[00:00:31] Speaker 02:
Next case is E2 Interactive versus Blackhawk Network, 2016, 1775 and 76.

[00:00:40] Speaker 02:
Ms.

[00:00:42] Speaker 02:
McGrath.

[00:00:44] Speaker 04:
May it please the court.

[00:00:45] Speaker 04:
My name is Robin McGrath.

[00:00:46] Speaker 04:
I'm here on behalf of Appellant E2 Interactive.

[00:00:49] Speaker 04:
Your Honor, the court should reverse the Patent Trial and Appeal Board's decision affirming the rejection of the challenge claims of the 439 patent as obvious in the inner party's reexamination proceeding brought by Blackhawk for two principal reasons.

[00:01:06] Speaker 04:
First and most importantly, the decision is based on a construction of the claim term transaction type as used in what we call the determining step of the claims

[00:01:16] Speaker 04:
which construction is inconsistent not only with the plain meaning of the claims but is also inconsistent with the way the term is used in the specification as well as the relevant extrinsic evidence under the proper construction of the term so that there can be no obviousness finding.

[00:01:31] Speaker 04:
Second, there is insubstantial evidence to support the finding of motivation to combine

[00:01:36] Speaker 04:
which is an issue that the board never addressed, much less provided a reasoned analysis for, which it was required to do.

[00:01:43] Speaker 03:
Can you explain where in your brief to the board you challenged the motivation to combine the various primary references with the various secondary references?

[00:01:54] Speaker 04:
I don't have the site and the appendix, but there was a submission by Scott Loftusness, who was the expert in the case, who argued that there was

[00:02:06] Speaker 04:
because he argued that the references were not analogous and that because they're not analogous and there was actually no basis for providing a motivation to combine.

[00:02:19] Speaker 04:
But I want to submit that the board, even though it didn't address it, the examiner, I should say, the basis for the motivation combined is the claim construction.

[00:02:27] Speaker 04:
And that's really where I want to focus on, because I think, Your Honor, if the claim transaction type, if the claim term is construed properly, everything else sort of falls in place, including motivation to combine.

[00:02:39] Speaker 04:
The plain language of the claim requires that a determination be made as to whether, quote, the requesting terminal is authorized to request

[00:02:49] Speaker 04:
the requested transaction type for the stored value card.

[00:02:53] Speaker 04:
This language tells us, unequivocally, three things.

[00:02:57] Speaker 04:
First, it tells us that the determination concerns the terminal's authorization to make a request, not as Blackhawk and the board seem to believe that it's authorization to either process a transaction or ability to authorize a transaction.

[00:03:12] Speaker 01:
Council, your argument is that the board's construction is too broad.

[00:03:19] Speaker 04:
Yes, sir.

[00:03:20] Speaker 01:
And yet we, we, we apply a, a BRI standard.

[00:03:25] Speaker 01:
That is correct.

[00:03:26] Speaker 01:
Tell us why it was not a reasonable law.

[00:03:30] Speaker 04:
Sure.

[00:03:30] Speaker 04:
Even under the BRI standard, your honor, this, this court has been very clear.

[00:03:35] Speaker 03:
It, it's fair to say, is it not, that the specification does not define transaction type

[00:03:41] Speaker 03:
The term?

[00:03:42] Speaker 04:
It doesn't have an explicit definition.

[00:03:44] Speaker 04:
It doesn't say, the words transaction type me, correct.

[00:03:47] Speaker 03:
Right, I agree with you.

[00:03:48] Speaker 04:
Yes, it does not have that.

[00:03:49] Speaker 04:
But what it does have are dozens of examples and discussions and embodiments where these determinations are discussed.

[00:03:58] Speaker 04:
And in every single one of them, without exception, the transaction type is the action being requested on the card.

[00:04:07] Speaker 04:
In fact, the

[00:04:08] Speaker 04:
Examiner, I'm sorry, the board found that the determining step would cover situations where the terminal is... Could you say that one more time?

[00:04:17] Speaker 03:
It's an action on the card?

[00:04:20] Speaker 04:
Correct.

[00:04:20] Speaker 04:
An action.

[00:04:22] Speaker 04:
A redemption.

[00:04:23] Speaker 04:
Okay.

[00:04:23] Speaker 04:
A activation.

[00:04:24] Speaker 04:
We're saying basically the status of the card, you're changing it from inactive to active, active to inactive.

[00:04:31] Speaker 04:
You are taking the money and you're redeeming it for something.

[00:04:34] Speaker 04:
You're working

[00:04:35] Speaker 04:
on the card and then the question from the determining step.

[00:04:38] Speaker 03:
So I guess why wouldn't purchases of frozen foods versus purchases of produce, fruits and vegetables, why is that not two types of transactions?

[00:04:54] Speaker 04:
It's the type of transaction, it's a purchase transaction, which by the way, is not really what you do with a stored value card.

[00:05:01] Speaker 04:
It's a redemption transaction.

[00:05:03] Speaker 04:
And if you look at, you're redeeming the value of the card.

[00:05:07] Speaker 04:
And if you look at the specification, there is not a single example anywhere in that patent where the determination is based on what is being purchased in a redemption transaction.

[00:05:20] Speaker 04:
It makes it clear that regardless of what is being purchased,

[00:05:23] Speaker 04:
The transaction type is redemption, without exception.

[00:05:28] Speaker 04:
If you look at the purpose in the specification of the patent, it talks about the invention provides, and this is at appendix 40, column 4.

[00:05:43] Speaker 04:
The present invention provides a system for managing stored value cards

[00:05:48] Speaker 04:
that provides controls over the entities that can request activation, deactivation, reloading, and redemption.

[00:05:55] Speaker 04:
So it starts with that.

[00:05:56] Speaker 04:
And then the question is, how are those things used throughout the patent?

[00:06:00] Speaker 04:
At no point

[00:06:01] Speaker 04:
Does this patent distinguish a redemption transaction by what the card is being used to be redeemed for?

[00:06:08] Speaker 04:
We don't say it's a redemption transaction for X and that's a separate transaction type than a redemption traction for Y. The way the board got there,

[00:06:19] Speaker 04:
The board didn't look at the specification and say, let's see how transaction type is defined in the specification.

[00:06:25] Speaker 04:
What it did was it said, there's no explicit definition, which we know is not required because it can be defined by implication through examples.

[00:06:33] Speaker 04:
We cite a number of cases of that.

[00:06:35] Speaker 04:
The PPC Power Board case is a recent example of that.

[00:06:39] Speaker 04:
It said, well, those transaction types, redemption, activation, those are merely exemplary.

[00:06:43] Speaker 04:
Well, we're not trying to limit it to those transaction types.

[00:06:46] Speaker 04:
We're saying it would be any transaction type.

[00:06:49] Speaker 04:
We're just defining what a transaction type is.

[00:06:52] Speaker 04:
And then it said there are no words of exclusion.

[00:06:56] Speaker 04:
Well, we're not excluding anything.

[00:06:58] Speaker 04:
We're defining a term.

[00:06:59] Speaker 04:
From there, it dismissed the specification, and it went to the extrinsic evidence that Blackhawks had submitted.

[00:07:06] Speaker 04:
That, first of all, procedurally, I would argue that that was incorrect.

[00:07:10] Speaker 04:
It was very Texas digitally, where it's looking for a specific definition, an absent a definition, it goes to the extrinsic evidence.

[00:07:17] Speaker 04:
But substantively, if you look at the extrinsic evidence on which it relied, it didn't have anything to do with stored value card transactions.

[00:07:24] Speaker 04:
It had to do with transactions involving traditional credit cards where there are integrated circuits on it, otherwise known as chip cards.

[00:07:32] Speaker 04:
And in that art, in that evidence,

[00:07:35] Speaker 04:
What was being purchased was very relevant because there can be restrictions placed on what the card can be used to purchase.

[00:07:43] Speaker 04:
Maybe you can't use it for an ATM or maybe you can't use it for an international purpose.

[00:07:49] Speaker 01:
Why isn't all action that's taken with respect to the card action on the card?

[00:07:55] Speaker 04:
It's not action on the card, it's action through the card.

[00:07:58] Speaker 04:
In other words, you are using the card in the prior art that the board relied on, it's what you're using the card to do.

[00:08:04] Speaker 04:
You're using it to get money from an ATM, you're using it to make a purchase.

[00:08:09] Speaker 04:
You won't find anything in the patent about that being the focus with respect to the determining step.

[00:08:15] Speaker 04:
The determining step is saying, does this terminal have the authority to request that certain actions

[00:08:24] Speaker 04:
I'll be taken on the card.

[00:08:26] Speaker 04:
Redemption, regardless of what it's being redeemed for.

[00:08:29] Speaker 04:
Activation, regardless of what kind of card it is.

[00:08:34] Speaker 04:
And the extrinsic evidence, which the board relied on, I believe improperly, is the focus.

[00:08:40] Speaker 04:
If you look at what the focus of that extrinsic evidence is, it's restricting what the card can be used for.

[00:08:46] Speaker 02:
And you're saying the significance of what we're talking about here depends on whether Schlafly would render some of the claims of this?

[00:08:55] Speaker 04:
Well, Schlafly, it was the prior art, along with ISO 8583, that the board combined with what we call the primary references,

[00:09:04] Speaker 04:
The board didn't rely on Schlafly for the construction of transaction type, but you're correct.

[00:09:09] Speaker 04:
When you're talking about what it discloses, Schlafly is so different in terms of the type of system.

[00:09:17] Speaker 04:
The board found that it was sort of a similar system with similar results.

[00:09:22] Speaker 04:
I think that's an actual quote, when in fact,

[00:09:25] Speaker 02:
But you can use a store value card to buy bananas, right?

[00:09:29] Speaker 02:
You can, Your Honor.

[00:09:30] Speaker 02:
And Schlafly deals with buying bananas as other goods?

[00:09:35] Speaker 04:
Schlafly is a system, it's a pre-internet ordering system that has specific terminals, not POS terminals as used in the 439, but specific ordering terminals.

[00:09:45] Speaker 04:
Today we go on Amazon, right, and we place an order.

[00:09:49] Speaker 04:
Back then you couldn't do that in 1988.

[00:09:51] Speaker 04:
So they had these personal order systems where you can place

[00:09:54] Speaker 04:
orders for goods and services and the terminal of Schlafly allowed you to do that.

[00:10:01] Speaker 04:
In the 439 patent, yes, you can use a stored value card to buy a banana, not to order anything, which is what Schlafly does, but to buy a banana, but that's not what the patent is going towards.

[00:10:14] Speaker 04:
The purpose of the patent goes towards

[00:10:18] Speaker 04:
are these terminals authorized to request a redemption transaction?

[00:10:22] Speaker 04:
It's allowing entities to control it.

[00:10:24] Speaker 04:
If we don't want that terminal to be able to authorize requests, we're going to shut it off at the transaction type.

[00:10:30] Speaker 02:
If you're arguing for a narrow definition, then aren't we getting to the question of whether claim two really is different from claim one?

[00:10:47] Speaker 04:
This is not a claim differentiation argument.

[00:10:49] Speaker 04:
Claim two gives you four specific types.

[00:10:53] Speaker 02:
If the transaction types are limited to the four.

[00:10:55] Speaker 02:
They're not.

[00:10:56] Speaker 02:
They're not.

[00:10:56] Speaker 04:
They're not.

[00:10:57] Speaker 04:
No, no, no.

[00:10:58] Speaker 04:
The transaction types, any kind of transaction type would be covered by claim one and over the four.

[00:11:06] Speaker 04:
The question is, what is a transaction type?

[00:11:09] Speaker 04:
And it's important to note, and I want to save some time for a bottle, but it's important to note that the board's construction

[00:11:15] Speaker 04:
goes way beyond simply distinguishing a transaction type by virtue of what the card is being redeemed for.

[00:11:21] Speaker 04:
The board's construction is any determination that is simply more generic to a determination to authorize a transaction.

[00:11:31] Speaker 04:
So way beyond

[00:11:33] Speaker 04:
anything in the specification.

[00:11:34] Speaker 04:
They don't point to the specification for anything, but even if you were to limit it to simply distinguishing the transaction type by virtue of what the card is being used to acquire, it's still overboard because you will not see anything about that in the specification.

[00:11:48] Speaker 04:
You will see no examples of that in the specification.

[00:11:51] Speaker 03:
Just to follow up, I understand you're making a specification-based argument, but just in terms of looking at the phrase or term transaction type,

[00:11:59] Speaker 03:
and we understand that it has to be something broader than the specific transaction that someone's using the card for.

[00:12:06] Speaker 03:
But a type of transaction could conceivably be any genre of transactions that's at least

[00:12:16] Speaker 03:
a level broader than the specific transaction itself.

[00:12:20] Speaker 03:
I'm just talking about the term transaction.

[00:12:22] Speaker 03:
Sure.

[00:12:23] Speaker 04:
If you look at it in the abstract, just the word transaction type, without context, okay, I might give that to you.

[00:12:29] Speaker 04:
But in the context of the specification, you're never going to see it talking about anything but that level, the level of what you're doing to the card.

[00:12:37] Speaker 04:
And there are others than those in the specification.

[00:12:40] Speaker 04:
You might have a balanced transaction.

[00:12:42] Speaker 04:
You're talking about what you're doing on the card.

[00:12:45] Speaker 04:
But you won't see, you can't take a broad meaning like they did in the PPC case and just plop it into this patent without looking at what the specification says.

[00:12:57] Speaker 02:
Do you want to spend brief time on ISO?

[00:13:00] Speaker 04:
8583?

[00:13:03] Speaker 04:
Yes, Your Honor.

[00:13:05] Speaker 04:
AISO 8583 is a messaging spec.

[00:13:08] Speaker 04:
It's designed for the problem of allowing incompatible systems to be able to communicate together.

[00:13:14] Speaker 04:
Code 120 simply says, transactions not permitted to terminal.

[00:13:18] Speaker 04:
If you were to even apply that in the stored value card section.

[00:13:21] Speaker 02:
Sounds like authorization to me.

[00:13:22] Speaker 04:
Not an authorization for

[00:13:25] Speaker 04:
whether the terminal can make a request for an action on the card.

[00:13:28] Speaker 04:
There are all sorts of teachings in the prior art where transaction is not permitted by the terminal.

[00:13:35] Speaker 04:
We cite several of them.

[00:13:36] Speaker 04:
If the terminal is not recognized by the system and tries to do a transaction, transaction is not going to be permitted to the terminal.

[00:13:44] Speaker 04:
If the terminal tries to send something and the ID number doesn't match the retail number, transaction is not going to be permitted to the terminal.

[00:13:51] Speaker 04:
Those are teachings in the prior art.

[00:13:53] Speaker 04:
that you can apply that language to.

[00:13:56] Speaker 03:
So you're saying we're using an MX card on a Visa terminal?

[00:14:01] Speaker 04:
Possibly, but that's not a transaction type.

[00:14:03] Speaker 04:
That's a card type.

[00:14:05] Speaker 04:
It's not a transaction type.

[00:14:06] Speaker 04:
And the problem is, in the prior art, they do not teach a determination about a terminal's authority to request a transaction type.

[00:14:14] Speaker 04:
And when you take that language, transaction not permitted, what you're doing is you're applying hindsight and saying, could this language apply to the 439 patent?

[00:14:23] Speaker 04:
But without the teaching of the 439 patent prior to that language, there's no basis to import that language into the past.

[00:14:30] Speaker 03:
What can transaction type be, a purchase of anything, bananas, ice cream, using a particular type of

[00:14:41] Speaker 04:
Because in the specification of the patent, it never distinguishes the transaction type by virtue of the type of card or by virtue of what you're purchasing.

[00:14:52] Speaker 04:
All it says is the transaction type, in any instance, any card, whatever you're doing it, that's not the focus.

[00:14:57] Speaker 04:
The focus is redemption.

[00:14:59] Speaker 03:
There's something in the spec, I'm sorry, I'm sure you'll get some rebuttal time.

[00:15:03] Speaker 03:
There's something in the spec about having multiple merchants in the system and then

[00:15:10] Speaker 03:
the second merchant can be authorized to redeem cards in first merchant and also be authorized to redeem cards from itself, from merchant number two.

[00:15:23] Speaker 03:
But if anybody were to try to use an SVC card from merchant number three on terminals in merchant number two stores,

[00:15:35] Speaker 03:
I mean, that's going to get rejected, right?

[00:15:37] Speaker 04:
But not because of the determining step.

[00:15:39] Speaker 04:
So the determining step will say, is this terminal authorized to do redemptions?

[00:15:44] Speaker 04:
The answer's going to be yes, because it's been programmed for that transaction type.

[00:15:49] Speaker 04:
It doesn't mean the transaction's going to get authorized.

[00:15:51] Speaker 04:
It might say, but we don't accept these cards.

[00:15:53] Speaker 04:
There's all sorts of security before an authorization is ultimately made.

[00:15:57] Speaker 04:
The determining step is a very narrow inquiry along the process, and it's

[00:16:02] Speaker 04:
Is this terminal authorized to request this transaction type?

[00:16:06] Speaker 04:
Yes.

[00:16:07] Speaker 04:
Now, there may be another check.

[00:16:09] Speaker 04:
Does this retailer take this card?

[00:16:11] Speaker 04:
No.

[00:16:11] Speaker 04:
Oops.

[00:16:12] Speaker 04:
It's going to be rejected, but not because of the determining step.

[00:16:16] Speaker 02:
Thank you, counsel.

[00:16:17] Speaker 02:
We'll give you your five minutes back for a bottle.

[00:16:21] Speaker 02:
Thank you.

[00:16:21] Speaker 02:
Mr. Armon.

[00:16:22] Speaker 00:
Good morning, and may it please the court.

[00:16:24] Speaker 00:
I'm Ryan Armon for Black Hawk Network.

[00:16:27] Speaker 00:
I'd like to focus the majority of my comments on the teachings of the specification.

[00:16:33] Speaker 00:
E2's counsel doesn't credit the full scope of the teachings of the specification.

[00:16:37] Speaker 00:
I'd like to draw your attention to a few particular places.

[00:16:41] Speaker 00:
In particular, the examiner found, and one of the key questions, let me step back.

[00:16:47] Speaker 00:
A key question with respect to the claim construction dispute is whether or not a transaction type authorization

[00:16:54] Speaker 00:
can be with regard to the target of the transaction.

[00:16:59] Speaker 00:
Our argument and the examiner in the board found that the target of the transaction can be considered.

[00:17:05] Speaker 00:
I'll direct your attention to a finding by the examiner from column two in the patent and it concerns user groups.

[00:17:13] Speaker 00:
The examiner found that in addition it's noted that these types are based on a target.

[00:17:20] Speaker 03:
Where are we in column two?

[00:17:21] Speaker 00:
Turn to the patent, APPX 48, column 2, line 37.

[00:17:29] Speaker 00:
And I was quoting from the examiner, but let me start, Judge Chen, with the language from the patent.

[00:17:35] Speaker 00:
Column 2, starting at line 37, it says, it would be further desirable to provide a system that allows for selectively processing stored value card requests, such as stored value card activation, deactivation,

[00:17:50] Speaker 00:
and or incrementing, and this is the key language on lines 40 and 41, based on a table of predefined codes associated with respective user groups.

[00:18:01] Speaker 00:
Now, user is referred to in three places in the specification.

[00:18:07] Speaker 00:
At column five, line five, you have reference to a card user.

[00:18:16] Speaker 00:
At column one, line 37, you have reference to an owner or end user of the card.

[00:18:23] Speaker 02:
But that's a stored value card, right?

[00:18:26] Speaker 00:
Yes, these are all stored value cards, Your Honor.

[00:18:28] Speaker 00:
And in column 14, you have reference to either a human user or potentially another computer.

[00:18:33] Speaker 02:
So in the three places in the specification... You said you were going to show us where there were references to target bananas and apples.

[00:18:44] Speaker 00:
Your Honor, the user in this case is the target.

[00:18:46] Speaker 00:
The reference in column two, as the examiner found,

[00:18:50] Speaker 00:
to different user groups.

[00:18:52] Speaker 01:
So the idea, for example... Okay, you gave us that one.

[00:18:56] Speaker 01:
That's in 37, right?

[00:18:57] Speaker 00:
Yes, and the examiner concluded that the teaching here in column two is with respect to a target of a transaction.

[00:19:06] Speaker 00:
In other words, one group might have certain redemption authority.

[00:19:10] Speaker 00:
A different group might have different redemption authorities.

[00:19:13] Speaker 00:
Okay, so that's one example of

[00:19:15] Speaker 00:
where the specification's teachings encompass consideration of a target of the transaction.

[00:19:20] Speaker 02:
We're talking about transaction type, not we, that's the key language.

[00:19:25] Speaker 00:
Correct, and the question is that the level of taxonomic degree, E2's argument is that transaction type is limited to an action at the highest level, such as redemption period.

[00:19:36] Speaker 00:
As the examiner found, however... Would you just...

[00:19:40] Speaker 01:
You sent us to column 237, and it's using the word there, store value code activation, deactivation, et cetera.

[00:19:51] Speaker 01:
I don't see how that fits with your argument.

[00:19:54] Speaker 00:
Your Honor, because it's with respect to user groups.

[00:19:57] Speaker 00:
So the teaching here is that you would consider the user group as part of an authorization determination.

[00:20:03] Speaker 03:
Can you translate what that means?

[00:20:06] Speaker 03:
Are we talking about customers?

[00:20:08] Speaker 03:
Are we talking about different stores?

[00:20:10] Speaker 03:
Are we talking about different levels of redemption?

[00:20:14] Speaker 03:
I mean, what are we talking about with respect to user groups?

[00:20:17] Speaker 00:
With respect to user groups, as I mentioned, the references in the specification refers to a user as a cardholder.

[00:20:25] Speaker 00:
The person who has the stored value card who's going to use it to redeem something.

[00:20:31] Speaker 00:
And so in this example, as found by the examiner,

[00:20:35] Speaker 00:
The fact that the authorization determination is considering a user group, that is a consideration with regard to a target of the transaction.

[00:20:48] Speaker 00:
In other words, who's using the card to redeem?

[00:20:51] Speaker 00:
That's one example where the specification specifically encompasses the broader teaching that the examiner and the board found.

[00:21:00] Speaker 00:
Of course, the specification is littered with

[00:21:03] Speaker 00:
the use of the word may.

[00:21:04] Speaker 01:
We're dealing with the issue of transaction type.

[00:21:08] Speaker 01:
Correct.

[00:21:10] Speaker 01:
You lost me on that argument.

[00:21:12] Speaker 01:
I don't see how the user group is going to illuminate the transaction type.

[00:21:19] Speaker 01:
What does transaction type mean in the patent?

[00:21:23] Speaker 00:
Your Honor, the primary claim construction dispute between the parties is whether you can consider additional information

[00:21:30] Speaker 00:
during the transaction authorization step, such as who the user is, who's redeeming something.

[00:21:38] Speaker 00:
Or, for example, whether you could consider the redemption amount.

[00:21:44] Speaker 00:
E2's argument is that you can only focus on the question of, is this a redemption?

[00:21:50] Speaker 00:
The argument that Blackhawk made that the examiner and board agreed with was that there's no limitations in the teachings, the specification.

[00:21:58] Speaker 00:
and so under VRI construction, you can consider additional information.

[00:22:03] Speaker 00:
The reason that's a key issue in dispute is, for example, the Schlothli reference teaches using codes that identify groups of goods or services.

[00:22:12] Speaker 00:
So there's a dispute about whether that teaching is relevant to the transaction type determination.

[00:22:20] Speaker 00:
The reference in column two is relevant because it relates to

[00:22:24] Speaker 00:
identification of a user or group, a user group, in addition to other information and making that authorization determination.

[00:22:32] Speaker 00:
In addition to the very broad language.

[00:22:35] Speaker 01:
It doesn't change the action on the card, does it?

[00:22:37] Speaker 01:
I mean, it could depending on who the user is and with respect to predefined codes, but

[00:22:45] Speaker 01:
The language is pretty clear that it provides a system that allows for selectively processing store value card requests such as telling us what the requests are, store value activation, deactivation, et cetera.

[00:23:00] Speaker 01:
I don't see how that takes you any broader to the broader bananas or apples type transaction.

[00:23:10] Speaker 00:
Two answers with respect to that.

[00:23:13] Speaker 00:
I think there's no disagreement between the parties that the transaction types identified in the patent are only exemplary.

[00:23:19] Speaker 00:
So I'd submit that the transaction types here in column two are only exemplary, not a complete list.

[00:23:26] Speaker 00:
Second issue is that there are other teachings in the specification, in addition to the extrinsic evidence I'd like to get to, that I think encompass the question of transaction type as you're understanding it.

[00:23:38] Speaker 00:
So I'd also direct your consideration to column 11 and the discussion of figures eight and nine.

[00:23:46] Speaker 00:
It's recognized by the parties that step 160 in figure eight is representative of the authorization determination.

[00:23:59] Speaker 00:
The discussion of figure nine, and again this is in the middle of column 11, mentions additional actions that may be added or put into

[00:24:08] Speaker 00:
the determinations in figure 8, including this authorization determination.

[00:24:15] Speaker 00:
And at line 35 of column 11, it mentions that the method 800, again this includes the key authorization step, may include determining the purchase amount from the redemption request.

[00:24:28] Speaker 00:
In the preferred embodiment mentioned in figure nine, it says that that step of looking at the purchase amount may optionally be included in step 170.

[00:24:40] Speaker 00:
But the permissive language concerning figure nine, referring to all of method 800, teaches that you could consider as part of the terminal authorization request a redemption amount.

[00:24:55] Speaker 00:
So for example, you could have limits on a redemption amount under the broad teachings here that disallow redemptions of more than $1,000 or disallow incrementation of more than $1,000.

[00:25:08] Speaker 03:
Well, let's just assume for the moment that this paragraph is talking about additional actions beyond the authorization of the terminal for the transaction type.

[00:25:19] Speaker 03:
So it seems like what you need to really focus on is why all the repetitive references to activation, deactivation, redemption don't necessarily channel us to thinking of transaction type on that classification level.

[00:25:39] Speaker 00:
So here's what we know.

[00:25:40] Speaker 00:
The claims are non-limiting in terms of their description of transaction type.

[00:25:46] Speaker 00:
Claim two, from a claim differentiation standpoint,

[00:25:49] Speaker 00:
shows us that more than the four types that are specifically enumerated are covered by claim one.

[00:25:56] Speaker 00:
But other than that, the claims do not speak to the scope of this term.

[00:26:02] Speaker 00:
If we turn to the specification, we have examples of transaction types that are non-limiting, they're non-exclusive.

[00:26:10] Speaker 00:
E2 argues that this is a case

[00:26:12] Speaker 00:
where the fact that the same examples have been used over and over again as preferred embodiments makes the case look like the Ballotlantic case, the DSL case, where there was an implied definition.

[00:26:28] Speaker 00:
But I think this case is more like the libel Flarsheim case, where the court found that

[00:26:34] Speaker 00:
The mere fact that the preferred embodiments always used the same examples was not determinative.

[00:26:42] Speaker 00:
And in that particular case, the fact that you had broad disclosures throughout and hedge language everywhere was significant.

[00:26:49] Speaker 00:
It's also important in this case that Laurie Breitsky, the expert for Blackhawk who submitted declaration evidence, submitted two specifications, one from MasterCard and one from EMV.

[00:27:03] Speaker 00:
that related to electronic card transactions.

[00:27:06] Speaker 00:
And it's important to note that in this case, the patent itself says that these stored value cards are analogous to a credit or a debit card, except for the fact that they don't have any value until you turn them on, until you activate them.

[00:27:19] Speaker 00:
In all the other respects, they're like credit and debit cards.

[00:27:23] Speaker 00:
And the extrinsic evidence that the board turned to, the examiner turned to, found persuasive, indicates that the types of transactions that you can consider

[00:27:32] Speaker 00:
go far beyond these four very high-level transaction types.

[00:27:37] Speaker 00:
Now, that's all very important with respect to the findings concerning the Schlothli supporting reference.

[00:27:45] Speaker 00:
But something important happened during oral argument on appeal with respect to the ISO 8583 reference.

[00:27:52] Speaker 00:
Remember, this is a case where there were multiple rejections over three primary references and two supporting references, Schlothli and ISO.

[00:28:00] Speaker 00:
And with respect to ISO 8583, there's a code 120 that's rejection to terminal.

[00:28:08] Speaker 00:
During oral argument, counsel for E2 offered what counsel for E2 claimed was an example, a scenario that would show why a rejection to a terminal did not teach or suggest a transaction type.

[00:28:21] Speaker 00:
And after questioning counsel on that, there was an express finding that that colloquy was an admission

[00:28:29] Speaker 00:
that ISO 8583 teaches or suggests or at least renders obvious the transaction type limitation.

[00:28:37] Speaker 00:
Those findings were not based at all on the dispute that Schlafly has about whether a transaction type can include a target of a transaction.

[00:28:47] Speaker 00:
The findings on ISO are that code 120 teaches or suggests making terminal authorization decisions based on

[00:28:58] Speaker 00:
a transaction type.

[00:29:01] Speaker 03:
And based upon those admissions... I know, but by repeating the conclusion as the fact finding, it clouds things for me.

[00:29:11] Speaker 03:
What is the transaction type?

[00:29:14] Speaker 03:
How would you define the transaction type in the example with the Visa terminal and the Amex card?

[00:29:21] Speaker 00:
The conclusion there was that the type of card being used was the transaction type.

[00:29:27] Speaker 00:
So in other words, an annex transaction versus a visa transaction.

[00:29:33] Speaker 00:
So a card-based, so with respect to counsel's argument that it's an action on the card, well, there is an action on the card.

[00:29:40] Speaker 00:
You either have a visa card or an annex card and a rejection for one but not the other.

[00:29:45] Speaker 03:
And so what the board must have been saying is the terminal

[00:29:51] Speaker 03:
is authorized to request transactions with a Visa card but is not authorized to request purchases with an Amex card.

[00:30:04] Speaker 03:
Correct.

[00:30:06] Speaker 03:
And so those two are two different transaction types under that understanding of transaction types.

[00:30:15] Speaker 00:
Yes.

[00:30:15] Speaker 00:
The point with respect to ISO 8583

[00:30:18] Speaker 00:
that based upon those findings and the admissions that E2's counsel made, the claim construction issue isn't determinative of whether you affirm the board on ISO 8583 invalidity findings because as interpreted by the examiner and the board, ISO 8583 teachings

[00:30:40] Speaker 00:
weren't focused as narrowly as Schlafly's are on particular goods and services.

[00:30:44] Speaker 00:
It was at this much higher level.

[00:30:46] Speaker 00:
So I'd encourage you to affirm the ISO 8583 invalidity findings and those grounds, regardless of the position you take on claim construction.

[00:30:57] Speaker 00:
I'd like to very briefly, in my remaining few seconds, speak to the question regarding the obviousness findings.

[00:31:04] Speaker 00:
The board did address the arguments concerning obviousness to combine that were raised.

[00:31:10] Speaker 00:
There were only two arguments raised in E2's briefing.

[00:31:13] Speaker 00:
One was with respect to claim construction.

[00:31:16] Speaker 00:
The other was with respect to Mr. Watzness's declarations.

[00:31:20] Speaker 00:
With respect to claim construction, the board found that the arguments were unpersuasive and rejected them.

[00:31:25] Speaker 00:
With respect to Watzness, they found him not credible.

[00:31:27] Speaker 02:
Your lights went on, but you may finish your thought.

[00:31:32] Speaker 00:
Judge Laurie, just that with respect to Mr. Lawsonis, the board found that his bare opinions were not entitled to much patentable weight, and therefore disregarded them.

[00:31:43] Speaker 00:
So in conclusion, we'd ask you to affirm on all grounds, but regardless of whether the claim construction has changed, given the admissions and the findings on ISO 8-583, you should at the very least affirm on those grounds that the claim construction changed and it remained on the Flockley grounds.

[00:32:01] Speaker 02:
Thank you, Council.

[00:32:03] Speaker 02:
Ms.

[00:32:03] Speaker 02:
McGrath will give you your bottle time back.

[00:32:06] Speaker 04:
Thank you, Your Honor.

[00:32:07] Speaker 04:
I want to address this notion of user groups because it has been thoroughly misrepresented.

[00:32:13] Speaker 04:
The passage that Council read is a reference to Figures 5 and 6, which is later discussed in Appendix 51, Column 7, Line 49.

[00:32:24] Speaker 04:
What the states, all the states, loosely related entities

[00:32:28] Speaker 04:
may be grouped for purposes of transaction authorization.

[00:32:32] Speaker 04:
We're talking about retailers, user groups for retailers.

[00:32:34] Speaker 04:
Terminal A for Merchant X.

[00:32:36] Speaker 04:
Interim OB for Merchant Y may both be a member of Group A1, the members of which all have the same authorizations.

[00:32:43] Speaker 04:
This does not undermine ET's construction.

[00:32:45] Speaker 04:
It does not support the board's construction.

[00:32:47] Speaker 04:
Number two, with the price on a redemption transaction, what that's saying, it's very clear if you look at the passage that counsel pointed to, of course you have to consider the price on a redemption transaction.

[00:32:58] Speaker 04:
You have to know how much is on the card and whether it's enough to cover what you're buying.

[00:33:03] Speaker 04:
completely separate determination from the determining step that is at issue.

[00:33:09] Speaker 04:
Third point, the extrinsic evidence on which the board relied, again, yes, has to do with credit card transactions.

[00:33:16] Speaker 04:
And if you want to say they're analogous in some respects, fine.

[00:33:19] Speaker 04:
But what the board didn't do is look at the extrinsic evidence regarding stored value card transactions, Dorff and Dawson.

[00:33:27] Speaker 04:
And in those references,

[00:33:30] Speaker 04:
They talk only about transaction types as the actions.

[00:33:33] Speaker 04:
They don't use these words, but they're talking about them as the actions being requested.

[00:33:37] Speaker 03:
Are those references talking about credit cards and debit cards as well?

[00:33:41] Speaker 04:
No, Your Honor, the DORF is a stored value card activation and transaction system where it talks about special codes identifying whether the transaction is either a redemption or an activation, and then it specifically says that the software reads those codes to determine the transaction type, activation versus purchase.

[00:34:03] Speaker 03:
There are... Did E2 point to Dorff and Dawson as a basis for understanding the meaning of transaction type or how one of ordinary skill at the time of invention would understand the word transaction type as it's used with SVTs?

[00:34:17] Speaker 04:
Unfortunately, no.

[00:34:19] Speaker 04:
But it's not a waiver has been argued because we're not arguing a different claim construction position.

[00:34:23] Speaker 04:
We are not arguing a broader scope.

[00:34:25] Speaker 04:
We're simply making an additional argument.

[00:34:27] Speaker 04:
So you're right.

[00:34:28] Speaker 04:
The board did not look at that.

[00:34:29] Speaker 04:
only looked at the extrinsic evidence that's not in the context of sword value transaction types, but certainly those items were of record, and certainly the board was very aware of them because they had analyzed both Dorff and Dawson in connection with Bacock's arguments, and if you look and are honest about how transaction type is used in both of those, it is at the highest level

[00:34:51] Speaker 04:
at the action being taken on the card.

[00:34:54] Speaker 04:
Then the fourth point I want to make, Your Honor, is that if you look at the board's construction, even if you were to agree with Blackhawk, which I submit there is no support in the specification for Blackhawk's position, but if you look at the board's construction

[00:35:10] Speaker 04:
It goes well beyond simply noting the card type, which is nowhere discussed in the patent, or what the card is being used to acquire as a transaction type.

[00:35:22] Speaker 04:
It literally says it entails any authorization determination more general than an authorization determination would need to be to authorize a specific transaction.

[00:35:33] Speaker 04:
How is that a transaction type determination?

[00:35:36] Speaker 04:
The board also says that the determination merely must be broader than or generic to a specific transaction authorization.

[00:35:44] Speaker 04:
So if there's a determination that the retailer's not authorized, according to the board's construction, that would be a transaction type determination.

[00:35:53] Speaker 04:
It has no tie whatsoever to the plain language of the claims or to the

[00:36:00] Speaker 04:
or to the specification.

[00:36:01] Speaker 04:
And the last point I'd like to make is this admission of Visa card versus American Express and tying that to the transaction.

[00:36:10] Speaker 04:
Your Honor, that's not a determination over what actions the terminal can request.

[00:36:17] Speaker 04:
In both of those cases, whether it's a Visa or an Amex, the terminal is requesting a purchase transaction.

[00:36:24] Speaker 04:
You can't point to anything in the specification of this patent where the

[00:36:30] Speaker 04:
redemption transaction in the case of a stored value card or a purchase transaction in the case of a credit card is differentiated by virtue of the type of card being used.

[00:36:40] Speaker 04:
It's a redemption transaction, whether using a Visa, an Amex, a Starbucks, iTunes.

[00:36:46] Speaker 04:
And so, Your Honor, we submit that there is no basis for the board's construction, very broad, untethered to the spec.

[00:36:52] Speaker 04:
But even if Your Honors were to sort of narrow it to what Blackhawk has been urging, there is also no support for that anywhere in the specification.

[00:37:00] Speaker 04:
You would have to rely on extrinsic evidence, which is not relevant to the store value card transactions.

[00:37:06] Speaker 02:
Thank you, Counsel.

[00:37:07] Speaker 02:
We will take the case under revisement.