Filed on behalf of: Askeladden LLC
`
`Paper No. _________
`Date Filed: ________
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_____________
`
`Askeladden LLC
`Petitioner
`v.
`Loyalty Conversion Systems Corporation
`Patent Owner
`_____________
`
`Case _____________
`U.S. Patent No. 8,523,063
`
`_____________
`
`PETITION FOR INTER PARTES REVIEW
`
`

`
`TABLE OF CONTENTS
`
`Table of Contents
`I.
`MANDATORY NOTICES UNDER 37 C.F.R. § 42.8(a)(1)............................... 1
`
`A.
`
`B.
`
`C.
`
`D.
`
`Real Party-in-Interest Under 37 C.F.R. § 42.8(b)(1) ................................... 1
`
`Related Matters Under 37 C.F.R. § 42.8(b)(2) ............................................. 1
`
`Lead and Back-Up Counsel Under 37 C.F.R. § 42.8(b)(3)......................... 2
`
`Service Information Under 37 C.F.R. § 42.8(b)(4)...................................... 2
`
`II.
`
`PAYMENT OF FEES UNDER 37 C.F.R. § 42.103 ............................................ 2
`
`III. GROUNDS FOR STANDING UNDER 37 C.F.R. § 42.104(a)........................ 2
`
`IV.
`
`IDENTIFICATION OF CHALLENGE UNDER 37 C.F.R. §
`42.104(b) AND RELIEF REQUESTED ............................................................... 3
`
`V.
`
`SUMMARY OF THE ’063 PATENT..................................................................... 3
`
`A.
`
`B.
`
`The Claimed Subject Matter........................................................................... 3
`
`Prosecution History ........................................................................................ 6
`
`VI.
`
`CLAIM CONSTRUCTION UNDER 37 C.F.R. § 42.104(b)(3) ......................... 6
`
`VII. ARGUMENTS ........................................................................................................... 9
`
`A.
`
`B.
`
`C.
`
`Statement of the Law...................................................................................... 9
`
`Background .................................................................................................... 10
`
`Grounds of Rejection ................................................................................... 15
`
`1.
`
`2.
`
`Ground 1: Claims 8-12 are obvious in view of
`MacLean and Sakakibara................................................................... 15
`
`Ground 2: Claims 1-7 and 13-20 are obvious in view
`of MacLean, Sakakibara, and Postrel............................................... 30
`
`VIII. Conclusion ................................................................................................................. 60
`
`- i -
`
`

`
`EXHIBITS
`
`1501 ― U.S. Patent No. 8,523,063;
`
`1502 ― Declaration of Matthew Calman;
`
`1503 ― U.S. Patent Application Publication No. 2005/0021399 (“Postrel”);
`
`1504 ― U.S. Patent Application Publication No. 2002/0143614 (“MacLean”);
`
`1505 ― U.S. Patent No. 6,721,743 (“Sakakibara”);
`
`1506 ― Wayback Machine archive dated June 20, 2000, for American Express web
`
`site: “How to redeem or transfer your points online;”
`
`1507 ― Wayback Machine archive dated June 20, 2000, for American Express web
`
`site: “Air rewards;”
`
`1508 ― Wayback Machine archive dated January 4, 1997, for Citibank web site:
`
`“Citibank Cards and Services;”
`
`1509 ― Wayback Machine archive dated December 1, 1998, for American Express
`
`web site: “Rewards Cards;”
`
`1510 ― Wayback Machine archive dated June 21, 2000, for American Express web
`
`site: “Shopping rewards;”
`
`1511 ― Wayback Machine archive dated December 9, 2003, for Marriott Rewards
`
`web site: “Air Mileage;”
`
`1512 ― Wayback Machine archive dated November 25, 2002, for Starwood Hotels &
`
`Resorts web site: “Transfer : Airlines;”
`- ii -
`
`

`
`1513 ― Wayback Machine archive dated June 19, 2000, for United Airlines web site:
`
`“Mileage Plus partners;”
`
`1514 ― Wayback Machine archive dated July 17, 2004, for WebFlyer web site:
`
`“Mileage Converter;”
`
`1515 ― MacDonald, Jay, Experience rewards pay off for some credit card users,
`
`Bankrate.com, November 17, 2003 (available at
`
`http://www.bankrate.com/finance/credit-cards/experience-rewards-pay-
`
`off-for-some-credit-card-users-1.aspx);
`
`1516 ― Claim Construction Memorandum Opinion and Order, issued September 2,
`
`2014, in Loyalty Conversion Systems Corp. v. American Airlines, Inc., Case No.
`
`2:13-cv-00655 (E.D. Tex.);
`
`1517 ― Memorandum Opinion and Order, issued September 3, 2014, in Loyalty
`
`Conversion Systems Corp. v. American Airlines, Inc., Case No. 2:13-cv-00655
`
`(E.D. Tex.);
`
`1518 ― Patent Owner’s Preliminary Response (Paper No. 17), in Covered Business
`
`Method Patent Review of U.S. Patent No. 8,313,023 (assigned CBM2014-
`
`00095);
`
`1519 ― Patent Owner’s Preliminary Response (Paper No. 14), in Covered Business
`
`Method Patent Review of U.S. Patent No. 8,511,550 (assigned CBM2014-
`
`00096);
`
`- iii -
`
`

`
`1520 ― USPTO Assignment Records for U.S. Patent No. 8,523,063 (as of September
`
`28, 2014);
`
`1521 ― Wayback Machine archive dated August 16, 2000, for United Airlines web
`
`site: “Car Rental Partners;”
`
`1522 ― Wayback Machine archive dated June 20, 2000, for United Airlines web site:
`
`“Cruise Partners;”
`
`1523 ― S&H Green Points – About S&H (available at
`
`http://www.greenpoints.com/info/inf_aboutsh.asp);
`
`1524 ― Wayback Machine archive dated November 27, 1999, for Green Points “The
`
`Points You’ve Been Waiting For;”
`
`1525 ― Wayback Machine archive dated April 15, 1998 for American Airlines web
`
`site: “Welome to AA.com;”
`
`1526 ― Security and Exchange Commission Letter from the Chief: Accountant Issues
`
`Related to Internet Operations, October 18, 1999, available at
`
`http://www.sec.gov/info/accountants/staffletters/calt1018.htm;
`
`- iv -
`
`

`
`1527 ― The Emerging Issue Task Force of the Financial Accounting Standards Board
`
`(“FASB”), “Accounting for ‘Points’ and Certain Other Time-Based of
`
`Volume-Based Sales Incentive Offers, and Offers for Free Products or
`
`Services to be delivered in the future,” Issue No. 00-22 (2001), available at
`
`http://www.fasb.org/cs/BlobServer?blobkey=id&blobnocache=true&blob
`
`where=1175820904620&blobheader=application/pdf&blobheadername2=C
`
`ontent-Length&blobheadername1=Content-
`
`Disposition&blobheadervalue2=79563&blobheadervalue1=filename=abs00-
`
`22.pdf&blobcol=urldata&blobtable=MungoBlobs;
`
`1528 ― Stone et al., User Interface Design and Evaluation, Interactive Technologies
`
`(April 29, 2005);
`
`1529 ― U.S. Patent No. 5,513,359; and
`
`1530 ― George Bond, “Gateways to the Internet,” Byte Magazine, pp. 229-31 (Sept.
`
`1995).
`
`- v -
`
`

`
`Askeladden LLC petitions for Inter Partes Review (“IPR”) under 35 U.S.C. §§
`
`311-319 and 37 C.F.R. § 42 of Claims 1-20 of U.S. Patent No. 8,523,063 (“’063
`
`Patent”) (Ex 1501)1. For the reasons set forth below, there is a reasonable likelihood
`
`of finding at least one of those claims unpatentable.
`
`I.
`
`MANDATORY NOTICES UNDER 37 C.F.R. § 42.8(a)(1)
`A.
`Real Party-in-Interest Under 37 C.F.R. § 42.8(b)(1)
`
`Askeladden LLC (“Petitioner”) is the real party-in-interest for this petition.
`
`Related Matters Under 37 C.F.R. § 42.8(b)(2)
`B.
`Petitioner is concurrently filing another petition for IPR against the ’063 Patent
`
`on other grounds. To Petitioner’s knowledge, the ’063 Patent has never been the
`
`subject of any litigation.
`
`Petitioner notes that U.S. Patent Nos. 8,313,023 and 8,511,550 (“’023 Patent”
`
`and “’550 Patent,” respectively), which share common domestic priority claims with
`
`the ’063 Patent, are the subjects of covered business method (CBM) review
`
`proceedings, assigned CBM2014-00095 (“’023 CBM”) and CBM2014-00096 (“’550
`
`CBM”), respectively. The ’023 and ’550 Patents are also the subject of an infringement
`
`1 Loyalty Conversion Systems Corporation purports to be the owner of the ’063
`
`Patent by virtue of various assignments, none of which are known to have been
`
`recorded with the USPTO. (Ex 1520.) For the sake of convenience, “Patent Owner”
`
`as used herein should be deemed to refer to the actual owner(s) of the ’063 Patent.
`
`- 1 -
`
`

`
`suit in the U.S. District Court for the Eastern District of Texas, captioned as Loyalty
`
`Conversion Systems Corp. v. American Airlines, Inc., Case No. 2:13-cv-00655 (“American
`
`Airlines Litigation”).2 The present Petitioner is not a privy of any party in that
`
`litigation or the related CBMs.
`
`C.
`
`Lead and Back-Up Counsel Under 37 C.F.R. § 42.8(b)(3)
`
`LEAD COUNSEL
`
`BACK-UP COUNSEL
`
`Robert H. Fischer, Reg. No. 30,051
`
`Frank A. DeLucia, Reg. No. 42,476
`
`Fitzpatrick, Cella, Harper & Scinto
`
`Fitzpatrick, Cella, Harper & Scinto
`
`1290 Avenue of the Americas
`
`1290 Avenue of the Americas
`
`New York, NY 10104
`
`New York, NY 10104
`
`(212) 218-2100 (o)/(202) 218-2200 (f)
`(212) 218-2100 (o)/(202) 218-2200 (f)
`D.
`Service Information Under 37 C.F.R. § 42.8(b)(4)
`Petitioner consents to service by email at AskeladdenIPR@fchs.com.
`
`II.
`
`PAYMENT OF FEES UNDER 37 C.F.R. § 42.103
`
`The USPTO may charge Deposit Account No. 50-3939 for any fees associated
`
`with the present petition (referencing docket number 02208.043011).
`
`III. GROUNDS FOR STANDING UNDER 37 C.F.R. § 42.104(a)
`Petitioner certifies that the ’063 Patent is eligible for IPR and that Petitioner is
`
`2 The Court issued a Claim Construction Memorandum Opinion and Order (Ex 1516)
`
`and Memorandum Opinion and Order (Ex 1517) on Sept. 2 and 3, 2014, respectively.
`
`- 2 -
`
`

`
`not barred or estopped from requesting IPR. Neither Petitioner nor any privy thereof
`
`has been served with an infringement complaint involving the ’063 Patent.
`
`IV.
`
`IDENTIFICATION OF CHALLENGE UNDER 37 C.F.R. § 42.104(b)
`AND RELIEF REQUESTED
`
`Petitioner requests (i) review of Claims 1-20 of the ’063 Patent on the grounds
`
`set forth below and (ii) that each of those claims be found unpatentable.
`
`Ground
`
`Claim(s)
`
`Basis for Invalidity
`
`1
`
`2
`
`8-12
`
`Obvious (§ 103) in view of US 2002/0143614
`
`1-7 and 13-20
`
`(MacLean) and US 6,721,743 (Sakakibara)
`Obvious (§ 103) in view of MacLean, Sakakibara, and
`
`US 2005/0021399 (Postrel)
`
`V.
`
`SUMMARY OF THE ’063 PATENT
`A.
`The Claimed Subject Matter
`The ’063 Patent has 20 claims, of which Claims 1, 8, and 13 are written in
`
`independent form. In general, the claims are directed to a method employing a
`
`computer for managing loyalty points (e.g., frequent flyer miles) issued by an entity
`
`(e.g., airline). Representative Claim 1 recites the following steps in principal part:
`
`- An entity (e.g., airline), agreeing to permit transfers or conversions of non-
`
`negotiable credits (e.g., airline miles of airline loyalty program) to entity
`
`independent funds (e.g., credit card loyalty program points) in accordance with
`
`a fixed credits-to-funds ratio (e.g., conversion/transfer based on an exchange
`
`rate between airline miles and credit card points);
`
`- 3 -
`
`

`
`-
`
`the entity agreeing to compensate a commerce partner (e.g., the credit card
`
`company) by paying an amount in cash or credit (e.g., a monetary valuation
`
`associated with the airline miles) for each non-negotiable credit redeemed by
`
`the commerce partner;
`
`- wherein the non-negotiable credits are loyalty points of a loyalty program of the
`
`entity (e.g., airline miles are loyalty points of the airline’s loyalty program),
`
`- wherein the entity independent funds are loyalty points of a different loyalty
`
`program of the commerce partner (e.g., credit card points are loyalty points of
`
`the credit card, which is not the airline);
`
`- wherein the entity independent funds are redeemable under terms-of-use of the
`
`different loyalty program for consumer partner goods or for consumer partner
`
`services (e.g., credit card points are redeemable under the credit card loyalty
`
`program’s terms-of-use towards goods or services listed in a credit card loyalty
`
`program catalog),
`
`- wherein terms-of-use of the different loyalty program does not permit
`
`commerce partner goods or commerce partner services to be exchanged for the
`
`non-negotiable credits in absence of the non-negotiable credits being
`
`transferred or converted into the entity independent funds of the different
`
`loyalty program (e.g., the credit card loyalty program prohibits purchasing its
`
`catalog goods/services using airline miles directly, without first converting to
`
`credit card loyalty program points);
`- 4 -
`
`

`
`-
`
`a computer for the loyalty program of the entity establishing an account for
`
`non-negotiable credits of a loyalty program member (a computer for the airline
`
`loyalty program establishes a customer’s airline mileage program account);
`
`-
`
`the computer detecting a set of two or more interactions earning additional
`
`non-negotiable credits for the loyalty program member in accordance with
`
`terms-of-use of the loyalty program, wherein the computer adds the additional
`
`non-negotiable credits to the account (e.g., the computer for the airline loyalty
`
`program receives at least two transactions which earn additional airline miles
`
`for the customer, and adds them to the customer’s miles balance); and
`
`-
`
`responsive to an indication of a conversion operation occurrence, the computer
`
`subtracting a quantity of the non-negotiable credits from the account, said
`
`subtracted quantity of non-negotiable credits comprising at least a quantity of
`
`non-negotiable credits that were converted or transferred to a new quantity of
`
`entity independent funds using the fixed credits-to-funds ratio (e.g., the
`
`computer for the airline loyalty program subtracts the amount of miles from
`
`the customer’s mileage account, based on those miles having been converted to
`
`credit card points).
`
`This conversion allows the user to make a purchase from the commerce partner (e.g.,
`
`via the credit card loyalty program’s catalog), who accepts as payment the converted
`
`loyalty points (i.e., credit card points) but not the pre-converted loyalty points (i.e.,
`
`airline miles).
`
`- 5 -
`
`

`
`Prosecution History
`B.
`The ’063 Patent issued from USPAN 13/863,605 (“’605 Application), filed on
`
`April 16, 2013. The ’063 Patent purports to be (1) a continuation of USPAN
`
`13/542,451 (“’451 Application”, filed on July 5, 2012 ), issued as U.S. Patent No.
`
`8,342,399 on January 1, 2013; (2) a continuation of USPAN 13/681,479 (“’479
`
`Application”, filed on November 20, 2012), issued as U.S. Patent No. 8,684,265 on
`
`April 1, 2014; (3) a continuation of USPAN 13/681,493 (“’493 Application”, filed on
`
`November 20, 2012), issued as U.S. Patent No. 8,668,146 on March 11, 2014; and (4)
`
`a continuation-in-part of USPAN 11/420,255 (“’255 Application”, filed on May 25,
`
`2006), issued as U.S. Patent No. 7,703,673 on April 27, 2010.
`
`Prior to initial examination, the applicants filed a terminal disclaimer over the
`
`‘479 and ‘493 Applications. The applicants also filed two Information Disclosure
`
`Statements, one concurrently with the filing of the application and the other the
`
`following day, which included over 800 citations. The PTO issued a Notice of
`
`Allowance on July 15, 2013, allowing the originally-filed claims. The applicant paid the
`
`issue fee that same day, and the patent issued on September 3, 2013.
`
`VI. CLAIM CONSTRUCTION UNDER 37 C.F.R. § 42.104(b)(3)
`Petitioner submits the following constructions for the claim terms below, in
`
`accordance with their broadest reasonable interpretation. Nothing asserted herein
`
`should be understood as waiving alternative claim constructions in any Article III
`
`litigation involving the ’063 or related patent(s) using different rules of construction.
`
`- 6 -
`
`

`
`“Entity” (independent Claims 1, 8, and 13)
`
`The ’063 Patent states that entities “often reward consumers for utilizing their
`
`services with certain credits … [which] can often be applied towards products and/or
`
`services provided by a granting entity or its affiliates.” (Ex 1501, 1:32-35.) The ’063
`
`Patent also states that the invention relates to “a system … in which non-negotiable
`
`funds … earned from consumer incentive activities … are converted into negotiable
`
`funds[.]” (Ex 1501, 3:60-64.) For the purposes of this proceeding, Petitioner interprets
`
`the term to mean an organization that has a rewards program for a consumer.
`
`“Non-negotiable credits” (independent Claims 1, 8, and 13)
`
`The ’063 Patent states that non-negotiable credits “may not be redeemable on
`
`an open market” (Ex 1501, 4:17-19), “generally have no value outside of an
`
`environment (building, Web site, etc.) of the … entity” (Ex 1501, 6:36-38), and
`
`include casino credits, and hotel and car rental loyalty points (Ex 1501, 6:38-55.) One
`
`intrinsic feature of non-negotiable credits is their “restriction on usage to goods
`
`and/or services of the [granting] entity[,]” thereby limiting their usefulness since “a
`
`consumer may have no need for the products or services listed by the entity for which
`
`the non-negotiable credits can be redeemed.” (Ex 1501, 1:39-42.) For purposes of this
`
`proceeding, Petitioner interprets the term to mean credits which are accepted only by
`
`the granting entity of the credits.
`
`It is noted that the patent owner in the ’023 and ’550 CBMs proposed that this
`
`term be construed as “credits which have redemption restrictions imposed by the
`- 7 -
`
`

`
`granting entity.” (Ex 1518, pp. 11, 15-16; Ex 1519, pp. 15-17.) However, such a
`
`construction here would be inconsistent with the ’063 Patent. The ’063 Patent states
`
`that, in addition to restricting usage to the granting entity’s goods/services,
`
`“additional restrictions and limitations can be placed upon the non-negotiable credits
`
`that lessen the usefulness of non-negotiable credits from the consumer's perspective.”
`
`(Ex 1501, 1:42-45.) As such, while additional restrictions may be imposed upon
`
`credits already constituting non-negotiable credits, the “non-negotiable” nature of the
`
`credits is defined by the usage restriction to the granting entity, and any additional
`
`restrictions or limitations are merely optional.
`
`“Entity independent funds” (independent Claims 1, 8, 13)
`
`The ’063 Patent does not specifically define this term, but states that one
`
`problem with non-negotiable credits is that “will not accept … the credits … for
`
`commercial transactions” (Ex 1501, 4:19-21), based on the inherent usage restriction
`
`of non-negotiable credits “to goods and/or services of the [granting] entity” (Ex 1501,
`
`1:39-40). On the other hand, these various vendors accept entity independent funds.
`
`(Ex 1501, 5:5-14, 42-52.) For purposes of this proceeding, Petitioner interprets the
`
`term to mean funds acceptable as payment by at least one entity different from the
`
`original granting entity of the non-negotiable credits.
`
`It is noted that the patent owner in the ’023 and ’550 CBMs proposed that this
`
`term be construed as “funds that are independent of restrictions on redemption
`
`imposed by the entity that granted the corresponding non-negotiable credits.” (Ex
`- 8 -
`
`

`
`1518, pp. 11, 17-20; Ex 1519, pp. 15, 17-18.) However, such a construction would be
`
`inconsistent with the ’063 Patent, inasmuch as certain entity-imposed restrictions tied
`
`to the non-negotiable credits can still persist with the entity independent funds.
`
`As one of many possible examples, the ’063 Patent describes that
`
`non-negotiable credits can be airline miles, for which an airline may impose
`
`restrictions in the form of black-out dates. (Ex 1501, 6:21-27.) If airline miles of one
`
`airline (e.g., United) are converted into airline miles of another airline (e.g., Delta), the
`
`Delta miles are then entity independent funds. Yet, Delta miles could be subject to the
`
`same black-out dates as the United miles. As such, the construction of entity
`
`independent funds should rely on its plain understanding that these funds are no
`
`longer subject to the inherent restriction from non-negotiable credits of accepted only
`
`by the granting entity of the credits.
`
`VII. ARGUMENTS
`A.
`Statement of the Law
`
`The proposed grounds of rejection rely on 35 U.S.C. § 103. A claim is obvious
`
`under § 103 when “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.” 35 U.S.C. § 103(a); see KSR Int’l Co. v.
`
`Teleflex Inc., 550 U.S. 398 (2007).
`
`In that regard, a person of ordinary skill in the art at the time of May 25, 2006,
`
`- 9 -
`
`

`
`would have had either (i) a Bachelor’s degree with two (2) years of experience in
`
`marketing, or (ii) a Masters of Business Administration (M.B.A.) degree or higher, as
`
`well as knowledge of Internet web page design and development, and knowledge of
`
`customer loyalty programs. (Ex 1502, ¶ 18.)
`
`As indicated above, Claim 1 includes a negative limitation. Likewise, each of
`
`the other independent claims includes a comparable negative limitation. The Board
`
`has previously ruled that silence in the reference concerning a negative limitation may
`
`fully meet the limitation. (Ex parte Cheng, Appeal 2007-0959, p. 6 (BPAI 2007) (non-
`
`precedential) (stating that silence in a reference as to whether specific data was
`
`transferred anticipated a negative limitation that the data was not transferred); Ex parte
`
`Chang, Appeal 2009-013592, pp. 7-8 (BPAI 2012).)
`
`Background
`B.
`Petitioner provides below a historical view of loyalty programs, which would
`
`have been known to one of ordinary skill in the art at the time of the ’063 Patent.
`
`Merchant Loyalty Programs
`
`As described in the expert declaration of Mr. Matthew A. Calman (Ex 1502, ¶¶
`
`1-29), merchant loyalty programs have existed since at least the 1970’s. (See, e.g., Ex
`
`1523.) Common examples of such long-standing programs include airline rewards
`
`(e.g., United or American Airlines award miles) and credit card rewards (e.g.,
`
`American Express (“AMEX”) membership reward points or MBNA Mastercard
`
`points). Merchants created these loyalty programs both to entice business with new
`- 10 -
`
`

`
`customers and to encourage repeat business by existing customers over competing
`
`merchants. (See generally, Ex 1526; Ex 1527.) Typically, customers accumulated
`
`program points in these loyalty programs through successive transactions with the
`
`respective merchant.3 For instance, in the case of airline rewards programs, a
`
`customer typically received a certain quantity of program points corresponding to the
`
`distance of a purchased flight. In the case of credit card rewards, a customer typically
`
`received a certain quantity of program points according to a value of purchases
`
`charged to the credit card. (Ex 1502, ¶¶ 24-29.)
`
`Redeeming Awards Using Loyalty Points
`
`With these loyalty programs, customers redeemed their accumulated points for
`
`rewards, the prospect of which drove the consumer interest in these programs. (See,
`
`e.g., Ex 1524.) Each loyalty program had particular redemption criteria in accordance
`
`with the program’s terms and conditions. For instance, an airline rewards program
`
`may have permitted a customer to exchange a certain number of points for a free
`
`airline flight or an upgrade. (Ex 1525.) A credit card reward program may have
`
`permitted a customer to exchange points for merchandise, gift cards, discounts, or
`
`even cash. Customers typically redeemed their points by submitting a request and
`
`identifying the desired reward. (Ex 1502, ¶¶ 27-29.)
`
`3 The ’063 Patent refers to these points of certain loyalty programs as “non-negotiable
`
`credits” and a merchant behind a loyalty program as an “entity.” (Ex 1501, 1:29-37.)
`
`- 11 -
`
`

`
`Such redemption rewards have been in place at least as early as the 1990’s. (Ex
`
`1502, ¶ 29; Ex 1508; Ex 1509.)
`
`Loyalty Reward Redemption via Web Site
`
`To one of ordinary skill, the concept of fulfilling loyalty point redemption
`
`requests via e-commerce was well-established prior to the filing of the ’063 Patent. In
`
`the pre-Internet era, customers typically redeemed their points for a reward by
`
`submitting a request via mail or telephone. With the Internet becoming a platform for
`
`conducting business in the 1990’s, merchants used web sites that included user online
`
`access to their loyalty programs. With this functionality, users could electronically
`
`submit a reward redemption request at their leisure by, e.g., filling out a web form in a
`
`GUI. (See, e.g., Ex 1528; Ex 1529; Ex 1530.) Alternatively, the reward redemption was
`
`conducted in the form of an online checkout, using points as a payment source. For
`
`instance, since at least June 2000, customers could redeem AMEX membership
`
`reward points for merchandise via its web site. (Ex 1502, ¶¶ 34-40; Ex 1506.)
`
`In addition to the AMEX example, the concept of loyalty programs and web
`
`site redemptions was described in U.S. Patent Appl. Pub. No. 2002/0143614
`
`(“MacLean”), which was filed on March 27, 2001. MacLean describes further
`
`examples of loyalty programs and web site redemptions. MacLean describes that
`
`loyalty programs are classified into “four main types… travel (airlines and hotels),
`
`financial (credit cards), retail and network (AirMiles, ClickRewards and WebMiles).”
`
`(Ex 1504, ¶ [0003].) A customer, after accumulating sufficient points in a loyalty
`- 12 -
`
`

`
`program, “redeems its points for some reward.” (Ex 1504, ¶ [0057].)
`
`Loyalty Point Conversion to Another Merchant’s Store Credit
`
`According to the ’063 Patent, the issuing entity may restrict redemption of
`
`loyalty credits only to the entity’s own goods/services. (Ex 1501, 1:39-45.) However,
`
`adaptations to work around this restriction, such as the redemption of one merchant’s
`
`loyalty points for another merchant’s store credit, have been known prior to the ’063
`
`Patent application. For instance, since at least June 2000, AMEX has provided an
`
`option to convert its membership reward points into store credit of independent
`
`merchants (e.g., Saks Fifth Avenue). (Ex 1510.) A customer was able to perform such
`
`conversion online at the AMEX web site. (Ex 1506; see also Ex 1513; Ex 1514; Ex
`
`1515; Ex 1521; Ex 1522.) Providing this conversion option enhanced the appeal of
`
`the loyalty points, leading to increased commerce. (Ex 1502, ¶¶ 30-33.)
`
`Loyalty Point Conversion to Another Merchant’s Loyalty Program Points
`
`The ’063 Patent also asserted that while consumers often accumulate credits
`
`across multiple credit-earning programs from different merchants, “a customer may
`
`have no need for the products or services listed by the [merchant] for which” points
`
`from each individual program may be redeemed. (Ex 1501, 1:40-1:42.) While loyalty
`
`point redemption at some merchants may have been limited to only their own
`
`products, many merchants have, for some time, permitted conversion of their loyalty
`
`points into points of another merchant’s loyalty program. (Ex 1502, ¶¶ 30-33.)
`
`For instance, since at least June 2000, AMEX has given its customers the
`- 13 -
`
`

`
`option to convert their AMEX membership reward points to loyalty program points
`
`for various airlines, including through an online conversion process. (Ex 1506; Ex
`
`1507; see also Ex 1511; Ex 1512.) The conversion was performed in accordance with a
`
`conversion ratio of AMEX membership rewards points to airline loyalty program
`
`points. (Ex 1507.) After the conversion, the customer could have used the converted
`
`points to purchase an airline ticket. (Ex 1506; Ex 1507.) (Ex 1502, ¶¶ 32, 33.)
`
`This concept was also described in MacLean, in that a user can exchange points
`
`from a first issuer loyalty program (or “withdrawing LP”), e.g., American Airlines, to a
`
`second issuer loyalty program (or “depositing LP”), e.g., American Express. (Ex 1504,
`
`¶¶ [0041]; [0052].) As MacLean states, this approach addresses the concern that “most
`
`customers do not accumulate sufficient numbers of points at which customers can
`
`accumulate sufficient number of points at which the customers can effect redemption
`
`for the rewards.” (Ex 1504, ¶ [0013].)
`
`As this practice of loyalty point conversion was already commonplace long
`
`before the ’063 Patent filing, adaptations of this concept to specific applications
`
`would have been well within the skills of an ordinary artisan.
`
`Similarities between Loyalty Point Conversions and Monetary Currency Conversions
`
`Likewise, a person of ordinary skill would be familiar with the well-known
`
`conversion between different monetary currencies. For instance, travelers have been
`
`able to exchange U.S. dollars for most worldwide foreign currencies, at banks and
`
`even dedicated currency exchange businesses for decades. The quantity of exchanged
`- 14 -
`
`

`
`currency is determined in accordance with a conversion ratio (i.e., exchange rate)
`
`between the two currencies. (Ex 1502; ¶¶ 41-45.)
`
`Given an appreciation of these foundational concepts, the person of ordinary
`
`skill in the art would have regarded the subject matter claimed in the ’063 Patent as
`
`clearly obvious, in view of the prior art that is discussed below. (Ex 1502, ¶¶ 46-48.)
`
`C.
`
`Grounds of Rejection
`1.
`Ground 1: Claims 8-12 are obvious in view of MacLean and
`Sakakibara
`
`MacLean is a U.S. patent application that published on October 3, 2002.
`
`Sakakibara is a U.S. patent that issued on April 13, 2004. Both MacLean and
`
`Sakakibara qualify as prior art under 35 U.S.C. § 102(b) regardless of whether the ’063
`
`Patent is entitled to its May 25, 2006 priority date. Although applicants cited MacLean
`
`and Sakakibara during prosecution, applicants did not emphasize their significance
`
`from the other 800-odd references which they cited, and there is no indication they
`
`received the Examiner’s individual attention over applicants’ other cited references.
`
`Independent Claim 8 (and Claims 9 and 12 depending therefrom)
`
`Claim 8 recites a method involving a conversion operation that transfers or
`
`converts non-negotiable credits to entity independent funds. As discussed above, non-
`
`negotiable credits are credits which are accepted only by the granting entity of those
`
`credits. In this regard, MacLean discloses credits in the form of loyalty points issued
`
`by loyalty programs (“LPs”) such as airline mileage programs. (Ex 1504, ¶¶ [0002];
`
`- 15 -
`
`

`
`[0003].) MacLean specifically notes that LPs “are based on the concept of influencing
`
`the customer to continue to purchase products and/or services from one source[.]”
`
`(Id.)With respect to a commerce partner agreeing to permit transfers or conversions
`
`of non-negotiable credits into entity independent funds, MacLean discloses an entity
`
`in the form of an issuer among points issuers 130a-130c that operates a withdrawing
`
`LP, a commerce partner in the form of an issuer among points issuers 130a-130c that
`
`operates a depositing LP, and a transaction center 120 executing a stored program 500
`
`whereby a customer’s withdrawing LP points are exchanged (i.e., transferred or
`
`converted) to depositing LP points. (Ex 1504, Fig. 1; ¶¶ [0044]; [0052].) MacLean
`
`provides for this transfer or conversion through the use of a conversion operation,
`
`wherein a button 648, called “continue xchange,” initiates a conversion of at least a
`
`subset of withdrawing LP points (i.e., “non-negotiable credits”) into depositing LP
`
`points (i.e., “entity independent funds”). (Ex 1504, Fig. 6E; ¶ [0052].) The converted
`
`depositing LP points are entity independent funds, in that they are funds acceptable as
`
`payment by at least one entity (i.e., by depositing LP) different from the original
`
`granting entity of the withdrawing LP points (i.e., by withdrawing LP, which is
`
`different from the depositing LP). (Ex 1504, Fig. 1.) This exchange occurs in
`
`accordance with an exchange rate (“fixed credits-to-funds ratio”) between points of
`
`the different LPs of system 100 (a network of computers). (Ex 1504, ¶ [0021]; Figs. 1,
`
`2.) For instance, one disclosed effective exchange rate (i.e., after consideration of a
`
`transaction fee) is “3,600:10,000 or .36.” (Id., ¶ [0064].) Another exchange rate, based
`- 16 -
`
`

`
`on raw withdrawal and deposit rates, is the ratio in withdrawal and deposit rates of
`
`$0.008:$0.02. (Ex 1504, ¶ [0064].) It is noted that the depositing LP issuer “agrees” to
`
`permit transfers or conversions by setting, e.g., the specific point withdrawal and
`
`deposit rates. (Ex 1504, ¶ [0023].)
`
`With respect to non-negotiable credits, MacLean’s LP points are consistent
`
`with the general concept that loyalty points earned from one merchant (e.g., United
`
`Airlines or Macy’s) could not be redeemed for goods or services at another merchant
`
`(e.g., Delta Airlines or Bloomingdale’s), which has long been the standard practice.
`
`(Ex 1502, ¶ 97.)
`
`Moreover, Sakakibara explicitly discloses this concept. Sakakibara describes a
`
`system that allows a user to convert loyalty points from one entity’s program into
`
`points from another’s in accordance with a conversion ratio. (Ex 1505, Abstract; 7:7-
`
`10.) Claim 9 of Sakakibara states that, prior to conversion, loyalty points issued by one
`
`entity are only redeemable at that entity (i.e., they are non-negotiable). (E