[00:00:01] Speaker 02:
The first case for argument this morning is 22-1598, Alexum versus Simon property.

[00:00:08] Speaker 02:
Mr. Richardson.

[00:00:14] Speaker 07:
Good morning.

[00:00:16] Speaker 07:
You may please the court.

[00:00:18] Speaker 07:
The District Court for the Eastern District of Texas erred when it failed to perform a derivative claim construction for the phrase, for use in the card system.

[00:00:28] Speaker 07:
which is a phrase found within the party's stipulated construction of the claim term on modified point of sale device.

[00:00:36] Speaker 07:
During the summary judgment proceedings below, the parties took opposing views about the meaning of the derivative phrase.

[00:00:43] Speaker 07:
The district court should have performed an examination of the intrinsic evidence as is required by long-standing Federal Circuit precedent.

[00:00:53] Speaker 07:
It did not do so.

[00:00:54] Speaker 02:
Can you be precise in terms of what this derivative claim construction or the construction deals with for use in the card system?

[00:01:03] Speaker 07:
Your Honor, thank you.

[00:01:04] Speaker 07:
The phrase for use in the card system means using a standard POS device, the standard POS device functionality to perform the claimed functions.

[00:01:16] Speaker 07:
And that is directly related to the meaning of the term unmodified.

[00:01:21] Speaker 07:
So we know from examining the intrinsic evidence relative to the term unmodified that the term or phrase for use in the card system must relate to the unmodified definition that's in the record, the intrinsic record.

[00:01:38] Speaker 02:
I'm not sure I frankly really understand the distinction.

[00:01:42] Speaker 02:
So what are the two alternatives?

[00:01:44] Speaker 02:
Maybe that will help me understand.

[00:01:46] Speaker 07:
Well, thank you.

[00:01:47] Speaker 07:
The two alternatives are one that's presented by the 608 Patented Self, which was a system that was intended to operate over the banking system using a BIN or a bank identification number.

[00:01:59] Speaker 07:
The other alternative was to use software, custom software, which is described in the remarks to the Patent Office,

[00:02:07] Speaker 07:
to use custom software to perform transactions from that device, the POS device, but off the banking network.

[00:02:15] Speaker 07:
So those were the two choices.

[00:02:17] Speaker 07:
An unmodified device, which treated the card much like a credit card, that used a bin.

[00:02:22] Speaker 02:
But we're here on summary judgment of non-infringement.

[00:02:25] Speaker 02:
And I thought the issue here, although I've got a lot of cases this week, so maybe I'm confusing this with something else.

[00:02:30] Speaker 02:
But I thought the issue here was whether or not you would put it on sufficient proof, right?

[00:02:37] Speaker 07:
So, Your Honor, there's two questions here, if I may.

[00:02:39] Speaker 07:
The first is claim construction, and that is that there was an improper claim construction that was applied below.

[00:02:45] Speaker 07:
The second question, I think, that you may be referring to has to do with the issue of the impact of the IDT decision that the Court reached some number of years ago and whether, under that standard, we had presented sufficient evidence.

[00:02:59] Speaker 07:
And I can address both of those issues.

[00:03:01] Speaker 02:
And does the answer to that question differ based, in your view, based on which claim, whether we adopt your derivative claim construction or not?

[00:03:10] Speaker 07:
I think it does substantially for a number of reasons, and that is that the IDT court did not perform any claim construction, let alone a derivative construction.

[00:03:21] Speaker 07:
So to understand the application of IDT, one first needs to understand... Okay, I think this is... Can you just go back?

[00:03:28] Speaker 06:
So on the claim construction... Yes.

[00:03:31] Speaker 06:
You want some

[00:03:33] Speaker 06:
smaller set of modifications than the other side wants.

[00:03:44] Speaker 06:
They want to say, I'm going to overstate this, any modification of the software or hardware for working on the system takes it out of the claim.

[00:03:54] Speaker 06:
You want to say, no, it has to be a very particular kind of

[00:03:58] Speaker 06:
Yes, Your Honor.

[00:03:59] Speaker 06:
How do you define your subset of changes that would remove something from the claim language?

[00:04:09] Speaker 07:
Your Honor, thank you for the question.

[00:04:11] Speaker 06:
It's just the same question, I think.

[00:04:13] Speaker 07:
It was, and I appreciate both questions.

[00:04:18] Speaker 07:
The answer is found in six sentences of APPX 3469 to 3470.

[00:04:24] Speaker 07:
and in that this and i'll give you a moment if you would to to find that this is the these are the remarks a company also page numbers yeah cpp x three four six nine to three four seven zero what volume is that?

[00:04:42] Speaker 06:
this is the prosecution history?

[00:04:44] Speaker 07:
it is it's okay I got it do you have it?

[00:04:51] Speaker ?:
which volume is it?

[00:04:53] Speaker 03:
it's in I think it's in volume three

[00:05:03] Speaker 03:
There's a lot of yellow on these pages.

[00:05:06] Speaker 07:
I was surprised to see the yellow as well, Your Honor.

[00:05:11] Speaker 03:
Well, you can't read us stuff that's in yellow unless you both have agreed that this isn't protected.

[00:05:17] Speaker 07:
This is not protected information.

[00:05:20] Speaker 04:
No, the yellow is from the district court's requirements that you highlight certain things to put them for.

[00:05:28] Speaker 03:
OK.

[00:05:31] Speaker 03:
That's a little inconvenient given that the yellow means something much different.

[00:05:35] Speaker 07:
Much different here.

[00:05:35] Speaker 07:
Yes, Your Honor.

[00:05:38] Speaker 07:
If I could draw your attention maybe a little bit out of order to 3470, this is where the definition actually takes place.

[00:05:46] Speaker 07:
The six sentences I was referring to begins on the page preceding.

[00:05:50] Speaker 07:
But the definition is at the top of 3470, which reads, this additional programming is required so that the point of sale device can reach network devices outside the banking network.

[00:06:04] Speaker 07:
So these were the two.

[00:06:05] Speaker 07:
And you can see, again, at the bottom of that paragraph, there's an emphasis, again, that all of the prior art references were directed to solutions outside or independent of the banking network.

[00:06:18] Speaker 07:
So those were the two choices.

[00:06:20] Speaker 07:
to use an existing standard POS device, which is required by the specification, required to use a BIN, and therefore access the banking network, or use custom software, a modification, that would allow you to perform transactions on these multifunction cards outside the banking network.

[00:06:41] Speaker 07:
Those were the two choices.

[00:06:43] Speaker 07:
And we know that this is true.

[00:06:44] Speaker 03:
So you've invented a multifunction card that doesn't require extra programming at all these terminals.

[00:06:53] Speaker 03:
Is that your view?

[00:06:54] Speaker 07:
That is in part the view.

[00:06:57] Speaker 07:
Because we're not talking about any programming again.

[00:06:59] Speaker 07:
The term on hardware.

[00:07:01] Speaker 03:
Yeah.

[00:07:01] Speaker 03:
But I'm struggling with this a little, too, about what it means for use in the card system.

[00:07:07] Speaker 03:
So I take it, first of all, you have a multifunction card.

[00:07:13] Speaker 03:
In the prior art to use those multi-function cards, or at least one of the things you referenced, required specific programming to adapt the POS terminals to work with it?

[00:07:26] Speaker 03:
Is that right?

[00:07:26] Speaker 07:
Well, the end of that sentence is to reach a processor outside the banking network.

[00:07:31] Speaker 07:
Because the two choices then were do the prior art, which was outside the banking network, and use software or hardware.

[00:07:38] Speaker 07:
They could use, for example, the Stimson closed system.

[00:07:43] Speaker 07:
But you use software or hardware to direct these transactions outside the banking network.

[00:07:49] Speaker 07:
Or you use the 608 patented system, which operated on the system, on the banking system, by using a bin.

[00:07:57] Speaker 07:
And that was mandated by column four that required the use of a bin on the POS devices of the 608 pat.

[00:08:06] Speaker 03:
I'm still trying to pin down exactly what you're arguing.

[00:08:09] Speaker 03:
Is your argument then that the point of this invention is to take a multifunction card and use the bins so that it can just be plugged into any terminal?

[00:08:19] Speaker 07:
Yes.

[00:08:20] Speaker 03:
And without any kind of special

[00:08:23] Speaker 03:
hardware for the terminal or special software for the terminal.

[00:08:26] Speaker 07:
Exactly.

[00:08:26] Speaker 07:
It wouldn't require some sort of special scanning device.

[00:08:29] Speaker 07:
It wouldn't require some sort of single function dedicated hardware, which is what the Stimson device was at column two of the patent.

[00:08:37] Speaker 07:
You're exactly right.

[00:08:39] Speaker 07:
Yes.

[00:08:40] Speaker 03:
OK.

[00:08:41] Speaker 03:
I get that.

[00:08:42] Speaker 03:
Because you've been relying on this stipulated construction for a long time.

[00:08:47] Speaker 03:
Yes.

[00:08:48] Speaker 03:
Where was the first time you ever specifically raised this notion of what

[00:08:53] Speaker 03:
This, what it means to be unmodified is not the terminals are unmodified from July 1997, but there's no specialized programming required to adapt it, hardware or programming to adapt it to this multifunction card.

[00:09:10] Speaker 07:
With respect to this case?

[00:09:11] Speaker 03:
No, ever.

[00:09:12] Speaker 03:
This construction has come up over and over again, and there's been understandings, I think, about how it's to be applied, particularly in our IDT case.

[00:09:23] Speaker 03:
Your construction doesn't necessarily seem wrong to me, but I don't know that you've made it specific enough before.

[00:09:30] Speaker 07:
Thank you, Your Honor.

[00:09:32] Speaker 07:
The answer to your question is the Green Dot, Alex Ambers' Green Dot case was the first time that I personally was aware of and made these arguments.

[00:09:42] Speaker 07:
that resolved in a settlement and the issues were not reached further.

[00:09:46] Speaker 02:
We've got data stream, we've got IDT, we've got GAP.

[00:09:51] Speaker 02:
Sure.

[00:09:52] Speaker 02:
So is Judge Hughes correct that in all of those other cases the stipulated claim construction is not the

[00:10:01] Speaker 02:
Derivative claim construction.

[00:10:03] Speaker 07:
The derivative claim construction was not reached previously.

[00:10:05] Speaker 07:
That is true.

[00:10:06] Speaker 02:
It's not a question of not reached.

[00:10:09] Speaker 02:
It wasn't presented by you or offered up by you.

[00:10:12] Speaker 02:
By Alexander.

[00:10:13] Speaker 02:
Yeah, in terms of modifying what you had stipulated to as the correct.

[00:10:17] Speaker 07:
Your Honor, I think I can say that you are correct that I am not aware of the litigation of that phrase for use in the card system previously.

[00:10:27] Speaker 07:
I would say, and I think this is important, that during claim construction in this case, we did notify Simon and Blackhawk that that was our view.

[00:10:37] Speaker 07:
And I would cite to Mr. Zatkovich's report that was provided for claim construction, particularly paragraph 52, and the pages that precede that.

[00:10:50] Speaker 07:
And if you're interested in learning about our disclosures and arguments in this case,

[00:10:56] Speaker 07:
that impact this claim construction, that's where I would initially point your honors to, that this was something that has been known very early, was our view of the phrase.

[00:11:07] Speaker 03:
If this was true, why didn't you make this argument in IDT?

[00:11:11] Speaker 03:
It seems like you were making a very similar argument there, maybe not in these specific words, but at least as I understand it now, maybe it's too simplistic, is you're just saying these cards can be used in

[00:11:25] Speaker 03:
in any kind of point of sale terminal that uses regular banking stuff.

[00:11:29] Speaker 03:
And the fact that, and this is the way I was thinking about it earlier, maybe you can tell me if this is right or not, this doesn't matter whether we've gone from card readers that you use to swipe to card readers that you insert to card readers that you use to chip for and tap now.

[00:11:45] Speaker 03:
Is that your view?

[00:11:46] Speaker 07:
That's exactly right.

[00:11:47] Speaker 07:
That's exactly right.

[00:11:48] Speaker 03:
But that doesn't seem to be the claim construction that's at least implicit in the IDT case, because your argument there seemed also to be that, you know, it's unmodified because you can just use a Visa card, which we rejected.

[00:12:04] Speaker 07:
Yes.

[00:12:05] Speaker 07:
But I'd like to unpack that a little bit, if I may.

[00:12:07] Speaker 07:
The IDT court, the problem below, certainly, and with our opposition's argument is that they're conflating the factual recitals of that case with the holding of the case.

[00:12:19] Speaker 07:
And I'd like to directly address the point you made about the standard car.

[00:12:23] Speaker 03:
I understand that point, that we didn't decide that specifically as a claim construction issue.

[00:12:28] Speaker 03:
But it seems that there's at least an inference that that was what was going on.

[00:12:32] Speaker 03:
And your arguments to avoid summary judgment were that

[00:12:36] Speaker 03:
that because this was a Visa card, it would work with any point of sale terminal, that that was good enough.

[00:12:42] Speaker 07:
In IDT?

[00:12:43] Speaker 07:
Yeah.

[00:12:44] Speaker 07:
That was after trial and the citations there are to the trial record.

[00:12:48] Speaker 03:
And the trial record showed only that the expert... Let me just ask you, if that was your argument there, and it was rejected, then isn't that your argument here today, basically?

[00:12:59] Speaker 03:
No.

[00:13:00] Speaker 03:
That because they're Visa cards?

[00:13:01] Speaker 03:
I know you have experts that say additional stuff, but the gist of it is, because it sounds like it's the gist of your invention, is these are multifunction cards that will work with any standard point of sale terminal.

[00:13:15] Speaker 07:
Thank you for the question, and this is a critical point.

[00:13:17] Speaker 03:
You know you can stop thanking us for our questions.

[00:13:19] Speaker 07:
Oh, I'm sorry.

[00:13:21] Speaker 07:
But I'm grateful to have this question, because it is something that I've been wanting to speak about.

[00:13:25] Speaker 07:
Fundamentally, it is not enough to just have a credit card device.

[00:13:33] Speaker 07:
You need to show it's unmodified, which means you need to show that it is not using custom software to direct that card traffic off of the device.

[00:13:44] Speaker 01:
Let me just say, you need to show who's got the burden here.

[00:13:47] Speaker 01:
We do, absolutely.

[00:13:50] Speaker 07:
Yes, we need to show that the card is being processed via the bin and banking network and not via the custom software that is not allowed by virtue of the construction that was or the definition provided by the applicant.

[00:14:09] Speaker 07:
That's what the difference is.

[00:14:11] Speaker 07:
IDT says it was not enough to just show that they could process standard transactions and we agree.

[00:14:17] Speaker 07:
Our burden is to show not just that they were capable of processing these transactions, but that the cards at issue were actually processed using that mechanism, the bin through the banking network, as opposed to the custom software that allowed you to process, for example, the Stimson card outside the banking network.

[00:14:41] Speaker 07:
That was our obligation, and that's what we've done.

[00:14:43] Speaker 02:
OK.

[00:14:43] Speaker 02:
We're way beyond the time, or we still have some rebuttal time.

[00:14:46] Speaker 02:
Let's hear from the others.

[00:14:47] Speaker 07:
I apologize.

[00:14:47] Speaker 07:
Thank you.

[00:14:58] Speaker 02:
Two people are arguing splitting time.

[00:15:02] Speaker 02:
Can you tell me what you're going to argue versus what the other side is going to argue?

[00:15:05] Speaker 02:
Sure.

[00:15:06] Speaker 05:
I'm up for 13 minutes.

[00:15:07] Speaker 05:
And basically, most of the issues that apply to my client, Blackhawk Network.

[00:15:12] Speaker 05:
And then there's a couple issues that apply this time.

[00:15:14] Speaker 06:
And did we really need to have two full red briefs in this case?

[00:15:19] Speaker 05:
The answer is yes, Your Honor.

[00:15:20] Speaker 05:
We had, below we each filed separate summary judgment motions because there are different products at issue.

[00:15:28] Speaker 05:
There are some overlapping products and then there are some different products.

[00:15:31] Speaker 06:
But there are not different products on appeal.

[00:15:34] Speaker 05:
No, there are different products on appeal as well.

[00:15:39] Speaker 05:
May it please the court?

[00:15:41] Speaker 05:
All the asserted claims of the 608 patent require an unmodified existing standard point-of-sale device.

[00:15:49] Speaker 05:
In order to get the 608 patent issued, Alex Ham needed to distinguish the anticipatory prior art reference Stimson.

[00:15:57] Speaker 05:
Alex Ham told this examiner that, quote, Stimson teaches the use of customized software requiring modification of existing point-of-sale devices.

[00:16:08] Speaker 05:
That for the applicant's invention, custom software is not necessary.

[00:16:12] Speaker 05:
And that, quote, existing point of sale devices can be utilized without modification.

[00:16:19] Speaker 05:
And that the invention is a, quote, great benefit over the systems of the prior art, since no additional programming is required in the device.

[00:16:27] Speaker 02:
So what is your response to the prosecution history that your friend directed us to?

[00:16:33] Speaker 05:
It's clear and unmistakable that in order to get around Stimson, the appellant here had to basically say that unmodified was something that was now in the invention.

[00:16:47] Speaker 05:
And in fact, even with these arguments, the examiner would not allow the claims without Alexander agreeing to add the word unmodified to every single independent claim via an examiner's amendment to overcome Stimson.

[00:17:02] Speaker 05:
So it was added to every claim.

[00:17:05] Speaker 05:
It wasn't there before, but in order to get around Simpson, which was anticipatory, it was added.

[00:17:10] Speaker 05:
And specifically the... We still have to determine unmodified as to

[00:17:18] Speaker 03:
with respect to what, don't we?

[00:17:20] Speaker 03:
Is your view that any kind of modification, like what I said earlier, going from a swipe system to an insert system to a chip system, even if everything else and whatever software is needed to do that, even if everything else with regard to their invention stays the same, does that bring it out?

[00:17:39] Speaker 05:
I would go with what this court said in IDT, which was, quote, no modifications were actually made to the terminal software in order to allow them to activate the car.

[00:17:50] Speaker 05:
That's the, if you wanted to paint the terminal a different color, that's okay.

[00:17:54] Speaker 03:
I admit it, but it sounds like, I mean, the stipulated language and the prosecution history sounds like they're not talking about we're gonna freeze in time a POS system with every single bit of hardware and software.

[00:18:07] Speaker 03:
What they're saying is these prior multi-function card systems required special programming.

[00:18:14] Speaker 03:
Ours doesn't.

[00:18:15] Speaker 03:
And so,

[00:18:16] Speaker 03:
you're never going to need to modify a POS terminal to use these cards.

[00:18:23] Speaker 03:
modified specifically.

[00:18:25] Speaker 03:
So to me, that sounds like individualized or specialized modification, not just the normal technological updates that happen over time that don't relate to this card system.

[00:18:37] Speaker 05:
That's correct.

[00:18:38] Speaker 05:
That's correct.

[00:18:39] Speaker 05:
It'd have to be limited.

[00:18:40] Speaker 05:
I mean, our view is that it's going to be limited to for use in the card system, which in this case are the activation of the gift cards.

[00:18:48] Speaker 03:
I'm not sure that that answered the question or that we even understand each other, because obviously if the readers, for instance, are updated from the swipe to the chip to the tap, that's updating something used in a card system, but not necessarily for their specific card system.

[00:19:08] Speaker 03:
There's a difference between, what I'm trying to get at is there a difference between

[00:19:13] Speaker 03:
generic modifications that don't specifically impact the ability of this multifunction card to work differently than specific modifications required to make this work.

[00:19:27] Speaker 03:
I know I just got way down the hole on that.

[00:19:30] Speaker 03:
But what I'm getting at is obviously these terminals have been updated over the years.

[00:19:36] Speaker 03:
And they've been updated in ways that impact everybody that uses a card, not just these multifunction cards.

[00:19:43] Speaker 03:
Does their definition in this stipulated construction only preclude modifications that relate to the specific functionality of the multi-function cards, or is it broader modifications all over that relate to just general operation of cards and terminals?

[00:20:01] Speaker 05:
I think it's the former.

[00:20:03] Speaker 03:
So it's the former, it's only specialized, individualized modifications that take them out.

[00:20:08] Speaker 03:
But then what takes them out here?

[00:20:10] Speaker 03:
They've made allegations in their expert testimony that these things, is it just that the gist of their argument is still the reason we win here is because these are just like Visa cards and they operate

[00:20:22] Speaker 03:
in an unmodified way because I thought that they pointed, that's why they lost an IDT, and they pointed to specific expert testimony that they said was more here.

[00:20:34] Speaker 05:
But the expert testimony that they used didn't apply to stipulated construction.

[00:20:38] Speaker 05:
The expert testimony was that he was trying to limit the word unmodified to either three claim functions, and then later on we were told that it was limited to four claim functions.

[00:20:47] Speaker 05:
And this was all after we filed our motion for summary judgment and after the close of expert discovery.

[00:20:52] Speaker 05:
And so the expert in this case never applied the actual construction.

[00:20:57] Speaker 05:
And in fact, in his... So let me ask you this then.

[00:21:00] Speaker 03:
If either of your accused products do operate like this, that you can just plug them in and they don't require special individualized processing, then why aren't they infringing?

[00:21:15] Speaker 05:
Well, they do require money.

[00:21:18] Speaker 05:
We brought forward all of this undisputed factual evidence that the cards could not be activated or sold.

[00:21:24] Speaker 05:
without the modifications.

[00:21:26] Speaker 03:
What kind of modifications?

[00:21:28] Speaker 05:
In order to be able to read the card, in order to be able to process it as a purchase transaction as opposed to a payment transaction, specifically with respect to these, the cards that are at issue in this case, there is a special fee that's on top of the card and the point of sale system has to recognize it.

[00:21:47] Speaker 05:
May I finish?

[00:21:47] Speaker 03:
No, I have a question.

[00:21:49] Speaker 03:
If you take your card into, I don't know what your cards do, the briefs weren't very good on the details on this stuff.

[00:21:55] Speaker 03:
If you took your card into a retail store that did not have all these modifications you talked about and tried to plug it in, it wouldn't work.

[00:22:04] Speaker 05:
Correct.

[00:22:05] Speaker 05:
Absolutely wouldn't work on this.

[00:22:06] Speaker 05:
The evidence is undisputed in that, with that perspective.

[00:22:10] Speaker 05:
They took the deposition back in 2012 in a previous one of these Alexander cases and asked the same witness back then,

[00:22:16] Speaker 05:
and asked that same witness in 2021 the same questions, and she answered it the same way, which is without these modifications, the cards would not work, the cards could not be read, the cards could not be processed.

[00:22:27] Speaker 03:
Does this derivative claim construction thing they're talking about really matter?

[00:22:30] Speaker 03:
It sounds like you, even if you agree with that,

[00:22:34] Speaker 03:
Your view is the summary judgment of no infringement was correct.

[00:22:37] Speaker 05:
Absolutely.

[00:22:38] Speaker 05:
And in fact, this derivative claim construction thing, this is not in their blue brief.

[00:22:43] Speaker 05:
It was only raised in their gray brief.

[00:22:45] Speaker 05:
And under this court's precedent, that's waived.

[00:22:48] Speaker 05:
So this whole derivative argument is waived.

[00:22:50] Speaker 05:
The ability to challenge the stipulated claim construction, they can't do that.

[00:22:56] Speaker 05:
The court's precedence is clear on that.

[00:22:59] Speaker 05:
And they don't put forward any argument at all

[00:23:02] Speaker 05:
with respect to how under whatever proposed construction, and I heard a different proposed construction today than I've heard in the briefs or even below as to what unmodified means, how under whatever their new construction is that there is infringement.

[00:23:21] Speaker 05:
I mean, under ARC, under the construction that the court, that they stipulated to,

[00:23:25] Speaker 05:
that was adopted by this court and applied in IDT, that was adopted by this court and applied in GAP.

[00:23:33] Speaker 05:
That's the construction we're dealing with here.

[00:23:36] Speaker 05:
And it's very clear that at the end of the day, that modifications made for use in the card system take you outside of the claims in this case.

[00:23:46] Speaker 05:
And in fact, we have undisputed modifications.

[00:23:49] Speaker 05:
And what they've done here in this case is exactly what they did in IDT.

[00:23:55] Speaker 05:
In IDT, you had an expert, or actually two experts, who never looked at the point of sale terminals.

[00:24:00] Speaker 05:
And in this case, you have an expert who came out and said, I didn't look at the point of sale terminals.

[00:24:05] Speaker 05:
In fact, you don't have to actually even look at the point of sale terminals to determine whether or not they're unmodified.

[00:24:12] Speaker 05:
And what Mr. Richardson has said is now, which is also a brand new argument, that the claims either require a bin or unmodified and not both.

[00:24:22] Speaker 05:
But that's reclaim 34 and claim 60.

[00:24:25] Speaker 05:
They require both a bank identification number and that the terminal be unmodified.

[00:24:31] Speaker 05:
Both requirements are in those claims.

[00:24:34] Speaker 05:
And as a result, the view from Alex Ham is that simply this court erred in IDT, and therefore we don't have to follow it.

[00:24:45] Speaker 05:
And they've now told us that, well, that was a mistake.

[00:24:48] Speaker 05:
They didn't mean to sort of say that.

[00:24:50] Speaker 05:
But as the district court found that basically their approach to IDT is as it doesn't exist, as they essentially ignored it.

[00:24:58] Speaker 05:
And under both IDT,

[00:25:00] Speaker 05:
And the GAP case, they are collaterally stopped from challenging the stipulated construction at this point.

[00:25:08] Speaker 05:
It's been used in two Federal Circuit cases, one where ultimately they're putting forward the same infringement theory that they're putting forward now, they put forward then.

[00:25:18] Speaker 05:
And then we have to talk about GAP.

[00:25:20] Speaker 05:
I mean, in GAP, this court invalidated the two asserted independent claims here, 34 and 60, and four of the dependent claims.

[00:25:31] Speaker 05:
And yet, we are still here arguing about them.

[00:25:34] Speaker 05:
And their point on GAP, which sort of blew my mind, but with respect to what they ultimately said about GAP in their brief, ultimately, is that they don't say anything about the GAP decision.

[00:25:48] Speaker 05:
I mean, I was looking at their gray brief.

[00:25:51] Speaker 05:
The table of authorities doesn't mention GAAP at all.

[00:25:54] Speaker 05:
And that's because there's no citation to or discussion about the GAAP decision of the Alexander.

[00:26:01] Speaker 05:
There's no acknowledgement regarding what this court had.

[00:26:03] Speaker 06:
Can you just describe the substance of the point you make about GAAP rather than... Sure.

[00:26:09] Speaker 05:
Ultimately, GAAP used this same construction, the unmodified construction, the stipulated construction, to find that six of the asserted claims in this case were invalidated.

[00:26:21] Speaker 06:
They were anticipated.

[00:26:23] Speaker 06:
distinction that your friend on the other side is trying to make today, one that was at issue in that decision?

[00:26:33] Speaker 05:
It was in the underlying case they had actually proposed a similar claim construction.

[00:26:39] Speaker 05:
in the Gap and Best Buy cases at Markman in that case, that was then rejected by the district court, that they did not appeal to the Federal Circuit.

[00:26:49] Speaker 05:
The Federal Circuit then used that claim construction to invalidate the same claims that we're talking about today, based upon specifically the unmodified aspect, that Alex Sam was unable to antedate

[00:27:03] Speaker 05:
the anticipatory SVS prior art that was in that particular case.

[00:27:10] Speaker 06:
You said something about this argument about the for use in the card system not being in the blue brief.

[00:27:17] Speaker 06:
I take it that we've been talking pretty much the whole morning about the section of the blue brief 42 to 44.

[00:27:29] Speaker 06:
The term unmodified refers to the limited list of claim commands.

[00:27:34] Speaker 06:
And although it's not so easy for me to parse, the opening sentence of that section specifically says we're making this argument based on the for use of applied system language.

[00:27:47] Speaker 06:
It doesn't feel new.

[00:27:48] Speaker 06:
I'm not sure what the argument is exactly, but it doesn't feel new.

[00:27:52] Speaker 05:
Sorry, it's in the blue, and this is in Alex Ham's brief.

[00:27:55] Speaker 05:
The blue brief?

[00:27:55] Speaker 06:
The blue brief, yeah.

[00:27:58] Speaker 06:
Page 42.

[00:27:59] Speaker 06:
in the parenthesis?

[00:28:04] Speaker 05:
The term unmodified refers to the limited list of claim functions?

[00:28:09] Speaker 05:
This section, your honor?

[00:28:10] Speaker 06:
Yes.

[00:28:10] Speaker 05:
Yes.

[00:28:11] Speaker 06:
Isn't that, I think that's what we've been talking about for the last half hour.

[00:28:13] Speaker 05:
Well, this is, this is, but this is not the claim construction that they stipulated to.

[00:28:17] Speaker 05:
This is not the claim construction that was used in IDT.

[00:28:20] Speaker 05:
This is not the claim construction that was used in YAP.

[00:28:22] Speaker 06:
That's a different point from, I never heard of this until the Gray Group.

[00:28:27] Speaker 06:
You said this argument was not made until the gray brief in this court.

[00:28:32] Speaker 06:
I'm looking at blue 42.

[00:28:33] Speaker 06:
It seems to me whatever this argument is, it's invoking this language.

[00:28:38] Speaker 05:
They didn't ask for a derivative construction below.

[00:28:40] Speaker 05:
They did not ask for a derivative construction in their blue brief, Your Honor.

[00:28:45] Speaker 05:
The first time that they mentioned the argument that they cited the case law for, which is the GE versus Lightning case, is in their gray brief.

[00:28:53] Speaker 05:
It's not in their blue brief, your honor.

[00:28:56] Speaker 05:
I respectfully disagree.

[00:28:58] Speaker 05:
They ultimately, before the district court, they tried to make an interpretation argument, which was they said, the stipulated construction is absolutely correct.

[00:29:09] Speaker 05:
The stipulated construction that goes all the way back to data stream is absolutely correct.

[00:29:13] Speaker 05:
But here, we want to interpret the construction differently.

[00:29:17] Speaker 06:
We get that all of the time.

[00:29:19] Speaker 06:
And sometimes in the application of a construction, an interpretation is made by the supplier, namely the Summary Judgment Court, that we treat sometimes as a claim construction issue.

[00:29:35] Speaker 05:
Well, in their blue brief, what they asked for was a new construction.

[00:29:40] Speaker 05:
They said the district court wrongly construed the unmodified.

[00:29:44] Speaker 05:
I mean, that is the first heading in the blue brief on page 26.

[00:29:53] Speaker 05:
The district court wrongly construed the unmodified term without adequately reviewing the intrinsic evidence, which excluded preferred embodiment.

[00:30:01] Speaker 06:
Right.

[00:30:01] Speaker 06:
That's one of their kind of process arguments, which are highly distracting.

[00:30:07] Speaker 06:
All these arguments about your side too, about what was said previously and what was not paid attention to and what was not in the table of authorities.

[00:30:18] Speaker 06:
There's a claim construction issue in dispute.

[00:30:23] Speaker 06:
They have a position.

[00:30:25] Speaker 06:
I'm not entirely sure I understand it.

[00:30:27] Speaker 06:
You say, no, that's wrong.

[00:30:29] Speaker 06:
And so you started, I think, fairly enough with the prosecution history, a merits point.

[00:30:37] Speaker 06:
So all of this kind of, there's a lot of noise around the only issue that makes any difference, which is, is the claim construction position that they assert wrong?

[00:30:47] Speaker 05:
Yes, the claim construction position that they present is completely wrong.

[00:30:53] Speaker 05:
It undermines the prosecution history.

[00:30:56] Speaker 03:
Can you tell me what the difference is between what you just told me the claim construction of a modified with respect to this in the use of the card system is versus what he just

[00:31:06] Speaker 03:
seemed to agree to, because it sounded like you're both saying the same thing.

[00:31:10] Speaker 05:
The first time, what he just said, it was the first time I had ever heard it.

[00:31:15] Speaker 05:
So that was his specific recitation.

[00:31:18] Speaker 03:
We both agree that with this stipulation, which is how you implement the unmodified portion, the unmodified doesn't mean any modification whatsoever.

[00:31:28] Speaker 03:
It just means specific modifications to use the specific cards.

[00:31:34] Speaker 05:
Yes.

[00:31:35] Speaker 05:
Yes, absolutely.

[00:31:37] Speaker 05:
And in fact, we have undisputed evidence, because this expert didn't look at any of the, actually, at the evidence, and he ultimately said, I don't need to look at any of the evidence.

[00:31:48] Speaker 05:
But we have undisputed evidence, and it's listed in the factual section of our brief, which goes through and talks about the money spent, the amount of weeks it took to modify the software on those point-of-sale terminals in order to make them work.

[00:32:02] Speaker 05:
And so it's a question of IDT was a question of they didn't actually put on any evidence as to whether or not it was unmodified.

[00:32:12] Speaker 05:
Here, we have all of the evidence to show that, in fact, it was modified.

[00:32:17] Speaker 05:
And the only thing you have on the other side is an expert who has admittedly not adopted and not used the claim construction that was stipulated by the parties.

[00:32:27] Speaker 06:
I think you said this, but just to clarify for me,

[00:32:32] Speaker 06:
You had testimony that the card reader itself wouldn't read the card without modifying the software resident on the reader, not that it read it, sent it upstream, and the upstream system said, what the heck is this?

[00:32:47] Speaker 05:
I don't know what to do with it.

[00:32:48] Speaker 05:
Correct.

[00:32:49] Speaker 05:
Correct.

[00:32:50] Speaker 05:
Our descriptions of the facts in this case are on pages.

[00:33:15] Speaker 05:
Starting on page 26 of our red brief, all the way through 32.

[00:33:21] Speaker 05:
And yes, with respect to reading the card, with respect to understanding what was on the card, with respect to specifically this additional fee that has to be processed with respect to the cards.

[00:33:37] Speaker 05:
I mean, there's a specifically on page 28,

[00:33:40] Speaker 05:
It says, at the bottom, DBS will create an enhancement that will intercept the item encoded on the BHN card's MSR Track 1 and pass that to the transaction register that the item is in the sale.

[00:33:51] Speaker 05:
That's a reading of the card, specifically.

[00:33:53] Speaker 05:
I mean, ultimately, what was this patent about?

[00:33:57] Speaker 05:
This patent was about putting a bin, which is a bank identification number, that's the same number that you'd have on a credit card, on a gift card, being able to swipe it at the point of sale, and it magically gets to where it's going to go.

[00:34:11] Speaker 05:
The ultimate problem with that is that a credit card is a payment card.

[00:34:15] Speaker 05:
You're using it, $20, let me swipe it, and the payment goes off.

[00:34:20] Speaker 05:
But this is a gift card, and you have to activate the gift card, which it turns out when you buy a gift card, you're purchasing the gift card.

[00:34:29] Speaker 05:
You're not using the gift card to pay for the transaction.

[00:34:32] Speaker 05:
And so the point of sale terminal has to know that this is not a payment transaction.

[00:34:36] Speaker 05:
but that this is a purchase transaction.

[00:34:38] Speaker 05:
And how much money do you want to put on the gift card?

[00:34:40] Speaker 05:
Well, you have to program the point of sale terminal to understand that.

[00:34:43] Speaker 05:
How much additional money do you have to pay for the right to buy the card?

[00:34:47] Speaker 05:
There's a special fee when you buy a Visa branded gift card, like $3.99 or $4.99.

[00:34:52] Speaker 05:
You have to add that too.

[00:34:54] Speaker 05:
And so ultimately, the point of sale terminal has to know all that.

[00:34:56] Speaker 05:
And it has to know that it has to send the transaction.

[00:35:00] Speaker 05:
Ultimately not over the banking network, but to the actual processor who's going to activate the gift card, which again is not a payment transaction.

[00:35:08] Speaker 06:
And so it's a completely different... Are these cards activated once or with every transaction?

[00:35:13] Speaker 05:
It's activated once and then ultimately the card gets used later on like a credit card because it has a bid number on it and it can be used to pay for things at a standard credit card terminal.

[00:35:25] Speaker 05:
But the key is and these claims all require activation.

[00:35:28] Speaker 05:
This is the first transaction.

[00:35:30] Speaker 05:
And so that activation transaction turns out is a very specialized transaction.

[00:35:36] Speaker 05:
And if you look on page 32 of our red brief, we even have an excerpt from the manual that Blackhawk produces for its customers for when they want to sell these cards.

[00:35:47] Speaker 05:
On top of it, it says, in big blue letters, point of sale application changes.

[00:35:50] Speaker 05:
The partner will create and maintain the necessary POS application changes required to support the Blackhawk network gift card program.

[00:35:58] Speaker 05:
So the changes that the modifications that the parties have made is, you know, 100% clear in terms of, in terms, and undisputed.

[00:36:08] Speaker 05:
And the only thing that they can point to

[00:36:10] Speaker 05:
is an expert who puts forward the same opinion that the IDT experts put forward, which was rejected already by this court.

[00:36:19] Speaker 05:
And, you know, Federal Circuit cases have consequences.

[00:36:22] Speaker 05:
They have to have meaning.

[00:36:24] Speaker 05:
If this court as an IDT has decided in a precedential decision that this is how you construe the unmodified construction and this is what you need to prove it, then the district court follows that.

[00:36:36] Speaker 05:
Right, they follow that and we... I think we need to end it.

[00:36:40] Speaker 02:
You're away over time and we'll try to restore something.

[00:36:47] Speaker 02:
Thank you, Your Honor.

[00:36:59] Speaker 00:
Mr. Hoffman has already explained the defendant's position on why the claim construction applied by the district court below was correct and should be affirmed on appeal or rather, in our view, affirmed again.

[00:37:14] Speaker 00:
Do you have anything to add?

[00:37:15] Speaker 00:
I would like to add just a couple of points, if I may.

[00:37:17] Speaker 00:
First, I wanted to clarify Your Honor's question about the scope of the products that are at issue in this case.

[00:37:22] Speaker 00:
Appellant's blue brief did say that at issue in this appeal are Simon cards and prepaid cards processed by Blackhawk.

[00:37:28] Speaker 00:
On behalf of Simon, there are additional cards at issue.

[00:37:30] Speaker 00:
Simon has cards that were provided by American Express and US Bank.

[00:37:35] Speaker 00:
And Blackhawk, I understand, has cards called the pay power cards that are not anything to do with Simon.

[00:37:40] Speaker 00:
So there were different cards at issue.

[00:37:42] Speaker 06:
And was there different expert evidence about the requirement

[00:37:50] Speaker 06:
or altering the point of sale software or hardware so that the cards could be read different evidence for the different classes of cards that you just described.

[00:38:02] Speaker 00:
Alex Sam had the same expert.

[00:38:04] Speaker 00:
Simon and Blackhawk had different infringement experts, but the fact witnesses were different for Simon.

[00:38:09] Speaker 00:
And Blackhawk, for example, Blackhawk's pay power cards had different witnesses that testified than the ones that were talking about the Simon cards.

[00:38:16] Speaker 00:
So there was different factual evidence as well.

[00:38:18] Speaker 06:
And you had for your non-Blackhawk cards some kind of evidence?

[00:38:25] Speaker 00:
So the Simon... I would say it's the same kind of evidence about all the many modifications

[00:38:30] Speaker 00:
The Simon witness was the same, but then there were witnesses from US Bank and American Express who were also deposed as well.

[00:38:37] Speaker 00:
So the evidence was different.

[00:38:38] Speaker 00:
Those witnesses had nothing to do with Blackhawk.

[00:38:42] Speaker 00:
And I would just like to make two points, if I may, about GAP, which we sort of started to talk about but didn't get very far down the road.

[00:38:47] Speaker 00:
As Ms.

[00:38:49] Speaker 00:
Rafa mentioned,

[00:38:50] Speaker 00:
to all of the assertive independent claims and many of the dependent claims were invalidated in GAAP.

[00:38:56] Speaker 00:
And I will say that Alexam, in its briefing here, does not dispute that the other dependent claims materially alter the question of invalidity at all.

[00:39:04] Speaker 00:
If you look at the gray brief at page 32, it only says the claims were not a part of GAAP.

[00:39:09] Speaker 00:
And for the claims that were in GAAP, Alexam has never claimed that they didn't have a full and fair opportunity to litigate those claims.

[00:39:15] Speaker 00:
They just claimed that they were able to, that those claims disappeared as a result of something they did in the court below.

[00:39:20] Speaker 00:
I'm happy to answer any other specific questions, Simon.

[00:39:23] Speaker 02:
Thank you.

[00:39:32] Speaker 07:
Thank you very much, Your Honor.

[00:39:35] Speaker 07:
There are a number of issues that I'd like to unpack.

[00:39:37] Speaker 07:
One of the ones that I'd like to respond to is Judge Toronto and Judge Hughes in particular, who raised issues with respect to understanding what our position really was on claim construction and on this concept of generic versus unique changes.

[00:39:51] Speaker 07:
Fundamentally, the issue is that not all changes to the POS device, that is, not any changes, are disqualifying changes.

[00:40:00] Speaker 07:
We know that, and I'd like to just point this out very briefly from Combs.

[00:40:04] Speaker 06:
Everybody agrees.

[00:40:05] Speaker 06:
Combs, Warren, Combs.

[00:40:07] Speaker 06:
Interface, whatever that means exactly.

[00:40:10] Speaker 06:
I thought it was agreed.

[00:40:11] Speaker 06:
You can make interface.

[00:40:13] Speaker 07:
That's not even, the non-infringement arguments are very complex and would be reviewed here for the first time with a new construction.

[00:40:22] Speaker 07:
And the issue is that some of the points... What new construction?

[00:40:25] Speaker 03:
You both just got up there and said that you agree to the same thing.

[00:40:30] Speaker 07:
We agree to the same language.

[00:40:32] Speaker 07:
We don't agree that it means the same thing.

[00:40:34] Speaker 07:
They say that for use in the card system means, for example, having to configure the POS device for use.

[00:40:42] Speaker 07:
Well, that's not for use in the 608 card system.

[00:40:45] Speaker 07:
That's to use the device.

[00:40:47] Speaker 07:
So for use in the card system must mean the claimed functions of the 608 patent, which are sending and receiving information to the processing hub.

[00:40:58] Speaker 07:
and swiping and scanning.

[00:40:59] Speaker 07:
That is entry of this.

[00:41:01] Speaker 06:
The phrase the card system, which is a reference to something antecedent, what is it a reference to?

[00:41:10] Speaker 07:
It is with reference to the 608 patented card system.

[00:41:14] Speaker 07:
That is this card system.

[00:41:15] Speaker 07:
That is the only way it makes sense.

[00:41:20] Speaker 07:
I'm sorry.

[00:41:20] Speaker 07:
And the reason is that these are the claims of this patent that circumscribe this invention.

[00:41:28] Speaker 06:
There was discussion toward the end of Mr. Hoffman's argument about these claims being about activation.

[00:41:37] Speaker 06:
Is the process of activating one of these cards a use in the card system?

[00:41:44] Speaker 07:
The process of activating is a use of the card system.

[00:41:51] Speaker 07:
However, the POS device, for it to be unmodified, what we look to because of pages 3469 to 3470, which is the remarks, and column four and five of the patent itself, what we're looking to is, is that, are we sending something off of

[00:42:09] Speaker 07:
the POS device, the standard POS device, and are we sending it somewhere it's not supposed to go?

[00:42:14] Speaker 07:
Are we sending it off the network?

[00:42:17] Speaker 07:
That was the only concern, and that is the only reason that unmodified was added.

[00:42:22] Speaker 07:
We can see that from the language of page 3470.

[00:42:26] Speaker 07:
The software allows you, the custom software allows you to process the Stimson card

[00:42:33] Speaker 07:
on the Stimson processor and never go and bypass the banking network.

[00:42:39] Speaker 07:
That was the only reason that unmodified was added.

[00:42:43] Speaker 07:
And it's really important for you to understand.

[00:42:45] Speaker 03:
Wait, are you now saying that unmodified me, all you meant by that was that it, I don't even understand this argument.

[00:42:54] Speaker 03:
This sounds like another new argument to me.

[00:42:56] Speaker 03:
Off the system?

[00:42:58] Speaker 03:
Why would you need to use unmodified to say off the system?

[00:43:03] Speaker 07:
Because, Your Honor, the unmodified device was on the system.

[00:43:07] Speaker 03:
But as we spent a lot of time talking about with you and with your friend,

[00:43:12] Speaker 03:
I thought unmodified meant that you didn't have to make specific changes to the POS device to use your card.

[00:43:21] Speaker 03:
Nothing on that has anything to do with it, whether it's on the system or off the system.

[00:43:25] Speaker 03:
It's whether you have to make individualized modifications to use the specific card system.

[00:43:31] Speaker 03:
And yours you don't, and theirs they say they do.

[00:43:35] Speaker 07:
I think we're very close, but we're arguing about an issue that is really super critical, which is that the... I'm sorry.

[00:43:42] Speaker 03:
If you're trying to say off the system is now somewhere in this claim construction, you're really too late.

[00:43:50] Speaker 07:
Your Honor, I'm not saying anything.

[00:43:52] Speaker 07:
I'm merely quoting what the inventor said, one, but I'm talking about the impact on for use in the card system must be... Where did you ever argue that

[00:44:02] Speaker 03:
in the card system met, it excluded off the system stuff.

[00:44:07] Speaker 07:
Well, Your Honor, on several occasions, one of them we were criticized for saying that the construction excluded closed systems.

[00:44:18] Speaker 07:
That's off the network.

[00:44:20] Speaker 07:
That argument, perhaps you'll recall, involved the Stimson disclosure at the bottom of Columns 1 and the top of Columns 2.

[00:44:26] Speaker 03:
Let me ask you this.

[00:44:27] Speaker 03:
If we reject this off the system stuff, and the construction is

[00:44:32] Speaker 03:
As you stipulated to, we read in the card system to mean the modifications that are excluded are ones that are individualized to be able to use a specific card product.

[00:44:45] Speaker 03:
And their representations that in order, at least for the activation, maybe the use of it after activation doesn't require modifications, but the use or the activation requires modifications, then their card doesn't infringe, does it?

[00:45:01] Speaker 07:
Your Honor, it does.

[00:45:02] Speaker 07:
And we're just missing each other, which is that it's the claimed functions that have to be unmodified.

[00:45:09] Speaker 03:
Is activation not one of your claimed functions?

[00:45:12] Speaker 07:
Your Honor, if you're required... That's a yes or no.

[00:45:15] Speaker 03:
Is activation one of your functions or not?

[00:45:18] Speaker 07:
Not as the question stated, no.

[00:45:20] Speaker 07:
Because the reason is that the... Why?

[00:45:25] Speaker 03:
Is there no activation in any of these claims?

[00:45:27] Speaker 07:
The reason is, is that there are some modifications, perhaps, some software, Your Honor, that allows you, that you're required to do, to perform for all cards.

[00:45:39] Speaker 07:
So it's not for use in the card system.

[00:45:41] Speaker 07:
It is merely to use the POS device.

[00:45:44] Speaker 07:
And I'm sorry if I've added confusion to this.

[00:45:46] Speaker 07:
I certainly didn't mean to, but the key

[00:45:48] Speaker 07:
The key takeaway here is that the phrase for use in the card system refers directly to the claimed functions and that it's modifications to those claimed functions that would be unique to the card and not generic to all cards that would be disqualified.

[00:46:06] Speaker 07:
Because if they are generic to all cards, they are not for use in the card system, they're merely for use in the system.

[00:46:15] Speaker 07:
And that reads out the import of this.

[00:46:19] Speaker 07:
May I briefly comment on GAAP, if the Court is interested?

[00:46:23] Speaker 07:
Just a couple sentences, please.

[00:46:26] Speaker 07:
The matter isn't properly before the Court.

[00:46:28] Speaker 07:
It wasn't the matter of... It wasn't cross-appealed.

[00:46:31] Speaker 07:
So under Federal Circuit Rule 3, it's not here.

[00:46:35] Speaker 07:
The last... How did they cross-appeal?

[00:46:37] Speaker 03:
They won.

[00:46:39] Speaker 07:
Well, they're seeking to expand their rights below, Your Honor.

[00:46:41] Speaker 07:
And they're seeking to expand their rights by

[00:46:44] Speaker 07:
They have a judgment of non-infringement, but they're seeking to expand their rights to include a finding of infelidity.

[00:46:49] Speaker 07:
And my understanding of the notes to Federal Circuit Rule 3 is that they were required to cross-appeal.

[00:46:56] Speaker 07:
There's also substantive defects in their arguments, if Your Honor is inclined to discuss them.

[00:47:05] Speaker 02:
Thank you.

[00:47:06] Speaker 02:
Thank you.