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`
` IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`§
`LOYALTY CONVERSION SYSTEMS
`§
`CORPORATION,
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`§
` Plaintiff,
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`§
` v.
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`§
`AMERICAN AIRLINES, INC., et al.,
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`§
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` Defendants. §
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`Case No. 2:13-CV-655
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`MEMORANDUM OPINION AND ORDER
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`Before the Court is the Defendants’ Motion for Judgment on the Pleadings (Dkt. No. 61).
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`The Court GRANTS the motion and holds that the asserted claims of the two patents in suit are
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`invalid on the ground that they are directed to unpatentable subject matter.
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`I. BACKGROUND
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`Plaintiff Loyalty Conversion Systems Corporation (“Loyalty”) owns the two patents at
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`issue in this case, U.S. Patent Nos. 8,313,023 (“the ’023 patent”) and 8,511,550 (“the ’550
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`patent”). On August 20, 2013, Loyalty filed actions against each of the nine defendants. Those
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`actions were later consolidated under the lead case, No. 2:13-cv-655. Loyalty asserted claims
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`31-34, 36-42, and 44-46 of the ’023 patent, and claims 1-3 and 5-7 of the ’550 patent against
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`each of the nine defendants.
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`1
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`ASKELADDEN 1517
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`Case 2:13-cv-00655-WCB Document 129 Filed 09/03/14 Page 2 of 29 PageID #: 2215
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`After the filing of answers and counterclaims, seven of the nine defendants jointly filed
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`this motion for judgment on the pleadings under Fed. R. Civ. P. 12(c).1 They sought an order
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`holding the asserted claims of the ’023 and ’550 patents invalid under 35 U.S.C. § 101.
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`The ’023 patent, entitled “Exchange of Non-Negotiable Credits of an Entity’s Rewards
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`Program for Entity Independent Funds,” is directed to a system by which non-negotiable credits
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`earned in an awards program (such as airline frequent flyer miles or hotel loyalty award points)
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`can be converted into credits that can be used to purchase goods or services from a vendor other
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`than the issuing entity. The ’550 patent, entitled “Graphical User Interface for the Conversion of
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`Loyalty Points Via a Loyalty Point Website,” is directed to a graphical user interface, such as a
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`website, that includes a conversion option that, as in the ’023 patent, allows the conversion of
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`non-negotiable credits earned from one entity into a form that can be used to purchase goods and
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`services from another vendor.
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`The common specification of the two patents explains that loyalty rewards issued to
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`customers are typically redeemable with the granting entity or its affiliates, but not with other
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`unaffiliated entities. That limitation reduces the attractiveness of the rewards to customers and
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`leads to some customers having modest amounts of rewards from multiple providers, none of
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`which have significant value to the customer. In addition, the specification cites delays in
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`processing requests for redemption of awards and the expiration of awards as discouraging
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`1 The seven defendants that have joined in this motion are American Airlines, Inc.; Delta
`Air Lines, Inc.; Frontier Airlines, Inc.; Southwest Airlines Co.; Spirit Airlines, Inc.; United
`Airlines, Inc.; and U.S. Airways, Inc. Two of the defendants, JetBlue Airways Corporation and
`Hawaiian Airlines, Inc., have not joined in this motion. JetBlue has filed a motion to dismiss
`based on improper venue, and Hawaiian has filed a motion to dismiss for lack of personal
`jurisdiction. The Court has ruled on both of those motions today.
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`2
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`consumers from participating in awards programs. ’023 patent, col. 1, line 18, through col. 2,
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`line 11; ’550 patent, col. 1, line 37, through col. 2, line 32.
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`Other aspects of the invention described in the common specification are (1) a software
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`method for converting non-negotiable credits into negotiable funds, in which the conversion of
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`non-negotiable credits into negotiable funds at an agreed-upon conversation rate is automatically
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`determined and the conversion transaction automatically performed; and (2) a “Web-based credit
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`to fund conversion system,” in which the negotiable funds obtained through conversion of non-
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`negotiable credits can be used for e-commerce purchases from vendors that do not honor the
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`non-negotiable credits. ’023 patent, col. 2, line 66 through col. 3, line 24; ’550 patent, col. 3, ll.
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`21-46.
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`1. The ’023 Patent Claims
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`The asserted claims of the ’023 patent include independent claims 31 and 39, and
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`dependent claims 32-38, 40-42, and 44-46. Claim 31 recites a method enabling a customer to
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`convert loyalty award credits of one vendor into loyalty award credits of a second vendor so that
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`the customer can use those converted credits to make purchases from the second vendor. Claim
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`39 recites a “computer program product” that performs the same function.
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`Independent claim 31 of the ’023 patent provides as follows:
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`31. A method comprising:
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`a commerce partner agreeing to accept transfers or conversions of
`quantities of non-negotiable credits to entity independent funds in accordance
`with a credits-to-funds ratio, wherein the non-negotiable credits have been earned
`as part of a rewards program of an entity, wherein the commerce partner accepts
`the entity independent funds for goods or services that the commerce partner
`provides, wherein in [the] absence of the non-negotiable credits being converted
`or transferred into the entity independent funds the commerce partner does not
`accept the non-negotiable credits for the goods or services that the commerce
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`3
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`partner provides, wherein the entity-independent funds are loyalty points of a
`loyalty program of the commerce partner;
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`at least one of one or more computers detecting a communication over a
`network to grant a consumer a quantity of the entity independent funds, wherein
`the quantity of entity independent funds results from a conversion or transfer of at
`least a subset of the non-negotiable credits into the quantity of entity independent
`funds in accordance with the credit-to-funds ratio, wherein the subset of the non-
`negotiable credits are expended as part of the conversion or transfer, and wherein
`the commerce partner is compensated for providing the entity independent funds
`to the consumer;
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`responsive to the communication, at least one of one or more computers
`granting the consumer the quantity of the entity independent funds; and
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`the at least one of the one or more computers accepting at least a portion
`of the quantity of entity independent funds in exchange for the goods or services
`that the commerce partner provides, wherein the one or more computers do not
`accept the non-negotiable credits of the entity’s rewards program for the goods or
`services in absence of the conversion or transfer.
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`Independent claim 39 of the ’023 patent provides as follows:
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`39. A computer program product comprising:
`one or more non-transitory computer-readable mediums;
`program instructions, stored on at least one of the one or more non-
`transitory computer-readable mediums, to detect a communication over a network
`to grant a consumer a quantity of entity independent funds, wherein the quantity
`of entity independent funds results from a conversion or transfer of at least a
`subset of non-negotiable credits into the quantity of entity independent funds in
`accordance with a credit-to-funds ratio, wherein the subset of the non-negotiable
`credits are expended as part of the conversion or transfer, and wherein the
`commerce partner is compensated for providing the entity independent funds to
`the consumer, wherein the commerce partner agrees to accept transfers or
`conversions of quantities of the non-negotiable credits to entity independent funds
`in accordance with the credits-to-funds ratio, wherein the non-negotiable credits
`have been earned as part of a rewards program of the entity, wherein the
`commerce partner accepts the entity independent funds for goods or services that
`the commerce partner provides, wherein in [the] absence of the non-negotiable
`credits being converted or transferred into the entity independent funds the
`commerce partner does not accept the non-negotiable credits for the goods or
`services that the commerce partner provides, wherein the entity-independent
`funds are loyalty points of a loyalty program of the commerce partner;
`one or more non-transitory computer-readable mediums;
`program instructions, stored on at least one of the one or more non-
`transitory computer-readable mediums, to, responsive to the communication,
`grant the consumer the quantity of the entity independent funds; and
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`4
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`Case 2:13-cv-00655-WCB Document 129 Filed 09/03/14 Page 5 of 29 PageID #: 2218
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`program instructions, stored on at least one of the one or more non-
`transitory computer-readable mediums, to accept at least a portion of the quantity
`of entity independent funds in exchange for the goods or services that the
`commerce partner provides, wherein, per the program instructions, the non-
`negotiable credits are not accepted for the goods or services in absence of the
`conversion or transfer.
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`The claims that depend from each of the independent claims add minor functions such as
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`calculating and transferring the converted loyalty points and completing the sale of goods and
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`services by the second vendor.
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`2. The ’550 Patent Claims
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`The only asserted independent claim in the ’550 patent is claim 1. Also asserted are
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`dependent claims 2-3 and 5-7. Claim 1 recites a method in which a computer provides one or
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`more Web pages that can be used by clients to convert non-negotiable loyalty award points of
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`one vendor into loyalty award points of a second vendor so that the customer can use those
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`converted points to make purchases from the second vendor. The claim also recites an
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`agreement between the first vendor and the second vendor that permits consumers to convert the
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`non-negotiable loyalty award points of the first vendor into loyalty award points of the second
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`vendor in accordance with a fixed conversion rate. When that occurs, the first vendor
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`compensates the second vendor in an agreed-upon amount for allowing the conversion, based on
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`the quantity of points converted. The computer that responds to a message indicating the
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`selection of the conversion option processes the selection, and the computer serving the Web
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`pages updates the graphical user interface with the changes in the user’s loyalty award point
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`accounts.
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`Independent claim 1 of the ’550 patent provides as follows:
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`1. A method comprising:
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`5
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`Case 2:13-cv-00655-WCB Document 129 Filed 09/03/14 Page 6 of 29 PageID #: 2219
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`a computer serving a set of one or more Web pages for a loyalty program
`of an entity to one or more remotely located client machines, wherein the Web
`pages are able to be rendered within a client-side browser as a graphical user
`interface on the one or more client machines, wherein upon being rendered within
`the client-side browser said graphical user interface shows a quantity of non-
`negotiable credits, wherein said non-negotiable credits are loyalty points of the
`loyalty program possessed by a member, wherein upon being rendered within the
`client-side browser the graphical user interface comprises a conversion option to
`convert at least a subset of the shown non-negotiable credits into a quantity [of]
`entity independent funds, wherein said entity independent funds are different
`loyalty points of a different loyalty program of a commerce partner, wherein said
`entity independent funds are possessed by the member, wherein an agreement
`exists between the entity and the commerce partner, wherein the agreement
`permits members to convert the non-negotiable credits to the entity independent
`funds in accordance with a fixed credits-to-funds conversion ratio, wherein the
`agreement specifies that the entity is to compensate the commerce partner in an
`agreed upon amount of cash or credit for conversions of non-negotiable credits to
`entity independent funds, wherein said agreed upon amount is a multiple of a
`quantity of converted non-negotiable credits, wherein the entity independent
`funds are redeemable per the different loyalty program for commerce partner
`goods or for commerce partner services, wherein the commerce partner is not said
`entity, wherein in [the] absence of being converted the non-negotiable credits are
`not accepted as payment for commerce partner goods or for commerce partner
`services;
`the computer responsive to receiving a message indicating a selection of
`the conversion option, processing the selection to effectuate changes in the served
`set of Web pages; and
`responsive to the processing, the computer serving one or more Web pages
`or Web page updates that include the effectuated changes to the one or more
`remotely located client machines, wherein upon being rendered within the client-
`side browser the graphical user interface is updated with the effectuated changes,
`wherein the updated graphical user interface shows a reduced quantity of non-
`negotiable credits possessed by the member in the loyalty program, said reduced
`quantity resulting at least in part from the subset of non-negotiable credits being
`converted into the quantity of entity independent funds in accordance with the
`fixed credits-to-funds conversion ratio.
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`The claims that depend from claim 1 add minor functions such as effectuating and
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`displaying the changes in the quantity of converted and available loyalty points.
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`II. DISCUSSION
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`A. The Standard for Granting Judgment on the Pleadings Under Rule 12(c)
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`Rule 12(c) of the Federal Rules of Civil Procedure provides that “[a]fter the pleadings are
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`closed—but early enough not to delay trial—a party may move for judgment on the pleadings.”
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`A motion under Rule 12(c) “is designed to dispose of cases where the material facts are not in
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`dispute and a judgment on the merits can be rendered by looking to the substance of the
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`pleadings and any judicially noticed facts.” Great Plains Trust Co. v. Morgan Stanley Dean
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`Witter & Co., 313 F.3d 305, 312 (5th Cir. 2002), quoting Hebert Abstract Co. v. Touchstone
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`Props., Ltd., 914 F.2d 74, 76 (5th Cir. 1990); see 5C Charles Alan Wright and Arthur R. Miller,
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`Federal Practice & Procedure § 1367, at 206-07 (3d ed. 2004). A court in ruling on a motion for
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`judgment on the pleadings may consider not only the pleadings themselves, but also any exhibits
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`to the pleadings or matters incorporated by reference in the pleadings, as long as all the material
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`allegations of fact are undisputed and only questions of law remain to be decided by the court.
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`Id. at 207-08. The ultimate question for the court in deciding a Rule 12(c) motion is whether,
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`viewed in the light most favorable to the plaintiff, the complaint states a valid claim for relief.
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`Hughes v. Tobacco Inst., Inc., 278 F.3d 417, 420 (5th Cir. 2001); St. Paul Mercury Ins. Co. v.
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`Williamson, 224 F.3d 425, 440 n.8 (5th Cir. 2000).
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`The issue of invalidity under section 101 presents a question of law. Accenture Global
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`Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1340-41 (Fed. Cir. 2013);
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`Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1333 (Fed. Cir. 2012); In re Bilski, 545 F.3d 943, 951
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`(Fed. Cir. 2008) (en banc), aff’d, 130 S. Ct. 3218 (2010). However, that legal conclusion “may
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`contain underlying factual issues.” Accenture, 728 F.3d at 1341. In this case, the parties have
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`7
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`not pointed to any factual issues that could affect the Court’s analysis of the section 101 issue.
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`The Court therefore regards that issue as appropriate for disposition under Rule 12(c).
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`Although the Federal Circuit has observed that “claim construction is not an inviolable
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`prerequisite to a validity determination under § 101,” the court has nonetheless suggested that “it
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`will ordinarily be desirable—and often necessary—to resolve claim construction disputes prior
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`to a § 101 analysis, for the determination of patent eligibility requires a full understanding of the
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`basic character of the claimed subject matter.” Bancorp Servs., L.L.C. v. Sun Life Assurance
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`Co., 687 F.3d 1266, 1273-74 (Fed. Cir. 2012). Accordingly, the Court has waited until after the
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`claim construction hearing in this case to rule on the present motion in order to ensure that there
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`are no issues of claim construction that would affect the Court’s legal analysis of the
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`patentability issue. The Court is now satisfied that there are no disputed issues of claim
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`construction that would affect the proper analysis of the patentability of the asserted claims, and
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`no other issues of fact that are material to the section 101 question. The Court therefore turns to
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`the merits of the patentability issue.
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`B. Patentable Subject Matter Under 35 U.S.C. § 101
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`Notwithstanding the prolixity of the claims, they recite a very simple invention: a
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`computer-driven method and computer program for converting one vendor’s loyalty award
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`credits into loyalty award credits of another vendor. In principle, the invention is thus the
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`equivalent of a currency exchange as applied to loyalty award credits such as airline frequent
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`flyer miles or hotel loyalty award points. The Court concludes that the invention claimed in the
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`’023 and ’550 patents is not fundamentally different from the kinds of commonplace financial
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`transactions that were the subjects of the Supreme Court’s recent decisions in Bilski v. Kappos,
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`Case 2:13-cv-00655-WCB Document 129 Filed 09/03/14 Page 9 of 29 PageID #: 2222
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`130 S. Ct. 3218 (2010), and Alice Corporation Pty. Ltd. v. CLS Bank International, 134 S. Ct.
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`2347 (2014), in which the Court held patent claims invalid for failing to recite patentable subject
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`matter. This case falls squarely within the principles announced in those cases. Accordingly, the
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`Court holds that the asserted claims of the ’023 and ’550 patents are invalid.
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`1. The Bilski Decision
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`In Bilski, the Supreme Court addressed the patentability of an invention claiming a
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`method for buyers and sellers of commodities to protect, or hedge, against the risk of price
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`fluctuations. As the Court explained, claim 1 of the application at issue in Bilski described a
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`series of steps instructing how to hedge risk, and claim 4 put the concept articulated in claim 1
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`into a simple mathematical formula. Claim 1 in Bilski provided as follows:
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`(a) initiating a series of transactions between said commodity provider and
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`consumers of said commodity wherein said consumers purchase said commodity
`at a fixed rate based upon historical averages, said fixed rate corresponding to a
`risk position of said consumers;
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`(b) identifying market participants for said commodity having a counter-
`risk position to said consumers; and
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`(c) initiating a series of transactions between said commodity provider and
`said market participants at a second fixed rate such that said series of market
`participant transactions balances the risk position of said series of consumer
`transactions.
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`130 S. Ct. at 3223-24.
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`The Supreme Court characterized the claims in Bilski as efforts to patent “both the
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`concept of hedging risk and the application of that concept to energy markets.” 130 S. Ct. at
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`3229. Applying principles drawn from several of its prior decisions, the Court concluded that
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`the claims at issue in Bilski were unpatentable “because they are attempts to patent abstract
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`ideas.” Id. at 3229-30. The prohibition against patenting abstract ideas, the Court explained,
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`“‘cannot be circumvented by attempting to limit the use of the formula to a particular
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`technological environment’ or adding ‘insignificant postsolution activity.’” Id. at 3230, quoting
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`Diamond v. Diehr, 450 U.S. 175, 191-92 (1981).
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`The claims in Bilski were unpatentable, the Court held, because they “explain the basic
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`concept of hedging, or protecting against risk,” and the concept of hedging “is an unpatentable
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`abstract idea.” Bilski, 130 S. Ct. at 3231. To allow the applicants to patent risk hedging “would
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`pre-empt use of this approach in all fields, and would effectively grant a monopoly over an
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`abstract idea.” Id. With respect to whether claims to the practice of hedging would be
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`patentable if limited to hedging as applied to commodities in the energy market, the Court held
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`that claims to an abstract idea cannot avoid invalidation on the ground that they are limited to the
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`application of that abstract idea to a single field of use. Id.
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`2. The CLS Bank Decision
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`Four years after Bilski, the Supreme Court addressed a similar issue in the CLS Bank
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`case. The claims at issue in that case were drawn to a computerized system for mitigating
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`“settlement risk,” i.e., the risk that only one party to an agreed-upon financial exchange will
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`satisfy its obligation. As the Court explained, the claims were “designed to facilitate the
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`exchange of financial obligations between two parties by using a computer system as a third-
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`party intermediary.” 134 S. Ct. at 2352. The claims involved “a method of exchanging financial
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`obligations between two parties using a third-party intermediary to mitigate settlement risk. The
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`intermediary creates and updates ‘shadow’ records to reflect the value of each party’s actual
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`accounts held at ‘exchange institutions,’ thereby permitting only those transactions for which the
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`parties have sufficient resources. At the end of each day, the intermediary issues irrevocable
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`instructions to the exchange institutions to carry out the permitted transactions.” Id. at 2356.
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`The Supreme Court held that the claims at issue were drawn to the abstract idea of
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`intermediated settlement and that “merely requiring generic computer implementation fails to
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`transform that abstract idea into a patent-eligible invention.” 134 S. Ct. at 2352. On their face,
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`the Court explained, the claims address the concept of intermediated settlement, i.e., “the use of a
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`third party to mitigate settlement risk.” Id. at 2356. The Court concluded that the concept of
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`intermediated settlement, like the concept of risk hedging in Bilski, is a fundamental economic
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`practice that qualifies as an “abstract idea” beyond the scope of 35 U.S.C. § 101. 134 S. Ct. at
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`2356. Both concepts, the Court held, “are squarely within the realm of ‘abstract ideas’ as we
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`have used that term.” Id. at 2357.
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`On one important issue, the Supreme Court in CLS Bank went beyond Bilski. The
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`claims in Bilski did not require the use of computers, while the claims in CLS Bank did.
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`Significantly, the Court held that the introduction of a computer into the claims did not render
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`the claims in CLS Bank patentable. Relying on its prior decision in Gottschalk v. Benson, 409
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`U.S. 63, 64 (1972), the Court stated that “simply implementing a mathematical principle on a
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`physical machine, namely a computer, ‘[i]s not a patentable application of that principle.’” 134
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`S. Ct. at 2357 (alteration in original). That is, “the mere recitation of a generic computer cannot
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`transform a patent-ineligible abstract idea into a patent-eligible invention.” Id. at 2358. The
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`relevant question, the Court explained, “is whether the claims here do more than simply instruct
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`the practitioner to implement the abstract idea of intermediated settlement on a generic
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`computer.” Id. at 2359. The Court concluded that they did not, because the function performed
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`by the computer at each step of the claims was “purely conventional,” id., quoting Mayo
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`Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1298 (2012), and that it merely
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`required “a generic computer to perform generic computer functions,” id. As the Court
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`explained, the method claims, did not “purport to improve the functioning of the computer itself.
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`Nor [did] they effect an improvement in any other technology or technical field. Instead, the
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`claims at issue amount to ‘nothing significantly more’ than an instruction to apply the abstract
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`idea of intermediated settlement using some unspecified, generic computer.” Id. at 2359-60
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`(citations omitted). The Court held that was “not ‘enough’ to transform an abstract idea into a
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`patent-eligible invention.” Id. at 2360, quoting Mayo, 132 S. Ct. at 1297.
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`3. Appling Bilski and CLS Bank to This Case
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`If the applicants in Bilski can be said to have claimed the unpatentable concept of
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`hedging, as applied to commodities in the energy market, and the patentees in CLS Bank can be
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`said to have claimed the unpatentable concept of intermediated settlement as applied to financial
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`transactions, the patentees in this case can fairly be said to have claimed the unpatentable
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`concept of currency exchange, as applied to the exchange of currencies in the form of loyalty
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`award credits of different vendors.2
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`a. Loyalty does not claim that the patentees invented the concept of converting the
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`loyalty award credits of one vendor into loyalty award credits of another in order to facilitate
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`2 Loyalty argues that the conversion of loyalty award credits does not constitute a form
`of “currency conversion,” because it does not involve money. The term “currency,” however, is
`not limited to money, but includes other credits that are exchangeable for things of value. See
`Webster’s Third New International Dictionary 557 (Philip Babcock Gove ed. 2002) (defining
`“currency” as “something that is in circulation as a medium of exchange”). The exchange of one
`vendor’s loyalty award points for another’s is not different in principle from any exchange of
`monetary currencies that are not readily negotiable outside of their country of origin. An
`exchange of Belarusian rubles for Polish złotys at the Polish-Belarus border would be an
`example of such a currency exchange, as would an exchange of Sheraton hotel award points for
`miles in an American Airlines frequent flyer account.
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`customer purchases from the second vendor. Instead, Loyalty argues that the patentees invented
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`a computerized method and system for doing that task efficiently. But close examination of the
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`asserted claims shows that they are largely functional in nature and do little more than set forth
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`the general concept of currency exchange, as applied to loyalty awards, and then announce the
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`use of “one or more” computers to obtain various efficiencies in the process of converting one
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`type of loyalty award credits into another.
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`In claim 31 of the ’023 patent, for example, the computers are identified as “detecting a
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`communication over a network to grant a consumer a quantity of the entity independent funds,
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`wherein the quantity of entity independent funds results from a conversion or transfer of at least
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`a subset of the non-negotiable credits into the quantity of entity independent funds in accordance
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`with the credit-to-funds ratio.” ’023 patent, col. 10, ll. 7-13. Translated into plain English, that
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`limitation simply requires the computers to keep track of the conversion of loyalty award credits
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`from one vendor to another. It is a purely functional limitation; neither the limitation nor
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`anything in the specification provides any detail as to how that function is performed. In any
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`event, recording a transaction is a mundane operation that can be performed by any generic
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`computer with conventional programming.
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`The same is true of the two subsequent limitations, which require the computers to
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`“grant[] the consumer the quantity of entity independent funds” and to “accept[] at least a portion
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`of the quantity of entity independent funds in exchange for the goods or services that the
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`commerce partner provides.” ’023 patent, col. 10, ll. 19-24. Translated, those limitations merely
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`require that the computers credit the consumer, after the conversion of the first vendor’s loyalty
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`award credits, with the loyalty award credits of the second vendor, and then facilitate the
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`consumer’s purchase of a product or service from the second vendor. Again, there is no detail
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`about how those functions are performed. In any event, there is no suggestion that those
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`functions are performed in any novel or unusual manner; instead, from their description those
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`functions appear to be routine functions that can readily be performed by a generic computer
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`with conventional programming.3
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`The dependent claims add nothing of substance that would affect the patentability of the
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`claims under section 101. Claim 32 requires the computers to add converted loyalty points to the
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`consumer’s existing account with the second vendor. Claim 33 requires the computers to
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`complete the sale of goods or services by the second vendor. Claim 34 requires the computers to
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`convert the loyalty points of the first vendor into a number of loyalty points of the second vendor
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`in accordance with a fixed conversion ratio. Claim 36 requires that a single computer perform a
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`number of the claimed functions. Claim 37 requires that a plurality of computers perform those
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`same functions. And claim 38 requires that the computer or computers be owned by or operated
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`for the second vendor. Again, those claims are mainly functional in nature, and nothing in the
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`claims or the specification reveals how any of the functions are performed or suggests why any
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`of those functions are not within the routine capacity of a generic computer with conventional
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`programming.
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`3 In another order entered today, the Court has held that claim 31 is invalid for
`indefiniteness based on the portion of the claim that recites “the at least one of the one or more
`computers accepting at least a portion of the quantity of entity independent funds in exchange for
`the goods or services that the commerce partner provides.” The Court’s indefiniteness ruling
`does not affect the section 101 analysis, which does not turn on the problem with the antecedent
`basis in the quoted language from that claim. Claim 31 is therefore invalid both for
`indefiniteness and for unpatentability under section 101.
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`Claims 39 of the ’023 patent and its dependent claims (40-42 and 44-46) are similar in
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`content to claim 31 and its dependent claims, except that claim 39 is directed to a “computer
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`program product” and contains limitations to “one or more non-transitory computer-readable
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`mediums” and “program instructions[] stored on at least one of the one or more non-transitory
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`computer-readable mediums.” ’023 patent, col. 11, ll. 1-4, 29-31, 34-35. Although drafted in
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`remarkably cumbersome form, the claim in essence recites a computer program that detects
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`communications relating to the conversion of loyalty award points, in which a customer converts
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`loyalty award points of one vendor into loyalty award points of another vendor pursuant to an
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`agreement between the vendors to allow the conversion of otherwise non-negotiable credits. The
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`claimed computer effects the conversion by granting the consumer award points of the second
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`vendor in exchange for the award points of the first vendor and then accepts the award points
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`associated with