Trials@uspto.gov
`571.272.7822
`
`
`Paper No. 54
`Filed: March 11, 2016
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`
`
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`UNITED STATES PATENT AND TRADEMARK OFFICE
`_______________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`_______________
`
`ASKELADDEN LLC,
`Petitioner,
`
`v.
`
`SEAN I. MCGHIE and BRIAN K. BUCHHEIT,
`Patent Owner.
`_______________
`
`Case IPR2015-00125
`Patent 8,540,152 B1
`_______________
`
`Before SALLY C. MEDLEY, JONI Y. CHANG, and
`GEORGIANNA W. BRADEN, Administrative Patent Judges.
`
`BRADEN, Administrative Patent Judge.
`
`FINAL WRITTEN DECISION
`Inter Partes Review
`35 U.S.C. § 318(a) and 37 C.F.R. § 42.73
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`INTRODUCTION
`I.
`We have jurisdiction to hear this inter partes review under 35 U.S.C.
`§ 6(c), and this Final Written Decision is issued pursuant to 35 U.S.C.
`§ 318(a) and 37 C.F.R. § 42.73. For the reasons that follow, we determine
`that Petitioner has shown by a preponderance of the evidence that claims 1–
`20 of U.S. Patent No. 8,540,152 B1 (Ex. 1001, “the ’152 patent”) are
`unpatentable.
`A. Procedural History
`Petitioner, Askeladden LLC1 filed a Petition to institute an inter
`partes review of claims 1–20 of the ’152 patent. Paper 1 (“Pet.”). Patent
`Owner, Sean I. McGhie and Brian K. Buchheit,2 filed a Revised Preliminary
`Response. Paper 14 (“Prelim. Resp.”). Upon consideration of the Petition
`and Preliminary Response, pursuant to 35 U.S.C. § 314(a), we instituted an
`
`
`1 The Real Parties-in-Interest also includes The Clearing House Payment
`Company. See Paper 36.
`2 Patent Owner is represented by inventor Brian Buchheit, who is an attorney
`and registered to practice before the Office. At times during the proceeding,
`Mr. Buchheit indicated that he was representing “Patent Owners” (Mr.
`Buchheit and Mr. McGhie), while at other times Mr. Buchheit indicated that
`he was not representing Mr. McGhie, but rather acting pro se. Papers 4, 14,
`37, 47, Ex. 2054. Over the course of the proceeding, we have provided
`instructions to Patent Owner on filing papers, authorized Patent Owner leave
`to refile papers and file papers beyond due dates, and expunged other Patent
`Owner papers that were not authorized, not in compliance with Board rules,
`and/or contained arguments beyond what was authorized. See, e.g., Papers
`8, 9, 11, 15, 37, 38 (and Exhibit 3001), 49, and 51.
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`inter partes review of claims 1–20 under 35 U.S.C. § 103 as obvious in view
`of Postrel,3 Sakakibara,4 and MacLean5. See Paper 34 (“Dec. to Inst.”), 31.
`In the Scheduling Order, which sets times for taking action in this
`proceeding, we notified the parties that “any arguments for patentability not
`raised in the [Patent Owner] response will be deemed waived.” Paper 35, 3;
`see also Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,766
`(Aug. 14, 2012) (a patent owner’s “response should identify all the involved
`claims that are believed to be patentable and state the basis for that belief”).
`Patent Owner, however, did not file a Patent Owner Response. To ensure
`clarity in our record, we required Patent Owner to file a paper, indicating
`whether it had abandoned the contest.6 Paper 51. Patent Owner indicated
`that it had not abandoned the contest. See id. Patent Owner, however, did
`not seek authorization to belatedly file a Patent Owner Response, nor
`indicated that it wished to file such a Response. We have, therefore, the
`Petition before us with no Patent Owner Response. Nonetheless, Petitioner
`
`
`3 US Patent Publication No. 2005/0021399 A1, iss. Jan. 27, 2005 (Ex. 1003,
`“Postrel”).
`4 US Patent No. 6, 721,743 B1, iss. Apr. 13, 2004 (Ex. 1005, “Sakakibara”).
`5 US Patent Publication No. 2002/0143614 A1, iss. Oct. 3, 2002 (Ex. 1004,
`“MacLean”).
`6 An abandonment of the contest is construed as a request for adverse
`judgment. 37 C.F.R. § 42.73(b)(4). A request for adverse judgment, on
`behalf of a Patent Owner, would result in the cancellation of the involved
`claims of a challenged patent, e.g., without consideration of the Petition, etc.
`On the other hand, when a Patent Owner does not abandon the contest, but
`chooses not to file a Patent Owner Response, the Board generally will render
`a final written decision, e.g., based on consideration of the Petition, etc.
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`bears the burden to show, by a preponderance of the evidence, that the
`challenged claims are unpatentable.
`For the reasons that follow, we determine that Petitioner has shown by
`a preponderance of the evidence that claims 1–20 of the ’152 patent are
`unpatentable.
`B. Related Proceedings
`Petitioner informs us that the ’152 patent is the subject of a
`concurrently-filed petition for inter partes review. Pet. 1; see IPR2015-
`00124. Petitioner also informs us that related U.S. Patent Nos. 8,313,023 B1
`and 8,511,550 B1 (“’023 patent” and “’550 patent,” respectively) are the
`subjects of covered business method review proceedings, cases CBM2014-
`00095 (“’023 CBM”) and CBM2014-00096 (“’550 CBM”). Pet. 1
`C. The ’152 Patent
`The ’152 patent discloses systems and methods for converting points
`or credits from one loyalty program to a different loyalty program and
`redeeming the points or credits for services or merchandise. Ex. 1001,
`Abstract. One embodiment of the ’152 patent is illustrated in Figure 1,
`reproduced below.
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`As shown in Figure 1, non-negotiable points or credits 136 earned from a
`consumer incentive activity 122 (e.g., a frequent flyer loyalty program) are
`converted to negotiable funds 138 provided by conversion agency 136. Id.
`at 3:60–64; Fig. 1. According to the ’152 patent, consumer incentive
`activity 122 is sponsored by credit providing entities 120. Ex. 1001, 6:19–
`21. Examples of “[c]redit providing entities 120 []includes corporations
`such as airlines, hotels, credit card companies, casinos, cruise ships, States
`(for lottery, scratch off games, etc.), churches, race tracks, online gambling
`site providers, e-commerce sites, slot-machine houses, carnivals, gambling
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`parlors, companies (for promotional sweepstakes), high schools (for raffles),
`and the like.” Id. at 6:21–27.
`The ’152 patent discloses an “online embodiment,” described as
`Embodiment 150 in Figure 1, where “person 110 can interact (130) with
`credit providing entity site 156 to participate in consumer incentive activity
`122.” Ex. 1001, 4:38–41; Fig. 1. According to embodiment 150,
`“commercial transaction 114 can be conducted via an e-commerce Web site
`157.” Id. at 4:41–42. “Additionally, conversion agency 124 can implement
`a software based conversion service 158, which performs conversion of non-
`negotiable funds 136 into the negotiable funds 138.” Id. at 4:43–46. “Web
`sites 156, 157 and service 158 can run within one or more servers 154.” Id.
`at 4:46–47. “[S]ervers 154 can be connected to client 152 via network 153,
`where client 152 is a computing device that user 110 interacts (130 and/or
`114) with.” Id. at 4:47–50.
`The ’152 patent discloses an “account transfer embodiment,”
`described as Embodiment 170 in Figure 1, where user 110 participates in
`consumer incentive activity 122 (e.g., in this instance game of chance 172).
`Id. at 5:15–17; Fig. 1. “Earnings (134, 136) from the consumer incentive
`activity 122 are recorded within tangible data store 174 associated with
`credit providing entity 120.” Id. at 5:18–20. Data store 174 can include
`account 175 for user 110, which tracks the amount of credits 134 (i.e.,
`non-negotiable funds 136) belonging to user 110. Id. at 5:20–23. According
`to the ’152 patent, conversion agency 124 can directly access account 175 of
`data store 174 and can convert a quantity of credits 134 into negotiable funds
`138, which are recorded in tangible data store 176 (not directly associated
`with entity 120). Id. at 5:23–27. “[D]ata store 176 can include account 177
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`for the [user] 110, which contains an amount of negotiable funds 138
`belonging to [user] 110.” Id. at 5:27–29. User 110 can conduct commercial
`transactions 114 via machine 179, such as a kiosk, an ATM, etc., which can
`a can assess and dispense the funds in account 177. Id. at 5:29–31.
`D. Illustrative Claims
`As noted above, an inter partes review was instituted as to claims
`1–20 of the ’152 patent, of which claims 1, 7, and 13 are independent
`claims. Claim 1 is illustrative of the challenged claims and is reproduced
`below (with paragraphing):
`1. A method comprising:
`an entity agreeing to permit transfers or conversions of non-
`negotiable credits to entity independent funds, wherein the entity agrees
`to compensate a commerce partner by paying an amount in cash or
`credit for each non-negotiable credit redeemed by the commerce
`partner, wherein said non-negotiable credits are loyalty points of the
`loyalty program possessed by a member, wherein the loyalty points are
`maintained in a loyalty program account owned or controlled by the
`entity, wherein the entity redeems the loyalty points for a set of entity
`services that the entity provides to the member, wherein said entity
`independent funds are different loyalty points of a different loyalty
`program of a commerce partner, wherein the different loyalty points are
`redeemable by the commerce partner for commerce partner services
`that the commerce partner provides to the member, wherein said entity
`independent funds are possessed by the member and are maintained in
`a funds account, wherein the funds account is neither owned or
`controlled by the entity or by any subsidiary or parent of the entity,
`wherein the entity does not accept the entity independent funds as
`payment for any of the entity services;
`the computer detecting a set of two or more interactions earning
`additional non-negotiable credits for the member in accordance with
`terms-of-use of the loyalty program, wherein the computer adds the
`additional non-negotiable credits to the loyalty program account; and
`responsive to an indication of a conversion operation occurrence,
`the computer subtracting a quantity of the non-negotiable credits from
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`the loyalty program 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,
`wherein the conversion operation occurrence causes the subtracting of
`the non-negotiable credits from the loyalty program account to occur
`approximately concurrently with an addition of a corresponding
`quantity of entity-independent funds being added to the funds account
`per the conversion operation occurrence.
`
`Ex. 1001, 16:5–45.
`
`II. DISCUSSION
`
`A. Claim Construction
`In an inter partes review, claim terms in an unexpired patent are
`interpreted according to their broadest reasonable construction in light of the
`specification of the patent in which they appear. 37 C.F.R. § 42.100(b); see
`In re Cuozzo Speed Technologies, LLC, 778 F.3d 1271, 1279–83 (Fed. Cir.
`2015), cert. granted, Cuozzo Speed Techs. LLC v. Lee, 136 S. Ct. 890
`(mem.) (2016). Under the broadest reasonable construction standard, claim
`terms are given their ordinary and customary meaning, as would be
`understood by one of ordinary skill in the art in the context of the entire
`disclosure. In re Translogic Tech., Inc., 504 F.3d 1249, 1257 (Fed. Cir.
`2007).
`
`Petitioner proposes constructions for the following claim terms:
`“entity,” “non-negotiable credits,” and “entity independent funds,” which are
`recited at least in independent claims 1, 7, and 13. Pet. 6–9. In our Decision
`to Institute, we determined that Petitioner’s proposed constructions are
`consistent with the broadest reasonable construction, and adopted them.
`Dec. to Inst. 7–10. We also construed “loyalty program of an entity / loyalty
`program of a commerce partner” to mean a program backed by the entity so
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`that the value of the loyalty points of the entity’s loyalty program is
`guaranteed or secured by the entity. Id. at 10–11. Neither party has
`indicated that our constructions are improper and we do not perceive any
`reason or evidence that now compels any deviation from our initial
`constructions. Accordingly, the following claim constructions apply to this
`Final Written Decision:
`Claim Term
`entity
`
`non-negotiable credits
`
`entity independent funds
`
`Loyalty Program of an Entity /
`Loyalty Program of a Commerce
`Partner
`
`Construction
`an organization that has a rewards
`program for a consumer
`credits which are accepted only by
`the granting entity of the credits
`funds acceptable as payment by at
`least one entity different from the
`original granting entity of the non-
`negotiable credits
`a program backed by the entity so
`that the value of the loyalty points
`of the entity’s loyalty program is
`guaranteed or secured by the entity
`
`Our analysis in this Decision is not impacted by whether we apply the
`broadest reasonable interpretation or the Phillips standard applicable to
`district court proceedings. See Phillips v. AWH Corp., 415 F.3d 1303 (Fed.
`Cir. 2005) (en banc).
`B. Principles of Law
`A claim is unpatentable under 35 U.S.C. § 103(a) if the differences
`between the subject matter sought to be patented and the prior art are such
`that the subject matter as a whole would have been obvious at the time the
`invention was made to a person having ordinary skill in the art to which said
`subject matter pertains. KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 406
`(2007). The question of obviousness is resolved on the basis of underlying
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`factual determinations, including: (1) the scope and content of the prior art;
`(2) any differences between the claimed subject matter and the prior art;
`(3) the level of skill in the art; and (4) objective evidence of nonobviousness,
`i.e., secondary considerations. See Graham v. John Deere Co., 383 U.S. 1,
`17–18 (1966).
`In that regard, an obviousness analysis “need not seek out precise
`teachings directed to the specific subject matter of the challenged claim, for
`a court can take account of the inferences and creative steps that a person of
`ordinary skill in the art would employ.” KSR, 550 U.S. at 418; see
`Translogic, 504 F.3d at 1259. A prima facie case of obviousness is
`established when the prior art itself would appear to have suggested the
`claimed subject matter to a person of ordinary skill in the art. In re Rinehart,
`531 F.2d 1048, 1051 (CCPA 1976).
`We analyze the instituted grounds of unpatentability in accordance
`with the above-stated principles.
`C. Level of Ordinary Skill in the Art
`The applied prior art reflects the appropriate level of skill at the time
`of the claimed invention. See Okajima v. Bourdeau, 261 F.3d 1350, 1355
`(Fed. Cir. 2001).
`D. Asserted Obviousness of Claims 1–20 in view of Postrel,
`Sakakibara, and MacLean
`Petitioner contends claims 1–20 of the ’152 patent are unpatentable
`under 35 U.S.C. § 103 in view of Postrel, Sakakibara, and MacLean.
`Pet. 14–60. To support its contentions, Petitioner provides detailed
`explanations as to how the combination of prior art meets each claim
`limitation. Id. Petitioner also relies upon a Declaration of Matthew Calman
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`(Ex. 1002) for support. For reasons that follow, we determine that Petitioner
`has shown by a preponderance of the evidence that the challenged claims of
`the ’152 patent would have been obvious in view of Postrel, Sakakibara, and
`MacLean.
`
`1. Overview of Postrel
`Postrel describes a system in which a user may redeem reward points
`earned with a merchant, or may redeem the points with another merchant
`through an exchange network. Ex. 1003 ¶ 9. The user additionally may
`aggregate reward points with those of other merchants into a central
`exchange account and then redeem the points for goods or services from any
`approved merchant on the network. Id. ¶¶ 10, 44.
`One embodiment in Postrel discloses a system that is illustrated in
`Figure 4, reproduced below.
`
`
`Figure 4 shows reward server computers 10, 12, 14, trading server 20,
`merchant computer 30 and user computer 40 in communication with
`network 40. Id. ¶ 59. According to Postrel, a user may acquire and
`accumulate reward points through any loyalty program and the points are
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`posted in a user’s reward account, which is accessible through reward server
`computer 10. Id. Postrel discloses that trading server 20 has both (i) a
`communication means to allow users to access the server and to allow the
`trading server to contact reward servers and (ii) a processing means to
`interpret the rules and coordinate the contact to the respective reward
`servers. Id. ¶ 68, Fig. 5. The processing means is adapted to allow the user
`to request and exchange consideration for rewards from reward servers, and
`coordinates the exchange of consideration and then can increase or decrease
`the user exchange accounts stored in memory in response to actions
`performed by the user computer, reward server, and/or merchants. Id. ¶ 68.
`Another embodiment in Postrel discloses maintaining loyalty points
`by storing user and merchant account information in database 54, which is
`associated with trading server 20. Id. ¶ 32. This embodiment is shown in
`Figure 12, reproduced below.
`
`
`Figure 12 illustrates a simple database format wherein each merchant and
`user under that merchant has a record which indicates how many points are
`in the account, as well as other optional information (such as par value of
`points, restrictions on use, etc.). Id.
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`2. Overview of MacLean
`MacLean discloses an apparatus and a method for facilitating the
`exchange of points between selected entities. Ex. 1004, Abstract. The
`method of MacLean specifically allows for tracking, managing, and
`exchanging points that are issued and redeemed in the context of a loyalty
`program. Id. ¶ 14. Figure 1, reproduced below, illustrates one embodiment
`of a point management system taught in MacLean.
`
`
`In Figure 1, “point management system 100 facilitates interaction
`
`between customer 110, a transaction center 120 and a plurality of points
`issuers 130a–c.” Id. ¶ 40. According to MacLean, point issuer 130 is any
`entity that (i) controls the disposition and distribution of a currency and (ii)
`operates a Loyalty Program that controls a private currency of points. Id.
`MacLean discloses that the points managed by system 100 may take the
`form of a variety of Loyalty Program (“LP”) points such as those issued by
`airlines, hotels, financial entities, e.g., credit cards, and networks, e.g., portal
`web sites on the Internet. Id.
`Another embodiment of the system taught in MacLean is illustrated in
`Figure 3, reproduced below.
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`Figure 3 shows the steps that MacLean’s point management system
`100 uses to permit a customer to affect an exchange of points from one LP to
`another. MacLean teaches that customer 110 opens a portfolio with
`transaction center 120 and enters information regarding each points issuer
`130 a–c with whom customer 110 has participated and has accumulated LP
`points. Id. ¶ 50; Figs. 4a–b. Transaction center 120 validates that customer
`110 has an account with each points issuer 130 a–c. Id. A valid account
`confirmation record will include the current points balance for that LP
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`account and transaction center 120 will add the account to customer 110’s
`the portfolio. Id. ¶ 50; Fig. 4E.
`MacLean discloses an embodiment that uses computer programs to
`implement the exchange of point from a first issuer LP (from which points
`are withdrawn) to a second issuer LP (to which points are deposited and
`received). Id. ¶ 52; Figs. 5A, 6A–I. This embodiment is illustrated in
`Figure 5A, reproduced below.
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`Figure 5A shows that once a customer has validated accounts in its
`portfolio, the customer can follow a series of steps to request that points be
`exchanged between two issuer LPs. According to MacLean, after the
`customer designates the withdrawing LPs, step 507 of Figure 5A compares
`the current point balances of the customer’s accounts in the withdrawing LPs
`with the number of points requested in step 506 and if the requested points is
`greater than the assessed account balances, then step 508 terminates the
`point exchange carried out by the execution of the point exchange program
`500 and a message is displayed to notify the customer that its current point
`balances are insufficient to complete the requested points exchange. Id.
`¶ 52; Figs. 5A. On the other hand, MacLean explains that “if the points are
`available in the customer’s LP accounts, then the point exchange program
`500 moves to step 509, which displays web page 630.” Id. ¶ 52; Figs. 5A,
`6D. Web page 630 includes a box 632 for step 510, which permits the
`customer to designate the depositing LP to which the points are transferred.
`Id. ¶ 52; Fig. 6D. Step 511 in MacLean calculates the exchange rates for
`this points transaction and displays a summary of the withdrawal and deposit
`points. If the customer chooses to continue with the transaction, then in step
`515 the customer enters any required payment information needed to affect
`the exchange. Id. ¶ 52; Fig. 6D–6I.
`MacLean discloses that “[o]nce the details of the requested points
`exchange have been accumulated and confirmed by the web server 230”,
`“points exchange program 500 is executed in a two-step procedure.” Id. ¶
`53; Fig. 2. “The first step performs all of the points withdrawals from the
`designated withdrawing LPs and the second step performs the points deposit
`to the designated depositing LPs.” Id. ¶ 53.
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`3. Overview of Sakakibara
`Sakakibara discloses a system for managing and exchanging points
`received as rewards for purchasing products, or using various products or
`services. Ex. 1005, 1:10–29. The system in Sakakibara allows a user to
`convert points from one program into points from another program in
`accordance with a conversion ratio. Id. at 7:7–10.
`Figure 1, reproduced below, illustrates one embodiment disclosed in
`Sakakibara.
`
`
`As shown in Figure 1, a first business entity 100 provides on-lines
`services, as well as loyalty points that are used as virtual money but can only
`be used on communication network 400. Id. at 6:3–12. Another
`embodiment in Sakakibara discloses that the loyalty points issued by first
`business entity 100 are redeemable only by first business entity 100. Id. at
`12:64–13:30.
`According to the illustration in Figure 1, “customers 200 are
`connected to communication network 400 through customer-use terminal
`units 20 such as personal computers, and also have a membership to point
`services provided by various second business entities 300 that serve valuable
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`points which are exchangeable for various products and services as a reward
`for consumption activity.” Id. at 6:16–22. First business entity 100 and
`second business entities 300 enter business cooperation contracts with each
`other and the entities are connected to network 400 through cooperate-use
`terminal units 30. Id. at 6:25–29. According to Sakakibara, communication
`points database 101 records information related to loyalty points, while
`exchange database 102 records information related to an exchange rate of
`loyalty points and various valuable exchange points managed by second
`business entities 300, and customer information database 103 records
`information related to customers 200. Id. at 6:44–51.
`Sakakibara provides an embodiment that allows customers 200 to
`authenticate their identities, confirm that they have memberships with first
`business entity 100 and respective second business entities 300, and then
`exchange loyalty points between the business entities. Id. at 7:40–8:10.
`Sakakibara discloses that in exchange database 102, data indicating the
`exchange rates between the valuable exchange points and the loyalty “points
`managed by respective second business entities 300 are recorded in the items
`showing the names of respective second business entities 300 (or the
`common names of provided services).” Id. at 7:1–6. Figure 4, reproduced
`below, illustrates an example of exchange rates established for second
`business entities 300 using Sakakibara’s system.
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`Figure 4 shown exchange rates used to calculate the value of loyalty
`points and determine the appropriate exchange information. Id. at
`8:36–8:40. “[T]he recorded exchange rates are values set according to the
`contents of the contracts made between first business entity 100 and
`respective second business entities 300.” Id. at 7:7–10.
`4. Analysis
`Petitioner contends the disclosures of Postrel, Sakakibara, and
`MacLean, as summarized above, teach or suggest each limitation of claims
`1–20 of the ’152 patent. Pet. 14–60.
`a. Independent Claims 1, 7, and 13
`Petitioner contends that a person of ordinary skill in the art would be
`well versed in loyalty programs, loyalty points, and the conversion or
`exchange of loyalty points. Id. at 10–14. Postrel, Sakakibara, and MacLean
`are all in the same field (loyalty points management systems) and address
`the same problem – managing/controlling and exchanging/converting loyalty
`points. Id. at 15–19; see Ex. 1002 ¶¶ 54, 64, 74. Petitioner supports its
`position with the Declaration of Mr. Calman, who testifies that a person of
`skill in the art would have understood that Postrel, Sakakibara, and MacLean
`relate to general principles of loyalty programs and include well-known
`features (such as withdrawing points from one loyalty program and
`converting them to another loyalty program’s points) that were widely
`practiced in loyalty programs, thereby rendering the challenged claims
`obvious. Ex. 1002 ¶¶ 54, 64, 74.
`Petitioner contends that Postrel discloses agreeing to permit
`conversions (i.e., aggregation or exchange) because Postrel describes an
`agreement, in the form of an “exchange rate and fee structure . . . set
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`amongst [i.e., agreed upon by] the merchants [e.g., Smith Pizzeria] and the
`exchange server operator [e.g., VISA].” Pet. 15–16 (citing Ex. 1003 ¶¶ 45,
`56). Petitioner then contends that Postrel teaches the use of loyalty points as
`non-negotiable credits and such loyalty points may be subject to a
`“restriction on use.” Id. at 16 (citing Ex. 1003 ¶¶ 8, 32, 41). According to
`Petitioner, Postrel’s loyalty points are consistent with the general concept
`that loyalty points earned from one merchant could not be redeemed for
`services at another merchant, which Petitioner argues has long been the
`standard practice. Id. at 16 (citing Ex. 1002 ¶¶ 51–53, 98–100, 145–147).
`Petitioner further contends that Sakakibara discloses the concept that
`loyalty points are non-negotiable credits. Id. at 16–17. According to
`Petitioner, 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 and explicitly recognizes that, absent
`conversion, another entity (i.e., a commerce partner) does not accept the
`nonnegotiable credits as payment for services. Id. (citing Ex. 1005,
`Abstract, 7:7–10, 12:64–13:30); Ex. 1002 ¶¶ 56, 100, 147. Petitioner cites to
`claim 9 of Sakakibara as support for its position, because “[c]laim 9 recites
`that, prior to conversion, loyalty points issued by [one] entity are only
`redeemable at that entity (i.e., they are nonnegotiable).” Pet. 17 (citing Ex.
`1005, 12:64–13:30).
`Petitioner then contends that both Postrel and MacLean teach “real
`time” transactions. Pet. 18. Petitioner explains that MacLean discloses a
`transaction server that affects a points exchange (i.e., subtracting non-
`negotiable credits from the entity loyalty program fund, and adding entity-
`independent funds to the commerce partner loyalty program fund) via an
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`application programming interface (API), i.e., a “real time” (approximately
`concurrent) protocol and immediately displays those points totals. Pet. 18
`(citing Ex. 1004 ¶¶ 51, 57–59, Figs. 6E, 6F). Petitioner concludes that one
`of skill in the art would have been motivated to combine Postrel and
`MacLean in order to minimize any significant delay in completing a
`conversion operation, which would avoid a situation where a user’s account
`reflects only a partially-complete conversion operation and thus, inaccurate
`information about points totals. Id. at 18–19; Ex. 1002 ¶¶ 72–74, 117–119,
`169–171.
`We agree with, and adopt as our own, Petitioner’s position that the
`combined teachings of Postrel, Sakakibara, and MacLean, as summarized
`above, teaches or suggests each limitation of challenged claims 1, 7, and 13,
`specifically that the combined disclosures of Postrel, Sakakibara, and
`MacLean teach or suggest “wherein said non-negotiable credits are loyalty
`points of the loyalty program possessed by a member” and “wherein said
`entity independent funds are different loyalty points of a different loyalty
`program of a commerce partner.” We credit the testimony of Mr. Calman,
`who states that “Postrel describes that the non-negotiable credits are loyalty
`points of a loyalty program possessed by a member (i.e., a user).” Ex. 1002
`¶ 105 (citing Ex. 1003 ¶¶ 9, 25, 30, Fig. 14). Mr. Calman further testifies
`that “Postrel also describes an acquiring bank that maintains the loyalty
`points in a loyalty program owned and controlled (contractually) by the
`entity (i.e., a merchant).” Id. With respect to the loyalty points and the
`loyalty program being different as required by the claims, Mr. Calman
`explains that “Postrel describes that entity independent funds are loyalty
`points of the central or exchange server operator (such as MasterCard,
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`VISA, or American Express) loyalty program [which] is different than the
`merchant’s, such as the Pizzeria’s, loyalty program”, and “a user instructs
`the central exchange server to exchange points into his exchange account
`from selected merchant loyalty accounts.” Ex. 1002 ¶ 108 (citing Ex. 1003
`¶¶ 30, 43, 59). We give Mr. Calman’s testimony substantial weight in that
`regard because it is supported by Postrel’s disclosure and what Postrel would
`have conveyed to a person of ordinary skill in the art at the time of the
`invention.
`We also agree with, and adopt as our own, Petitioner’s position that
`loyalty points, prior to conversion, are non-negotiable credits. See Pet.
`16–18. Postrel recognizes that, absent an exchange system, redeeming
`loyalty points is restricted to goods or services of the entity that issued the
`points. Ex. 1003 ¶¶ 5, 41. Furthermore, we credit the testimony of Mr.
`Calman that it was well known in the art that loyalty points, prior to
`conversion, are non-negotiable credits, as evidenced by Sakakibara. Ex.
`1002 ¶ 53 (citing Ex. 1005, 12:64–13:30); see also id. ¶¶ 46–48 (discussion
`of the knowledge of one of skill in the art at the time of the alleged
`invention). Mr. Calman’s testimony is consistent with the description in the
`’152 patent regarding the state of the art at the time of the invention, which
`indicates that “[e]ntities often reward consumers for utilizing their services
`with certain credits. These non-negotiable credits, can often be applied
`towards products and/or services provided by a granting entity or its
`affiliates.” Ex. 1001, 1:32–35 (emphases added). Therefore, we are
`satisfied one of ordinary skill in the art would have recognized that, in light
`of Sakakibara, Postrel’s loyalty points, prior to conversion, are non-
`negotiable credits.
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`We also determine that Petitioner has ident