UNITED STATES PATENT AND TRADEMARK OFFICE
`
`____________
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`
`
`DELTA AIR LINES, FRONTIER AIRLINES, INC., UNITED AIRLINES, INC.,
`US AIRWAYS, INC., AND AMERICAN AIRLINES, INC.
`Petitioner
`
`v.
`
`LOYALTY CONVERSION SYSTEMS CORPORATION
`Patent Owner
`
`
`
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`
`
`
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`
`
`
`____________
`
`Case CBM2014-00096
`Patent 8,511,550
`____________
`
`
`Before GRACE MEDLEY, Administrative Patent Judge
`
`
`
`
`
`
`PATENT OWNER’S PRELIMINARY RESPONSE
`
`
`ASKELADDEN 1519
`
`
`
`____________
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`
`
`DELTA AIR LINES, FRONTIER AIRLINES, INC., UNITED AIRLINES, INC.,
`US AIRWAYS, INC., AND AMERICAN AIRLINES, INC.
`Petitioner
`
`v.
`
`LOYALTY CONVERSION SYSTEMS CORPORATION
`Patent Owner
`
`
`
`
`
`
`
`
`
`
`
`
`
`
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`
`
`
`
`____________
`
`Case CBM2014-00096
`Patent 8,511,550
`____________
`
`
`Before GRACE MEDLEY, Administrative Patent Judge
`
`
`
`
`
`
`PATENT OWNER’S PRELIMINARY RESPONSE
`
`
`ASKELADDEN 1519
`
`
`
`TABLE OF CONTENTS
`
`
`TABLE OF AUTHORITIES ………………………………………….
`LIST OF EXHIBITS …………………………………………………..
`I.
`INTRODUCTION …………………………………………..
`II.
`STATEMENT OF RELIEF REQUESTED ………………….
`III. BACKGROUND ……………………………………………..
`IV. PETITIONER HAS FAILED TO DEMONSTRATE
`THAT IT IS MORE LIKELY THAN NOT THAT AT
`LEAST ONE CLAIM OF THE ‘550 PATENT IS INVALID ..
`A. Patent Owner’s Proposed Claim Construction …………….
`B. Petitioner Has Not Established that the Claims
`of the ‘550 Patent are More Likely Than Not Invalid
`on the Asserted Grounds Based on 35 USC §112(a)
`(Proposed Ground 4) ……………………………………….
`C. Petitioner Has Not Established that the Claims of the
`‘550 Patent are More Likely Than Not Invalid on the
`Asserted Grounds Based on 35 USC §102(b) as Being
`Anticipated by MacLean et al (Proposed Ground 2) ……….
`D. Proposed Ground 3 is Redundant and Malformed …………
`E. Petitioner Has Not Established that the Claims
`of the ‘550 Patent are More Likely Than Not Invalid
`on the Asserted Grounds Based on 35 USC § 103 as Being
`Obvious Over Antonucci in View of MacLean
`(Proposed Ground 3) ……………………………………….
` F. Attempted Combinations of Antonucci and MacLean
`
`Are Not Obvious ……………………………………………
` G. Material Claimed Limitations Are Not Disclosed by
`
`Antonucci in View of MacLean ……………………………
` H. Response to Petition Arguments ……………………………
` I. Petitioner Has Not Established that the Claims of the
`‘550 Patent are More Likely Than Not Invalid on the
`Asserted Grounds Based on 35 USC § 101
`(Proposed Ground 1) ……………………………………….
`J. The Petition Fails to Conform to PTAB Rules ……………..
`V. CONCLUSION ………………………………………………..
`
`
`
`
`
`
`
`
`
`
`Page(s)
`iii
`v
`1
`5
`6
`
`9
`9
`
`18
`
`20
`41
`
`46
`
`48
`
`50
`61
`
`63
`76
`79
`
`
`
`ii
`
`
`
`TABLE OF AUTHORITIES
`
`
`CASES
`
`Ariad Pharms., Inc. v. Eli Lilly & Co.,
`
`598 F.3d 1336 (Fed. Cir. 2010) (en banc) ……………………….
`
`In re Gardner,
`
`480 F.2d 879, 879 (C.C.P.A. 1973) ……………………………..
`
`In re Wertheim,
`
`541 F.2d 257, 263, 191 USPQ 90, 97 (CCPA 1976) ……………
`
`In re Koller,
`
`613 F.2d 819, 204 USPQ 702 (CCPA 1980) ……………………
`
`In re Napier,
`
`55 F.3d 610, 613, 34 USPQ2d 1782, 1784 (Fed. Cir. 1995) ……
`
`In re Robertson,
`
`169 F.3d USPQ2d 1949, 1950-51 (Fed. Cir. 1999) …………….
`
`Graham v. John Deere Co.,
`383 U.S. 1, 148 USPQ 459 (1966) ………………………………
`
`
`Liberty Mutual Ins. Co. v. Progressive Casualty Ins. Co.,
`
`CBM2012-00003 ………………………………………………..
`
`Diamond v. Diehr,
`
`450 U.S. 175 (1981) …………………………………………….
`
`CLS Bank Int’l v. Alice Corp,
`717 F.3d 1269 (Fed. Cir. 2013) (en banc),
`
`
`affirmed by 573, U.S., (2014)(slip opinion) ………………………
`
`CyberSource Corp. v. Retail Decisions, Inc.,
`
`654 F.3d 1366, 1372 (Fed. Cir. 2011) ………………………….
`
`
`
`
`
`iii
`
`Page(s)
`
`19
`
`19
`
`19
`
`19
`
`21
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`21
`
`42
`
`42
`
`66
`
`67, 70
`
`73
`
`
`
`SiRF Tech., Inc. v. ITC,
`
`601 F.3d 1319, 1333 (Fed. Cir. 2010) …………………………
`
`Research Corp. Tech., Inc., v. Microsoft Corp.,
`
`627 F.3d 859, 867 (Fed. Cir. 2011) ……………………………
`
`
`STATUTES
`
`35 U.S.C. §101 ………………………………………………………..
`
`73
`
`75
`
`5, 65
`
`35 U.S.C. §102 ……………………………………………………….
`
`5, 20
`
`35 U.S.C. §103 ……………………………………………………….. 5, 41, 46
`
`35 U.S.C. §112 ……………………………………………………….
`
`5,18
`
`35 U.S.C. §312(a) …………………………………………………… .
`
`76, 77
`
`35 U.S.C. §316(e) ……………………………………………………..
`
`67
`
`37 C.F.R §42.20(c) …………………………………………………. 42, 61, 65, 76
`
`37 C.F.R §42.6(a)(2)(iii) ………………………………………………
`
`37 C.F.R §42.8(a)(1) and (b)(3) ……………………………………….
`
`37 C.F.R §42.104(b)(4) ………………………………………………..
`
`37 C.F.R §42.204(b)(4) ………………………………………………..
`
`37 C.F.R §42.207(a) ………………………………………………….. .
`
`37 C.F.R §42.208(c) ……………………………………………………
`
`43
`
`76
`
`77
`
`77
`
`1
`
`9
`
`
`
`
`
`
`
`iv
`
`
`
`LISTS OF EXHIBITS
`
`
`Petitioner’s Exhibits
`
`
`Exhibit Description
`
`1001
`
`U.S. Patent No. 8,511,550
`
`1002
`
`U.S. Patent No. 3,083,906
`
`1003
`
`U.S. Patent No. 3,795,795
`
`1004
`
`U.S. Pat. Appl. Pub. No. 2003/0200144 to Antonucci et al.
`
`1005
`
`U.S. Pat. Appl. Pub. No. 2002/0143614 to Maclean et al.
`
`1006
`
`U.S. Patent No. 8,297,502
`
`1007
`
`U.S. Patent No. 7,703,673
`
`1008
`
`Patent File History for U.S. Patent No. 7,703,673
`
`1009
`
`Declaration of Sandeep Chatterjee
`
`1010
`
`Patent File History for U.S. Patent No. 8,511,550
`
`1011
`
`1012
`
`1013
`
`1014
`
`1015
`
`
`
`Transitional Program for Covered Business Method Patents –
`Definitions of Covered Business Method Patent and Technological
`Invention, 77 Fed. Reg 157 (August 14, 2012)
`
`Loyalty Conversion Systems Corp. v. US Airways, 2:13-cv-00666,
`Complaint
`
`Office Patent Trial Practice Guide, 77 Fed Reg. 157 (August 14, 2012)
`
`Loyalty Conversion Systems Corp. v. Delta Air Lines, 2:13-cv-00659,
`Complaint
`Loyalty Conversion Systems Corp. v. United Airlines, 2:13-cv-00665,
`Complaint
`
`v
`
`
`
`1016
`
`1017
`
`Loyalty Conversion Systems Corp. v. Frontier Airlines, 2:13-cv-00660,
`Complaint
`
`Loyalty Conversion Systems Corp. v. American Airlines,2:13-cv-
`00655, Complaint
`
`
`
`Patent Owner’s Exhibits
`
`Exhibit Description
`
`2001
`
`Loyalty by the Billions by Jay Sorensen
`
`2002
`
`Definition of Negotiable Instrument from Business Dictionary
`
`2003
`
`USPTO Patent Agent/Agent Search database record for Stephen
`
`Baskin ("No records were found".)
`
`2004
`
`IATA Special Report – The Price of Loyalty
`
`2005
`
`Peter Soares Private LinkedIn Profile on 6-6-2014
`
`2006
`
`New York State Unified Court System Attorney Details, for Peter
`
`Soares
`
`2007
`
`Definition of Entity, from MacMillan
`
`2008
`
`Definition of Commerce, from Oxford
`
`2009
`
`Definition of Partner, from Yahoo
`
`2010
`
`Definition of Fund, from Collins
`
`2011
`
`Definition of Independent, from Collins
`
`2012
`
`Definition of Point, from Oxford
`
`
`
`vi
`
`
`
`2013
`
`Definition of Loyalty, from Oxford
`
`2014
`
`Flying Ahead of the Airplane by Nawal Taneja
`
`2015
`
`Hotel Points-to-Miles Conversion Tables for 9 Hotel Programs and 7
`
`U.S. Airlines by Ric Garrido
`
`2016
`
`The Ultimate Points Transfer Table by Scott MacKenzie
`
`2017
`
`An Open Economy in the Loyalty Rewards Space – Good For Whom
`
`2018
`
`JETBLUE AIRWAYS CORPORATION v. COPYTELE INC., JOHN
`
`ROOP, CTI PATENT ACQUISITION CORPORATION, and
`
`LOYALTY CONVERSION SYSTEMS CORPORATION, Civil
`
`Action No. 14-cv-1782, Complaint
`
`2019
`
`Definition of Entity, from Business Dictionary
`
`2020
`
`Definition of non- , from Dictionary.com
`
`2021
`
`Creative Business: Substitutes and Complements
`
`2022
`
`Strategic Report for Southwest Airlines
`
`2023
`
`Using Points.com to Combine Miles and Points: A Good Deal?
`
`2024
`
`Loyalty Traveler Examines Points.com Exchange Value
`
`2025
`
`Proprietary Programs vs. Coalition Loyalty
`
`2026
`
`Declaration of Independence?
`
`2027
`
`The Economics Behind Customer Loyalty: Using Coalition Program
`
`
`
`vii
`
`
`
`Assets to Turbo-Charge Results
`
`2028
`
`Notice of Allowance U.S. Patent No. 8,511,550
`
`2029
`
`U.S. Patent No. 8,595,055 to Maclean et al.
`
`2030
`
`U.S. Patent No. 7,467,096 to Antonucci et al.
`
`2031
`
`What Miles & Points are Worth: Airline Miles
`
`2032
`
`Points on the Dollar – How I Estimate The Value of Points and Miles
`
`2033
`
`MacLean Prosecution History Response of 12-02-2005
`
`2034
`
`MacLean Prosecution History Response of 8-23-2006
`
`2035
`
`MacLean Prosecution History Response of 03-05-2008
`
`2036
`
`MacLean Prosecution History Reply of 06-27-2011
`
`2037
`
`Definition of currency from Oxford Dictionaries
`
`2038
`
`IHG Anywhere screenshots 6-29-2014
`
`
`
`
`
`
`viii
`
`
`
`
`
`Pursuant to 37 C.F.R. § 42.207(a), the owner of exclusive rights to license
`
`and enforce U.S. Patent No. 8, 511, 550 (“the ‘550 patent”), Loyalty Conversion
`
`Systems Corporation
`
`("Patent Owner"), hereby submits
`
`the
`
`following
`
`Preliminary Response in response to the Petition for Covered Business Method
`
`("CBM") Review of the ‘550 patent; Ex 1001. The ‘550 patent is one of two
`
`related patents being challenged by the Petitioner in co-pending CBM petitions,
`
`the other being U.S. Patent 8, 313, 023 (CBM2014-00095).
`
`
`I.
`
`
`INTRODUCTION
`
`Merchants have used loyalty rewards programs for many years to attempt to
`
`create and maintain customer loyalty, to increase the perceived value of their goods
`
`and services, and to generate a profit. Ex 2001. However, inherent limitations in
`
`the way that loyalty programs were administered, limitations in the way that
`
`rewards programs communicated with each other, and limited redemption options
`
`available to customers, all decreased the effectiveness and usefulness of rewards
`
`programs and the perceived value of loyalty points. Ex 1001, col 1: 52-63. The
`
`enhanced loyalty program functionality covered by the ‘550 patent overcomes the
`
`limitations imposed by earlier loyalty programs, making it possible for operators to
`
`administer their own loyalty reward programs, loyalty rewards programs to
`
`communicate with other programs, and customers to transfer points from one
`
`
`
`1
`
`
`
`program to another resulting in many more points redemption options.
`
`Prior to the ‘550 patent, in an attempt to rectify the limited redemption
`
`options, centralized loyalty point exchange systems emerged that allowed
`
`members of different loyalty programs to indirectly exchange rewards points in
`
`one loyalty program for loyalty points in another. Ex 1005. The centralized
`
`exchange systems did not operate loyalty points programs of their own, but acted
`
`as intermediaries for a number of third party loyalty program operators. In these
`
`centralized exchange systems, no loyalty program operator had any direct
`
`agreement with any other loyalty program operator. Instead, each loyalty program
`
`operator unilaterally established a “buy rate” and “sell rate,” which the centralized
`
`exchange system relied upon. Ex 1005, para 0062.
`
`Centralized exchange systems had certain drawbacks. Customer loyalty to a
`
`particular merchant was reduced (Ex 2017, page 3 “Once reward programs
`
`become a proxy for cash any true differentiation between programs is lost”),
`
`the loyalty program operator’s ability to channel customer behavior was
`
`diminished, and the centralized loyalty point conversion systems added a
`
`middleman charge to every transaction. Ex 1005, para 0065. The inventors of the
`
`‘550 patent and related patents of the same family invented a new type of rewards
`
`system, enhanced for differentiated, commerce partner relationships, which cured
`
`the deficiencies of the centralized exchange systems. The partner-differentiated
`
`
`
`2
`
`
`
`rewards systems enable limited conversions across program barriers by mutual
`
`agreement. Commerce partnerships permitted conversions with a limited subset of
`
`complementary businesses such as hotels, airlines, and rental car agencies. The
`
`partner-differentiated rewards system embodied in the ‘550 patent, offered loyalty
`
`program members the benefits of increased redemption options, while maintaining
`
`program control and loyalty incentives. The loyalty incentives help both the
`
`commerce partner and the entity. In the partner-differentiated rewards system,
`
`customer behavior could be channeled to the benefit of each of the complementary
`
`business partners with no detriment to either party’s business. Cross promotions
`
`and other marketing programs could enhance each partner’s business with no
`
`detriment to their complementary business partners.
`
`Another attempted solution to granting consumers increased redemption
`
`options is to aggregate large sets of retailers into a single rewards program. Ex.
`
`1004; Ex 2025; Ex 2026. These aggregated programs, sometimes referred to as
`
`networked loyalty programs or coalition programs, have disadvantages in that
`
`participating retailers surrender control to a centralized, aggregate program. If
`
`competitors are permitted to join in the aggregate program, customers have options
`
`within the program for competing goods and services. Loyalty to a specific retailer
`
`is compromised in aggregate programs. In contrast, a partner-differenced rewards
`
`program permits control of the program to be retained by a single retailer.
`
`
`
`3
`
`
`
`Today, many loyalty program operators in the airline, hotel, rental car
`
`agency, etc. operate under these kinds of mutually beneficial points conversion
`
`arrangements. Ex 2015; Ex 2016. Loyalty program operators have come to
`
`understand that a partner-differentiated rewards system is crucial to allowing
`
`points conversion while retaining the benefits of the customer loyalty which is the
`
`object of these programs. Ex 2001; Ex 2004; Ex 2014; Ex 2026; Ex 2027.
`
`The partner-differentiated rewards system covered by the ‘550 patent allow
`
`loyalty program members to convert their redemption restricted loyalty points
`
`earned through interactions with a first entity into different loyalty points of a
`
`commerce partner of that entity. The rewards points that were previously “non-
`
`negotiable” because of the restrictions imposed by the points granting entity
`
`become, as a result of the conversion, funds that are independent of the granting
`
`entity and its restrictions. In the claims at issue in the instant petition, the
`
`converted rewards points have become a different type of loyalty points
`
`redeemable with the commerce partner of the entity.
`
`Thus, the partner-differentiated rewards system covered by the 550 Patent
`
`includes a novel method that allows a plurality of loyalty rewards programs
`
`operators to enhance the perceived value of their loyalty programs by offering
`
`conversions of rewards points between (preferably) complementary businesses
`
`such as hotels, airlines, and rental car companies. The partner-differentiated
`
`
`
`4
`
`
`
`rewards system enlarges the pool of potential customers for each of the parties but
`
`retains the marketing benefits of each party’s rewards program.
`
`The Petitioner asserts that “The ’550 Patent is directed to nothing more than
`
`the abstract and well-known concept of currency conversion.” This is incorrect.
`
`The Petitioner mistakenly confuses the partner-differentiated rewards system
`
`covered by the ‘550 patent with a generic currency conversion system. The
`
`partner-differentiated rewards system provide conversions at a mutually agreed
`
`upon ratio using mutually agreed upon compensation amounts. Currency
`
`exchanges do not differentiate rates or compensation based upon business
`
`relationships. If anything, a generic currency conversion system is akin to the
`
`centralized exchange systems in operation before the invention of partner-
`
`differentiated reward systems covered by the ‘550 patent.
`
`II.
`
`STATEMENT OF RELIEF REQUESTED
`
`
`
`Patent owner respectfully requests the Board to deny the Petition for CBM
`
`review of claims 1-3 and 5-7 of the ‘550 patent because the Petition fails to
`
`demonstrate that it is more likely than not the challenged claims are unpatentable
`
`under 35 U.S.C. §112, first paragraph, under 35 U.S.C. §102 given MacLean’s
`
`disclosure, under 35 U.S.C. §103 given disclosures of Antonucci and MacLean,
`
`and under 35 U.S.C. §101. The Petition also fails to conform to the PTAB rules,
`
`and should be refused as a result. Alternatively, if the Board institutes CBM
`
`
`
`5
`
`
`
`review of the ‘550 patent, Patent Owner additionally requests the Board to reject
`
`Petitioner’s proposed claim construction, and instead adopt Patent Owner’s
`
`constructions proposed herein.
`
`III. BACKGROUND
`
`
`
`The ‘550 patent and related patents (there are twenty five patents total –
`
`nineteen (19) issued and six (6) pending issue) relate to transferring a member’s
`
`loyalty points across loyalty program boundaries in accordance with an agreement
`
`between two program operators. The ‘550 patent issued on August 20, 2013, from
`
`an application filed April 16, 2013, and claims priority to non-provisional patent 7,
`
`703, 673 filed on May 25, 2006 as well as priority to patents 8, 297, 502,
`
`8,684,265, and 8,668,146. In this response, the Patent Owner does not address the
`
`priority date to be afforded to the ‘550 patent, as no asserted grounds (grounds 1-4)
`
`in this Petition make the priority date afforded to the ‘550 patent a relevant issue
`
`for the Board to address.
`
`
`
`By 2006, Airlines and others embraced loyalty programs finding them to be
`
`tremendously profitable enterprises. Ex 2001. Loyalty points incentivize
`
`customers to perform actions that are desired by a program operator. Loyalty
`
`points have no objective valuation, and are instead a subjectively valued
`
`instrument, which is a common characteristic of artifacts that incentivize consumer
`
`actions. Ex 2032, first paragraph; Ex 2031, first paragraph.
`
`
`
`6
`
`
`
`
`
` Loyalty points are typically tied to a customer and program and are not
`
`freely transferrable between people or across program boundaries. Ex 1004, para
`
`0011. Consequently, a member of an airline loyalty program may generally not
`
`use earned loyalty points to purchase a flight on a competitor’s airline.
`
`
`
`A currency has a reference value, which is consistent regardless of use, and
`
`currency is a bearer instrument freely transferable among people. Possession
`
`implies ownership and a right to use the currency. Unlike a currency, the
`
`contextual perceived value (e.g., subjective value) of loyalty points in a
`
`marketplace varies. The below chart shows a few variable valuations applicable to
`
`loyalty program points.
`
` Different Valuations
`for LP
`Incentivizing Value
`
`Cost for Providing
`Rewards
`Liability Value
`
`Cash Redemption Value
`(Program Permitting)
`Sale Value (Open
`Market)
`(Program Permitting)
`Customer Perceived
`Value
`
`Explanation
`
`Value to a LP operator to shape member
`behavior
`Actual cost of rewards provided to LP members
`
`Amount reported to SEC as “debt obligations”
`from unredeemed LPs
`Amount LP operator will pay in cash for
`unredeemed LPs held by members
`Amount for which LP operator will sell (on
`open market) a quantity of LP points (to be
`added to a specific member account)
`Amount of value a member having the LP
`ascribes to the possessed loyalty points
`
`
`
`From the above, it is evident that loyalty points are not a “fungible” medium of
`
`exchange, and that value varies by usage, purpose, and perspective. For example,
`
`
`
`7
`
`
`
`two different customers may possess sufficient points in an airline loyalty program
`
`to upgrade from coach to first class (retail value $200). The value equated to this
`
`upgrade to a first class flyer may be $200. Value equated to a coach flyer, may be
`
`$50, which is all he/she is willing to pay for the upgrade. If the airline has an
`
`excess of first class seats, the airline may desire to fill the first class seats so that
`
`additional profit can be made. The loyalty point usage by the coach flyer earns the
`
`airline extra profit, while the loyalty point usage by the first class flyer reduces
`
`otherwise earned profit by $200. The same loyalty points are valued very
`
`differently by three different actors depending on underlying circumstances.
`
`
`
`In 2006, the inventors recognized that it was feasible to allow limited point
`
`transferability across loyalty program boundaries while maintaining loyalty
`
`incentives. Transfers are limited, as recognized by the inventors, since unrestricted
`
`transferability permits loyalty points to be used to purchase competitor
`
`goods/services, which undermines the purpose of such a program. Ex. 2017, page
`
`3 “Once reward programs become a proxy for cash any true differentiation
`
`between programs is lost.”
`
`
`
`The inventors recognized business-to-business relationships are non-
`
`uniform. Some relationships from a consumer acquisition and retention standpoint
`
`are positive, others are negative. For example, an airline may establish a beneficial
`
`relationship with a hotel, as flying and lodging are complementary businesses. Ex
`
`
`
`8
`
`
`
`2021, page 2; Ex 2022, page 14. Permitting airline miles and hotel points to be
`
`converted one way or the other may increase airline and hotel customer satisfaction
`
`and encourage use of the airline and hotel in the future. This positive cross
`
`marketing effect makes these types of conversions desirable. Ex 2022, page 14.
`
`
`
`These insights from the inventors in 2006 are embodied in issued claims of
`
`the ‘550 patent, which requires a mutual agreement between two loyalty point
`
`operators, where the agreement establishes a fixed conversion ratio and a
`
`compensation amount.
`
`IV. PETITIONER HAS FAILED TO DEMONSTRATE THAT IT IS
`
`MORE LIKELY THAN NOT THAT AT LEAST ONE CLAIM OF
`
`THE ‘550 PATENT IS INVALID
`
`
`
`To successfully initiate a CBM review, Petitioner bears the burden of
`
`proving that it is more likely than not that at least one claim of the ‘550 patent is
`
`not patentable. 37 C.F.R. § 42.208(c). The Petitioner has not satisfied this burden,
`
`as described herein.
`
`A. Patent Owner’s Proposed Claim Construction
`
`
`
`The Petition attempts to misconstrue claimed loyalty points as currency.
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`The Petition also fails to read the claims as a whole and fails to provide context
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`when citing from MacLean or Antonucci. The Patent Owner attempts to directly
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`address these shortcomings in this response.
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`Before elaborating on the terms to be construed, a brief overview of the
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`9
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`context of the terms when read as a whole in light of the specification is necessary.
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`The following example (presented hereafter), which is consistent with claims 1-3
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`and 5-7 will aide in understanding the lengthy claim limitations. In the example,
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`an Airline corresponds to the “entity”; an Airline Loyalty Program corresponds to
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`the “loyalty program”; Miles corresponds to “non-negotiable credits”; a Hotel
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`corresponds to the “commerce partner”; a Hotel Loyalty Program corresponds to
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`the “different loyalty program”; and, Hotel Points corresponds to “entity
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`independent funds”.
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`The following illustrates the example pictorially, which will be elaborated
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`on hereafter.
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`Turning to the first diagram, an agreement between the Airline and Hotel is shown.
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`Claim 1 of the ‘550 patent includes “wherein an agreement exists between
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`the entity (e.g., Airline) and the commerce partner (e.g., Hotel), wherein the
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`10
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`agreement permits members to convert the non-negotiable credits (e.g., Miles) to
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`the entity independent funds (e.g., Hotel Points) in accordance with a fixed credits-
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`to-funds conversion ratio.” Thus, an explicit agreement exists between the Airline
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`and the Hotel, the fixed credits-to-funds conversation ratio of the agreement could
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`be specified as a 1:1 ratio, as illustrated.
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`The claims of the ‘550 patent also include “wherein the agreement specifies
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`that the entity (e.g., Airline) is to compensate the commerce partner (e.g., Hotel) in
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`an agreed upon amount of cash or credit for conversions of non-negotiable credits
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`(e.g., Miles) to entity independent funds (e.g., Hotel Points), wherein said agreed
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`upon amount is a multiple of a quantity of converted non-negotiable credits (e.g.,
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`Miles).” As used in the example, the Airline agrees to pay the Hotel two cents per
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`Hotel Point, which the Hotel provides to the Member during a conversion. This
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`amount (e.g., 2 cents/Point) is a multiple of the quantity of converted Miles (two
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`cents for each Mile, since there is a one to one ratio of Miles to Hotel Points).
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`It was illustrated (above) that the member has received Miles. This is
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`present in claim 1 of the ‘550 patent, which includes “said graphical user interface
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`shows a quantity of non-negotiable credits (e.g., Miles), wherein said non-
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`negotiable credits (e.g., Miles) are loyalty points of the loyalty program (e.g.,
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`11
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`Airline Loyalty Program) possessed by a member.”
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`It was illustrated (above) that the Airline Loyalty Program server serves a set
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`of loyalty point Webpages to the member. Claim 1 of the ‘550 patent includes “a
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`computer serving a set of one or more Web pages for a loyalty program (e.g.,
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`Airline Loyalty Program) of an entity (e.g., Airline) to one or more remotely
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`located client machines.” It is clear that the Web pages being served are for the
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`Airline Loyalty Program. Claim 1 of the ‘550 patent also includes “wherein the
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`Web pages are able to be rendered within a client-side browser as a graphical user
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`interface on the one or more client machines.” In the illustration, a member is
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`shown using a computer with an interface. The computer represents the claimed
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`client machine. The interface represents the graphical user interface presented in
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`the claimed client-side browser.
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`It was illustrated (above) that the browser of a computer shows Web pages
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`
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`that indicate a quantity of Miles and an option to convert the Miles into Hotel
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`Points. Claim 1 of the ‘550 patent includes “wherein upon being rendered within
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`the client-side browser said graphical user interface shows a quantity of non-
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`12
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`negotiable credits (e.g., Miles), wherein said non-negotiable credits (e.g., Miles)
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`are loyalty points of the loyalty program (e.g., Airline Loyalty Program) possessed
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`by a member” and “wherein upon being rendered within the client-side browser the
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`graphical user interface comprises a conversion option to convert at least a subset
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`of the shown non-negotiable credits (e.g., Miles) into a quantity entity independent
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`funds (e.g., Hotel Points).”
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`It was illustrated (above), that the Web pages are updated to show the
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`
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`reduced quantity of Miles, which result from the user having converted some of the
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`Miles into Hotel Points. The claims include “the computer responsive to receiving
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`a message indicating a selection of the conversion option, processing the selection
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`to effectuate changes in the served set of Web pages.” Thus, the claims require the
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`conversion option to be selected and processed. The claims also include
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`“responsive to the processing, the computer serving one or more Web pages or
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`Web page updates that include the effectuated changes to the one or more remotely
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`located client machines, wherein upon being rendered within the client-side
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`browser the graphical user interface is updated with the effectuated changes,
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`wherein the updated graphical user interface shows a reduced quantity of non-
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`negotiable credits (e.g., Miles) possessed by the member in the loyalty program
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`13
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`
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`(e.g., Airline Loyalty Program), said reduced quantity resulting at least in part
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`from the subset of non-negotiable credits (e.g., Miles) being converted into the
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`quantity of entity independent funds (e.g., Hotel Points) in accordance with the
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`fixed credits-to-funds conversion ratio.” Thus, the shown quantity is the results of
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`the conversion, per the ratio established by the agreement.
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`Having provided context for the claims and their terms, by the above
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`example, it is clear that claim 1 of the ‘550 patent permits a conversion of member
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`earned loyalty points across a program operator’s boundaries to different loyalty
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`points for a different program operator. A mutual agreement between the two
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`loyalty point operators establishes a conversion ratio and a compensation amount
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`for conversions.
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`The following table shows a set of claim terms, along with the Petitioner’s
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`proposed construction contrasted with the Patent Owner’s proposed construction.
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`The framework for claim construction in District Court is different from the
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`“broadest reasonable interpretation standard,” and Petitioners reserve their rights to
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`propose constructions in District Court based on the framework set forth in Phillips
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`v. AWH Corp., 415 F.3d 1303, 1312-18 (Fed. Cir. 2005) (enbanc).
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`Claim Term
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`Petitioner
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`Patent Owner
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`Entity
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`
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`an organization that offers a
`rewards program to a
`consumer
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`a unit ( such as a person,
`partnership, organization, or
`business) that has a legal and
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`14
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`
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`commerce
`partner
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`an organization that is a
`partner of the entity
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`non-
`negotiable
`credits
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`entity
`independent
`funds
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`credits or points of a reward
`program of an entity
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`funds including monetary
`currency and/or loyalty
`points that are not
`associated with the entity
`
`loyalty
`points
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`a type of currency specific
`to an entity
`
`separately identifiable
`existence
`
`an entity that is an independent
`entity from another entity, and
`associated with that other entity
`in some commercial activity
`
`credits which have redemption
`restrictions imposed by the
`granting entity
`
`funds that are independent of
`restrictions on redemption
`imposed by the entity that
`granted the corresponding non-
`negotiable credits
`
`units of non-negotiable credit
`granted to a member of a
`loyalty program by a granting
`entity as a reward for the
`member’s utilizing services or
`products of that granting entity
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`
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`A dictionary definition of "entity" is "a separate unit that is complete and has
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`its own character;" Ex. 2007; "A person, partnership, organization, or business
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`that has a legal and separately identifiable existence" Ex. 2019. The petition
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`incorrectly reads into "entity" the requirement that it must provide a "rewards
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`program to a consumer." An entity is a unit (such as person, partnership,
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`organization, or business) that has a legal and separately identifiable existence.
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`A dictionary definition of "commerce" is "The activity of buying and selling,
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`15
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`especially on a large scale". Ex 2008. A dictionary definition of "partner" is "One
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`that is united or associated with another or others in an activity or a sphere of
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`common interest, especially: A member of a business partnership." Ex 2009.
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`Thus, the ordinary meaning of "commerce partner" is: an entity that is associated
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`with another in some commercial activity. The Petition 's proposed a definition
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`fails to lend meaning to the word "commerce." Thus, the '550 patent defines a
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`commerce partner to mean: an entity that is an independent entity from another
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`entity, and associated with that other in some commercial activity.
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`
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`The prefix "non-" means indicating negation. Ex 2020. The term
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`"negotiable credit" means "indebtedness that is freely (unconditionally)
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`transferable in trading as a substitute for money." Ex 2002. Consequently,
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`dictionary definitions result in a common meaning of non-negotiable credit as
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`indebtedness that is not freely (unconditionally) transferable in trading as a
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`substitute for money. The '550 patent further defines "non-negotiable credits" as
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`credits that "can be applied towards products and/or services provided by a
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`granting entity or its affiliates," which indicates that "non-negotiable credits" are
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`credits which cannot be applied to at least some other products and/or services. Ex
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`1001, col. 1:42-44. The '550 patent further clarifies this definition, stating that
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`"One such problem is the restriction on usage [sic; of non-negotiable credits] to
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`goods and/or services of the entity." Ex 1001, col. 1:53-55. Hence, the '550 patent
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`16
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`defines "non-negotiable credits," as credit granted by an entity, to some recipient,
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`which entity imposes certain restrictions on redemption of that credit.
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`For the reasons noted below, the meaning of "entity independent funds" in
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`the '550 patent are funds that are independent of restriction on redemption imposed
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`by the entity that granted the corresponding non-negotiable credits. A dictionary
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`definition of "independent" is "not dependent on..." Ex 2011. Therefore, "entity
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`independent" means not dependent on the entity. A dictionary definition of "fund"
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`is "a supply or store of something; stock". Ex 2010. Therefore, a common
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`meaning of "entity independent funds" is a supply or store of something that is not
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`dependent upon the entity. Explicit claimed limitations of the ‘550 patent note
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`that the entity independent funds are accepted by the commerce partner in
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`exchange for goods or services of the commerce partner, bu
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