Apple Inc. v. Fintiv, Inc.

Trials@uspto.gov Paper 15
571-272-7822 Date: May 13, 2020
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
APPLE INC.,
Petitioner,
v.
FINTIV, INC.,
Patent Owner.
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Before WILLIAM M. FINK, Vice Chief Administrative Patent Judge, and
LINDA E. HORNER and LYNNE E. PETTIGREW, Administrative Patent
Judges.
HORNER, Administrative Patent Judge.
DECISION
Denying Institution of Inter Partes Review
35 U.S.C. § 314, 37 C.F.R. § 42.4
I. INTRODUCTION
Petitioner, Apple Inc., filed a Petition requesting inter partes review
of claims 11, 13, 14, 16‒18, and 20‒25 of U.S. Patent No. 8,843,125 B2
(Ex. 1001, “the ’125 patent”). Paper 1 (“Pet.”). Patent Owner, Fintiv, Inc.,
filed a Preliminary Response. Paper 10 (“Prelim. Resp.”). In its Preliminary
7/13/2020

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Response, Patent Owner requests that the Board apply its discretion under
35 U.S.C. § 314(a) to deny institution of the requested proceeding due to the
advanced state of a parallel district court litigation, in which the same issues
have been presented and trial has been set for November 16, 2020. Prelim.
Resp. 22‒26 (citing NHK Spring Co. v. Intri-Plex Techs., Inc., IPR2018-
00752, Paper 8 (PTAB Sept. 12, 2018) (precedential, designated May 7,
2019)). Although Petitioner addressed the issue briefly in the Petition, at
that time no trial date had been set. See Pet. 7. In light of the change in
status of the parallel proceeding, the Board ordered supplemental briefing on
the issue of discretionary denial under 35 U.S.C. § 314(a) to give Petitioner
an opportunity to respond. Paper 11. This Order, which is now
precedential, discussed the factors relevant to the Board’s decision on
whether to apply its discretion under 35 U.S.C. § 314(a) to deny institution.
Id. (“Order” or “Precedential Order”). Petitioner filed a Reply to Patent
Owner’s Preliminary Response to address the issue of discretionary denial.
Paper 12 (“Reply”). Patent Owner filed a Sur-Reply to Petitioner’s Reply.
Paper 13 (“Sur-Reply”).
Upon consideration of the parties’ briefing, and for the reasons
explained below, we exercise our discretion under 35 U.S.C. § 314(a) and
deny institution of inter partes review.
II. BACKGROUND
A. Real Parties in Interest
Apple Inc. identifies itself as the real party-in-interest. Paper 1, 4.
Fintiv, Inc. identifies itself as the real party-in-interest. Paper 4, 1.
B. Related Matter
Petitioner and Patent Owner identify the following related matter:
Fintiv, Inc. v. Apple Inc., Case No. 6:18-cv-00372, filed in the United States

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District Court for the Western District of Texas on December 21, 2018.
Paper 1, 4; Paper 4, 1.
C. The ’125 Patent
The ’125 patent relates to management of virtual cards stored on
mobile devices. Ex. 1001, 1:25‒26. Specifically, the ’125 patent “provides
a mobile device to store a mobile wallet application and a wallet
management system to store corresponding wallet application information.”
Id. at 2:55‒58. The patent also provides a method for provisioning a wallet
application, a contactless card applet, a wallet management applet, and a
widget, and a method for synchronizing a mobile wallet application with the
wallet management system. Id. at 2:58‒63.
Figure 1 below shows a mobile wallet system according to the ’125
patent.

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Figure 1 is a system diagram of a mobile wallet system and associated
integration. Ex. 1001, 4:44‒45. As shown in Figure 1, the mobile wallet
system includes mobile device 100 and wallet management system (WMS)
110. Id. at 4:48‒49. WMS 110 is supported by trusted service manager
(TSM) system 120, mobile network operator 130, and service provider 140.
Id. at 4:48‒51.
Figure 2 below shows installation of a wallet application on a mobile
device.
Figure 2 is a system diagram illustrating a system and method for
installing a mobile wallet application on the mobile device and correlating
wallet management applet in the secure element (SE) of the mobile device.
Id. at 5:49‒52.

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The ’125 patent also describes that the system can dynamically filter a
list of mobile widget applications that are available for installation based on
corresponding mobile device attributes. Id. at 10:9‒12, Fig. 4. Specifically,
rule engine 116 of WMS 110 may be used to display to mobile device 100 a
filtered list of downloadable applications. Id. at 10:18‒26. Downloadable
applications include contactless card applets 23 housed in TSM system 120.
Id. at 10:35‒36. The ’125 patent describes that “by providing an active
dynamic filtering mechanism at the TSM system 120 level, all of the parties
involved in such transaction need to make only a general request to the TSM
system 120 to access and to provide customer specific services.” Id. at
10:63‒67.
The ’125 patent also describes that the system synchronizes mobile
wallet application 24 in mobile device 100 with TSM 120. Id. at 11:5‒7,
Fig. 5. Specifically, TSM system 120 stores the master configuration of
mobile wallet application 24, which may be changed by service providers
from time-to-time. Id. at 11:13‒18. When the user logs into mobile wallet
application 24, the application checks with TSM system 120 for any
modifications to the wallet configuration since the last login by the user. Id.
at 11:35‒39. If updates are needed, the user will be prompted to make the
update. Id. at 11:48‒50. While mobile wallet application 24 is active, any
modifications made in the application itself will be updated in WMS 110.
Id. at 11:54‒57.

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D. Challenged Claims
The Petition challenges claims 11, 13, 14, 16‒18, and 20‒25. Of
these, claims 11, 18, and 23 are independent. Claim 11, which is illustrative
of the subject matter at issue, is directed to a method of provisioning a
contactless card applet and is reproduced below.
11. A method for provisioning a contactless card applet in a
mobile device comprising a mobile wallet application, the
method comprising:
activating the mobile wallet application;
connecting to a Trusted Service Manager (TSM) system;
synchronizing the mobile wallet application with the TSM
system;
displaying a contactless card applet based on attributes of
the mobile device;
receiving a selection of a contactless card applet;
retrieving a widget and a wallet management applet
(WMA) corresponding to the contactless card applet; and
provisioning the selected contactless card applet, the
widget, and the WMA.
Ex. 1001, 13:16‒30. Independent claim 18 is directed to a wallet
management system. Id. at 14:7‒23. Independent claim 23 is directed to a
mobile device. Id. at 14:38‒53.

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E. Asserted Grounds of Unpatentability
Petitioner contends that the challenged claims are unpatentable based
on the following grounds:
Claim(s) Challenged 35 U.S.C. § Reference(s)/Basis
11, 13, 14, 16, 17, 23‒25 103(a)1 Aiglstorfer2, Buhot3, Wang4
18, 20‒22 103(a) Aiglstorfer, Wang
III. DISCRETIONARY DENIAL
A. Legal Standards
In exercising the Director’s discretion under 35 U.S.C. § 314(a), the
Board may consider “events in other proceedings related to the same patent,
either at the Office, in district courts, or the ITC.” Consolidated Trial
Practice Guide November 20195 (“TPG”) at 58. The recent Precedential
Order in this case sets forth factors that balance considerations of system
efficiency, fairness, and patent quality when a patent owner raises an
argument for discretionary denial due to the advanced state of a parallel
proceeding. Order 5‒6. These factors include:
1. whether the court granted a stay or evidence exists that one
may be granted if a proceeding is instituted;
1 The Leahy-Smith America Invents Act (“AIA”), Pub. L. No. 112-29, 125
Stat. 284, 285–88 (2011), revised 35 U.S.C. §§ 102, 103 effective March 16,
2013. Because the challenged patent was filed before March 16, 2013, we
refer to the pre-AIA version of §§ 102, 103.
2 U.S. Patent Application Publication No. US 2010/0138518 A1, published
June 3, 2010. Ex. 1004.
3 U.S. Patent Application Publication No. US 2010/0190437 A1, published
July 29, 2010. Ex. 1005.
4 Chinese Patent Application Publication No. CN 101459902A, published
June 17, 2009. Ex. 1008. We refer to the English language translation
provided by Petitioner, and submitted as Exhibit 1009.
5 Available at https://www.uspto.gov/TrialPracticeGuideConsolidated.

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2. proximity of the court’s trial date to the Board’s projected
statutory deadline for a final written decision;
3. investment in the parallel proceeding by the court and the
parties;
4. overlap between issues raised in the petition and in the
parallel proceeding;
5. whether the petitioner and the defendant in the parallel
proceeding are the same party; and
6. other circumstances that impact the Board’s exercise of
discretion, including the merits.
Id. See also NHK, Paper 8 at 20 (considering an earlier trial date as a factor
in favor of discretionary denial).
As explained in detail in the Order, the Board examines these factors,
which relate to whether efficiency, fairness, and the merits support the
exercise of authority to deny institution. Id. at 6, 9. In evaluating the
factors, the Board takes a holistic view of whether efficiency and integrity of
the system are best served by denying or instituting review. Id.
B. Facts
Fintiv filed its original complaint in the Western District of Texas on
December 21, 2018, and served Apple with the complaint on January 4,
2019. Ex. 3002 (docket #1, 8). Fintiv served its initial asserted claims and
infringement contentions on Apple on May 20, 2019. Ex. 2029. Shortly
thereafter, the District Court held a case management conference, and
subsequently issued a scheduling order. Ex. 2023. The scheduling order set,
among other things, a due date for Apple to serve preliminary invalidity
contentions on July 25, 2019 and a Markman Hearing for November 8,
2019. Id. at 1‒2.

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Between the time of the case management conference and the
scheduled Markman Hearing, Apple filed the present Petition on October 28,
2019.6 Paper 1. This Petition was filed five months after Apple received
Fintiv’s Initial Infringement Contentions and ten months after Apple was
served with Fintiv’s complaint. At the time of filing the Petition, the parties
were in the midst of preparations for the Markman hearing, and initial
contentions had been exchanged, but fact discovery had not yet begun, and
the District Court had not yet set a trial date. Ex. 2023.
Shortly thereafter, the District Court held a Markman hearing and, a
few weeks later, issued a claim construction order. Exs. 2009, 1027. At the
Markman hearing, the District Court also set a trial date of November 16,
2020. Ex. 2009. Fact discovery then began on November 14, 2019.
Ex. 2023, 2.
Meanwhile, Apple served Fintiv with its final invalidity contentions.
Ex. 1045 (filed Jan. 17, 2020). The parties are currently in the midst of
ongoing discovery. Exs. 1034, 1039, 1040, 1041, 1043, 2028. Many of the
documents and witnesses involved in this case are located in the Northern
District of California, which has been under a shelter-in-place order since
March 16, 2020. Ex. 1042.
6 During this time, Apple sought to transfer venue. Ex. 2037 (seeking, in
part, to transfer the case to the Northern District of California). The District
Court denied Apple’s motion to transfer the case to California. Ex. 3002
(docket # 65, 73) (denying, in part, motion on September 13, 2019).
The U.S. Court of Appeals for the Federal Circuit denied Apple’s petition
for a writ of mandamus. Ex. 2026 (denying petition on Dec. 20, 2019). See
also Ex. 2027 (denying Apple’s petition for rehearing en banc on March 30,
2020).

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The District Court recently issued several orders related to the
COVID-19 pandemic. Among others, the District Court issued a Standing
Order Regarding Post-Markman Patent Cases, in which the Court indicated
its willingness to “consider all reasonable adjustments to the current
scheduling orders to allow the parties to complete discovery, and have
adequate time to complete expert reports, take expert depositions, and file
appropriate motions.” Ex. 3002 (docket #122).
On April 23, 2020, the District Court granted a joint motion to extend
the schedule, resetting the jury trial to begin on March 8, 2021, and
postponing the due dates to complete fact and expert discovery and the
deadline for filing dispositive motions. Ex. 1049 (Agreed Amended
Scheduling Order).
C. Policy Considerations
1. Policy Arguments
Before turning to the factors, Petitioner argues, as an overall matter of
policy, that we should not deny institution based on the state of a parallel
district court proceeding. Reply 1‒5. Petitioner argues that taking into
account the state of a parallel district court proceeding in a decision on
institution negates the statutorily provided one-year filing period, encourages
forum shopping, improperly bases the decision on trial dates that are often
moving targets,7 and contravenes Congressional intent of the America
Invents Act, which was based on district courts granting stays. Id.
7 In addition to its policy arguments, Petitioner argues that the Board should
take judicial notice of effect of the COVID-19 pandemic and the disruption
it is causing to trial schedules. Reply 4. Since the filing of Petitioner’s
supplemental brief, the parties have agreed to an amended scheduling order
that renders moot this argument. We address the amended scheduling order
below in our analysis of the factors.

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Relatedly, Petitioner also argues that NHK did not hold that the advanced
state of a parallel case, alone, is sufficient reason to deny. Id. at 5.
Patent Owner argues that the district court trial date is not dispositive,
and is used in conjunction with other factors to assess and promote
efficiency and fairness in inter partes review proceedings. Sur-Reply 7.
Patent Owner asserts that the factors in this case demonstrate that
discretionary denial will promote efficiency and fairness. Id. Patent Owner
also argues that forum shopping is not an issue in this case, noting that the
District Court denied Apple’s motion to transfer the case to another district.
Id. at 9‒10.
2. Analysis
We have addressed Petitioner’s policy arguments in our Precedential
Order. As discussed there, a parallel proceeding in an advanced state
implicates considerations of efficiency and fairness, which can serve as an
independent reason to apply discretion to deny institution. See Order 3. As
to Petitioner’s concern about forum shopping, it always has been the case
that some district courts move faster than others, and patent owners seeking
to enforce patents may be inclined to file suit in a district that moves
relatively quickly. It is up to a district court to determine whether adequate
ties exist between the defendant and the selected district. As noted by Patent
Owner, in this case, the District Court determined that venue was proper. To
Petitioner’s point regarding the time-bar of 35 U.S.C. § 315(b), we recognize
that, under certain circumstances, considerations of the state of a parallel
proceeding may require petitioners to act more quickly than the maximum
amount of time permitted by Congress. Nonetheless, Congress also gave the
Director discretion to deny institution. See Cuozzo Speed Techs., LLC v.
Lee, 579 U.S. __, 136 S. Ct. 2131, 2140 (2016) (citing 35 U.S.C. § 314(a)).

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Thus, considerations of efficiency and fairness require a holistic look at the
facts surrounding the parallel proceeding in each case. See id. at 6.
D. Analysis of Factors
We turn to each of the factors set forth in our Order and briefed by the
parties.
1. Factor 1: whether the court granted a stay or evidence exists that
one may be granted if a proceeding is instituted
Neither party has requested a stay of the District Court case pending
this proceeding. Thus, the District Court has not ruled on this issue.
Petitioner argues that there is no reason that a stay should be denied in
the District Court case because Congress intended for district courts to be
liberal in granting stays pending AIA post-grant proceedings. Reply 6‒7.
Patent Owner argues that Petitioner does not provide specific facts or cases
that indicate the District Court would be inclined to stay this case.
Sur-Reply 2. Patent Owner also argues that a stay is unlikely under the
three-factor analysis employed by the District Court. Id. at 2‒4 (citing Exs.
2024, 2025).
A judge determines whether to grant a stay based on the facts of each
specific case as presented in the briefs by the parties. We decline to infer,
based on actions taken in different cases with different facts, how the
District Court would rule should a stay be requested by the parties in the
parallel case here. This factor does not weigh for or against discretionary
denial in this case.
2. Factor 2: proximity of the court’s trial date to the Board’s
projected statutory deadline for a final written decision
The parties’ supplemental briefs presented arguments addressing
uncertainty about the November 16, 2020, trial date due to the COVID-19

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pandemic. Reply 7; Sur-Reply 4‒5. After filing of these briefs, the parties
agreed to an amended scheduling order. Ex. 1049. In the amended
scheduling order, the District Court set the jury trial to begin on March 8,
2021, approximately two months before a final written decision would be
due in this proceeding. Id. at 3. We generally take courts’ trial schedules at
face value absent some strong evidence to the contrary. We have no reason
to believe that the jointly agreed-upon trial date, which already has been
postponed by several months due to complications stemming from the
COVID-19 pandemic, will be postponed again. Because the currently
scheduled District Court trial is scheduled to begin two months before our
deadline to reach a final decision, this factor weighs somewhat in favor of
discretionary denial in this case.
3. Factor 3: investment in the parallel proceeding by the court and
the parties
Petitioner argues that apart from a Markman Hearing conducted early
in the district court litigation, no other efforts have been expended by the
court on the parties’ claims and defenses (e.g., no preliminary injunction has
been sought, summary judgment motions are months away, fact discovery is
ongoing, Patent Owner has taken only two depositions, and Petitioner has
taken no depositions). Reply 7‒8. Patent Owner argues that substantial
investment in the district court case has been made because claim
construction is complete, the parties have served final infringement and
invalidity contentions and exchanged multiple rounds of written discovery,
depositions have been taken, and venue issues have been briefed and
appealed. Sur-Reply 5‒6.
The parties each filed three briefs addressing claim construction issues
in this case in the District Court, i.e., opening, responsive, and reply briefs,

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the District Court held a claim construction hearing on November 7, 2019,
and a few weeks after the hearing, the District Court issued a detailed
34-page claim construction order construing seven claim terms. Ex. 1027.
The parties also exchanged both initial and final infringement and invalidity
contentions, including detailed invalidity claim charts addressing the prior
art cited in this Petition. Exs. 2010, 2023, 2029, 2031‒2036. We recognize
that much work remains in this case as it relates to invalidity: fact discovery
is in its early stages, with document production ongoing and depositions just
getting underway, expert reports are not yet due, and substantive motion
practice is yet to come. Thus, although the parties and the Court have
invested effort in the District Court case to date, further effort remains to be
expended in this case before trial. Based on the level of investment and
effort already expended on claim construction and invalidity contentions in
the District Court, this factor weighs somewhat in favor of discretionary
denial in this case.
4. Factor 4: overlap between issues raised in the petition and in the
parallel proceeding
Petitioner admits that the same claims are challenged in the Petition
and in the district court, but Petitioner argues that its invalidity contentions
in district court contain more prior art than the art presented in the Petition.
Reply 9‒10. Petitioner also states that it has not decided whether to pursue
the art presented in its Petition in expert discovery or at trial in the district
court. Id. at 9. Patent Owner argues that Petitioner challenges the same
claims and presents the same grounds in both the Petition and in the District
Court and the fact that Petitioner raises additional contentions in the District
Court is irrelevant. Sur-Reply 6‒7 (citing Exs. 2010, 2031‒2036).

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We agree with Patent Owner that Petitioner’s assertion of additional
invalidity contentions in the District Court is not relevant to the question of
the degree of overlap for this factor. Further, the fact that Petitioner has not
decided whether to pursue the art from this proceeding in its expert
discovery or at trial in the District Court is not persuasive. The same art is
presented in Petitioner’s final invalidity contentions, which are extremely
detailed and developed. See Exs. 2010, 2031‒2036. Thus, because the
identical claims are challenged based on the same prior art in both the
Petition and in the District Court, this factor weighs in favor of discretionary
denial in this case.
5. Factor 5: whether the petitioner and the defendant in the parallel
proceeding are the same party
The parties agree that the Petitioner here, and the defendant in District
Court, are the same party. Reply 10; Sur-Reply 7. Because the petitioner
and the defendant in the parallel proceeding are the same party, this factor
weighs in favor of discretionary denial.
6. Factor 6: other circumstances that impact the Board’s exercise of
discretion, including the merits
As noted in our Order, a balanced assessment of factors may include
consideration of the merits. Order 14‒15. Each party argues that the merits
tip the balance in its favor. Reply 10; Sur-Reply 10. A full merits analysis
is not necessary as part of deciding whether to exercise discretion not to
institute, but rather the parties may point out, as part of the factor-based
analysis, particular “strengths or weaknesses” to aid the Board in deciding
whether the merits tip the balance one way or another. See Order 15–16. As
an example, a petitioner can use the opportunity to draw attention to
particular grounds that it believes are particularly persuasive of

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unpatentability. Conversely, a patent owner can use the opportunity to call
attention to particular arguments that, on balance, make the petitioner’s case
a close call.
Here, our initial inspection of the merits on the record before us
suggests some of Petitioner’s challenges contain certain weaknesses and,
taken as a whole, the strengths of the merits do not outweigh other factors in
favor of discretionary denial. For example, Patent Owner identifies a
weakness in Petitioner’s challenge to claim 11 in explaining where the prior
art discloses the claimed synchronizing step. Prelim. Resp. 31‒32. We
agree that the Petition does not propose an interpretation of “synchronizing,”
in light of how that term is used in the context of the ’125 patent, to explain
how Aiglstorfer’s download of banking card information from the Trusted
Service Manager to a Trusted Secure Agent of the electronic device
synchronizes the first moblet software module with the Trusted Service
Manager.
Also, Patent Owner identifies a weakness in Petitioner’s challenges to
claims 11 and 18 in explaining where the prior art discloses the filtering
aspect of these claims. Prelim. Resp. 32‒35, 58. The Petition relies on
Aiglstorfer, as modified by Wang, to disclose these filtering aspects of
claims 11 and 18. Pet. 32‒33. Patent Owner argues that the Petition fails to
explain why it would have been obvious to modify Aiglstorfer to filter the
moblet software modules based on attributes of the mobile device “given
that [Aiglstorfer’s] applets are typically device-independent.” Prelim.
Resp. 35. We find that neither Petitioner nor Dr. Neuman explains
sufficiently why one of ordinary skill in the art would have modified
Aiglstorfer’s system to filter device-independent moblet software modules
based on attributes of the mobile device, or to modify Aiglstorfer’s

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device-independent moblet software modules to make them device-
dependent.
As noted in our Order, a full analysis of the merits is not necessary to
evaluate this factor. Order 15. It is sufficient that Patent Owner has pointed
out that Petitioner’s case, at least as to two of three independent claims, is a
close call. As to claim 23, we express no opinion. The merits, taken as a
whole, do not tip the balance in favor of Petitioner and instead also weigh in
favor discretionary denial in a balanced assessment of all the circumstances.
IV. CONCLUSION
Based on the circumstances discussed above, we agree with Patent
Owner that instituting a trial would be an inefficient use of Board resources.
As discussed above, the District Court case is ongoing, trial is scheduled to
begin two months before we would reach a final decision in this proceeding,
the District Court has expended effort resolving substantive issues in the
case, the identical claims are challenged based on the same prior art in both
the Petition and in the District Court, and the defendant in District Court and
the Petitioner here are the same party. Further, based on our own
preliminary assessment of the merits of some challenges presented in the
Petition, we view Petitioner’s arguments as containing some weaknesses.
On balance, these facts, when viewed holistically, lead us to determine that
efficiency is best served by denying institution. Thus, we exercise our
discretion to deny institution under § 314(a).
V. ORDER
In consideration of the foregoing, it is hereby:
ORDERED that that Petition is denied; and
FURTHER ORDERED that no inter partes review is instituted.

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FOR PETITIONER:
Travis Jensen
K. Patrick Herman
ORRICK, HERRINGTON & SUTCLIFFE LLP
T61PTABDocket@orrick.com
P52PTABDocket@orrick.com
Apple-Fintiv_OHS@orrick.com
FOR PATENT OWNER:
Jonathan K. Waldrop
Rodney R. Miller
John W. Downing
KASOWITZ BENSON TORRES LLP
jwaldrop@kasowitz.com
rmiller@kasowitz.com
jdowning@kasowitz.com