Trials@uspto.gov
`571.272.7822
`
`Paper 35
`Filed: April 23, 2015
`
`
`
`
`
`
`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 IPR2015-00124
`Patent 8,540,152 B1
`_______________
`
`Before SALLY C. MEDLEY, JONI Y. CHANG, and
`GEORGIANNA W. BRADEN, Administrative Patent Judges.
`
`
`BRADEN, Administrative Patent Judge.
`
`
`
`DECISION
`Institution of Inter Partes Review
`37 C.F.R. § 42.108
`
`
`
`
`571.272.7822
`
`Paper 35
`Filed: April 23, 2015
`
`
`
`
`
`
`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 IPR2015-00124
`Patent 8,540,152 B1
`_______________
`
`Before SALLY C. MEDLEY, JONI Y. CHANG, and
`GEORGIANNA W. BRADEN, Administrative Patent Judges.
`
`
`BRADEN, Administrative Patent Judge.
`
`
`
`DECISION
`Institution of Inter Partes Review
`37 C.F.R. § 42.108
`
`
`
`
`
`IPR2015-00124
`Patent 8,540,152 B1
`
`
`A. Background
`
`I.
`
`INTRODUCTION
`
`Askeladden LLC1 (“Petitioner”) filed a Petition (Paper 1, “Pet.”) to
`
`institute an inter partes review of claims 1–20 of U.S. Patent No. 8,540,152
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`B1 (Ex. 1501, “the ’152 patent”). Sean I. McGhie and Brian K. Buchheit
`
`(collectively “Patent Owner”) filed a Revised Preliminary Response (Paper
`
`15, “Prelim. Resp.”). We have jurisdiction under 35 U.S.C. § 314(a), which
`
`provides that an inter partes review may not be instituted “unless . . . there is
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`a reasonable likelihood that the petitioner would prevail with respect to at
`
`least 1 of the claims challenged in the petition.”
`
`Upon consideration of the Petition and Patent Owner’s Preliminary
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`Response, we conclude Petitioner has established a reasonable likelihood it
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`would prevail with respect to at least one of the challenged claims.
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`Accordingly, for the reasons that follow, we institute an inter partes review.
`
`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-
`
`00125. 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”). Id.
`
`
`1 The Real Parties-in-Interest includes The Clearing House Payment
`Company. See Paper 29.
`
`2
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`IPR2015-00124
`Patent 8,540,152 B1
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`C. The ’152 Patent
`
`The ’152 patent discloses systems and methods for converting points
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`or credits from one loyalty program to a different loyalty program and
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`redeeming the points or credits for services or merchandise. Ex. 1501,
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`Abstract. One embodiment of the ’152 patent is illustrated in Figure 1,
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`reproduced below.
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`
`
`As shown in Figure 1, non-negotiable points or credits 136 earned from a
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`consumer incentive activity 122 (e.g., a frequent flyer loyalty program) are
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`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. Id. at 6:19–21.
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`Examples of credit providing entities 120 includes corporations such as
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`airlines, hotels, credit card companies, casinos, cruise ships, States (for
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`lottery, scratch off games, etc.), churches, race tracks, online gambling site
`
`providers, e-commerce sites, slot-machine houses, carnivals, gambling
`
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`IPR2015-00124
`Patent 8,540,152 B1
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`parlors, companies (for promotional sweepstakes), high schools (for raffles),
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`and the like. Id. at 6:21–27.
`
`The ’152 patent discloses an “online embodiment,” described as
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`Embodiment 150 in Figure 1, where person 110 can interact (130) with
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`credit providing entity site 156 to participate in consumer incentive activity
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`122. Id. at 4:38–41; Fig. 1. According to embodiment 150, commercial
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`transaction 114 can be conducted via an e-commerce Web site 157. Id. at
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`4:41–42. Additionally, conversion agency 124 can implement a software
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`based conversion service 158, which performs conversion of non-negotiable
`
`funds 136 into negotiable funds 138. Id. at 4:43–46. Web sites 156, 157 and
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`service 158 can run within one or more servers 154. Id. at 4:46–47. Servers
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`154 can be connected to client 152 via network 153, where client 152 is a
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`computing device that user 110 interacts (130 and/or 114) with. Id. at 4:47–
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`50.
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`The ’152 patent discloses an “account transfer embodiment,”
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`described as Embodiment 170 in Figure 1, where user 110 participates in
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`consumer incentive activity 122 (e.g., in this instance game of chance 172).
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`Id. at 5:15–17; Fig. 1. Earnings (134, 136) from the consumer incentive
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`activity 122 are recorded within tangible data store 174 associated with
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`credit providing entity 120. Id. at 5:18–20. Data store 174 can include
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`account 175 for user 110, which tracks the amount of credits 134 (i.e., non-
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`negotiable funds 136) belonging to user 110. Id. at 5:20–23. According to
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`the ’152 patent, conversion agency 124 can access directly account 175 of
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`data store 174 and can convert a quantity of credits 134 into negotiable funds
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`138, which are recorded in tangible data store 176 (not directly associated
`
`with entity 120). Id. at 5:23–27. Data store 176 can include account 177 for
`
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`IPR2015-00124
`Patent 8,540,152 B1
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`the user 110, which contains an amount of negotiable funds 138 belonging to
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`user 110. Id. at 5: 27–29. User 110 can conduct commercial transactions
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`114 via machine 179, such as a kiosk, an ATM, etc., which can assess and
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`dispense the funds in account 177. Id. at 5:29–31.
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`D. Illustrative Claim
`
`As noted above, Petitioner challenges 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.
`
`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
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`5
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`IPR2015-00124
`Patent 8,540,152 B1
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`responsive to an indication of a conversion operation occurrence,
`the computer subtracting a quantity of the non-negotiable
`credits from 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.
`
`E. The Evidence of Record
`
`Petitioner relies upon the following references, as well as the
`
`Declaration of Matthew Calman (Ex. 1502):
`
`Reference
`Postrel
`
`MacLean
`
`Patent/Printed Publication
`US Patent Publication No.
`2005/0021399 A1
`US Patent Publication No.
`2002/0143614 A1
`Sakakibara US Patent No. 6, 721,743 B1 Apr. 13, 2004
`
`Date
`Jan. 27, 2005
`
`Oct. 3, 2002
`
`Exhibit
`1503
`
`1504
`
`1505
`
`F. The Asserted Grounds of Unpatentability
`
`Petitioner challenges the patentability of claims 1–20 of the ’152
`
`patent based on the following grounds:
`
`References
`MacLean and Sakakibara
`MacLean, Sakakibara, and
`Postrel
`
`
`
`Basis
`§ 103
`§ 103
`
`Claims Challenged
`7–11
`1–6 and 12–20
`
`6
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`IPR2015-00124
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`II. DISCUSSION
`
`A. Claim Construction
`
`In an inter partes review, claim terms in an unexpired patent are
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`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
`
`also In re Cuozzo Speed Techs., LLC, 778 F.3d 1271, 1279–83 (Fed. Cir.
`
`2015) (“Congress implicitly adopted the broadest reasonable interpretation
`
`standard in enacting the AIA,” and “the standard was properly adopted by
`
`PTO regulation.”). Under that standard, and absent any special definitions,
`
`we give claim terms their ordinary and customary meaning, as would be
`
`understood by one of ordinary skill in the art at the time of the invention. In
`
`re Translogic Tech., Inc., 504 F.3d 1249, 1257 (Fed. Cir. 2007).
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`
`
`1. “Entity”
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`Petitioner contends the term should be construed as “an organization
`
`that has a rewards program for a consumer.” Pet. 7. According to
`
`Petitioner, the Specification never defines expressly “entity,” but instead
`
`provides embodiments where an “entity” has a program that issues non-
`
`negotiable funds to consumers as a way of “reward[ing] consumers for
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`utilizing [the entity’s] services with certain credits . . . [which] can often be
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`applied towards products and/or services provided by a granting entity or its
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`affiliates.” Id. at 6–7 (citing Ex. 1501, 1:32–35; 3:60–64). Petitioner
`
`concludes that the broadest reasonable construction of the claim limitation
`
`“entity” is “an organization that has a rewards program for a consumer.” Id.
`
`at 7.
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`Patent Owner does not contest Petitioner’s proposed claim
`
`construction. Prelim. Resp. 1.
`
`7
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`IPR2015-00124
`Patent 8,540,152 B1
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`Given the disclosure in the ’152 patent and the record before us, for
`
`purposes of this decision, we agree with and adopt Petitioner’s proposed
`
`claim construction of “entity” as “an organization that has a rewards
`
`program for a consumer.”
`
`2. “Non-Negotiable Credits”
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`Petitioner contends the term should be construed as “credits which are
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`accepted only by the granting entity of the credits.” Pet. 7. According to
`
`Petitioner, the Specification never defines expressly “non-negotiable
`
`credits,” but states that they “may not be redeemable on an open market” (id.
`
`(citing Ex. 1501, 4:17–19)) and “generally have no value outside of an
`
`environment (building, Web site, etc.) of the . . . entity” (id. (citing Ex. 1501,
`
`6:36–38)). Petitioner further contends that one intrinsic feature of “non-
`
`negotiable credits” is their “restriction on usage to goods and/or services of
`
`the [granting] entity[,]”which limits 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.” Id. (citing Ex. 1501, 1:39–42).
`
`Petitioner concludes that the broadest reasonable construction of the claim
`
`limitation “non-negotiable credits” is “credits which are accepted only by
`
`the granting entity of the credits.” Id.
`
`Patent Owner does not contest Petitioner’s proposed claim
`
`construction. Prelim. Resp. 1.
`
`Given the disclosure in the ’152 patent and the record before us, for
`
`purposes of this decision, we agree with and adopt Petitioner’s proposed
`
`claim construction of “non-negotiable credits” as “credits which are
`
`accepted only by the granting entity of the credits.”
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`8
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`3. “Entity Independent Funds”
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`Petitioner contends the term should be construed as “funds acceptable
`
`as payment by at least one entity different from the original granting entity
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`of the non-negotiable credits.” Pet. 8. According to Petitioner, the
`
`Specification never defines expressly “entity independent funds,” but states
`
`that vendors other than the original granting entity will accept these funds.
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`Id. (citing Ex. 1501, 1:39–40; 5:5–14; 5:42–52). Petitioner further contends
`
`that the claim construction proposed for related patents challenged in the
`
`’023 and ’550 CBMs (i.e., “funds that are independent of restrictions on
`
`redemption imposed by the entity that granted the corresponding non-
`
`negotiable credits”) would be inconsistent with the ’152 patent, inasmuch as
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`certain entity-imposed restrictions tied to the non-negotiable credits can still
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`persist with the entity independent funds. Id. (citing Ex. 1518, 11, 17–20;
`
`Ex. 1519, 15, 17–18). Petitioner concludes that the construction of “entity
`
`independent funds” should rely on its plain understanding that these funds
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`are no longer subject to the inherent restriction from non-negotiable credits
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`of accepted only by the granting entity of the credits, and therefore, the
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`broadest reasonable construction is “funds acceptable as payment by at least
`
`one entity different from the original granting entity of the non-negotiable
`
`credits.” Id.
`
`Patent Owner does not contest Petitioner’s proposed claim
`
`construction. Prelim. Resp. 1.
`
`Given the disclosure in the ’152 patent and the record before us, for
`
`purposes of this decision, we agree with and adopt Petitioner’s proposed
`
`claim construction of “entity independent funds” as “funds acceptable as
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`payment by at least one entity different from the original granting entity of
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`the non-negotiable credits.”
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`4. Commerce Partner
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`Patent Owner contends the term should be afforded some meaning
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`and should be construed as “an entity that is an independent entity from
`
`another entity, and associated with that other in some commercial activity.”
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`Prelim. Resp. 2. Petitioner does not address this claim term. According to
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`Patent Owner, its proffered construction of the term is consistent with
`
`Petitioner’s construction of “entity independent funds” and with the
`
`definition of “commerce partner” provided in the related U.S. Patent No.
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`8,523,063 B1 patent (“the ’063 patent”). Id. The ’063 patent, however, does
`
`not define “commerce partner.” The ’152 patent also does not define
`
`“commerce partner.”
`
`The Patent Owner then contends that the ordinary meaning of
`
`“commerce partner” supports its position. To illustrate the ordinary
`
`meaning, Patent Owner cites to dictionary definitions for the terms
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`“commerce” and “partner.” Id. at 2 (citing Ex. 2003). The dictionary
`
`defines “commerce” as “the activity of buying and selling, especially on a
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`large scale,” and “partner” as “[o]ne that is united or associated with another
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`or others in an activity or a sphere of common interest, especially: A
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`member of a business partnership.” See Ex. 2003. Patent Owner concludes
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`that given the dictionary definitions of “commerce” and “partner,” the
`
`ordinary meaning of “commerce partner” is “an entity that is associated with
`
`another in some commercial activity.” Prelim. Resp. 2.
`
`Given the record before us, for purposes of this decision, we find
`
`Patent Owner’s proposed construction to be construed too narrowly. Rather,
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`10
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`IPR2015-00124
`Patent 8,540,152 B1
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`for purposes of this decision, we find “commerce partner” to mean “an
`
`individual or group involved in some commercial activity.”
`
`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
`
`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,
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`i.e., secondary considerations. See Graham v. John Deere Co., 383 U.S. 1,
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`17–18 (1966).
`
`We analyze the challenges presented in the Petition 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). Based on the stated qualifications of Petitioner’s
`
`Declarant, Mr. Calman (Ex. 1502 ¶¶ 2–13) and his Curriculum Vitae (Ex.
`
`1502, Appendix A), we have determined that he is qualified to testify on the
`
`matter before us.
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`D. Asserted Obviousness of Claims 7–11 in view of MacLean and
`Sakakibara
`
`Petitioner contends claims 7–11 of the ’152 patent are unpatentable
`
`under 35 U.S.C. § 103 in view of MacLean and Sakakibara. Pet. 15–32. For
`
`reasons that follow, we determine Petitioner has demonstrated a reasonable
`
`likelihood of prevailing as to claims 7–11.
`
`1. Overview of MacLean
`
`MacLean discloses an apparatus and a method for facilitating the
`
`exchange of points between selected entities. Ex. 1504, 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. ¶¶ 1, 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
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`airlines, hotels, financial entities, e.g., credit cards, and networks, e.g., portal
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`web sites on the Internet. Id.
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`Another embodiment of the system taught in MacLean is illustrated in
`
`Figure 3, reproduced below.
`
`
`
`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
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`transaction center 120 and enters information regarding each points issuer
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`130a–c with whom customer 110 has participated and has accumulated LP
`
`points. Id. ¶ 50; Figs. 4a–b. Transaction center 120 validates that customer
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`110 has an account with each points issuer 130a–c. Id. A valid account
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`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
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`portfolio. Id.; Fig. 4E.
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`MacLean discloses an embodiment that uses computer programs to
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`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
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`received). Id. ¶ 52; Figs. 5A, 6A–I. This embodiment is illustrated in
`
`Figure 5A, reproduced below.
`
`
`
`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 withdrawing LPs, step 507 of Figure 5A compares the
`
`current point balances of the customer’s accounts in withdrawing LPs with
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`the number of points requested in step 506, and if the requested points are
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`greater than the assessed account balances, then step 508 terminates the
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`point exchange carried out by the execution of the point exchange program
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`500 and a message is displayed to notify the customer that its current point
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`balances are insufficient to complete the requested points exchange. Id.
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`¶ 52; Figs. 5A. On the other hand, MacLean explains that if the points are
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`available in the customer’s LP accounts, then the point exchange program
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`500 moves to step 509, which displays web page 630. Id. ¶ 52; Figs. 5A,
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`6D. Web page 630 includes a box 632 for step 510, which permits the
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`customer to designate the depositing LP to which the points are transferred.
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`Id.; Fig. 6D. Step 511 in MacLean calculates the exchange rates for this
`
`points transaction and displays a summary of the withdrawal and deposit
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`points. If the customer chooses to continue with the transaction, then in step
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`515 the customer enters any required payment information needed to affect
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`the exchange. Id.; Figs. 6D–6I.
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`MacLean discloses that once the details of the requested points
`
`exchange have been accumulated and confirmed by the web server 230,
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`points exchange program 500 is executed in a two-step procedure. Id. ¶ 53;
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`Fig. 2. The first step performs all of the point withdrawals from the
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`designated withdrawing LPs and the second step performs the points deposit
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`to the designated depositing LPs. Id.
`
`2. Overview of Sakakibara
`
`Sakakibara discloses a system for managing and exchanging points
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`received as rewards for purchasing products, or using various products or
`
`services. Ex. 1505, 1:10–29. The system in Sakakibara allows a user to
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`convert points from one program into points from another program in
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`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-line
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`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
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`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
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`provided by various second business entities 300 that serve valuable points
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`which are exchangeable for various products and services as a reward for
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`consumption activity. Id. at 6:15–22. 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
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`points database 101 records information related to loyalty points, while
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`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
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`information related to customers 200. Id. at 6:44–51.
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`Sakakibara provides an embodiment that allows customers 200 to
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`authenticate their identities, confirm that they have memberships with first
`
`business entity 100 and respective second business entities 300, and then
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`exchange loyalty points between the business entities. Id. at 7:40–8:10.
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`Sakakibara discloses that in exchange database 102, data indicating the
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`exchange rates between the valuable exchange points and the loyalty points
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`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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`
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`Figure 4 shows exchange rates used to calculate the value of loyalty points
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`and determine the appropriate exchange information. Id. at 8:36–9:9. The
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`recorded exchange rates are values set according to the contents of the
`
`contracts made between first business entity 100 and respective second
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`business entities 300. Id. at 7:7–10.
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`17
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`IPR2015-00124
`Patent 8,540,152 B1
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`3. Analysis
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`Petitioner contends the disclosures of MacLean and Sakakibara, as
`
`summarized above, teach or suggest each limitation of claims 7–11 of the
`
`’152 patent. Pet. 15–32.
`
`a. Independent Claim 7
`
`Petitioner contends that a person of ordinary skill in the art, at the time
`
`of the invention, would have been well versed in loyalty programs, loyalty
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`points, and the conversion or exchange of loyalty points. Pet. 10–15.
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`MacLean and Sakakibara are both in the same field (loyalty points
`
`management systems) and address the same problem —
`
`managing/controlling and exchanging/converting loyalty points. Id. at 17–
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`18; see Ex. 1502 ¶ 99. Petitioner supports its position with the Declaration
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`of Mr. Calman, who testifies that a person of skill in the art would have
`
`understood MacLean and Sakakibara 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
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`challenged claims obvious. Ex. 1502 ¶¶ 24–40; 53–55.
`
`For claim 7, Petitioner contends that MacLean discloses loyalty
`
`programs issuing credits in the form of loyalty points, such as airline
`
`mileage programs, to aid in influencing customers to continue to purchase
`
`products and/or services from one source. Pet. 15–16 (citing Ex. 1504 ¶¶ 2,
`
`3; Fig. 2). According to Petitioner, the system described in MacLean allows
`
`for the transfer of conversion of loyalty program points in accordance with
`
`an exchange rate that is set for points of different loyalty programs. Id. at
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`16–17 (citing Ex. 1504 ¶¶ 21, 23, 44, 52, 64, Figs. 1, 2, 6E). Petitioner then
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`18
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`IPR2015-00124
`Patent 8,540,152 B1
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`explains that MacLean 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 Petitioner argues has long
`
`been the standard practice. Id. at 17 (citing Ex. 1502 ¶ 96.)
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`Petitioner further contends that Sakakibara discloses the concept that
`
`loyalty points are non-negotiable credits. Pet. 17. According to Petitioner,
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`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 non-negotiable credits
`
`as payment for services. Id. (citing Ex. 1505, Abstract; 7:7–10, 12:64–
`
`13:30); Ex. 1502 ¶ 97. Petitioner cites to claim 9 of Sakakibara as support
`
`for its position, because claim 9 recites that, prior to conversion, loyalty
`
`points issued by one entity are only redeemable at that entity (i.e., they are
`
`non-negotiable). Id. (citing Ex. 1505, 12:64–13:30).
`
`Petitioner then concludes that one of ordinary skill in the art would
`
`have recognized that MacLean’s individual merchant loyalty points would
`
`preferably have been accepted only by that merchant, and would not have
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`been accepted as payment with another merchant, based on the explicit
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`teachings of Sakakibara, which also relates to the general principles of
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`loyalty programs. Id.
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`Patent Owner disagrees with Petitioner’s conclusion that MacLean
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`and Sakakibara teach or suggest the limitations of challenged claim 7 for
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`several reasons. Prelim. Resp. 41–46. First, Patent Owner contends that
`
`MacLean fails to teach subtracting a quantity of non-negotiable credits from
`
`19
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`IPR2015-00124
`Patent 8,540,152 B1
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`a loyalty account program and the adding entity independent funds to a
`
`funds account at approximately the same time. Id. at 44–45. According to
`
`Patent Owner, in claim 7 there is no “intermediary” conversion between the
`
`entity’s program points and the commerce partners so delays between the
`
`adding/subtracting would potentially cause an inconsistency that could be
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`exploited. Id. at 31. Patent Owner argues that MacLean explicitly requires a
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`two stage process, where the first stage occurs first and where there is a
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`known delay between the first and second stages. Patent Owner explains
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`that in the first stage, points of one entity are converted to cash using an LP
`
`established withdrawal value, and then once the cash is received by the
`
`transaction center, points of a different LP are purchased with the cash and
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`MacLean states that this process takes 24–72 hours. Id. (citing Ex. 1504,
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`Fig. 6F).
`
`Second, Patent Owner contends that MacLean fails to teach a
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`“commerce partner agreeing to permit transfers or conversions of quantities
`
`of non-negotiable credits to entity independent funds” as required by claim
`
`7. Prelim. Resp. 41. Instead, according to Patent Owner, MacLean requires
`
`a transaction center to perform conversions based on LP established deposit
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`and withdrawal rates. Id. Patent Owner argues that Petitioner fails to
`
`establish that MacLean teaches explicitly, inherently, or implicitly an
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`agreement where a commerce partner agrees to transfers/conversions of an
`
`entity’s points for the commerce partner’s points. Id.
`
`Third, Patent Owner contends that MacLean fails to teach a commerce
`
`partner receiving “compensation from an entity (the entity having a loyalty
`
`program) in an amount in cash or credit for transfers or conversions.”
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`Prelim. Resp. 43–44 (citing Pet. 21–22). Patent Owner explains that in
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`20
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`IPR2015-00124
`Patent 8,540,152 B1
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`MacLean, the deposit LP receives compensation from the transaction center
`
`for selling points for cash. Patent Owner argues that no teachings are
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`present in MacLean for a commerce partner receiving compensation from an
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`entity (with whom there is an agreement to permit transfers/conversions of
`
`points in accordance with an agreed upon fixed ratio) as required by claim 7.
`
`Id. at 56.
`
`Fourth, Patent Owner contends that MacLean fails to teach a
`
`computer (which is the computer for the different loyalty program of the
`
`commerce partner) redeeming at least a portion of the new quantities of
`
`entity independent funds in exchange for user selected ones of the commerce
`
`partner services as required by claim 7. Prelim. Resp. 45. According to
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`Patent Owner, MacLean states that consumers may aggregate points from
`
`different LPs for redemption of rewards offered by a single IP, which Patent
`
`Owner argues contradicts the claimed limitations that “the computer does
`
`not accept the non-negotiable credits of the loyalty program for the
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`commerce partner services.” Id. at 45–46.
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`Lastly, Patent Owner contends that Petitioner’s obviousness challenge
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`fails because MacLean and Sakakibara are not properly combined and that
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`modifications of Sakakibara to accommodate MacLean’s disclosure is
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`unsupportable. Prelim. Resp. 15–21. Patent Owner specifically contends
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`that the Petition fails to identify any deficiencies in the teachings of
`
`MacLean that are overcome by the teachings of Sakakibara, but instead
`
`asserts that the teachings of Sakakibara are redundant with those of
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`MacLean. Id. at 15. Patent Owner concludes that Petitioner’s reliance on
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`Sakakibara in view of the “general principles of loyalty points” ignored that
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`21
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`IPR2015-00124
`Patent 8,540,152 B1
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`fact that the “specific principles of loyalty points relied upon” by MacLean
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`and Sakakibara are different. Id. at 15–16.
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`Despite Patent Owner’s argum
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