[00:00:00] Speaker 00:
We will hear argument next in number 21, 2352, Samsung Electronics Against Dynamics.

[00:00:08] Speaker 00:
Mr. O'Quinn.

[00:00:10] Speaker 02:
Thank you, Judge Toronto.

[00:00:11] Speaker 02:
May it please the court, John O'Quinn, on behalf of Samsung.

[00:00:15] Speaker 02:
The board's decision is erroneous for three separate reasons.

[00:00:18] Speaker 02:
First, it's procedurally erroneous under the APA, failing to address Samsung's argument about combining the lesson reference

[00:00:27] Speaker 02:
and Shoemaker's teaching about slight direction patterns.

[00:00:30] Speaker 02:
Second, it's methodologically wrong under KSR, rigidly looking for fully formed elements in a single piece of prior art and insisting that motivation be in the references themselves.

[00:00:41] Speaker 02:
And third, it is substantively wrong in view of the record evidence, which compels the conclusion that the challenge claims are obvious.

[00:00:50] Speaker 02:
Now, to take a step back, the board did not dispute

[00:00:54] Speaker 02:
that both the Lesson and, for that matter, the Guttman references each have everything that the claims require except for storing a second data pattern.

[00:01:05] Speaker 02:
And a key point to understand, which the board seemed to miss, is that neither Lesson nor Guttman's card will work with all card readers unless they also have a second data pattern so that they can transmit data in forms that are compatible

[00:01:23] Speaker 02:
with both swipe directions.

[00:01:25] Speaker 02:
Yes, they will transmit data without swiping, but sometimes they're gonna produce a compatibility error.

[00:01:32] Speaker 02:
And that's because they transmit a single pattern or representation, like A, B, C. And while some card readers can read in that order, it turns out that other card readers need to receive data in essentially the reverse pattern, like C, B, A.

[00:01:51] Speaker 02:
And that is exactly what Shoemaker teaches.

[00:01:55] Speaker 02:
And frankly, that's what we rely on Shoemaker for.

[00:01:57] Speaker 02:
Shoemaker teaches the problem that you need to have two data patterns in order to be compatible with all then existing card readers.

[00:02:07] Speaker 02:
And Shoemaker teaches the solution.

[00:02:09] Speaker 00:
Mr. Oakland, just so I understand it, as I read Shoemaker, Shoemaker recognizes that the card that it is talking about has to be able to produce

[00:02:21] Speaker 00:
both ABC and CBA, but not to hold both of them at the same time in a memory.

[00:02:28] Speaker 00:
This is the on the fly notion.

[00:02:30] Speaker 00:
I hope that is clear.

[00:02:33] Speaker 00:
As the card is going across, whichever of the two sensors on the opposite ends of the magnetic strip that detects direction will immediately run through a circuit and tell the card whether to do an ABC or a CBA order on that strip.

[00:02:55] Speaker 00:
But that's not the same thing as claimed here, which requires

[00:02:59] Speaker 00:
in this example, both ABC and CBA to be simultaneously, for the same track, recorded in memory?

[00:03:10] Speaker 02:
That's right, Judge Toronto.

[00:03:12] Speaker 02:
If Shoemaker disclosed recording both of the patterns in memory specifically, then we might be arguing anticipation.

[00:03:20] Speaker 02:
Our argument is that it was obvious.

[00:03:22] Speaker 02:
Once you know that you need two data patterns, it was obvious to modify

[00:03:28] Speaker 02:
either lesson or, for that matter, Gottman's card in order to store both of those data patterns.

[00:03:35] Speaker 02:
And essentially, yes, Shoemaker teaches that you can do on the fly, but that just means that there's really essentially one of two ways that you can present a data pattern.

[00:03:48] Speaker 02:
It's either to put it together on the fly or it's to store it in memory where it can then be retrieved.

[00:03:54] Speaker 02:
And as this court held in Uber versus X1, where you're left with two design choices, each is an obvious combination.

[00:04:02] Speaker 02:
Now, I think the board committed a couple of errors here before we even get to that ultimate question.

[00:04:08] Speaker 02:
And obvious design is, of course, ultimately a question of law.

[00:04:13] Speaker 02:
And we think the court can reverse.

[00:04:15] Speaker 02:
Methodologically, the board erred with respect to the lesson combination in that it didn't even address this argument.

[00:04:24] Speaker 01:
It addressed you.

[00:04:26] Speaker 01:
Counsel, you argue here in court and throughout your briefs that the board did not address your petition argument in particular that was directed to the bi-directional data, right, the forward and reverse swipes?

[00:04:42] Speaker 02:
That's correct, Chief Judge Moore.

[00:04:43] Speaker 01:
OK, what about on page 46 of the board's opinion where it says, despite petitioner citations to the personal and business profiles in Schumacher, your first argument,

[00:04:54] Speaker 01:
And it's argument that Schumacher discloses a card emulating the same track data, regardless of directionality, your second argument.

[00:05:02] Speaker 01:
We find the record does not support petitioner's contention.

[00:05:06] Speaker 01:
It seems that the board did, in fact, address it and expressly decided it.

[00:05:10] Speaker 02:
So Chief Judge Moore, I agree that the board acknowledged that we made too much?

[00:05:15] Speaker 01:
No, that's not acknowledging that you made an argument.

[00:05:17] Speaker 01:
We find the record does not support petitioner's contention.

[00:05:22] Speaker 02:
Well, Chief Judge Moore, the board then continues to offer an explanation for its statement.

[00:05:29] Speaker 02:
And the explanation that it then provides is just addressing the profiles argument.

[00:05:35] Speaker 01:
Yes, but throughout your brief, you didn't complain that the board did not provide a sufficiently articulated explanation so that you could understand the nature of its conclusions.

[00:05:46] Speaker 01:
You claimed it didn't reach any conclusions.

[00:05:48] Speaker 01:
You claimed it didn't make the findings.

[00:05:50] Speaker 01:
You claimed it ignored and disregarded the argument in its entirety.

[00:05:55] Speaker 01:
You didn't make the argument that they didn't give us enough information.

[00:06:00] Speaker 01:
You claimed they didn't decide it.

[00:06:03] Speaker 02:
So Chief Judge Moore, respectfully, I thought we essentially made both arguments.

[00:06:08] Speaker 02:
Show me.

[00:06:09] Speaker 01:
Show me in your brief where you made an argument that insufficient in your blue brief

[00:06:14] Speaker 01:
Where you made an argument that they decided it, but didn't give a sufficient explanation so that we could follow their reasoning.

[00:06:24] Speaker 02:
Sure.

[00:06:25] Speaker 02:
So what we argue is sort of any alternative.

[00:06:29] Speaker 02:
The first that the board has failed to- Show me where in your brief.

[00:06:34] Speaker 02:
Yeah, I think it's with respect to pages 30 to 31, where we say that the board's analysis falls short.

[00:06:41] Speaker 01:
Quote me.

[00:06:41] Speaker 01:
Here, I'm on page 30.

[00:06:43] Speaker 02:
But the top of 31, we say the board's analysis easily falls short of that which the APA and this court's precedents require, and proceed to address how the board addressed this argument.

[00:06:56] Speaker 02:
And Chief Judge Moore, our simple point was, we think that the board is conflating the two arguments, and that the board is addressing the profile argument.

[00:07:06] Speaker 02:
But I certainly agree.

[00:07:08] Speaker 02:
that this is a situation where you could not, quote, reasonably discern that the board had followed the proper path as this court explained.

[00:07:17] Speaker 01:
You didn't make that argument, counsel.

[00:07:19] Speaker 01:
You did not.

[00:07:20] Speaker 01:
Let me take you to page 29 of your brief.

[00:07:23] Speaker 01:
The board did not address whether Schumacher's forward and reverse swipe representations, much less find the representations do not.

[00:07:33] Speaker 01:
You talk about how the board disregarded your argument.

[00:07:36] Speaker 01:
On page 2.

[00:07:38] Speaker 01:
You say the board ignored your argument and disregarded it.

[00:07:42] Speaker 01:
On page 24, you say the board overlooked your argument and disregarded it.

[00:07:46] Speaker 01:
These are your words.

[00:07:49] Speaker 01:
And yet the opinion clearly articulates your argument in exactly the way you made it and says they do not agree with it.

[00:07:58] Speaker 02:
And on page 29, we say that, quote, the board did not provide any analysis with regard to the manner in which Samsung proposed its key

[00:08:07] Speaker 02:
obviousness combination.

[00:08:09] Speaker 02:
And that for this reason, the board's decision must at least be vacated in the case.

[00:08:13] Speaker 01:
You say that's on page 29.

[00:08:14] Speaker 01:
Where is that on page 29?

[00:08:16] Speaker 02:
It's the buckle of page 29 of our blue brief.

[00:08:19] Speaker 02:
It's the beginning of the second paragraph.

[00:08:22] Speaker 02:
I mean, Chief Judge Moore, I think these arguments are very closely related.

[00:08:26] Speaker 02:
And our point was simply that the board, in its analysis, treats it and conflates the profiles

[00:08:36] Speaker 02:
with the swine direction patterns.

[00:08:39] Speaker 02:
And that is clear if you continue on.

[00:08:41] Speaker 02:
Yes, the board has a conclusory sentence.

[00:08:44] Speaker 02:
But it then says, we find insufficient persuasive evidence.

[00:08:49] Speaker 02:
And then it proceeds to address the profile issue.

[00:08:52] Speaker 02:
And it goes on to say, this is still on page 46, the petitioner fails to explain persuasively how the cited profiles read on the challenge claim limitations.

[00:09:04] Speaker 02:
And so I think this is a case, just like this court addressed in the Lacroetech case, where the board appears to have misapprehended the party's arguments.

[00:09:13] Speaker 02:
I know we cite that case for that specific proposition.

[00:09:17] Speaker 01:
Does that sentence make any sense to you?

[00:09:19] Speaker 01:
Petitioner fails to explain persuasively how the cited profiles read on the challenge claim limitation.

[00:09:24] Speaker 01:
Because Schumacher discloses that when its card determines swipe direction, it then represents or encodes the data, yada, yada, yada.

[00:09:32] Speaker 01:
It says the data stream is always provided in the experienced order irrespective of swipe direction.

[00:09:39] Speaker 01:
Does that make sense to you in the context of the profiles argument?

[00:09:43] Speaker 02:
It does not, Chief Judge Moore.

[00:09:44] Speaker 02:
The entire sentence doesn't.

[00:09:46] Speaker 01:
So what if instead the word profiles were actually the word representations?

[00:09:50] Speaker 02:
Well, so Chief Judge Moore, if

[00:09:52] Speaker 02:
The board had actually addressed the representations argument as opposed to essentially copying from its institution decision at Appendix 306.

[00:10:01] Speaker 02:
Well, then the argument that I would have in front of you about the lesson combination would be the same argument that I have for you about the Guttman combination.

[00:10:09] Speaker 01:
Do you agree that if the word profiles were taken out of that ultimate sentence and the word representations were put in, then the sentence would actually make sense and it would directly respond?

[00:10:18] Speaker 02:
Well, especially, I don't.

[00:10:21] Speaker 02:
I do think that it would at least identify that the board was addressing the profile, excuse me, the representation or the patterns argument as opposed to just the... Well, it's clear they were addressing the bidirectionality argument because they talk about it twice in the sentence.

[00:10:38] Speaker 01:
Well, Chief, just more, I mean, I think it's... Three times, actually.

[00:10:40] Speaker 01:
Three times in that same sentence.

[00:10:41] Speaker 01:
In the single sentence, they addressed directionality three separate times.

[00:10:46] Speaker 02:
Yeah, I don't dispute that they make reference to it.

[00:10:50] Speaker 02:
And so that this is, at a minimum, the situation that this court faced in Warsaw and in the evasive, where you do not have an explanation for the board's decision.

[00:11:02] Speaker 02:
I do think, however, that when you read it in context, that what the board is doing is

[00:11:07] Speaker 02:
is conflating the two arguments and therefore not actually responding to the argument that we specifically made.

[00:11:14] Speaker 01:
That's my problem.

[00:11:15] Speaker 01:
I think the argument you specifically made throughout your blue brief is that the board didn't decide it.

[00:11:20] Speaker 01:
They didn't find anything with regard to it, and yet they clearly did.

[00:11:25] Speaker 01:
So I think the board responded to your argument.

[00:11:27] Speaker 01:
Now perhaps, in your view, they didn't give enough of an explanation, but that's not what I understand your argument to be.

[00:11:34] Speaker 01:
I understand your argument to be they didn't decide it.

[00:11:37] Speaker 02:
But respectfully, Chief Judge Moore, I think we have made both arguments in the blue brief and in the reply brief.

[00:11:43] Speaker 02:
where we have both.

[00:11:45] Speaker 01:
Reply brief doesn't help you.

[00:11:46] Speaker 01:
And see, my problem with your reply brief is between the fact that I think that your argument on the APA focuses only on a claim the board did not decide something, which it absolutely clearly did, and amounts, as far as I'm concerned, to a dramatic misrepresentation or overstatement on your bar.

[00:12:04] Speaker 01:
But in addition, you accuse the others.

[00:12:06] Speaker 01:
And then you ask us to reverse.

[00:12:11] Speaker 01:
of fact findings, which again, feels like a pretty dramatic overreach if we were to do that.

[00:12:17] Speaker 01:
But then you have sentences like the following.

[00:12:19] Speaker 01:
This is a single sentence in your reply brief.

[00:12:22] Speaker 01:
After setting aside dynamic misquotations of record evidence,

[00:12:26] Speaker 01:
mischaracterization of the board's findings, misstatement of the burden of proof, misplaced reliance on inapposite case law.

[00:12:35] Speaker 01:
The only reasonable conclusion based on the indisputable facts is that the challenge claims are obvious.

[00:12:42] Speaker 01:
Wow, you paint a picture the likes of which I've never seen.

[00:12:46] Speaker 01:
That is an enormous number of accusations hurled

[00:12:49] Speaker 01:
at dynamics, when you're asking for what amounts to a tremendous overreach of a remedy, a reversal.

[00:12:55] Speaker 01:
And if they, in fact, did all these things, have you reported them to the state bar?

[00:12:59] Speaker 01:
Because these would actually amount to significantly unethical things if they had done all of these things that you claim.

[00:13:06] Speaker 02:
So Chief Judge Moore, I'm not accusing anyone of any sort of ethical violations.

[00:13:11] Speaker 02:
There is a misquotation in the red brief.

[00:13:14] Speaker 02:
We address that in the reply brief.

[00:13:16] Speaker 02:
I do think that in responding on... But you also say they mischaracterized the board's findings.

[00:13:23] Speaker 01:
In fact, Mr. O'Quinn, I think it's your brief that mischaracterizes the board findings, because your brief expressly and five separate occasions says the board made no findings with regard to the bidirectionality.

[00:13:37] Speaker 01:
And yet, when you look at the page I just pointed you to, they clearly made a finding.

[00:13:41] Speaker 01:
They may not have provided enough explanation for it, but they clearly did make a finding.

[00:13:46] Speaker 01:
So I think if either brief mischaracterizes the board's finding, it's in fact yours.

[00:13:51] Speaker 02:
Well, Chief Judge Moore, certainly not my intent to mischaracterize the board's finding in our brief.

[00:13:56] Speaker 01:
Respectfully- Do you agree the board did make a finding with regard to bidirectionality?

[00:14:02] Speaker 02:
The reason that I don't, Chief Judge Moore, is that I read the board's decision on page 46 as conflating the two issues.

[00:14:09] Speaker 02:
And so I don't read the board as actually deciding the issue that we presented vis-a-vis the lesson combination.

[00:14:16] Speaker 02:
I'm happy to point the court, of course, to the issues vis-a-vis the Guttman combination.

[00:14:26] Speaker 01:
Did the board clearly articulate your argument on page 42 when they were explaining petitioner's contentions?

[00:14:33] Speaker 02:
I think the board did identify that because, for starters, the board addressed this argument in the context of the Guttman combination.

[00:14:43] Speaker 02:
which I think makes what the board did at age 46 all the more inexplicable.

[00:14:47] Speaker 01:
This is the combination of Lesson and Schumacher.

[00:14:50] Speaker 01:
They say, Schumacher, this is your argument, Schumacher exposes that its card can emulate the same track data in forward or reverse manner depending on swipe direction.

[00:14:59] Speaker 01:
Is that not a correct articulation of your argument?

[00:15:02] Speaker 02:
It absolutely is, and we pointed out in our brief that it made the

[00:15:06] Speaker 02:
board's decision on page 46.

[00:15:08] Speaker 01:
And then on page 46, they stated again, it's argument that Schumacher discloses a card emulating the same track data regardless of directionality.

[00:15:17] Speaker 01:
Is that also a correct statement of your argument?

[00:15:20] Speaker 02:
It is correct that we made an argument based on the bidirectional swiping.

[00:15:27] Speaker 02:
What I modestly disagree with, Chief Judge Moore, is that what the board then proceeds to do in reaching a conclusion

[00:15:34] Speaker 02:
is actually addressed that argument.

[00:15:36] Speaker 01:
And I agree that it's inexplicable because... In the same sentence, they articulated your argument, I believe you just agreed, correctly.

[00:15:44] Speaker 01:
That sentence concludes, we find the record does not support petitioner's contention.

[00:15:49] Speaker 01:
How is that not directly refuting your argument?

[00:15:54] Speaker 02:
Chief does more.

[00:15:54] Speaker 02:
I just respectfully don't believe that sentence can be read in isolation.

[00:15:58] Speaker 02:
I think it has to be read

[00:15:59] Speaker 02:
in the context of the sentences that follow and in the sentences that follow, the board does articulate a reasoning that has nothing to do with the swipe direction profiles, which I respect that reasonable people can disagree about this, but I take that to be the board

[00:16:20] Speaker 01:
uh... not addressing our argument and if you look at what they were doing that people can disagree with the board says we find the petitioners comment or contentions to be without merit i don't see how reasonable people could disagree that they're fighting your contentions are without merit uh... through into the more actively articulated your contentions in two places in their opinion and concluded to find them without merit i can understand your argument that perhaps they didn't explain the rationale enough

[00:16:50] Speaker 01:
But I don't understand your argument they didn't make a finding.

[00:16:53] Speaker 02:
Well, I think the two arguments are essentially linked because at the end of the day, my point is that when you read that sentence and you read it in the context of the sentences that follow, it seems like the board is addressing something else.

[00:17:08] Speaker 02:
But at the end of the day, then if you think that the board actually did resolve the issue, then you would have the APA violation that we do make reference to.

[00:17:19] Speaker 02:
of the board actually failing to give articulated reasoning.

[00:17:23] Speaker 02:
I see I'm well past my time.

[00:17:25] Speaker 01:
I would ask you to go back and read that page four sentence from your reply brief and never write another sentence like that in any court.

[00:17:34] Speaker 02:
Thank you, Chief Judge.

[00:17:36] Speaker 03:
I know we're over time, but Mr. Quinn, if I could ask, if we were to reach the issue of whether the board's articulation was sufficient for us to understand their thinking, help me understand if I've got the larger context correct and which way, in your view, it would cut.

[00:17:59] Speaker 03:
It seems that in the institution decision, the board

[00:18:03] Speaker 03:
indicated that it wasn't quite persuaded it should even institute on the profiles embodiment of Shoemaker and then by the time you finish the briefing and get to the hearing in front of the board there's really as best I could tell no

[00:18:20] Speaker 03:
articulation of the argument based on the shoemaker profile embodiment in combination, at least, with lesson.

[00:18:28] Speaker 03:
Is that your understanding of how things proceeded in front of the board?

[00:18:33] Speaker 03:
And if so, does that give us any insight or an ability to more reasonably ascertain what the board was thinking in these various sections that you've been talking about?

[00:18:46] Speaker 02:
So Judge Stark, I do agree that

[00:18:50] Speaker 02:
that some of what the board said on page 46 seems to come from language that was in its institution decision at appendix 306.

[00:19:02] Speaker 02:
And I do think that may shed some light as to the board's procedural errors here.

[00:19:10] Speaker 02:
You're right that in our reply in front of the board, we did articulate and identify

[00:19:18] Speaker 02:
both arguments, both distinct arguments about swipe direction profiles and, excuse me, swipe direction patterns and profiles.

[00:19:27] Speaker 02:
But I agree that by the time of the hearing, I think most of the focus was on the swipe direction patterns.

[00:19:34] Speaker 02:
And so all of this, I think, makes the board's decision with respect to this all the more inexplicable with the board seeming to point back to part of its analysis in the institution decision.

[00:19:47] Speaker 02:
as opposed to addressing the arguments as we had at least articulated them.

[00:19:55] Speaker 02:
I realize that I am well past any time.

[00:19:57] Speaker 02:
I'm happy to address the combination of the board's methodological errors with respect to the Guttman combination, because I do think that the board applied it.

[00:20:08] Speaker 00:
Before you sit down, can you say on the substance of the argument that even though Shoemaker doesn't itself

[00:20:17] Speaker 00:
teach simultaneous holding of two representations.

[00:20:23] Speaker 00:
Nevertheless, it would be an obvious thing to do with lessons memory to record and store and hold the two different representations in the ABC CBA that Shoemaker could produce.

[00:20:41] Speaker 00:
What is the evidence for that argument?

[00:20:45] Speaker 00:
Yeah, for that argument.

[00:20:48] Speaker 02:
So if I understand this question, Judge Taranto, it's really why would a person of ordinary skill in the art be motivated to take the patterns that one could generate in Inchumaker or the types of patterns that one could generate in Inchumaker and store them into memory?

[00:21:08] Speaker 02:
And I refer you to a couple of places.

[00:21:11] Speaker 02:
Our experts certainly address this at appendix 722 to 723, 734 to 735.

[00:21:18] Speaker 02:
But our argument, of course, most basically here is that you don't need a single reference to teach the recited limitation.

[00:21:26] Speaker 02:
That seems to be what the board thinks at appendix 29 to 30, saying that the government does not disclose storing track data for two directions, that neither reference teaches the recited limitation.

[00:21:38] Speaker 02:
And of course, in addition to KSR, you have cases like FormCo versus AlignTech, even before KSR held that a claim can be obvious.

[00:21:48] Speaker 02:
even where all the claimed features are not found in the specific prior art reference.

[00:21:54] Speaker 02:
And so you don't need a single reference to disclose the storing of two patterns in memory, which, of course, is just the conventional use of memory as memory.

[00:22:06] Speaker 02:
I mean, that is, in the words of KSR, the predictable use of prior art elements according to their established functions.

[00:22:13] Speaker 02:
And so once

[00:22:16] Speaker 02:
A person of ordinary skill in the art appreciates that you actually need both patterns.

[00:22:22] Speaker 02:
Our position is that it would simply be obvious to store them.

[00:22:27] Speaker 02:
Yes, they could do them on the fly, but then that just looks like the Uber versus X1 case.

[00:22:31] Speaker 02:
And that's why we respectfully submit that given that obviousness is a question of law, the court can reverse.

[00:22:38] Speaker 02:
But at a minimum, the court should vacate and remand.

[00:22:41] Speaker 00:
Thank you, Mr. Oakland.

[00:22:42] Speaker 00:
We'll hear from Mr. Morris, and we'll restore your rebuttal time.

[00:22:50] Speaker 00:
Thank you, Judge.

[00:22:51] Speaker 00:
Do something like equalize.

[00:22:54] Speaker 00:
Mr. Morris.

[00:22:56] Speaker 04:
Thank you, Your Honors.

[00:22:56] Speaker 04:
May it please the court?

[00:22:58] Speaker 04:
I'm Robert Morris, representing Appellee Dynamics, Inc.

[00:23:03] Speaker 04:
With regard to one of the last questions that Your Honor Tarantino asked, what's the evidence for that argument?

[00:23:11] Speaker 04:
And that was with regard to how or why would a person of ordinary skill in the art go there.

[00:23:17] Speaker 04:
The only place that the evidence was introduced to the PTAB was by their expert.

[00:23:24] Speaker 04:
And over and over and over again, the PTAB made factual findings that the experts' opinions were conclusory, that they were unsupported.

[00:23:34] Speaker 04:
Interestingly, at the PTAB,

[00:23:39] Speaker 00:
I'm sorry, does the expert say, and I guess I'm looking at 722, 23, I'm not sure if, I think that was one of the focuses, maybe also 734, 35, that a person of skill in the art would, in considering less than

[00:24:02] Speaker 00:
I guess this is a good Guttman discussion, but the lesson discussion refers back to it, would want this card, the lesson or Guttman card, to be usable with the installed base of swipe card readers.

[00:24:16] Speaker 00:
And everybody knows that some of them work bidirectionally, some of them work only in one direction.

[00:24:24] Speaker 00:
Shoemaker recognizes this bi-directional problem.

[00:24:28] Speaker 00:
And so it would be obvious for somebody who wanted the Lesson or Guttman card to work with the installed base to actually have in memory, rather than generate on the fly, both the left to right and the right to left version of whatever the reader would need.

[00:24:49] Speaker 04:
Well, as a starting point, even if it did have it in memory both forward and reverse, Lesson and Guttman have no way to know what direction it's being swiped.

[00:25:01] Speaker 04:
Without the swipe detectors of Guttman, you have to take that technology also and you have to import the swipe direction detectors because Guttman's really clear.

[00:25:10] Speaker 04:
I put a detection director on one side.

[00:25:13] Speaker 04:
And another sensor on the other side, whichever one gets detected first.

[00:25:16] Speaker 04:
That's how I know which end of the card is being swiped.

[00:25:20] Speaker 04:
Guttman and Lessin both transmit.

[00:25:23] Speaker 04:
They transmit from outside the reader.

[00:25:25] Speaker 04:
They don't even have to be inserted into the slot.

[00:25:28] Speaker 04:
When they get close to the slot, they transmit.

[00:25:31] Speaker 04:
And so you'd have to make further modifications.

[00:25:33] Speaker 04:
You'd have to add more things to go down this path.

[00:25:37] Speaker 00:
So how much of the initial thing I tried to describe and then what you just said about how even that wouldn't be produced without greater effort, how much of that is recorded in the evidence that is before us on both sides?

[00:25:56] Speaker 04:
By both sides, nothing.

[00:25:57] Speaker 04:
Virtually nothing.

[00:25:58] Speaker 04:
I mean, that's part of what happened, is the PTA have found over and over again a complete failure to provide evidence to back up even the most rudimentary claims that their expert put forth.

[00:26:13] Speaker 04:
Shoemaker was about, or Shoemaker, not sure which, is about creating these tracks on the fly and never, ever, ever storing a complete track

[00:26:24] Speaker 04:
other than as it builds it and puts it out for security reasons.

[00:26:28] Speaker 04:
Shoemaker solved the problem.

[00:26:31] Speaker 04:
The PTAB and we are lost on how, if you have Shoemaker and Shoemaker solves the problem of forward and reverse, why somebody would go back in time to a patent from 10 years before that and go and try to modify it in some way.

[00:26:46] Speaker 04:
And the only way to do that is hindsight reconstruction that's prohibited by KSR and who knows how many other cases.

[00:26:55] Speaker 04:
It just flat out is, because the problem's already solved.

[00:26:59] Speaker 04:
It's just that dynamics went and they solved it in a completely different way.

[00:27:03] Speaker 00:
Did your expert walk through the kind of thing that you've just been describing about why

[00:27:14] Speaker 00:
somebody interested with lesson, say, in having the device, first of all, is it part of the case from the petitioner that somebody interested in with lesson would be interested in having it work with the installed base of readers?

[00:27:35] Speaker 00:
I thought, doesn't Lesson have a paragraph that says that?

[00:27:38] Speaker 04:
Yes.

[00:27:38] Speaker 04:
Lesson has backward compatibility with existing readers.

[00:27:42] Speaker 00:
Right.

[00:27:43] Speaker 00:
And then the expert, their expert, did or did not say somebody wanting

[00:27:51] Speaker 00:
to meet this standard under the paragraph near the end of lesson about backward compatibility with swiping devices would want to store in lessons memory the two representations you need that Shoemaker doesn't store in memory but generates on the fly.

[00:28:15] Speaker 00:
Does their experts say that?

[00:28:17] Speaker 00:
Is that what 722 and 23 are about?

[00:28:21] Speaker 00:
Those are Gutman paragraphs, but Lesson just says C. I don't think their experts said that about Lesson.

[00:28:29] Speaker 04:
It's kind of interesting, because multiple times we've asked, how did we get here?

[00:28:34] Speaker 04:
The way that we got here is because the petition flip-flops everything.

[00:28:39] Speaker 04:
The petition is centered on Gutman and Schumacher Schumacher.

[00:28:44] Speaker 04:
And then at the end, it basically says, and you take a lot of the discussion that we had before that with regard to Schumacher, Shoemaker, and you apply it to Lesson as well.

[00:28:54] Speaker 04:
I think because of what happened at the ITC and the arguments there and the arguments that happened before the board during the oral argument.

[00:29:02] Speaker 00:
What are we supposed to do with this little chronology story you're telling me?

[00:29:05] Speaker 00:
They've got two arguments.

[00:29:06] Speaker 00:
There's no question about forfeiting anything.

[00:29:08] Speaker 00:
So we evaluate each one on its merits.

[00:29:10] Speaker 00:
Sure.

[00:29:11] Speaker 00:
So who cares about how they came to shift in emphasis?

[00:29:14] Speaker 04:
Well, I say that just with regard to the fact that you asked about their expert in lesson.

[00:29:19] Speaker 04:
And I don't think their expert in lesson got into it at that kind of a level.

[00:29:23] Speaker 04:
Their expert repeatedly made these conclusory statements.

[00:29:27] Speaker 04:
Their expert said, provided a basis for making this combination so that you would have improved commerciality.

[00:29:50] Speaker 04:
Both of the bases that their expert provided were rejected by the PTAF for being insufficient because they didn't provide a reasoned explanation, because their expert didn't provide a reasoned explanation.

[00:30:04] Speaker 04:
The whole concept that these are two separate arguments is also belied by their own papers.

[00:30:14] Speaker 00:
What are two separate arguments?

[00:30:17] Speaker 04:
The whole thing about an APA violation because they had these two separate and distinct arguments and that somehow.

[00:30:22] Speaker 00:
I'm not actually focused on the APA violations.

[00:30:26] Speaker 00:
I'm interested in the substance of the evidence.

[00:30:32] Speaker 00:
for the idea that even though Shoemaker doesn't disclose holding in memory to representations, but recognizes the need for forward and reverse and lessen with its memory that in the substance of the evidence for the proposition,

[00:30:53] Speaker 00:
that it would be obvious to combine those by storing on Lesson's Guard, forget about Guttman for now it could have really been focused on Lesson, the two representations that Shoemaker recognizes it's useful to be able to have.

[00:31:08] Speaker 04:
There's little to no evidence to support that contention that someone of a person of ordinary skill in the art would do that.

[00:31:16] Speaker 04:
And the little bit of evidence that was introduced by their expert was cited by the board as a failure, as one of at least 10 failures of evidence that I counted.

[00:31:27] Speaker 04:
And Samsung didn't respond to any of that in their briefs.

[00:31:31] Speaker 04:
They haven't directed your honors to a single instance where the board missed evidence that they put forward.

[00:31:39] Speaker 04:
It's an argument about a characterization of whether or not that evidence is sufficient.

[00:31:44] Speaker 00:
And I'll move beyond this in just one minute.

[00:31:49] Speaker 00:
But one more question, which goes back to where I started.

[00:31:51] Speaker 00:
Forget for a minute about their evidence.

[00:31:55] Speaker 00:
When the petitioner said what it said in the petition,

[00:32:00] Speaker 00:
What did your expert say about the reasons that their expert's observation on this point was insufficient?

[00:32:15] Speaker 00:
Things like the sort of things that you were saying at the beginning was, think of the problems that would have to be solved or the additional complexities.

[00:32:23] Speaker 00:
Is there evidence?

[00:32:24] Speaker 04:
I will admit that at some level,

[00:32:27] Speaker 04:
what the expert said during his deposition.

[00:32:30] Speaker 00:
Yours or theirs?

[00:32:32] Speaker 04:
Ours.

[00:32:32] Speaker 04:
Thank you.

[00:32:33] Speaker 04:
It gets a little murky in my head because we were deposed for two days in the ITC case and I don't want to bring in stuff from the ITC, etc.

[00:32:40] Speaker 04:
But our expert said that this issue of forward and reverse swiping

[00:32:45] Speaker 04:
It is a tiny, tiny, tiny piece of the world.

[00:32:48] Speaker 04:
For example, if you go to a gas station and you stick a card in the reader and it pulls it in because it's a mechanized reader, that can only be done one way.

[00:32:58] Speaker 04:
If you look at Lesson, Lesson's a big, fat, smart thing, and it has this little wedge on it for if you want to go and swipe it.

[00:33:04] Speaker 04:
And in that instance, even if it had forward and reverse, you couldn't shove it into the gas station's card reader.

[00:33:10] Speaker 04:
Most card readers, the vast majority of the card readers, and that's what our experts testified to, the vast majority of the card readers work forward and reverse.

[00:33:18] Speaker 04:
This is a little tiny problem.

[00:33:20] Speaker 04:
It's a little tiny problem for some specific, crazy card readers.

[00:33:25] Speaker 04:
And the reason and how it came to be.

[00:33:28] Speaker 00:
I'm sorry.

[00:33:30] Speaker 00:
If most card readers work in both directions, it wouldn't matter.

[00:33:35] Speaker 04:
That's correct.

[00:33:37] Speaker 04:
And it came up for us.

[00:33:39] Speaker 04:
when we were trying to implement cards in Japan, because the Japanese rail system that sells tickets for the Japanese trains is a mechanized reader that would only take it in one direction.

[00:33:51] Speaker 04:
And that's how Dynamics actually eventually developed this invention.

[00:33:56] Speaker 04:
And Randy Rhodes, one of the inventors, was sort of a hero in the company.

[00:34:01] Speaker 04:
But if you go and you look to the petition,

[00:34:05] Speaker 04:
How did Samsung define what their issue is, what their central argument was?

[00:34:12] Speaker 04:
If you look at the petition at appendix 105, which is page 24 of the petition,

[00:34:18] Speaker 04:
They talk about Schumacher or Shoemaker, and it says, Schumacher provides a card that can emulate multiple representations of the same data found on conventional magnetic cards.

[00:34:29] Speaker 04:
That's the one issue that the board was obligated to consider.

[00:34:33] Speaker 04:
And further down on that page, Samsung says, Samsung provides two examples of that argument.

[00:34:42] Speaker 04:
And it's not my words.

[00:34:43] Speaker 04:
It's not Dynamics' words.

[00:34:45] Speaker 04:
These are Samsung's words.

[00:34:47] Speaker 04:
Samsung says, the petition says, for example, in describing that problem.

[00:34:53] Speaker 04:
And it goes on to describe the business and the personal profiles.

[00:34:57] Speaker 04:
And then the petition goes further.

[00:34:58] Speaker 04:
And it says, as another example of the one problem that we're trying to deal with.

[00:35:04] Speaker 04:
Because the problem is that Schumacher, according to them, provides a card that emulates this.

[00:35:10] Speaker 04:
And it goes on, again, as another example.

[00:35:13] Speaker 04:
This is Samsung's language that now they're trying to run away from.

[00:35:17] Speaker 04:
And then on page 46... I'm sorry, I'm missing the point you're trying to make.

[00:35:21] Speaker 00:
I'm sorry about that.

[00:35:23] Speaker 00:
I get it.

[00:35:24] Speaker 00:
Everybody agrees that there is a business profile, personal profile portion of Shoemaker and there's also

[00:35:32] Speaker 00:
the ABC CBA.

[00:35:37] Speaker 04:
All I'm doing is saying from the express language that's in the petition itself, Samsung's own language, Samsung never characterized in the petition as we have argument A profiles, we have argument B. It just says these are two literally, they use the word examples of their one argument.

[00:35:57] Speaker 04:
There wasn't some big central argument that was completely missed.

[00:36:02] Speaker 04:
And it was a part of the oral argument.

[00:36:04] Speaker 04:
But over and over again, the PTAB found that the evidence that they provided was insufficient.

[00:36:11] Speaker 04:
Because none of the prior art, none of them show storing, as you astutely pointed out, none of them show storing multiple representations of track data.

[00:36:24] Speaker 04:
And so the only place that Samsung can get that is from the façade, from the person of ordinary skill in the art.

[00:36:32] Speaker 04:
At appendix 32, the PTAB expressly rejected Samsung's and their expert's teachings because they said Samsung failed to provide any explanation as to why someone would take Shoemaker's teachings and try to apply them from a reference 10 years old when Shoemaker already addressed that problem at hand, that Samsung failed in that regard.

[00:36:58] Speaker 04:
with on page 33 of the appendix or the final written decision.

[00:37:02] Speaker 04:
Samsung basically criticized or the PTAB criticized Samsung for the very same thing that they're criticizing the PTAB.

[00:37:12] Speaker 04:
They said they rejected Samsung arguments and said Samsung was selecting disparate parts of the prior art in order to

[00:37:20] Speaker 04:
meet the claim limitation in contravention of KSR.

[00:37:25] Speaker 04:
Exactly what they're saying the board erred on, Samsung said they're the ones that made such an error.

[00:37:31] Speaker 04:
And they went further at the crossover from pages 33 to 34 and found that Samsung was using hindsight bias in violation of KSR as the thread to stitch together the prior art.

[00:37:44] Speaker 04:
Further down on 34, they rejected Samsung's expert testimony as being conclusory and unsupported.

[00:37:54] Speaker 04:
Samsung completely ignored that in either of their briefs.

[00:37:59] Speaker 04:
They said, and this is what I was referring to earlier.

[00:38:02] Speaker 04:
I realize my time is up.

[00:38:03] Speaker 04:
But they rejected Samsung's experts, the basis that he provided for trying to say, well, take the forward and reverse and throw it in lesson.

[00:38:12] Speaker 04:
Because on page 34, the entire basis that he put forth was that it would improve functionality.

[00:38:18] Speaker 04:
And it would make it more commercially convenient.

[00:38:21] Speaker 04:
But they failed to then what was expressly disclosed in each reference.

[00:38:25] Speaker 04:
And the PTAB made a finding.

[00:38:27] Speaker 04:
that Samsung failed to provide the reason and explanation for that.

[00:38:31] Speaker 04:
So any basis that Samsung and its expert put forth to try to take the teachings and shove them into lessons, memory, were rejected by the PTAB because the only place for them to get evidence of a posita was from their expert.

[00:38:50] Speaker 04:
And over and over again, the proffers were just simply rejected for failure proof.

[00:38:56] Speaker 03:
If we have to resolve the APA question, is the explanation at page 46 of Lesson and Shoemaker, is it inexplicable?

[00:39:06] Speaker 03:
Or can you explain to us what you think it means?

[00:39:10] Speaker 03:
And how is it addressing the bidirectional swiping environment as opposed to the business and personal profiles?

[00:39:19] Speaker 04:
I think the best explanation for that is that if you go back further and you go through all of the different rejections that they had just made,

[00:39:26] Speaker 04:
that, in essence, on page 46, they're concluding that Samsung's contentions, that the one problem that's defined at page 105, page 24 of the petition, that one problem that Samsung then characterized as just two examples, that the board actually looked at it as a single problem and that they rejected it.

[00:39:52] Speaker 04:
Thank you, Your Honors.

[00:39:53] Speaker 00:
OK.

[00:39:54] Speaker 00:
Thank you.

[00:39:57] Speaker 02:
Thank you, Judge Toronto.

[00:39:58] Speaker 02:
So first, with respect to Shoemaker, we consistently made two separate arguments, one involving the profiles, one involving the swipe direction patterns.

[00:40:07] Speaker 02:
And you can see in Appendix 117 in the petition that we said that the profile argument was both independent of swipe direction, end quote.

[00:40:15] Speaker 02:
Now, with respect to a number of the questions that Your Honor was asking, I think there's a couple of things to recognize.

[00:40:22] Speaker 02:
The board found that there was no impediment to storing both data patterns in memory.

[00:40:28] Speaker 02:
The board also found that there was no teaching away from storing both data patterns in memory.

[00:40:35] Speaker 02:
The board found this in appendix 28 and appendix 48.

[00:40:38] Speaker 02:
And so it all comes down to the board's conclusion with respect to Gottman that there was no single reference that disclosed storing both in memory.

[00:40:49] Speaker 02:
And that's the point that Dynamics doubles down on at pages 1, 26, 29, and 40 of its red brief.

[00:40:57] Speaker 02:
And respectfully, I think that is the type of formalism that KSR rejected.

[00:41:02] Speaker 02:
I think that the question is not whether or not the references disclose fully formed claim limitations.

[00:41:10] Speaker 02:
The question is, what do the references, viewed together as KSR instructs, what do the references teach?

[00:41:18] Speaker 02:
And with respect to whether there was a motivation to combine the references, I think it's hard to square the board's reasoning vis-a-vis the lesson combination with the board's reasoning vis-a-vis the government combination.

[00:41:29] Speaker 02:
But the board seemed to miss what we argued in our petition, for example, at appendix 103, that the government itself disclosed, which is a desire for compatibility with all existing infrastructure.

[00:41:46] Speaker 02:
That is, to be able to work

[00:41:48] Speaker 02:
with, quote, whichever type of card reader infrastructure is available at a particular location for engaging in a transaction, end quote, that's appendix 1741.

[00:41:57] Speaker 02:
And so you have the motivation on the face of government itself, and the board's explanation to the contrary is really hard to understand in light of that.

[00:42:10] Speaker 02:
And why would somebody combine these?

[00:42:12] Speaker 02:
Why would you store them in memory?

[00:42:13] Speaker 02:
Well, at the end of the day, you ultimately

[00:42:16] Speaker 02:
with the art disposing two solutions.

[00:42:19] Speaker 02:
You have the art disposing that you can encode on the fly.

[00:42:25] Speaker 02:
But you have the art disclosing that you can use memory as memory, exactly what it's intended to be used for.

[00:42:33] Speaker 02:
And I think that means that this case falls squarely within the ambit of Uber versus X1.

[00:42:39] Speaker 02:
And so for all of these reasons, I think the board has aired methodologically under KSR.

[00:42:44] Speaker 02:
I respectfully submit that the board did air under the APA.

[00:42:49] Speaker 02:
And as we explained in pages 30 to 31 of our blue brief,

[00:42:53] Speaker 02:
Yes, we read the board as not addressing our argument.

[00:42:57] Speaker 02:
But we said at page 30 that there's not an alternative reading of the final written decision that would save it, and specifically cite the language from Newvasive and Warsaw about failing to articulate a reasoning.

[00:43:09] Speaker 02:
And again, at page 31, we pointed out that even if you read the board differently than we did, at most the board merely partially reiterated its merely rejected Samsung swipe direction argument

[00:43:22] Speaker 02:
as combined with less and without explanation.

[00:43:24] Speaker 02:
And so we submit that for any of the reasons that were heard under the APA, I appreciate the court's admonitions on all of these matters and will certainly take them to heart.

[00:43:34] Speaker 00:
Thank you.

[00:43:35] Speaker 00:
Thanks to both counsel.

[00:43:36] Speaker 00:
The case is submitted.

[00:43:38] Speaker 00:
And that completes our proceedings for the morning.