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`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`____________
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`
`
`Askeladden LLC
`Petitioner
`
`v.
`
`Sean McGhie and Brian Buchheit
`Patent Owner
`
`
`
`____________
`
`Case IPR2015-00137
`Patent 8, 297, 502
`____________
`
`
`Before SALLY C. MEDLEY, Administrative Patent Judge
`
`
`
`
`
`
`PATENT OWNER’S PRELIMINARY RESPONSE
`
`
`
`
`TABLE OF CONTENTS
`
`
`TABLE OF AUTHORITIES ………………………………………….
`LIST OF PETITIONER’S EXHIBITS..………………………………..
`LIST OF PATENT OWNERS’ EXHIBITS…………………………….
`I.
`INTRODUCTION …………………………………………..
`II.
`CLAIM CONSTRUCTION…………………………………..
`III. PETITION’S 35 USC103 GROUNDS DEFICIENT………….
`IV. REAL PARTY OF INTEREST IMPROPER………………….
`V. CONCLUSION ………………………………………………..
`
`
`
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`Page(s)
`iii
`iv
`ix
`1
`2
`2
`29
`36
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`ii
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`TABLE OF AUTHORITIES
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`CASES
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`STATUTES
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`35 U.S.C. §103 ……………………………………………………….. 5, 41, 46
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`Page(s)
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`iii
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`
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`LISTS OF EXHIBITS
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`PETITIONER’S EXHIBITS
`
`
`1501
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`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
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`web site: "Air rewards"
`
`1508
`
`Wayback Machine archive dated January 4, 1997, for Citibank web
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`site: "Citibank Cards and Services"
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`1509
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`Wayback Machine archive dated December 1, 1998, for American
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`Express web site: "Rewards Cards"
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`1510
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`Wayback Machine archive dated June 21, 2000, for American Express
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`
`
`iv
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`
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`web site: "Shopping rewards"
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`1511
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`Wayback Machine archive dated December 9, 2003, for Marriott
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`Rewards web site: "Air Mileage"
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`1512
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`Wayback Machine archive dated November 25, 2002, for Starwood
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`Hotels & Resorts web site: "Transfer: Airlines"
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`1513
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`Wayback Machine archive dated June 19, 2000, for United Airlines
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`web site: "Mileage Plus partners"
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`1514
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`Wayback Machine archive dated July 17, 2004, for WebFlyer web site:
`
`"Mileage Converter"
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`1515
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`MacDonald, Jay, Experience rewards pay off for some credit card
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`users, Bankrate.com, November 17, 2003 (available at http: / / www.
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`bankrate.com/finance/credit-cards /experience-rewards-pav-off-for-
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`some-credit-card-users-i.aspx)
`
`1516
`
`Claim Construction Memorandum Opinion and Order, issued
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`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
`
`
`
`v
`
`
`
`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. 835113550
`
`(assigned CBM2014¬00096)
`
`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
`
`
`
`vi
`
`
`
`"The Points You've Been Waiting For"
`
`1525
`
`Wayback Machine archive dated April 15, 1998 for American Airlines
`
`web site: “Welcome to AA.com”
`
`1526
`
`Security and Exchange Commission Letter from the Chief: Accountant
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`Issues Related to Internet Operations, October 18, 1999, available at
`
`http://www.sec.gov/info/accountants/staffletters/calt1018.htm
`
`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.orglcs /BlobServer? Blobkey=id
`
`&blobnocache=true&blobwhere= 117 5 820904 620&blobheader= a-
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`Dl2hcation/t)df&blobheadername2=Content-Length blobheadervalue1
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`=Content-Disposition&blobheadervalue2 = 79 5 6 3&blobheadervalue
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`1= filenameabs00¬22.pdf&b1obco1 urldata&blobtableMungoBlobs
`
`1528
`
`Stone, et al., User Interface Design and Evaluation, Interactive
`
`Technologies (April 29, 2005)
`
`1529
`
`U.S. Patent No. 5,513,359
`
`
`
`vii
`
`
`
`1530
`
`George Bond, “Gateways to the Internet,” Byte Magazine, pp. 229-31
`
`(Sept. 1995)
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`
`viii
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`
`
`PATENT OWNERS’ EXHIBITS
`
`IATA Special Report – The Price of Loyalty
`
`2001
`
`2002
`
`Definition of Commerce, from Oxford
`
`2003
`
`Definition of Partner, from Yahoo
`
`2004
`
`Definition of Loyalty Program, from Wikipedia
`
`2005
`
`An Open Economy in the Loyalty Rewards Space – Good for Whom
`
`2006
`
`Creative Business: Substitutes and Complements
`
`2007
`
`Strategic Report for Southwest Airlines
`
`2008
`
`Using Points.com to Combine Miles and Points: A Good Deal?
`
`2009
`
`Loyalty Traveler Examines Points.com Exchange Value
`
`2010
`
`Proprietary Programs vs. Coalition Loyalty
`
`2011
`
`Declaration of Independence?
`
`The Economics Behind Customer Loyalty: Using Coalition Program
`
`2012
`
`Assets to Turbo-Charge Results
`
`2013 What Miles & Points are Worth: Airline Miles
`
`2014 MacLean Prosecution History Response of 12-02-2005
`
`2015 MacLean Prosecution History Response of 08-23-2006
`
`2016 MacLean Prosecution History Response of 03-05-2008
`
`2017 MacLean Prosecution History Response of 06-27-2011
`
`
`
`ix
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`
`
`Email 1: from Brian Buchheit to Justin Oliver and Frank DeLucia on
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`2018
`
`December 12, 2014, 11:41 AM
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`2019
`
`Email 2: Response to Email 1
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`Email 3: from Brian Buchheit to Justin Oliver on December 12, 2014,
`
`12:11 PM
`
`Email 4: from Justin Oliver and Frank DeLucia to Brian Buchheit on
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`December 22, 2014, 11:27 AM
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`Email 5: Response to Email 4 from Brian Buchheit to Justin Oliver and
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`Frank DeLucia on December 22, 2014, 1:06 PM
`
`Email 6: Response to Email 5 from Justin Oliver and Frank DeLucia,
`
`AskeladdenIPR, and Sean McGhie on December 23, 2014, 11:24 AM
`
`Email 7: Response to Justin Oliver, AskeladdenIPR and Sean McGhie
`
`from Brian Buchheit on December 31, 2014, 10:44 AM
`
`Email 8: From Justin Oliver to Brian Buchheit, AskeladdenIPR and
`
`Sean McGhie on January 13, 2015, 6:15 PM
`
`Email 9: Response to Justin Oliver, AskeladdenIPR and Sean McGhie
`
`on January 14, 2015, 8:08 AM
`
`IAM: New Banking Group Launches with Focus On Improving Patent
`
`Quality (available at: http://www.iam-magazine.com / Blog/ Detail.
`
`x
`
`2020
`
`2021
`
`2022
`
`2023
`
`2024
`
`2025
`
`2026
`
`2027
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`
`
`
`
`2028
`
`2029
`
`aspx?g=972d0d5d-d116-42fd-945d-82ac28c33b3a)
`
`Patent Quality Initiative FAQ (available at:
`
`http://www.patentqualityinitiative.com/about%20pqi/faq)
`
`Patent Quality Initiative Leadership Team (available at:
`
`http://www.patentqualityinitiative.com/about%20pqi/team)
`
`The Clearing House Executive Management (available at:
`
`2030
`
`http://www.theclearinghouse.org/about-tch/tch-executives/executive-
`
`management)
`
`The Clearing House Payments Executives (available at:
`
`2031
`
`http://www.theclearinghouse.org/about-tch/tch-executives/payments-
`
`executives)
`
`The Clearing House Association Executives (available at:
`
`2032
`
`http://www.theclearinghouse.org/about-tch/tch-executives/association-
`
`executives)
`
`Press Release: “Patent Quality Initiative Launched to Facilitate Better
`
`2033
`
`Patents and Fewer Disputes”
`
`Press Release: “Patent Quality Initiative Challenges the Validity of Five
`
`2034
`
`Patents by Filing Nine IPRs” (available at:
`
`http://www.patentqualityinitiative.com/news/press%20releases/2014_oct
`
`
`
`xi
`
`
`
`%2024_nine%20i)
`
`2035
`
`U.S. Patent No. 8,595,055 to MacLean, et al.
`
`Liu, Jack C. “Bitcoin backed corporate currencies are coming”
`
`2036
`
`(available at: http://jackcliu.com/post/102166140017/bitcoin-backed-
`
`corporate-currencies-are-coming)
`
`Winship, Tim “Looming Bankruptcies Threaten Airline Miles”
`
`2037
`
`(available at: http://www.smartertravel.com/travel-advice/Looming-
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`bankruptcies-threaten-airline.html?id=10712)
`
`
`
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`
`
`xii
`
`
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`
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`Pursuant to 37 C.F.R. § 42.207(a), the owners of U.S. Patent No. 8, 297,
`
`502 (“the ‘502 patent”), Sean McGhie and Brian Buchheit ("Patent Owner"),
`
`hereby submits the following Preliminary Response in response to the Petition
`
`for Inter Partes Review ("IPR") Review of the ‘502 patent; Ex 1001. The ‘502
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`patent is one of three related patents being challenged by the Petitioner in co-
`
`pending IPR petitions, the others being IPR2015-00122, IPR2015-00123,
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`IPR2015-00124, IPR2015-00125, and IPR2015-00133. Patent owners request
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`that the Board determines the grounds of IPR2015-00137 are deficient for
`
`reasons stated herein.
`
`
`I.
`
`
`
`
`INTRODUCTION
`
`The ‘502 patent and related patents (there are twenty eight patents total –
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`twenty five (25) issued and three pending issue) relate to transferring a member’s
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`loyalty points across loyalty program boundaries in accordance with an agreement
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`between two program operators. The petition notes the substantial number of
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`references filed for the ‘502 patent, which is a result of diligent searching of all
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`known prior art and of properly presenting this information to the USPTO
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`Examiner, who has examined these references using his extensive knowledge of
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`this field and has continuously found the claimed subject matter to be patentable
`
`
`
`1
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`
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`over this prior art. Additionally, the PTAB reviewed claims of the 8, 511, 550
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`patent in CBM2014-0096 based on the MacLean referenced cited herein, and
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`found the claims to be patentable over MacLean in their decision to not institute.
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`The grounds asserted herein are redundant to those previously asserted to which
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`the Board has already rendered a decision. Patent Owners ask that the same
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`decision (based on the same rationale) be determined for the instant petition.
`
`
`
`
`
`II.
`
`
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`CLAIM CONSTRUCTION
`
`
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`
`
`The Petitioner’s claim construction defines the terms “entity”, “non-
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`negotiable credits,” and “entity independent funds.” For purposes of the
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`institution decision only, the Petitioner’s claim construction on these three terms
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`may be used by the Board. Patent Owners expressly reserves the right to
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`challenge the claim construction asserted by the Petitioner should the IPRs be
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`instituted and should claim construction of these three terms be at issue at such a
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`time.
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`
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`III. The Petition’s 35 USC 103 Grounds Are Deficient
`
`
`
`
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`A. Combination of Postrel and Sakakibara is Improper
`
`Sakakibara is silent in regards to a networked loyalty program, such as the
`
`one taught by Postrel. Claims 1, 4-10, 12-17, and 20-30 were asserted as being
`
`
`
`2
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`
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`obvious in light of Postrel in view of Sakakibara. No proper motivation is
`
`provided for this combination, and the asserted grounds fail as a result.
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`
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`Pages 15- 19 of the Petition appear to be the only places in the Petition
`
`where support for combining Postreal in view of Sakakibara exists. Pages 15-17
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`provide Petitioner assertions regarding teachings of Postrel. The bottom of page
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`17 states “Moreover, such a concept is explicitly disclosed in Sakakibara (after
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`discussing many things that Postrel is asserted to teach). Continuing, page 17
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`provide Peitioner assertions regarding teachings of Sakakibara. Continuing, Page
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`18 asserts “One or ordinary skill in the art would have recognized that Postrel’s
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`individual merchant loyalty points would preferably have been accepted only by
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`the merchant, but would not have been accepted as payment with another merchant
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`…” This is a false statement. Postrel’s intended purpose includes establishing a
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`networked loyalty program, having points accepted by multiple merchants. These
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`points are explicitly fungible (last sentence of para 0036) and are explicitly
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`negotiable (para 0063: “The term point is used to reference any earned value that
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`has a cash equivalent or negotiable worth …”); See also para 0063 first sentence,
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`para 0044, first sentence. This statement proposes a modification EXPLICILTY
`
`adverse to the intended purpose and principle of operation of Postrel. Continuing,
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`page 18 asserts “… based on the explicit teachings of Sakakibara, which also
`
`relates to the general principles of loyalty programs.” Postrel, as a networked
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`
`
`3
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`
`
`loyalty program, attempts to include multiple merchants and users within its
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`program, as known by one of ordinary skill in the art (i.e., one of ordinary skill in
`
`the art knows including multiple merchants and consumer members is a general
`
`principle of networked loyalty programs). Continuing, page 17 asserts “Indeed,
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`both references are directed to loyalty points earned by customer activity”. This is
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`a statement unrelated to the proposed modification. Page 17 continues with
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`“Second, both references describe withdrawing points from one loyalty program
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`and converting them to another loyalty program’s points.” This is unrelated to the
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`asserted change. Further, both of the above are statements of commonality, which
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`means no change would be necessary for Postrel to possess these asserted features.
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`Hence, it does not provide a rational underpinning to make a change to Postrel’s
`
`teachings. One of ordinary skill would not combine teachings from two different
`
`references in order to have redundant teachings. Page 17 continues with “While
`
`Postrel does not state in detail that loyalty points issued by a merchant are only
`
`accepted as payment by that merchant, this was a well understood feature of
`
`loyalty points, as clarified by Matthew Calman and as evidenced by Sakakibara.”
`
`This statement of what is “well known” is directly contradicted by explicit
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`teachings of Postrel (see para 0047; last sentence of para 0036). Additionally, the
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`statement is untrue in context, as networked loyalty programs typically permit
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`merchants redemption for merchants other than the point distributors. (See
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`
`
`4
`
`
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`Antonucci, which is a networked loyalty program cited in the CBM2014-00096 (ex
`
`1019), for example). To this point, no proper motivation for modifying teachings
`
`of Postrel in light of teachings of Sakakibara have been provided. No other
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`assertions are present in the petition with regards to providing motivation to
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`combine Postrel with Sakakibara for obvious grounds challenging claims 1, 4-10,
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`12-17, and 20-30.
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`
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`The Supreme Court in KSR noted that the analysis supporting a rejection
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`under 35 U.S.C. 103 should be made explicit. The Court quoting In re Kahn, 441
`
`F.3d 977, 988, 78 USPQ2d 1329, 1336 (Fed. Cir. 2006), stated that “[R]ejections
`
`on obviousness cannot be sustained by mere conclusory statements; instead, there
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`must be some articulated reasoning with some rational underpinning to support the
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`legal conclusion of obviousness.” It is consistently held, such as in re Lizer
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`(Appeal 2009-001858) that a generic benefit is not proper motivation, when no
`
`explanation is provided.
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`
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`The asserted grounds of rejection for claims 1, 4-10, 12-17, and 20-30 with
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`regards to combining the teachings of Postrel and Sakakibara have been thoroughly
`
`analyzed, yet no articulated reasoning with some rational underpinning to support
`
`the legal conclusion of obviousness has been asserted. The asserted grounds fail as
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`a result, and the Board should not institute on these grounds on this basis.
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`A. Regarding claims 5, 13, 21, and 30
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`
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`5
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`
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`On pages 18-19, the Petitioner makes some assertions against claims 5, 13,
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`21, and 30, which will be briefly addressed. The Petitioner asserts that claims 5,
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`13, 21 and 30 include limitations that are contradictory. Patent Owners
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`respectfully disagree. The referenced claims note the GUI includes an option to
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`pay for commerce partner goods or services with non-negotiable credits. The
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`independent claims do not mention options to pay, nor do they mention that the
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`conversion option cannot be linked to a GUI option to pay. Hence, the user
`
`selectable ‘option to pay using non-negotiable credits’ can function (when
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`triggered) by performing a conversion operation and using results of the
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`conversion option to pay for the goods. By claim interpretation axioms, claims of
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`issued patents are to be read so as to impart meaning – and there are no
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`inconsistencies with the above asserted meaning (consistent with the claimed
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`limitations).
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`B. Combination of Postrel and MacLean is Improper
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`
`
`In the petition (pages 49-53), claims 2, 3, 11, 18, and 19 were are asserted as
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`unpatentable based on 35 USC 103 in view of a combination of Postrel in view of
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`Sakakibara in further view of MacLean. This combination is improper, so the
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`relied upon grounds for claims 1-20 fail and the petition should not be instituted
`
`for this reason.
`
`As an overview, Postrel describes a networked loyalty program having two
`
`6
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`
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`different types of points, merchant points and exchange points. The networked
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`program operator of Postrel backs both types of points. That is, even if a merchant
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`that previously distributed the networked points goes out of business, the members
`
`of the networked program retain their points. If the networked loyalty program
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`operator goes out of business, both types of the networked loyalty program points
`
`are forfeited (such as in an event of bankruptcy of the networked program
`
`operator). The network program operator establishes terms under which its
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`networked loyalty program operators. The network program points are distributed
`
`by multiple venders (who have to pay the networked operator for the points and for
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`new point originations) and redeemed by multiple venders participating in the
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`networked loyalty program. Postrel lacks teachings for crossing the networked
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`loyalty program boundaries. That is, activities possible within the program
`
`boundaries of the networked loyalty program are unrelated to our claims. They are
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`also unrelated to MacLean’s teachings, which require a transaction center, which is
`
`not a program operator, to perform exchanges outside of the boundaries of any
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`loyalty programs. To do so, a first set of points within program boundaries of a
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`first LP operator are converted to cash, which is a negotiable fund outside any
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`program boundaries. Then, the cash is used to purchase points within the program
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`boundaries of a different program. Each program operator must establish deposit
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`and withdrawal rates (which are cash rates for buying/selling points). The
`
`
`
`7
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`
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`attempted combination doesn’t make sense, as it forces intra-program activities to
`
`be combined with an extra-program exchange. The combination would not be
`
`performed by one of ordinary skill understanding the teachings of Postrel and
`
`MacLean as a result.
`
`
`
`To elaborate and support the above, Postrel establishes a global universal
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`network based rewards program (para 0042, third sentence) that utilizes the
`
`infrastructure of a typical credit card network (abstract, first sentence; para 0026
`
`defining this infrastructure). Postrel allows its network points to be “branded”
`
`(para 0030) while leveraging existing contractual relationships of a credit card
`
`network (para 0031). The point information regardless of branding is held in a
`
`central server (para 0033) of Postrel’s networked loyalty program. By leveraging
`
`the credit card network, points (of both types available in the networked program)
`
`must have a par value (para 0036, last sentence) and points of the networked
`
`program are earned by a customer across many merchants (para 0036, first
`
`sentence). Points held in the central network are redeemed by swiping a credit
`
`card (last sentence of para 0039) at a POS that allows the points to be used as cash
`
`equivalent at credit card accepting merchants (referenced against a cash equivalent
`
`value). If a person is willing to incur credit card ‘network’ fees, branded
`
`merchant points can be unbranded and turned into credit card pre-paid credit,
`
`which is referred to as exchange points (para 0043, last few sentences). In other
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`
`
`8
`
`
`
`words, the two different types of points in Postrel’s networked loyalty program
`
`determine who (the user or a merchant) is responsible for transaction fees (of the
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`credit card network). A person could lose points because of the transaction fees to
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`‘unbrand’ his or her points (first sentence of para 0045) because a merchant in the
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`program typically pays the transaction fees (para 0052), yet unbranding incurs a
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`service fee that the user pays (which is able to be paid using the cash-value of
`
`points, causing a ‘loss’ of points). Without points being fungible (thereby making
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`them negotiable), they cannot be exchanged per Postrel’s teachings. The default
`
`fungibility of points (last sentence of para 0036) and the fact that points have a
`
`cash equivalent (para 0063 “The term point is used to reference any earned value
`
`that has a cash equivalent or negotiable worth …” is what allows the credit card
`
`network to be utilized. Branding of points can permit a “fake” number of
`
`merchant specific points to be attributed to a customer. Regardless of this
`
`branding, each point has a cash value, which is what the centralized system really
`
`uses. In other words a pizza business can brand a dollar’s worth of exchange
`
`points “1000 Pizza points” and a supermarket can brand a dollar’s worth of
`
`exchange points “200 SuperMart points” (FIG. 12), yet aggregating and redeeming
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`these points will always be handled at two dollar worth (total) of exchange points
`
`each (see para 0043-0045). There may be ‘unbraiding’ charges (see first sentence
`
`of para 0045 and para 0046) that is a service fee. These network points regardless
`
`
`
`9
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`
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`of branding are accumulated in a network loyalty program that includes many
`
`different retailers that issue and redeem the network points. Aggregated network
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`points are effectively pre-paid credit card currency that are accepted by every
`
`merchant that accepts as equivalent to credit card payments (para 0047). From
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`Postrel’s teachings, all points (merchant or exchange) are handled as if they are
`
`pegged to a single currency value on a per point basis. This is what allows points
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`to be treated like cash by the credit card network. All redemptions are cash
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`equivalent exchanges, which are made using a credit card. This is a significant
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`limitation imposed on the networked loyalty program points in order to leverage
`
`the credit card infrastructure. (Therefore, concepts such as offering rewards that
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`effectively cost a loyalty point operator nothing – like rewarding otherwise unused
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`capacity are not possible using Postrel’s networked loyalty system. Instead,
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`redemption options are restricted to cash-equivalent transactions purchased via a
`
`credit card. The fundamental equities of balancing costs verses profit from shaping
`
`consumer behavior are therefore not possible, which is the purpose of the claimed
`
`invention – maintaining a beneficial LP that shapes behavior for an entity while
`
`softening the boundaries defined by program restrictions such as black-out dates,
`
`reward restrictions, etc. typically needed to maintain this balance. This balance is
`
`why the transactions of the claims occur across program boundaries with a
`
`commerce partner, with whom a specific relationship with the entity exists - such
`
`
`
`10
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`
`
`as the potential beneficial relationship between Hotels and Airlines, with regard to
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`program loyalty – as discussed in the overview section.)
`
`
`
`MacLean provides teachings that bridge a strong boundary between two
`
`different loyalty programs. These teachings require that each of two or more
`
`program establishes a deposit value and a withdrawal value for its points. (para
`
`0044, second sentence; para 0062, first sentence; para 0062 defining withdrawal
`
`rate deposit rate and liability rate; para 0064, first sentence; para 0064, last
`
`sentence; para 0021; para 0023, second sentence; para 0027; para 0031, last
`
`sentence; para 0037). Without the deposit and withdrawal rates being established
`
`that are baselined against a currency value, MacLean cannot function in
`
`accordance with its declared principles of operation and MacLean cannot be used
`
`for its intended purpose.
`
`
`
`Grounds asserted in the petition for combining Postrel and MacLean are
`
`presented between pages 49-53. Pages 49-50 provide petitioner assertions, which
`
`include assertions about Postrel (but lack assertions for combining Postrel and
`
`MacLean). Continuing, page 50 states “The Postrel and Sakakibara loyalty point
`
`conversion disclosures are consistent with the well understood concept of a second
`
`quantity of non-negotiable credits after a subset of those credits are converted into
`
`entity independent funds (i.e., displaying a remaining account balance of individual
`
`merchant loyalty points after an exchange). Patent owners note that Postrel lacks
`
`
`
`11
`
`
`
`teachings for non-negotiable credits (para 0063 for example states “The term point
`
`is used to reference any earned value that has a cash equivalent ..”; para 0077; para
`
`0075- last sentence; para 0036 – last sentence). Continuing, page 51 asserts
`
`“Moreover, this concept is explicitly disclosed in MacLean.” Patent owners note
`
`that if multiple references provide the same teachings, there is no motivation to
`
`combine them to achieve redundant teachings of the same thing. Continuing, the
`
`petition makes assertions about MacLean’s teachings. Continuing, page 51 asserts
`
`“One of ordinary skill in the art would have recognized that Postrel’s display of an
`
`individual merchant loyalty account balance on its GUI, along with its display of
`
`the exchange point balance following the conversion and exchange account record
`
`updates, would have also included a display of the remaining account balance
`
`following a conversion of individual merchant loyalty exchange points, based on
`
`the teachings of MacLean …” This is a false statement, as MacLean does not
`
`provide the asserted teaching. MacLean explicitly teaches a GUI that display
`
`anticipated results of a transaction yet to be submitted. These anticipated results
`
`may change if problems are experienced during MacLean’s two-stage process. See
`
`FIG. 6F, item 657 noting “Your exchanges will take 24-72 hours to complete and
`
`para 0053 – last sentence noting an email is sent if problems occur during
`
`transaction processing. An email is necessary, as transaction processing takes 24-
`
`72 hours and the user will not still be engaged in a Web session used to submit the
`
`
`
`12
`
`
`
`transaction request (which is what is relied upon by the Petitioner). Continuing,
`
`Page 51 asserts “… because a user could then plan upcoming transactions
`
`accordingly based on knowledge an up-to-date quantity of non-negotiable credits.”
`
`The advantage noted, is not present in the teachings of MacLean so this statement
`
`of motivation is deficient. Continuing, page 51 asserts “Indeed, both Postel and
`
`MacLean relate to web site interfaces for exchange of loyalty points.” When two
`
`references have a commonality, no modification of one reference is needed. One
`
`of ordinary skill would not combine two references to simply have redundant
`
`teachings. Continuing, page 51 asserts “One of ordinary skill in the art would have
`
`recognized that showing the updated loyalty program balance information
`
`following the conversion provides the user with more detail regarding the
`
`transaction.” This statement is not relevant, as MacLean lacks these teachings,
`
`which renders the asserted advantage moot for purposes of providing a motivation
`
`to combine.
`
`
`
`Continuing with reference to claims 3 and 19, page 52 presents petition
`
`assertions about Postrel and MacLean individually. Continuing, page 52 asserts “It
`
`would have been obvious to one of ordinary skill in the art to combine MacLean’s
`
`teachings of a confirmation selector with Postrel’s system, because doing so would
`
`provide a user of Postrel’s system with an additional opportunity to consider a
`
`proposed point exchange before finally committing to such a transaction, and can
`
`
`
`13
`
`
`
`be useful to reduce possible inadvertent exchanges. This statement of motivation
`
`appears to be a valid one on its face.
`
`
`
`What is not considered, however, is the significant differences between the
`
`references, which must be weighed against the probative weight of combining
`
`teachings. Postrel teaches a networked loyalty program, which allows for intra-
`
`program point transfers. MacLean provides teachings for a points exchange
`
`residing outside boundaries of any loyalty program. These differences appear to
`
`the Patent owner to outweigh the probative weight for combining the references
`
`asserted, the Board’s judgment on this may differ.
`
`
`
` The Supreme Court in KSR noted that the analysis supporting a rejection
`
`under 35 U.S.C. 103 should be made explicit. The Court quoting In re Kahn, 441
`
`F.3d 977, 988, 78 USPQ2d 1329, 1336 (Fed. Cir. 2006), stated that “[R]ejections
`
`on obviousness cannot be sustained by mere conclusory statements; instead, there
`
`must be some articulated reasoning with some rational underpinning to support the
`
`legal conclusion of obviousness.” It is consistently held, such as in re Lizer
`
`(Appeal 2009-001858) that a generic benefit is not proper motivation, when no
`
`explanation is provided.
`
`
`
`The asserted grounds of rejection for claims 2, 11, and 18 with regards to
`
`combining the teachings of Postrel and MacLean have been thoroughly analyzed,
`
`yet no articulated reasoning with some rational underpinning to support the legal
`
`
`
`14
`
`
`
`conclusion of obviousness has been asserted. The asserted grounds fail as a result,
`
`and the Board should not institute on these grounds on this basis.
`
`
`
`The asserted grounds of rejection for claims 3 and 19 have an articulated
`
`reasoning with a rational underpinning, but the probative weight for combing the
`
`references as suggested is believed to be outweighed by the differences between
`
`the references such that one of ordinary skill would not find the suggested
`
`combination obvious. The Board should not institute on these grounds on this
`
`basis.
`
`
`
`
`
`C. Material Claimed Limitations Are Not Disclosed by Postrel in View of
`
`Sakakibara (in further view of MacLean for claims 2, 3, 11, 18, and 19)
`
`
`
`Claim 1
`
`
`
`Claim 1 includes “a conversion option to convert at least a subset of the
`
`shown non-negotiable credits into entity independent funds in accordance with a
`
`conversion ratio”. The petition asserted grounds rely on Postrel to explicitly,
`
`inherently, or implicitly teach these claimed limitations. Postrel lacks teachings for
`
`converting non-negotiable credits.
`
`
`
`The points of Postrel’s networked loyalty program are explicitly negotiable.
`
`Para 0063 of Postrel states “The term point is used to reference any earned value
`
`
`
`15
`
`
`
`that has a cash equivalent or negotiable worth …” ; Para 0036 of Postrel states
`
`points are fungible and fully transferable; para 0077 states points are treated as
`
`cash; para 0075 last sentence states points are a cash substitute; para 0085 last
`
`sentence treats cash as a point equivalent; para 0047 notes that any merchant that
`
`accepts a credit card (virtually every merchant) accepts the points – hence they are
`
`a cash equivalent. Consequently, Postrel’s explicit teachings is that points (which
`
`are negotiable) are transferable between accounts of a networked loyalty program.
`
`The claimed limitations are not obvious in light of these teachings, and the
`
`rejection fails.
`
`
`
`Critiquing the asserted ground (in light of the above), the petition (page 20,
`
`21) asserts para 0043, 0045, 0047. 0049, 0059 provide these teachings. Para 0043
`
`notes points of the networked loyalty program can be aggregated between accounts
`
`of the networked loyalty program. P
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