In Xerox Corp. v. Bytemark, Inc.,1 the Director of the U.S. Patent and Trademark Office made precedential a prior decision of the Patent Trial and Appeal Board (the Board) over when an expert declaration from an inter partes review (IPR) should be afforded little weight. In particular, the Board held that Xerox's declaration should be discounted because it merely offered conclusory assertions without underlying factual support and repeated, verbatim, the petition's conclusory arguments.
Xerox Corp. filed a petition for an IPR of claims 1–16 of U.S. Patent No. 10,360,567 B2 (the '567 patent) owned by Bytemark, Inc. The '567 patent, titled "Method and System for Distributing Electronic Tickets with Data Integrity Checking," was directed to tickets obtained electronically and stored on a user's device, such as a mobile phone. When the ticket was submitted, it was verified through examination of a visual object that the examiner could observe without scanning it. Specifically, when the time came to submit the ticket, the venue could choose the specific visual indicator as the validation visual object. In addition, the validation of the visual object could be used for data integrity checking to determine whether the user's device was improperly altered.2
Xerox challenged claims 1–16 of the '567 patent. Claim 1 recited the following:
1. A mobile ticketing system for detecting fraudulent activity of tickets using data integrity, comprising:
a mobile device in communication with a server;
a server adapted to receive authentication data for a user account from the mobile device via a data network, and transmit data in the form of a ticket payload that contains code to the mobile device embodying a pass, wherein the pass includes a validation visual object that a ticket taker can rely on as verification of the pass without using a scanning device and wherein the validation visual object is not accessible until a time selected to be close to the point in time where the ticket has to be presented;
wherein the server is further configured to:
receive the pass with the data from the mobile device and determine if there is any mismatch in the received data of the pass by comparing the received data with the data transmitted;
block the user account in an event [of] the received data is mismatched with the transmitted data and detected as a fraudulent activity; and
determine the occurrence of the fraudulent activity associated with the user account in connection with the mobile ticketing system and store in a data record associated with the account a data value indicating the fraudulent activity, and in dependence on the data value indicating fraudulent activity, the code in the ticket payload makes the pass, including the validation visual object, no longer available on the device.3
Xerox alleged that the contested claims were unpatentable based on the prior art Terrell, WO 2009/141614 A1 (pub. Nov. 26, 2009), and Ritter, US 7,114,179 B1 (Sept. 26, 2006). Xerox submitted the declaration of Dr. Mark Jones in support of its unpatentability grounds. Xerox contended that claims 1–6, 8–10 and 12–16 would have been obvious over Terrell and Ritter or the knowledge of a person of ordinary skill in the art (POSITA). Claim 1 was independent and claims 2–6, 8–10 and 12–16 depended, directly or indirectly, on claim 1.
Terrell disclosed an electronic ticket that included an eye-readable image shown on a mobile device to be used for inspection and a machine-readable code providing a unique ticket number to validate the ticket. Ritter was directed to ordering, loading and using tickets for admission, such as access to public transportation.4
On appeal, the court explained the overall test for obviousness as follows:
A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed [...] if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. [...] The underlying factual considerations include the scope and content of the prior art, the differences between the prior art and the claimed invention, the level of ordinary skill in the art, and any relevant secondary considerations of non-obviousness, including commercial success of the patented product or method, a long-felt but unmet need for the functionality of the patented invention, and the failure of others who have unsuccessfully attempted to accomplish what the patentee has achieved.5
Independent claim 1 indicated that the server was constructed to store in a data record a data value corresponding to a user account signifying a fraudulent activity. The Board observed that Terrell disclosed that after fraudulent activity was detected, the buyer of the ticket could be blocked from additional purchases or tracked in connection with their potential fraud. Xerox contended that a POSITA would recognize that the blocking function would necessitate storing blocking data in a data record corresponding to that user's account.6
Bytemark countered that Xerox's petition did not demonstrate that the Terrell/Ritter prior art combination showed the storing of a data value signifying a fraudulent transaction. Bytemark also contended that Xerox's argument and expert declaration that a POSITA understanding would have found obvious the use of a data value to indicate fraudulent activity was merely conclusory.
The court agreed and explained that Xerox failed to produce adequate evidence to support the expert declaration. Specifically, the court noted that Xerox's only evidence used to show that blocking the purchaser would necessitate storing the blocking in a record was the opinion of its declarant, Jones. The court noted that it reviewed this excerpt from Jones' declaration and that it only repeated, verbatim, this summary statement regarding the POSITA. According to the court:
Dr. Jones does not cite to any additional supporting evidence or provide any technical reasoning to support his statement. Thus, the cited declaration testimony is conclusory and unsupported, adds little to the conclusory assertion for which it is offered to support, and is entitled to little weight.7
The court explained that this was "particularly problematic in cases where, like here, expert testimony is offered not simply to provide a motivation to combine prior-art teachings, but rather to supply a limitation missing from the prior art."8
Therefore, the court was not convinced that Xerox adequately proved that claim 1, as well as dependent claims 2–6, 8–10 and 12–16, would have been obvious over Terrell and Ritter, and refused to institute an IPR of these claims.
Lessons Going Forward
This decision, which the Director made precedential, puts patent litigants and patent owners on notice that the Board will be closely scrutinizing IPR petitions, including aspects of the petition that set forth the prior art arguments. For declarations submitted in support of the invalidity grounds, the Board will examine them for technical details, explanation or statements supporting why the expert determined that the feature in question was, for example, present, required or would have been obvious.
Patent litigants should take care when preparing IPR petitions to ensure that expert declarations include specific facts/technical details that can be relied on to show specific claim features were in the prior art. Patent owners should carefully review the petitions for gaps in the prior art as potential defenses to have the petition rejected in the first instance or during the proceeding/written opinion.
Footnotes
1. Xerox Corp. v. Bytemark, Inc., IPR2022-00624, Paper 9, 2022 WL 3648989 (PTAB Aug. 24, 2022) (designated precedential Feb. 10, 2023).
2. Id., slip op. at 3–4.
3. Id., slip op. at 6.
4. Id., slip op. at 10.
5. Id., slip op. at — (citations and quotation marks omitted).
6. Id., slip op. at 12.
7. Id., slip op. at 15.
8. Id., slip op. at 16.
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