communicate with outside resources, e.g., the directory or the like as prescribed by various authentication protocols. Id. at 7: Similarly, [t]he connectivity layer

23 provides a generic layer for external entities such as merchants to connect to and process a specific payment authentication transaction. Id. at 7: Petitioner s proposal disregards that the specific connection software interfaces of the system are part of the layered architecture recited in claim 1 and instead refers broadly to any software for communicating over a network. D. Plug-in Layer Term Cardinal s Proposal Petitioner s Proposal plug-in layer A software layer comprising various plug-in components A plurality of software components for authenticating card holders based on the payment information Cardinal s proposal is consistent with the ordinary meaning of the term and its use in the claim 1, which recites a plug-in layer including a plurality of plug-in components. It also is consistent with the specification which states that plug-in layer 230 includes a plurality of individual authentication initiative plug-in components 232. See id. at 8:47 63, Fig. 3. Petitioner s proposal disregards that the plug-in layer is part of the layered system architecture of claim 1 comprising plug-in components. Petitioner s proposal also adds functionality inconsistent with the plain claim language and the teaching of the 002 Patent neither of which limits the use of a plug-in for authentication of cardholders. Also, the 002 Patent 16

24 discloses that the plug-ins are used to facilitate communication with the issuer or service organization the plug-ins do not authenticate the consumer themselves. Id. at 11:1 11:10 ( the authentication determination made by the issuing entity ). E. Distribution Layer Term Cardinal s Proposal Petitioner s Proposal distribution layer Software layer for routing messages among other software layers within the system Software for routing data among software components Cardinal s proposal is consistent with the ordinary meaning of the claim term and supported by the specification, which discloses that [t]he message distribution layer 220 is a component within the software architecture [of the MAPS 200]. 002 Patent at 8:38 40; see id. at 7:32 39, Fig. 3 (element 220). Further, the 002 Patent discloses that distribution layer 220 is preferably a low footprint message distribution application configured to route XML or other like messages to specific plug-in components in the plug-in layer 230 for appropriate transaction processing. 002 Patent at 8: Petitioner s proposal, however, disregards that the distribution layer is a part of the layered system architecture of claim 1 and ignores that it sends messages to other software layers within that system. 17

25 VII. RESPONSE TO GROUND 1: CLAIMS 1 14 OF THE 002 PATENT ARE DIRECTED TO PATENTABLE SUBJECT MATTER Petitioner fails to establish that the 002 Patent claims are more likely than not unpatentable under 35 U.S.C Petitioner alleges that the claims are patent ineligible because they are drawn to an abstract idea. Pet. at In SAP America, Inc. v. Versata Development Group, Inc., CBM (P.T.A.B. June 11, 2013), the Board explained that a patent claim does not recite an abstract idea if it incorporates sufficient meaningful limitations. Here, such meaningful limitations exist in the 002 Patent claims. A. 35 U.S.C. 101 Section 101 controls the inquiry into what constitutes patentable subject matter. It states [w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title. 35 U.S.C Underscoring its breadth, 101 both uses expansive categories and modifies them with the word any. The Supreme Court has emphasized that, [i]n choosing such expansive terms modified by the comprehensive any, Congress plainly contemplated that the patent laws would be given wide scope. Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335, 1341 (Fed. Cir. 2013), quoting Bilski v. Kappos, 130 S. Ct. 3218, 3226 (2010) ( Bilski II ). Of 18

26 19 the three limited, judicially created categories of patent-ineligible subject matter under 101 laws of nature, natural phenomena, and abstract ideas, Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1293 (2012), only the abstract idea exception is at issue here. To determine whether a patent claim satisfies 101 and/or is directed to an abstract idea, the claim as a whole must be analyzed. Diamond v. Diehr, 450 U.S. 175, 188 (1981). [I]t is irrelevant that any individual step or limitation of such processes by itself would be unpatentable under 101. In re Bilski, 545 F.3d 943, 958 (Fed. Cir. 2008). As the Supreme Court explained: It is inappropriate to dissect the claims into old and new elements and then to ignore the presence of the old elements in the analysis. This is particularly true in a process claim because a new combination of steps in a process may be patentable even though all the constituents of the combination were well known and in common use before the combination was made. Diehr, 450 U.S. at 188. Thus, while an abstract idea by itself is not patentable, a practical application of an abstract idea is deserving of patent protection. Mayo, 132 S. Ct ; Bilski II, 130 S. Ct. at 3230; Diehr, 450 U.S. at 187. [T]he fact that a claim is limited by a tie to a computer is an important indication of patent eligibility. This tie to a machine moves it farther away from a claim to the abstract idea itself. Moreover, that same tie makes it less likely that

27 the claims will pre-empt all practical applications of the idea. Ultramercial, 722 F.3d at With method claims, where a claim recites a specific combination of computer components, at specific locations, that interact in a specific way to accomplish the steps, the claim is not directed to an abstract idea. Apple Inc. v. Sightsound Tech., LLC, CBM , Doc. 17, at 18 (P.T.A.B. Oct. 8, 2013). Finally, a claim is directed to an abstract idea only if that idea exhibit[s] itself so manifestly as to override the broad statutory categories of eligible subject matter and the statutory context that directs primary attention on the patentability criteria of the rest of the Patent Act. Research Corp. Techs., Inc. v. Microsoft Corp., 627 F.3d 859, 868 (Fed. Cir. 2010). B. The 002 Patent Claims Are Directed To A Technical Solution To A Technical Problem As detailed above, the 002 Patent claims are directed to a technical solution to a technical problem in the prior art, and not to an abstract idea. The prior-art payment authentication solution described in the Background required e-commerce merchants to install software ( plug-ins ) in their payment processing systems for each debit or credit card payment brand that it supported and wished to authenticate. 002 Patent at 2:56 2:64. The 002 Patent describes the technical solution of the prior-art systems, including a description of how the merchant 20, via a plug-in 22 installed on their server, passes a verify enrollment request 20

28 (VEReq) message to a directory 38 on a server, e.g., suitably operated by the credit card network 34 and the interactions of the directory and issuer in response to such message. 002 Patent at 1:64 2:35. One problem that the inventors recognized with that technical solution was the burden for merchants to maintain plug-ins corresponding to each authentication initiative the merchant wished to support. Id. The 002 Patent invention overcame those problems by having the merchant install on its server a simplified thin-client and installing on a third-party server, or universal platform server (MAPS 200, depicted below in Figure 3), the complicated plug-ins for a plurality of authentication protocols. Id. at 4: That third-party centralized processing system/server(s) is a core component within the system and contains processing logic and functionality for facilitating the authentication of a consumer during the processing of an e-commerce transaction. See id. at 7:7 11:31. 21

29 The claims of the 002 Patent are directed to a technical solution to the problems described in the Background. Claim 5, which largely is the only claim Petitioner addressed, recites that a first party server has software that sends payment information to a universal platform server being equipped to format and route messages over the communications network in different manners to accommodate the plurality of different authentication protocols prescribed by the different payment methods, a universal platform server that receiv[es] payment information from the first party, determin[es] which of the different authentication protocols is prescribed by the payment network, select[s] a 22

30 23 particular the authentication protocol from [a] plurality of different authentication protocols and obtain[s] an authentication determination in accordance with the selected authentication protocol, including formatting and routing the formatted messages over the communications network in accordance with one or more of the mandates of the selected authentication protocol. Independent claim 1, which Petitioner largely ignores, requires a specific layered system architecture, as disclosed in Fig. 3, including a connection layer to receive payment information from a merchant over a communications network, a plug-in layer including a plurality of plug-in components, each plug-in component administering a different one of a plurality of authentication programs in accordance with the authentication protocols prescribed to obtain an authentication determination for the transactions ; a distribution layer residing between the connection layer and the plug-in layer [for] determining which of the different authentication programs is prescribed [and] routing communications between the connection layer and the selected plug-in components in the plug-in layer. When viewed as a whole, the 002 Patent claims simply are not directed to an abstract idea. Claim 1 is directed to a particular server for receiving payment information from a merchant with three processing layers, a particular arrangement of components, i.e., a distribution layer residing between the connection layer and

31 24 the plug-in layer, and particular limitations directed to how the particular software/hardware components communicate, e.g., payment information is routed to the plug-in component responsible for administering the authentication program for the particular payment instrument. Similarly, claims 5 and 14 are directed to the universal merchant platform and expressly require particular meaningful limitations to be performed by such platform including the determining and selecting of an appropriate authentication protocol from a plurality of different authentication protocols supported by the universal platform server and obtaining an authentication determination in accordance with the selected authentication protocol, including formatting and routing the formatted messages over the communications network in accordance with one or more of the mandates of the selected authentication protocol. Thus, instead of being abstract, the claims are all directed to a novel technological solution to the problems associated with the prior-art technological solutions described in the Background. See Research, 627 F.3d at 869 ( [I]nventions with specific applications or improvements to technologies in the marketplace are not likely to be directed to abstract ideas.). In particular, the claims are directed to a technological solution in which the universal platform server plays a significant part in permitting and indeed must perform the recited functionality of determining from payment information received for a particular transaction (which requires analysis of the payment information) which

32 25 of the different authentication protocols is prescribed by the payment network, selecting the appropriate authentication protocol from the plurality of different authentication protocols, and obtaining an authentication determination in accordance with the selected authentication protocol. Such claim elements necessarily encompass and must be performed using computer and network components. See SiRF Tech., Inc. v. Int l Trade Comm n, 601 F.3d 1319, (Fed. Cir. 2010) (holding inability of claimed method to be performed without computer indicates it is directed to patentable subject matter). Indeed, Petitioner itself argues that the universal platform server is an important element of the 002 claims stating [t]he use of a separate, non-merchant platform for authentication is the essence of the claimed invention of the 002 Patent. Pet. at 4; see also Pet. at 28 ( [E]ach of the steps of claim 5 are performed by layers or plug-ins, which are disclosed to be software operating on one or more servers, i.e., computers. ), 31 (Claim 1 requires various connection, plug-in, and distribution layers. ), 31 (Claim 14 requires the computer components of claim 1 and, in addition, a verification step performed by a software component on [a] third party server. ). Thus, the 002 Patent claims are clearly and admittedly limited by a tie to a computer, which is an important indication of patent eligibility. See Ultramercial, 722 F.3d at Besides being tied to a computer, as detailed above, the claims are directed

33 to specific components and/or steps performed by specific servers to support authentication and thus contain meaningful limitations. Petitioner concedes this point as well, noting that the claims require, among other things, receiving, selecting and obtaining various information by various servers. See Pet. at 33. There is simply nothing abstract about those actions as they require specific machines to perform the functions required for an authentication determination. As the Board explained, a combination of computer components, at specific locations, that interact in a specific way to accomplish a technological improvement over the prior art results in a claim that is patentable under 101. See Apple, CBM , at 18. Moreover, the Australian Patent Office rejected a similar argument made by Visa Corporation during an opposition proceeding to the Australian counterpart to the 002 Patent. 4 Visa argued that the claims, which were similar to the claims of the 002 Patent, were unpatentable because they were directed to an abstract or arbitrary concept. Ex. 2002, Australian Patent Office Opinion, at The Australian Patent Office rejected that argument: The claims to my mind clearly set out the functionality and 4 Australian Patent Application No is a foreign counterpart to U.S. Patent Application Serial No. 10/459,849, which issued as the 002 Patent. 26

34 27 juxtaposition of tangible, networked features of a method and system that supports authentication processing in an on-line commercial transactions environment. Id. Just like those of the Australian patent application, the 002 Patent claims are directed to the juxtaposition of tangible, networked features of a method and system that supports authentication processing and thus are unlikely to be found invalid under 101. C. Petitioner s Attempt to Define the Claims of the 002 Patent as an Abstract Idea Is Baseless A claim is directed to an abstract idea only when th[at] disqualifying characteristic exhibit[s] itself so manifestly as to override the broad statutory categories of eligible subject matter and the statutory context that directs primary attention on the patentability criteria of the rest of the Patent Act. Research, 627 F.3d at 868. Petitioner argues that the abstract idea encompassed by the 002 Patent claims is authenticating a credit card holder during an e-commerce transaction according to known authentication programs. Pet. at 25. That argument disregards, however, that a claim is patent ineligible only if it is directed to the abstract idea itself instead of an application of the idea. Ultramercial, 722 F.3d at As detailed above, the claims contain meaningful limitations directed to methods and systems that improve upon the prior-art payment authentication

35 solutions described in the Background. See Research, 627 F.3d at 869 ( [I]nventions with specific applications or improvements to technologies in the marketplace are not likely to be so abstract that they override the statutory language and framework of the Patent Act. ). The claims recite a specific technological solution to authenticated payment processing one requiring specific hardware (a third-party server or universal platform server) that contains specific components (plug-in and distribution layers) and/or performs specific functionality (determining and selecting an authentication protocol and using that protocol to format and route messages to obtain an authentication determination). In attempt to avoid the clear implications of the limitations of the system claims, Petitioner largely addresses only independent method claim 5 asserting: Claim 5 recites little more than the abstract concept of determining an authentication for a transaction between a first party (merchant) and a second party (buyer/card holder) with [the] steps to provide communication software on the merchant s server to send payment information constituting the transaction, determining and selecting an appropriate protocol to guide the authentication for a particular card, and obtaining and returning the transaction authentication to complete the transaction. Pet. at 20. Petitioner s self-serving description ignores entirely the universal 28

36 29 platform server of claim 5, the requirement that such server be equipped to format and route messages in different manners to accommodate the plurality of different authentication protocols, and that the authentication determination must be obtaining in accordance with the formatting and routing of messages prescribed by the mandated authentication protocol. Further, Petitioner s selfserving description of claim 5, recognizes that claim 5 is directed to a technological solution for authenticated payment processing and does not preclude the general abstract idea of all third-party authentication: Claim 5 recites steps to provide communication software on the merchant s server to send payment information to a third-party server which determin[es] and select[s] an appropriate protocol to guide the authentication based on the received payment information. Id. Also, the plain language of the claims establishes that Petitioner s suggestion that the claims preempt all manner of third party authentication is simply false. Pet. at 25. As discussed above, far from precluding all manner of third-party authentication, as Petitioner alleges, the 002 Patent claims instead cover one technological solution that is an improvement over the prior art disclosed in the Background. Nothing in the claims would prevent the use of a single authentication protocol, as taught in Weller and discussed below. And nothing would prevent the determination and selection of the authentication protocol based

37 on something other than the received payment information. Petitioner attempts to support its argument that the claims preclude all manner of third party authentication by stating that certain credit card authentication may be performed manually. See Pet. at 27. In particular, Petitioner asserts that [a] person could review the buyer s payment information, look up the buyer in a directory for the credit card bank, manually review the buyer/credit card information, and call or the merchant and provide the results (authenticated or not). Pet. at 28. That argument has no bearing on the validity of the claims because those alleged mental steps are neither recited in nor implicated by the 002 Patent claims. Ultramercial, 722 F.3d at 1350 (finding [i]t was error for the district court to strip away the [claim] limitations and instead imagine some core of the invention. ). Petitioner never argues that the specific steps or system limitations recited in the 002 Patent claims are drawn to a series of mental steps or were ever done manually before the 002 Patent. Instead, Petitioner concedes that all claims of the 002 Patent claims are directed to a computer. See Pet. at 28 ( each of the steps of claim 5 are performed by computers ), 31 (recognizing that claims 1 and 14 require various layers and plug-ins operating on servers). Indeed, Petitioner s recitation of mental steps ignores entirely the processing layers required by the claims and the authentication protocols which require computer understandable messages to be formatted and routed according to pre- 30

38 31 determined rules, which must be performed by a computer to comply with the realities of an e-commerce transaction (such as encryption). The 002 Patent claims simply do not recite a series of mental steps and therefore are not invalid under 35 U.S.C Petitioner s Section 101 arguments also miss the mark because they confuse and conflate patent ineligibility with patent invalidity under Sections 102 and 103. For example, Petitioner alleges that software layers are known to drive the function of computers, the claims are directed already known steps, the idea of hosting processes was known, and the claims are not directed to any technical leap over the known processes for performing authentication. Pet. at The focus of the analysis under 35 U.S.C. 101, however, is on whether each claim as a whole is directed to an abstract idea, not on whether individual claim elements were known. Diehr, 450 U.S. at 188 (Under 101, [i]t is inappropriate to dissect the claims into old and new elements and then to ignore the presence of the old elements in the analysis. ); Apple, CBM , at 19 n.3 (Whether a claim is directed to an abstract idea is a different question from whether it recites a feature that is novel and unobvious. ). Petitioner s analysis under 101 never addresses any claim as a whole, i.e., the particular recited combination of components and their claimed interaction and functionality, and therefore must be rejected. See Diehr, 450 U.S. at 188; Apple, CBM , at

39 32 Lastly, Petitioner s failure to specifically address the system claims of the 002 Patent (i.e., claims 1 4 and 14) in particular, the recited computer software layers, and how they could possibly be abstract completely undermines its conclusory assertion (Pet. at 31-32) that the only difference between the subject matter of claim 1 and independent claims 5 is claim 1 is presented from the perspective of an authentication program. Claim 1 expressly requires a layered system architecture and even Petitioner concedes that each of these layers is implemented to perform a specific function as part of a computer system. See id. at 14. It defies logic for Petitioner to fail to address claim 1 s specific layered system architecture, and the specific function performed by each software layer. For example, claim 1 expressly requires a distribution layer that is adapted to determine the authentication protocol select the plug-in associated with the authentication protocol and instruct the selected plug-in to obtain an authentication determination in accordance with its associated authentication protocol. It also expressly requires that the distribution layer is residing between the connection layer and the plug-in layer. See Claim 1. Like the meaningful limitations of the method claims, this software component of the invention expressly ties the inventive technological solution to the problems of the prior art identified in the Background of the 002 Patent and requires the distribution layer of the system to determine the authentication protocol and