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. 8,297,502
`
`_____________
`
`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 ’502 PATENT..................................................................... 3
`
`A.
`
`B.
`
`The Claimed Subject Matter........................................................................... 3
`
`Prosecution History ........................................................................................ 5
`
`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 .................................................................................. 14
`
`1.
`
`2.
`
`Ground 1: Claims 1, 4-10, 12-17, and 20-30 are
`obvious in view of Postrel and Sakakibara ..................................... 14
`
`Ground 2: Claims 2, 3, 11, 18, and 19 are obvious in
`view of Postrel, Sakakibara, and MacLean...................................... 49
`
`VIII. Conclusion ................................................................................................................. 59
`
`- i –
`
`

`

`EXHIBITS
`
`1001 ― U.S. Patent No. 8,297,502;
`
`1002 ― Declaration of Matthew Calman;
`
`1003 ― U.S. Patent Application Publication No. 2005/0021399 (“Postrel”);
`
`1004 ― U.S. Patent Application Publication No. 2002/0143614 (“MacLean”);
`
`1005 ― U.S. Patent No. 6,721,743 (“Sakakibara”);
`
`1006 ― Wayback Machine archive dated June 20, 2000, for American Express web
`
`site: “How to redeem or transfer your points online”;
`
`1007 ― Wayback Machine archive dated June 20, 2000, for American Express web
`
`site: “Air rewards”;
`
`1008 ― Wayback Machine archive dated January 4, 1997, for Citibank web site:
`
`“Citibank Cards and Services”;
`
`1009 ― Wayback Machine archive dated December 1, 1998, for American Express
`
`web site: “Rewards Cards”;
`
`1010 ― Wayback Machine archive dated June 21, 2000, for American Express web
`
`site: “Shopping rewards”;
`
`1011 ― Wayback Machine archive dated December 9, 2003, for Marriott Rewards
`
`web site: “Air Mileage”;
`
`1012 ― Wayback Machine archive dated November 25, 2002, for Starwood Hotels &
`
`Resorts web site: “Transfer : Airlines”;
`- ii –
`
`

`

`1013 ― Wayback Machine archive dated June 19, 2000, for United Airlines web site:
`
`“Mileage Plus partners”;
`
`1014 ― Wayback Machine archive dated July 17, 2004, for WebFlyer web site:
`
`“Mileage Converter”;
`
`1015 ― 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);
`
`1016 ― 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.);
`
`1017 ― 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.);
`
`1018 ― 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);
`
`1019 ― 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 -
`
`

`

`1020 ― USPTO Assignment Records for U.S. Patent No. 8,297,502 (as of September
`
`28, 2014);
`
`1021 ― Wayback Machine archive dated August 16, 2000, for United Airlines web
`
`site: “Car Rental Partners”;
`
`1022 ― Wayback Machine archive dated June 20, 2000, for United Airlines web site:
`
`“Cruise Partners”;
`
`1023 ― S&H Green Points – About S&H (available at
`
`http://www.greenpoints.com/info/inf_aboutsh.asp);
`
`1024 ― Wayback Machine archive dated November 27, 1999, for Green Points “The
`
`Points You’ve Been Waiting For”;
`
`1025 ― Wayback Machine archive dated April 15, 1998 for American Airlines web
`
`site: “Welome to AA.com”;
`
`1026 ― 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 -
`
`

`

`1027 ― 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;
`
`1028 ― Stone et al., User Interface Design and Evaluation, Interactive Technologies
`
`(April 29, 2005;
`
`1029 ― U.S. Patent No. 5,513,359; and
`
`1030 ― 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 1-30 of U.S. Patent No. 8,297,502 (“’502
`
`Patent”) (Ex 1001)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 ’502 Patent
`
`on other grounds. To Petitioner’s knowledge, the ’502 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 ’502 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 ’502
`
`Patent by virtue of various assignments, none of which are known to have been
`
`recorded with the USPTO. (Ex 1020.) For the sake of convenience, “Patent Owner”
`
`as used herein should be deemed to refer to the actual owner(s) of the ’502 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 ’502 Patent is eligible for IPR and that Petitioner is
`
`2 The Court issued a Claim Construction Memorandum Opinion and Order (Ex 1016)
`
`and Memorandum Opinion and Order (Ex 1017) 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 ’502 Patent.
`
`IV.
`
`IDENTIFICATION OF CHALLENGE UNDER 37 C.F.R. § 42.104(b)
`AND RELIEF REQUESTED
`
`Petitioner requests (i) review of Claims 1-30 of the ’502 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
`
`1, 4-10, 12-17,
`
`Obvious (§ 103) in view of US 2005/0021399
`
`(Postrel) and US 6,721,743 (Sakakibara)
`and 20-30
`2, 3, 11, 18, and 19 Obvious (§ 103) in view of Postrel, Sakakibara, and
`
`US 2002/0143614 (MacLean)
`
`V.
`
`SUMMARY OF THE ’502 PATENT
`A.
`The Claimed Subject Matter
`The ’502 Patent has 30 claims, of which Claims 1, 9, 17, and 25 are written in
`
`independent form. In general, the claims are directed to a method (Claims 1-16), a
`
`computer program product (Claims 17-24), and a computing device (Claims 25-30),
`
`employing a graphical user interface (GUI) such as a web site, 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:
`
`- Presenting on a computer (e.g., web server) a GUI on a display (e.g., web page
`
`on a user’s computer);
`
`-
`
`the GUI showing a quantity of non-negotiable credits earned through previous
`
`- 3 -
`
`

`

`interactions with an entity (e.g., allows a user to view an account balance of
`
`merchant loyalty points of a merchant, such as an airline);
`
`-
`
`the GUI product comprising a conversion option to convert at least a subset of
`
`the shown non-negotiable credits into independent funds (e.g., provides a user
`
`option to convert some/all of the displayed loyalty points into another form of
`
`points valid for purchases at a commerce partner (e.g., e-commerce shopping
`
`site) in accordance with a conversion ratio (e.g., conversion based on an
`
`exchange rate between original loyalty points and converted points);
`
`-
`
`accepting the entity independent funds by a commerce partner as at least partial
`
`payment for goods or services provided by the commerce partner (e.g., the e-
`
`commerce site accepts the converted points), wherein the commerce partner is
`
`not said entity (e.g., e-commerce site is different from the airline);
`
`-
`
`and correspondingly, as a negative limitation, the claim recites that in absence
`
`of converting the non-negotiable credits into entity independent funds the
`
`commerce partner does not accept the non-negotiable credits as payment for
`
`goods or services provided by the commerce partner (e.g., the e-commerce site
`
`does not accept airline points);
`
`-
`
`-
`
`the computer receiving a selection of the conversion option (e.g., the web
`
`server receives the customer’s conversion request); and
`
`responsive to the received selection being processed, the computer presenting
`
`within the GUI a quantity of available entity independent funds for use as
`- 4 -
`
`

`

`payment for the goods or services provided by the commerce partner (e.g., web
`
`server shows quantity of the converted points usable at e-commerce site), said
`
`quantity of available entity independent funds resulting from converting the
`
`subset of non-negotiable credits into the quantity of available entity
`
`independent funds in accordance with the conversion ratio (e.g., final balance
`
`based on exchange rate and the quantity of points being converted)
`
`This conversion allows the user to make a purchase from the commerce partner, who
`
`accepts as payment the converted points but not the pre-conversion loyalty points.
`
`Prosecution History
`B.
`The ’502 Patent issued from USPAN 13/532,342 (“’342 Application), filed on
`
`June 25, 2012. The ’502 Patent purports to be a continuation of USPAN 11/420,255
`
`(“’255 Application”), which was filed on May 25, 2006 and issued as U.S. Patent No.
`
`7,703,673 (“’673 Patent”) on April 27, 2010. However, such domestic benefit claim is
`
`improper under 35 U.S.C. § 120, inasmuch as the ’255 and ’342 Applications were
`
`never co-pending. Accordingly, the effective filing date of the ’502 Patent is limited to
`
`the actual filing date of June 25, 2012.
`
`The PTO issued a first Office Action on Sept. 7, 2012, rejecting the claims
`
`based on obviousness-type double patenting over the ’673 Patent. In responding to
`
`the Office Action that same day, the applicant did not amend the claims but asserted
`
`that a terminal disclaimer was being concurrently filed to overcome the rejection. No
`
`terminal disclaimer was actually filed that day, but one was filed on Sept. 10, 2012.
`- 5 -
`
`

`

`The applicant also filed an Information Disclosure Statement that day, which included
`
`over 800 citations across 3 citation forms. The PTO issued a Notice of Allowance on
`
`Sept. 24, 2012, the applicant paid the issue fee that same day, and the patent issued on
`
`Oct. 30, 2012.
`
`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 ’502 or related patent(s) using different rules of construction.
`
`As relevant to the claims at issue herein, Petitioner is providing proposed
`
`constructions for the following claim terms:
`
`“Entity” (independent Claims 1, 9, 17, 25): The ’502 Patent states that entities
`
`“often reward consumers for utilizing their services with non-negotiable credits, such
`
`as frequent flier miles, consumer loyalty points, and entertainment credits.” (Ex. 1001,
`
`1:20-22.) The ’502 Patent also states that “the present disclosure permits consumers
`
`to transform non-negotiable credits provided by an entity to negotiable funds[.]” (Ex.
`
`1001, 2:32-34.) 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, 9, 17, 25): The ’502 Patent
`
`states that non-negotiable credits include “multiple merchant specific credit, credit
`
`card credits, and frequent flier miles,” which “can be applied towards products and/or
`- 6 -
`
`

`

`services provided by a granting entity or its affiliates.” (Ex 1001, 1:22-24; 2:3-7.) 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 1001, 1:32-37.) 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
`
`granting entity.” (Ex 1018, pp. 11, 15-16; Ex 1019, pp. 15-17.) However, such a
`
`construction here would be inconsistent with the ’502 Patent. The ’502 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 1001, 1:37-40.) 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, 9, 17, 25): The ’502 Patent
`
`does not specifically define this term, but states that one problem with non-negotiable
`
`credits is that “[one] or more venders [sic] … do not honor the non-negotiable credits
`- 7 -
`
`

`

`for … purchases” (Ex 1001, 3:22-24), based on the inherent usage restriction of non-
`
`negotiable credits “to goods and/or services of the [granting] entity” (Ex 1001, 1:32-
`
`35). On the other hand, these various vendors accept entity independent funds. (Ex
`
`1001, 2:45-48, 62-65; 3:20-24.) 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.
`
`1018, pp. 11, 17-20; Ex. 1019, pp. 15, 17-18.) However, such a construction would be
`
`inconsistent with the ’502 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 ’502 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 1001, 1:40-42.) 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.
`
`- 8 -
`
`

`

`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,
`
`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 1002, ¶ 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).)
`
`- 9 -
`
`

`

`Background
`B.
`Petitioner provides below a historical view of loyalty programs, which would
`
`have been known and understood to one of ordinary skill in the art at the time of the
`
`’502 Patent filing.
`
`Merchant Loyalty Programs
`
`As described in the expert declaration of Mr. Matthew A. Calman (Ex 1002, ¶¶
`
`1-29), merchant loyalty programs have existed since at least the 1970’s. (See, e.g., Ex
`
`1023.) 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
`
`customers and to encourage repeat business by existing customers over competing
`
`merchants. (See generally, Ex 1026; Ex 1027.) 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
`
`3 The ’502 Patent refers to these points of certain loyalty programs as “non-negotiable
`
`credits” and a merchant behind a loyalty program as an “entity”. (Ex 1001, 1:20-31.)
`
`- 10 -
`
`

`

`charged to the credit card. (Ex 1002, ¶¶ 24-29.)
`
`Redeeming Awards Using Loyalty Points
`
`With these loyalty programs, customers redeemed their accumulated points for
`
`rewards. (See, e.g., Ex 1024.) The prospect of redeeming for rewards drove the
`
`consumer interest in these programs. Each loyalty program had particular redemption
`
`criteria in accordance with the terms and conditions of the program. 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 to an existing flight. (Ex 1025.) 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 1002, ¶¶ 27-29.)
`
`Such redemption rewards have been in place at least as early as the 1990’s. (Ex
`
`1002, ¶ 28-29; Ex 1008; Ex 1009.)
`
`Loyalty Reward Redemption via Web Site
`
`To one of ordinary skill, the concept of fulfilling loyalty point redemption
`
`requests via e-commerce had already been well-established prior to the filing of the
`
`’502 Patent application. 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.,
`- 11 -
`
`

`

`filling out a web form in a GUI. (See, e.g., Ex 1028; Ex 1029; Ex 1030.) 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 1002, ¶¶ 34-
`
`40; Ex 1006.)
`
`In addition to the AMEX example, the concept of loyalty programs and web
`
`site redemptions was described in U.S. Patent Appl. Pub. No. 2005/0021399
`
`(“Postrel”), which claims domestic priority as early as June 23, 1999. Postrel describes
`
`loyalty programs issued by various merchants such as Smith Pizzeria, Blockbuster, and
`
`GAP. (Ex 1003, ¶ [0030].) A customer redeems, for instance, Smith Pizzeria rewards
`
`points, by “indicat[ing] this to the merchant at the point of sale (which may be over a
`
`web site or physically at the restaurant).” (Ex 1003, ¶ [0041] (emphasis added).)
`
`Loyalty Point Conversion to Another Merchant’s Store Credit
`
`According to the ’502 Patent, the issuing entity may restrict redemption of
`
`loyalty credits only to the entity’s own goods/services. (Ex 1001, 1:32-42.) 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 ’502
`
`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 1010.) A customer was able to perform such
`
`conversion online at the AMEX web site. (Ex 1006; see also Ex 1013; Ex 1014; Ex
`- 12 -
`
`

`

`1015; Ex 1021; Ex 1022.) Providing this conversion option enhanced the appeal of
`
`the loyalty points, leading to increased commerce. (Ex 1002, ¶¶ 30-33.)
`
`Loyalty Point Conversion to Another Merchant’s Loyalty Program Points
`
`The ’502 Patent also asserted that while consumers often accumulate credits
`
`across multiple credit-earning programs from different merchants, accounts from
`
`each individual program may “contain[] insufficient credits to have any meaningful
`
`consumer value[,]” and the differing redemption criteria among the various programs
`
`“can understandably confuse and frustrate consumers, who due to their confusion,
`
`often elect to avoid participating in an entity sponsored credit program.” (Ex 1001,
`
`1:62-2:11.) However, while loyalty point redemption at some merchants may have
`
`been limited to only their own products, many merchants have, for some time,
`
`offered an option to convert their loyalty points into points of another merchant’s
`
`loyalty program. (Ex 1002, ¶¶ 30-33.)
`
`For instance, since at least as early as June 2000, AMEX has given its
`
`customers the option to convert their AMEX membership reward points to loyalty
`
`program points for various airlines, including through an online conversion process.
`
`(Ex 1006; Ex 1007; see also Ex 1011; Ex 1012.) The conversion was performed in
`
`accordance with a conversion ratio of AMEX membership rewards points to airline
`
`loyalty program points. (Ex 1007.) After the conversion, the customer could have
`
`used the converted points to purchase an airline ticket. (Ex 1006; Ex 1007.) (Ex 1002,
`
`¶¶ 30-33.)
`
`- 13 -
`
`

`

`This concept was also described in Postrel, where a user can repeatedly
`
`exchange individual merchant loyalty points, for instance, Smith Pizzeria rewards
`
`points and Blockbuster points, into exchange points (e.g., VISA points), to use
`
`aggregated exchange points “for the purpose of purchasing an item that he may
`
`otherwise be unable to obtain with the points aggregation.” (Ex 1003, ¶¶ [0030];
`
`[0046].) (Ex 1002, ¶¶ 32-33.)
`
`As this practice of loyalty point conversion was already commonplace long
`
`before the ’502 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
`
`currency is determined in accordance with a conversion ratio (i.e., exchange rate)
`
`between the two currencies. (Ex 1002; ¶¶ 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 ’502 Patent as
`
`clearly obvious, in view of the prior art that is discussed below. (Ex 1002, ¶¶ 46-48.)
`
`C.
`
`Grounds of Rejection
`1.
`
`Ground 1: Claims 1, 4-10, 12-17, and 20-30 are obvious in view
`
`- 14 -
`
`

`

`of Postrel and Sakakibara
`Independent Claims 1, 9, 17, and 25 (and Claims 4-8, 10, 12-16, 20-24, and
`26-30 depending therefrom)
`
`Postrel is a U.S. patent application that published on January 27, 2005.
`
`Sakakibara is a U.S. patent that issued on April 13, 2004. Both Postrel and Sakakibara
`
`qualify as prior art under 35 U.S.C. § 102(b) regardless of whether the ’502 patent is
`
`entitled to its May 25, 2006 priority date. Although applicants cited Postrel and
`
`Sakakibara during prosecution, applicants did not emphasize their significance from
`
`the other 800-odd cited references which they cited, and there is no indication they
`
`received the Examiner’s individual attention over the applicants’ other cited
`
`references. The Examiner did not cite any prior art or issue any prior art rejections,
`
`aside from the mentioned double-patenting rejection.
`
`Claims 1, 4, 17, and 25 require a graphical user interface (“GUI”) presented on
`
`a display. Postrel describes a GUI, in the form of a web site, that allows a user to
`
`convert loyalty points (i.e., “non-negotiable credits”) into aggregated loyalty points,
`
`which Postrel also calls “exchange points”. (Ex 1003, ¶ [0043].) The website performs
`
`the conversion in accordance with an exchange rate (“conversion ratio”). (Ex 1003, ¶
`
`[0045].) The system uses the existing infrastructure of credit card networks. (Ex 1003,
`
`Abstract; ¶¶ [0043]-[0044].) It is understood that a web site is a GUI, as it utilizes
`
`graphics to interact with a user. (Ex 1002, ¶¶ 52, 77, 128, and 163.) The GUI permits
`
`“the user [to be] able to view his loyalty point account balance by logging into a
`
`- 15 -
`
`

`

`website.” (Ex 1003, ¶ [0033].) The loyalty points are earned through previous
`
`interactions with an entity; for example, “a $100 purchase will yield 100 ‘Smith Pizza
`
`Points’ for a purchaser.” (Ex 1003, ¶ [0030].) After the loyalty points are earned, a
`
`central server (or an acquiring bank) updates the user’s reward account. (See, e.g., Ex
`
`1003, ¶¶ [0030]; [0033]; [0043]; [0061].)
`
`Claims 1, 4, 17, and 25 also require the showing of a quantity of non-negotiable
`
`credits, and a conversion option to convert non-negotiable credits into entity
`
`independent funds in accordance with a conversion ratio. Postrel’s GUI allows a user
`
`to convert his non-negotiable loyalty points into points for an exchange account
`
`based on an agreed upon exchange rate (i.e., conversion ratio) and fee structure,
`
`where “the actual exchange rate and fee structure may be set amongst the merchants
`
`[e.g., Smith Pizzeria] and the exchange server operator [e.g., VISA].” (Ex 1003, ¶
`
`[0045].) The aggregated loyalty points in the exchange account are entity independent
`
`funds because they can be redeemed for goods or services from any approved
`
`merchant or, for instance, from a catalog provided by a credit card company (i.e.,
`
`from a commerce partner). (See Ex 1003, ¶¶ [0043]; [0045]; [0047]; [0049].) (Ex 1002,
`
`¶¶ 61-67, 105-107, 138-142, 173-177.)
`
`Claims 1, 4, 17, and 25 further require non-negotiable credits. As discussed
`
`above, non-negotiable credits are credits which are accepted only by the granting
`
`entity of the credits. In this regard, Postrel states that “it is also recognized that users
`
`may end up with many loyalty point accounts, each having relatively small numbers of
`- 16 -
`
`

`

`points … It is therefore desired to provide a loyalty point system that allows users to
`
`aggregate loyalty points earned from these various merchants into a central exchange
`
`account, wherein the aggregated loyalty points may be advantageously used to
`
`purchase goods or services from any merchant in the system.” (Ex 1003, ¶ [0008].)
`
`Postrel also states that the individual merchant loyalty points are redeemable at the
`
`individual merchant (e.g., Smith Pizzeria rewards points used to discount a meal at
`
`Smith Pizzeria). (Ex 1003, ¶ [0041].) In addition to redemption at the individual
`
`merchant, Postrel’s loyalty points may be subject to a “restriction on use”. (Ex 1003, ¶
`
`[0032].) Postrel’s merchant loyalty 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 1002, ¶ 54-55, 95-96,
`
`130-131, and 165-166.) Moreover, such concept is explicitly disclosed in Sakakibara.
`
`Sakakibara describes a GUI that allows a user to convert loyalty points of a first
`
`entity in