IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
CARD CONNECT, LLC,
Plaintiff,
v.
SHIFT4 PAYMENTS, LLC, AND
SHIFT4 CORPORATION
Defendants.
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CIVIL ACTION
NO. 19-5223 (JLS)
Philadelphia, Pennsylvania
July 19, 2021
B E F O R E:
THE HONORABLE JOEL H. SLOMSKY, U.S.D.J.
APPEARANCES:
For the Plaintiff:
SAUL EWING ARNSTEIN & LEHR, LLP
BY: BRIAN M. KINNEY, ESQUIRE
JUSTIN C. LAMBERT, ESQUIRE
JOSEPH P. KULP, ESQUIRE
Centre Square West
1500 Market Street, 38th Floor
Philadelphia, PA 19102-2186
(215)972-1967
brian.kinney@saul.com
justin.lambert@saul.com
joseph.kulp@saul.com
WILSON, SONSINI, GOODRICH
& ROSATI
BY: JONATHAN LAMBERT, ESQUIRE
(Pro Hac Vice)
JASON T. KUCHMAY, ESQUIRE
(Pro Hac Vice)
1700 K Street, NW, Fifth Floor
Washington, DC 20006-3817
(202)973-8800
jlambert@wsgr.com
jkuchmay@wsgr.com

18 and then Mr. Taylor Lavery, who you heard from during the
19 Plaintiff's opening, testified live today.
20 Mr. Ranalli at the time, to give you some
21 context in 2016, when this was going on and will be the
22 subject of the testimony, was the Chief Executive Officer
23 of what was then known as Lighthouse Network. He stepped
24 down as CEO in early 2017, when he made the decision to
25 merge with Shift4, and that is how it became Shift4. It
1 was called Lighthouse at the time.
2 Mr. Lavery was the Vice President of product
3 at CardConnect at the time. So he's the individual
4 tasked with development and creation of the patent we are
5 discussing.
6 And what the evidence will show is this all
7 started with CardConnect and Lighthouse having a meeting
8 and discussion of a potential partnership, that
9 they -- for their mutual financial gain -- would put
10 something together and create a partnership so both of them
11 could do better in business. And Mr. Ranalli was going to
12 have his technical team work with Mr. Lavery and
13 CardConnect to figure out the next step, which is really
14 critical in assessing the validity of the patents that are
15 here.
16 And what you will see, there will be a
17 demonstration, is that a series of emails and text
18 messages, text message being Exhibit 123 here, went back
19 on forth on July 27, 2016. They had a discussion and, as
20 you can see, the last text message in that chain, Taylor
21 Lavery describes to Mr. Ranalli a "very high level"
22 explanation of CardConnect's "secret sauce," and that is
23 how the '846 and '241 Patents came about, the invention
24 that CardConnect came up with to solve the identified
25 problem.

1 Then the next day, and this one is, I
2 believe it's Exhibit 21, there is an email from Mr. Ranalli
3 to Mr. Lavery at CardConnect, and it says, "Love it." It
4 lays out with specificity the steps that we just talked
5 about that Mr. Lavery did. It includes all the detail. It
6 includes an image of the interface. And it concludes, it
7 says, "I understand the system, the device transmits the
8 token, unique ID to PA, P2PE, the database, and then the
9 same data element is, you know, going back and forth." It's
10 -- I am paraphrasing, but that how he concludes this.
11 Then there is another email the same day --
12 and I apologize, I think I got that wrong, that it was Mr.
13 Lavery describing it back to him. Mr. Ranalli responds
14 again, saying, "Love it." It's an email, I believe that
15 one will be 22, "Love it."
16 And they have a text message, Exhibit 124,
17 another exchange, describing Shift4's capabilities, what
18 they can do, what they are known for. And I believe this
19 one is called "fish market" in the title. It will come up
20 later as well, but that is the full title.

11 BY MR. KINNEY:
12 Q. Mr. Lavery, I am putting up on the screen what
13 has been marked and admitted as Plaintiff's Exhibit 123.
14 Have you seen this document before?
15 A. Yes, I have.
16 Q. What is it?
17 A. It's a text message communication between J.R. and
18 myself, and then a little bit Jared Isaacman.
19 Q. When did this -- what was the time period when
20 this happened?
21 A. This happened in late July of 2016.
22 Q. And turning to more specifics, what are you
23 discussing, generally, with Mr. Isaacman -- I am sorry,
24 Mr. Ranalli?
25 A. So J.R. and his team were working on a prototype,
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Case 2:19-cv-05223-JHS Document 247 Filed 08/02/21 Page 89 of 420
1 I guess, that's fair to say, or an experience related to
2 CardConnect's method of operation. And he's talking about
3 user experience, and he's sharing with us sort of their
4 progress, their thoughts, their designs around a user
5 experience. And so we are giving him some feedback and,
6 ultimately, this culminates to what will be shown later.
7 Q. Before we go any further, what did he mean by a
8 "user experience"?
9 A. So there is -- well, the ultimate solution in this
10 case is that the user, the merchant in this case, the
11 person accepting the card, the user is going to be the
12 merchant's staff or the merchant's technical team.
13 Q. And that would be using the key, basically, you
14 are talking about?
15 A. Yeah.
16 Q. Okay.
17 I wanted to direct you to this email text
18 message chain -- I am sorry, this text message chain. I
19 didn't mean to say email. From July 27th, can you see
20 where it starts at, timestamped, at 11:27 a.m.? Do you
21 see that portion.
22 A. Yes.
23 Q. And what's happening here between you and J.R.?
24 A. So in this message, I -- so keep in mind J.R. is,
25 you know, a CEO, and he's non-technical, but he, you know,
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Case 2:19-cv-05223-JHS Document 247 Filed 08/02/21 Page 90 of 420
1 obviously has lots of technical resources. And he reached
2 out to me earlier. In this case, he reaches back out again
3 and says, "Okay, I really want to talk about what you guys
4 do that is special."
5 Q. And then what happens next?
6 A. So I give J.R. an extremely high level
7 description, one sentence on, essentially, how we process
8 transactions. I try to explain in layman's terms.
9 Q. And what did you say to him?
10 A. I said the key insight isn't the interface, but
11 that all messages between any two points are encrypted, the
12 same key for all messages. We generate a unique key per
13 customer, and we don't use that key for any other customer.
14 Q. And what was that a description --
15 A. That --
16 Q. Go ahead, I am sorry.
17 A. I am sorry, that was a description of
18 CardConnect's patented method.

10 Q. Okay. I am turning to the next page. Do you see
11 at the top the, "Love it," email from J.R. Ranalli?
12 A. Yes.
13 Q. And what did he say in the very beginning?
14 A. He acknowledged that he received the diagram, and
15 that he understood it well.
16 Q. Let's go to the next page, and this is admitted
17 as, Plaintiff's Exhibit Number 124.
18 Have you seen this document before?
19 A. I recognize the content of it. I do.
20 Q. And what is it?
21 A. It's another text message conversation between
22 J.R. and myself.
23 Q. When does this conversation take place?
24 A. This is midday on July 28th.
25 Q. And that is the day -- is that the day of the
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1 diagram or the day after?
2 A. This would be the day of the diagram.
3 Q. And what's the -- what's basically happening in
4 this text message conversation?
5 A. So there is a lot going on here, but J.R. had his
6 team assembling a set of capabilities that would allow his
7 gateway customers to, in essence, perform the CardConnect
8 method of operation. And he walks through a little bit of
9 what he put together.
10 Q. Can you describe what he describes here?
11 A. Sure. So Lighthouse or Shift4 Payments, at this
12 time, they had a product called 4Go, the number four, G-O, I
13 guess is the way to spell that. And this application would
14 run on an end user's computer, and it would control the
15 communication with the actual physical credit card terminal.
16 And he thought that he could install his application,
17 called Token ID, on that computer. And that his
18 application would listen to messages coming out of the
19 credit card terminal, and it would remove the sensitive
20 information from the messages.
21 Q. How would it do that?
22 A. He says that -- in the first sort of message block
23 that I am looking at at 9:48, so he says his software, his
24 Token ID software, will, quote, "grab" the token, the track
25 data, the KSN, and the device serial number. And he --
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1 he talks about being able to grab all necessary data.
2 Q. And what is he describing doing with it once he
3 has it, once it's grabbed?
4 A. So his software is going to listen between the
5 application that runs today and the 4Go product. So, in
6 essence, he's going to be listening in the middle, on the
7 computer. And his software will run, will intercept the
8 messages, will react to the messages, and then send,
9 forward, the non-sensitive data.
10 Q. And do you have any response to him in this
11 email?
12 A. Yes.
13 Q. Text message, I am sorry.
14 A. Yes.
15 Q. And what do you say?
16 A. So I -- you know, this is my method that is
17 patented. And, in essence, what he's describing is
18 CardConnect's patented technology that J.R. Ranalli is
19 describing to me in -- on July 28th.

2 Q. I am putting up on the screen, Mr. Lavery, what
3 has been marked and admitted as Plaintiff's Exhibit 188.
4 Do you recognize this document?
5 A. Yes, I do.
6 Q. What is it.?
7 A. This is an email communication I had with J.R.
8 Q. And when did this email take place?
9 A. Conversation started on August 1st, there are
10 messages into August 2nd.
11 Q. And it's, again, just yourself and J.R.?
12 A. Yes.
13 Q. And what's the subject of this email?
14 A. So J.R. had gone back, he said, "Oh, well,
15 actually I can enhance" -- he had some time to think about,
16 he came back, he said, "Oh, I think I can enhance
17 CardConnect's method in two ways," and he suggests that,
18 using device serial number, that he can create even more
19 uniqueness. And then there is, and I am looking at the
20 message -- the email message at 10:36 p.m., and he talks
21 about some additional attributes, that using device serial
22 number, that there could be some other enhancements through
23 using device serial number.
24 Q. And did you have any response?
25 A. I told him that that would be -- at 10:47 I see
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1 here on, you know, August 1st that, "That might be cool,
2 using device serial number."

Case 2:19-cv-05223-JHS Document 68-6 Filed 04/27/20 Page 1 of 22

UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

CARD CONNECT, LLC,
Plaintiff,
v.
SHIFT4 PAYMENTS, LLC, et al.,
Defendants.

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Civil Action No. 2:19-cv-05223-JHS
DEFENDANTS’ INITIAL INVALIDITY
CONTENTIONS PURSUANT TO
PATENT L.R. 3-3
(REDACTED)

...messages to Shift4 CEO, J.R. Ranalli, who was then CEO of Lighthouse
Network. Ex. 123. Mr. Lavery and Mr. Ranalli continued to exchange messages regarding use of
Shift4’s technology to develop a prototype of a product that would implement the claimed
invention, including an exchange on July 28, 2016 with the subject line “Fish Market.” Ex. 124,
Ex. 22...

...On
July 28, 2016, Mr. Ranalli updated Mr. Lavery on Shift4’s implementation via a text message
exchange titled “Fish Market.” Ex. 124. Specifically, Mr. Ranalli described that Shift4 could use
its “4Go” product to “grab” the components of the authorization request message (such as the
tokenized track data, KSN and device serial number) that are then used to assemble the
authorization request. Id. Mr. Ranalli explained that Shift4’s “Token ID” software will “sit between
the [merchant] app and 4Go,” “listen for interesting datagrams,” “grab” the data, and “pass all non-
interesting data from the app” to its destination. Id. Shift4’s software will “pass along all datagrams
to [their] original destination.” Id. Mr. Lavery confirmed, “Makes sense.” Id...

From: J.R. Ranalli <jrr@lighthousenetwork.com>
Sent: Thursday, July 28, 2016 11:37:11 AM
To: Taylor Lavery
Subject: RE:

Love it

From: Taylor Lavery [mailto:tlavery@cardconnect.com]
Sent: Thursday, July 28, 2016 11:36 AM
To: J.R. Ranalli <jrr@lighthousenetwork.com>
Subject: Re:

Got the diagram and I understand it well.

Sent from my iPhone

From:   J.R. Ranalli <jrr@lighthousenetwork.com>
Sent:   Thursday, July 28, 2016 11:38:32 AM
To:     Taylor Lavery
Subject: Fish Market

Love it

From: Taylor Lavery [mailto:tlavery@cardconnect.com]
Sent: Thursday, July 28, 2016 11:38 AM
To: 'J.R. Ranalli' <jrr@lighthousenetwork.com>
Subject: Re: Fish Market

I got an image, I do understand.

On Jul 28, 2016, at 11:37 AM, J.R. Ranalli <jrr@lighthousenetwork.com> wrote:

Got the diagram and I understand it well.

Sent from my iPhone

Messages (215) 704-9030 Details

J.R. Ranalli
(215) 704-9030

Today 11:27 AM
What u guys do that's special?

The key insight isn't the interface but
that all messages between any
two points are encryped w the same key
for all messages. We generate a unique
key per customer and we don't use that
key for any other customer.

Messages (215) 704-9030 Details

J.R. Ranalli

Fish Market
(215) 704-9030

Today 9:45 AM
Here is my theory:
Lighthouse has this windows app
called 4Go that connects, configures, and
communicates to the device.
Now imagine we install a new app on
the same computer and call it Token ID
(or whatever)
That software will sit between the app and
4Go

It will listen for interesting datagrams
and will grab all necesarry data (token data
(track), KSN, DSN)
Otherwise it will pass all non interesting
data from the app
And of course pass along all datagrams
to original destination

Does that make sense?

Makes sense

Think of it as an interesting user experience

Our software will listen between app and
4Go but will only respond or react to
certain secure devices (those that do
tokenization)...

From: J.R. Ranalli <jrr@lighthousenetwork.com>
Sent: Tuesday, August 02, 2016 12:25:31 AM
To: Taylor Lavery
Subject: RE: Fish Market

Actually.... I can enhance ur method in 2 ways.

1)  Using DSN, I can create even more uniqueness
2)  Fraud. If a DSN ever attempted to replay a token for a different MID or TID on our gateway, we
could prevent that. Now I think about it, that would be cool.

From: Taylor Lavery [mailto:tlavery@cardconnect.com]
Sent: Monday, August 01, 2016 10:47 PM
To: J.R. Ranalli <jrr@lighthousenetwork.com>
Subject: Re: Fish Market

That might be cool. Using device serial number ☺.

On Aug 1, 2016, at 10:36 PM, J.R. Ranalli <jrr@lighthousenetwork.com> wrote:

So it’s key per customer, right? I wonder if also using device serial number would eliminate key
management.

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF PENNSYLVANIA
CARD CONNECT, LLC,
Plaintiff,
vs.
SHIFT4 PAYMENTS, LLC, and
SHIFT4 CORPORATION,
Defendants.
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CIVIL ACTION
NO. 19-5223 (JLS)
COMBINED DEPOSITION TRANSCRIPT
30(b)(6) Dep. Of CardConnect, LLC
Taylor Lavery 30(b)(6) Dep. Of
Shift4 Payments, LLC
Philadelphia, Pennsylvania
Wednesday, March 4, 2020
Volume I
Reported by:
Susan P. Hughes, RPR, CRR

...A And it looks like JR is walking through
19 his understanding of point-to-point encryption and
20 how it works and attempting to explain what we now
21 refer to as the Card Connect method.
22 Q Okay. And is this -- let me back up. Is
23 the title of this text, is that "fish market"?
24 A It appears so.
25 Q What is fish market?

1 A I don't know. I don't recall what fish
2 market represents actually.
3 Q Do you recall any discussion or reference to
4 fish market in any of your conversations with JR
5 Ranalli?
6 A No. There is a message in here somewhere,
7 he might describe it. No?
8 Q Does the exchange that you have, both of
9 you, concerning fish market, does that extend beyond
10 July 28, 2016?
11 A Yes.
12 Q Okay. To what period of time?
13 A I'm aware of it. It looks like August 2nd
14 in an email.
15 Q Okay. We'll get to that.
16 MR. KULP: We'll get there.