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`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`____________
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`____________
`
`
`
`Askeladden LLC
`Petitioner
`
`v.
`
`Sean McGhie and Brian Buchheit
`Patent Owner
`
`
`
`____________
`
`Case IPR2015-00125
`Patent 8, 540, 152
`____________
`
`
`Before SALLY C. MEDLEY, Administrative Patent Judge
`
`
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`
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`PATENT OWNER’S PRELIMINARY RESPONSE
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`TABLE OF CONTENTS
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`TABLE OF AUTHORITIES ………………………………………….
`LIST OF PETITIONER’S EXHIBITS ………………………………..
`LIST OF PATENT OWNERS’ EXHIBITS…………………………….
`I.
`CLAIM CONSTRUCTION…………………………………..
`II.
`REAL PARTY OF INTEREST……………………………….
`III. CONCLUSION ………………………………………………..
`
`
`
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`Page(s)
`iii
`iv
`ix
`1
`47
`50
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`ii
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`TABLE OF AUTHORITIES
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`CASES
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`STATUTES
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`35 U.S.C. §103 ……………………………………………………….. 14, 18
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`Page(s)
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`iii
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`
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`LISTS OF EXHIBITS
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`PETITIONER’S EXHIBITS
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`
`1501
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`U.S. Patent No. 8,523,063
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`1502
`
`Declaration of Matthew Calman
`
`1503
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`U.S. Patent Application Publication No. 2005/0021399 ("Postrel")
`
`1504
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`U.S. Patent Application Publication No. 2002/0143614 ("MacLean")
`
`1505
`
`U.S. Patent No. 6,721,743 ("Sakakibara")
`
`1506
`
`Wayback Machine archive dated June 20, 2000, for American Express
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`web site: "How to redeem or transfer your points online”
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`1507
`
`Wayback Machine archive dated June 20, 2000, for American Express
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`web site: "Air rewards"
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`1508
`
`Wayback Machine archive dated January 4, 1997, for Citibank web
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`site: "Citibank Cards and Services"
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`1509
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`Wayback Machine archive dated December 1, 1998, for American
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`Express web site: "Rewards Cards"
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`1510
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`Wayback Machine archive dated June 21, 2000, for American Express
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`
`
`iv
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`
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`web site: "Shopping rewards"
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`1511
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`Wayback Machine archive dated December 9, 2003, for Marriott
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`Rewards web site: "Air Mileage"
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`1512
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`Wayback Machine archive dated November 25, 2002, for Starwood
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`Hotels & Resorts web site: "Transfer: Airlines"
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`1513
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`Wayback Machine archive dated June 19, 2000, for United Airlines
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`web site: "Mileage Plus partners"
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`1514
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`Wayback Machine archive dated July 17, 2004, for WebFlyer web site:
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`"Mileage Converter"
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`1515
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`MacDonald, Jay, Experience rewards pay off for some credit card
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`users, Bankrate.com, November 17, 2003 (available at http: / / www.
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`bankrate.com/finance/credit-cards /experience-rewards-pav-off-for-
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`some-credit-card-users-i.aspx)
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`1516
`
`Claim Construction Memorandum Opinion and Order, issued
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`September 2, 2014, in Loyalty Conversion Systems Corp. v. American
`
`Airlines, Inc., Case No. 2:13-cv-00655 (E.D. Tex.)
`
`1517
`
`Memorandum Opinion and Order, issued September 3, 2014, in
`
`
`
`v
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`
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`Loyalty Conversion Systems Corp. v. American Airlines, Inc., Case
`
`No. 2:13-cv-00655 (E.D. Tex.)
`
`1518
`
`Patent Owner's Preliminary Response (Paper No. 17), in Covered
`
`Business Method Patent Review of U.S. Patent No. 8,313,023
`
`(assigned CBM2014¬00095);
`
`1519
`
`Patent Owner's Preliminary Response (Paper No. 14), in Covered
`
`Business Method Patent Review of U.S. Patent No. 835113550
`
`(assigned CBM2014¬00096)
`
`1520
`
`USPTO Assignment Records for U.S. Patent No. 8,523,063 (as of
`
`September 28, 2014)
`
`1521
`
`Wayback Machine archive dated August 16, 2000, for United Airlines
`
`web site: "Car Rental Partners"
`
`1522
`
`Wayback Machine archive dated June 20, 2000, for United Airlines
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`web site: "Cruise Partners"
`
`1523
`
`S&H Green Points - About S&H (available at
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`http://www.greenpoints.com/info/inf aboutsh.asp);
`
`1524
`
`Wayback Machine archive dated November 27, 1999, for Green Points
`
`
`
`vi
`
`
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`"The Points You've Been Waiting For"
`
`1525
`
`Wayback Machine archive dated April 15, 1998 for American Airlines
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`web site: “Welcome to AA.com”
`
`1526
`
`Security and Exchange Commission Letter from the Chief: Accountant
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`Issues Related to Internet Operations, October 18, 1999, available at
`
`http://www.sec.gov/info/accountants/staffletters/calt1018.htm
`
`1527
`
`The Emerging Issue Task Force of the Financial Accounting Standards
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`Board ("FASB"), "Accounting for Points' and Certain Other Time-
`
`Based of Volume-Based Sales Incentive Offers, and Offers for Free
`
`Products or Services to be delivered in the future," Issue No. 00-22
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`(2001), available at http: / /www.fasb.orglcs /BlobServer? Blobkey=id
`
`&blobnocache=true&blobwhere= 117 5 820904 620&blobheader= a-
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`Dl2hcation/t)df&blobheadername2=Content-Length blobheadervalue1
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`=Content-Disposition&blobheadervalue2 = 79 5 6 3&blobheadervalue
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`1= filenameabs00¬22.pdf&b1obco1 urldata&blobtableMungoBlobs
`
`1528
`
`Stone, et al., User Interface Design and Evaluation, Interactive
`
`Technologies (April 29, 2005)
`
`1529
`
`U.S. Patent No. 5,513,359
`
`
`
`vii
`
`
`
`1530
`
`George Bond, “Gateways to the Internet,” Byte Magazine, pp. 229-31
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`(Sept. 1995)
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`viii
`
`
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`
`
`2001
`
`PATENT OWNERS’ EXHIBITS
`
`IATA Special Report – The Price of Loyalty
`
`2002
`
`Definition of Commerce, from Oxford
`
`2003
`
`Definition of Partner, from Yahoo
`
`2004
`
`Definition of Loyalty Program, from Wikipedia
`
`2005
`
`An Open Economy in the Loyalty Rewards Space – Good for Whom
`
`2006
`
`Creative Business: Substitutes and Complements
`
`2007
`
`Strategic Report for Southwest Airlines
`
`2008
`
`Using Points.com to Combine Miles and Points: A Good Deal?
`
`2009
`
`Loyalty Traveler Examines Points.com Exchange Value
`
`2010
`
`Proprietary Programs vs. Coalition Loyalty
`
`2011
`
`Declaration of Independence?
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`The Economics Behind Customer Loyalty: Using Coalition Program
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`2012
`
`Assets to Turbo-Charge Results
`
`2013 What Miles & Points are Worth: Airline Miles
`
`2014 MacLean Prosecution History Response of 12-02-2005
`
`2015 MacLean Prosecution History Response of 08-23-2006
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`2016 MacLean Prosecution History Response of 03-05-2008
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`2017 MacLean Prosecution History Response of 06-27-2011
`
`
`
`ix
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`
`
`Email 1: from Brian Buchheit to Justin Oliver and Frank DeLucia on
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`2018
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`December 12, 2014, 11:41 AM
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`2019
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`Email 2: Response to Email 1
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`Email 3: from Brian Buchheit to Justin Oliver on December 12, 2014,
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`12:11 PM
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`Email 4: from Justin Oliver and Frank DeLucia to Brian Buchheit on
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`December 22, 2014, 11:27 AM
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`Email 5: Response to Email 4 from Brian Buchheit to Justin Oliver and
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`Frank DeLucia on December 22, 2014, 1:06 PM
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`Email 6: Response to Email 5 from Justin Oliver and Frank DeLucia,
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`AskeladdenIPR, and Sean McGhie on December 23, 2014, 11:24 AM
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`Email 7: Response to Justin Oliver, AskeladdenIPR and Sean McGhie
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`from Brian Buchheit on December 31, 2014, 10:44 AM
`
`Email 8: From Justin Oliver to Brian Buchheit, AskeladdenIPR and
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`Sean McGhie on January 13, 2015, 6:15 PM
`
`Email 9: Response to Justin Oliver, AskeladdenIPR and Sean McGhie
`
`on January 14, 2015, 8:08 AM
`
`IAM: New Banking Group Launches with Focus On Improving Patent
`
`Quality (available at: http://www.iam-magazine.com / Blog/ Detail.
`
`x
`
`2020
`
`2021
`
`2022
`
`2023
`
`2024
`
`2025
`
`2026
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`2027
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`
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`
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`2028
`
`2029
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`aspx?g=972d0d5d-d116-42fd-945d-82ac28c33b3a)
`
`Patent Quality Initiative FAQ (available at:
`
`http://www.patentqualityinitiative.com/about%20pqi/faq)
`
`Patent Quality Initiative Leadership Team (available at:
`
`http://www.patentqualityinitiative.com/about%20pqi/team)
`
`The Clearing House Executive Management (available at:
`
`2030
`
`http://www.theclearinghouse.org/about-tch/tch-executives/executive-
`
`management)
`
`The Clearing House Payments Executives (available at:
`
`2031
`
`http://www.theclearinghouse.org/about-tch/tch-executives/payments-
`
`executives)
`
`The Clearing House Association Executives (available at:
`
`2032
`
`http://www.theclearinghouse.org/about-tch/tch-executives/association-
`
`executives)
`
`Press Release: “Patent Quality Initiative Launched to Facilitate Better
`
`2033
`
`Patents and Fewer Disputes”
`
`Press Release: “Patent Quality Initiative Challenges the Validity of Five
`
`2034
`
`Patents by Filing Nine IPRs” (available at:
`
`http://www.patentqualityinitiative.com/news/press%20releases/2014_oct
`
`
`
`xi
`
`
`
`%2024_nine%20i)
`
`2035
`
`U.S. Patent No. 8,595,055 to MacLean, et al.
`
`Liu, Jack C. “Bitcoin backed corporate currencies are coming”
`
`2036
`
`(available at: http://jackcliu.com/post/102166140017/bitcoin-backed-
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`corporate-currencies-are-coming)
`
`Winship, Tim “Looming Bankruptcies Threaten Airline Miles”
`
`2037
`
`(available at: http://www.smartertravel.com/travel-advice/Looming-
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`bankruptcies-threaten-airline.html?id=10712)
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`xii
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`
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`Pursuant to 37 C.F.R. § 42.207(a), the owners of U.S. Patent No. 8, 540,
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`152 (“the ‘152 patent”), Sean McGhie and Brian Buchheit ("Patent Owner"),
`
`hereby submits the following Preliminary Response in response to the Petition
`
`for Inter Partes Review ("IPR") Review of the ‘152 patent; Ex 1001. The ‘152
`
`patent is one of three related patents being challenged by the Petitioner in co-
`
`pending IPR petitions, the others being IPR2015-00122, IPR2015-00123,
`
`IPR2015-00124, IPR2015-00133, and IPR2015-00137. Patent owners request
`
`that the Board determines the grounds of IPR2015-00125 are deficient for
`
`reasons stated herein.
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`
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`
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`I. CLAIM CONSTRUCTION
`
`In the present IPR, it is important to construe what is meant by a “loyalty
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`program of an entity” as well as a “loyalty program of a commerce partner” in
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`context of the patent and in context of the prior art relied upon in the asserted
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`grounds.
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`
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`The Patent Owner defines a loyalty program of an entity to mean “a program
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`backed by the entity” meaning the value of the loyalty points of the entity’s loyalty
`
`program is guaranteed or secured by the entity.” Similarly, the loyalty program of
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`the commerce partner means “a program backed by the commerce partner”
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`meaning the value of the loyalty points of the commerce partner’s program is
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`guaranteed or secured by the commerce partner. An issuer of points (as opposed to
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`
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`a distributer of points) is the company that creates the points (from nothing) then
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`backs the value of the points.
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`
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`One of ordinary skill in the art would use this meaning in context of the
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`claims at issue, as evidenced by the following, for example. Ex. 2036 notes
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`“Quora credits, American Airline miles, Esso points, reddit Gold. What are these
`
`things backed by ? The companies that issue them”. Ex. 2037 notes “Unlike
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`dollars deposited in a checking account, which in most cases are insured by the
`
`FDIC, miles come and go with the airlines that operate the mileage program.”;
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`“Often in the case of an airline declaring bankruptcy, the miles simply disappear
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`because when the carrier’s assets are sold, miles are viewed as a liability …”;
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`“when Midway was a partner in the programs of Continental and Northwest, but it
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`did not operate its own program. So no miles were lost (when it went bankrupt).”
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`Thus, per the above, Midway did not back the program’s points, so it would be
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`considered a distributor of points, not an operator. Midway was a member of a
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`networked loyalty program, which issued network points.
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`
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`Using an analogy, US currency is currency of the US government (backed
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`by the US government). A bank may distribute US minted currency, but the US
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`government is the issuer (that backs the value of the currency). Similarly, in a
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`networked loyalty program, multiple venders may distributed program points, but
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`the network operator issues the points and backs the value of the points. Stated
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`
`
`2
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`
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`different, a merchant providing network points is not able to create new networked
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`points from nothing, but can purchase and distribute points created or issued by a
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`network operator.
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`
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`Our specification is clearly consistent with the above proposed definition.
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`The entity’s loyalty points are non-negotiable funds (C4 ln 17-19) that cannot be
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`redeemed on an open market. Instead, the market within which the entity’s points
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`are redeemed is created and defined by the entity. The entity’s loyalty points are
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`non-negotiable funds that generally have no value outside an environment
`
`(building, Web site, etc.) of the credit providing entity 120 (C6 ln 36-38). Use of
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`these entity backed points have advantages including legal benefit as some
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`activities are regulated when conducted with negotiable funds (such as gambling
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`laws) but are not when non-negotiable funds are used (C7 ln 1-7). In other words,
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`you can play a card game for ‘chips’ that have no negotiable value without being
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`subject to laws related to illegal gambling, but you cannot do the same if
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`negotiable funds are used. To elaborate, use of credit card networks and wire
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`transfers when conducted with negotiable funds are regulated by state and federal
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`statutes (C7 ln 12-14), but conveyances of non-negotiable credits are not (points in
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`a video game, for example, see FIG. 5 items 510, 519). The entity’s loyalty points
`
`include any of a variety of financial instruments that are not legal currency and are
`
`not governed under article 3 of the Uniform Commercial Code (UCC) (Col 7 ln
`
`
`
`3
`
`
`
`18-22). In contrast, negotiable funds are a set of negotiable instruments, which are
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`a specialized type of “contract” for the payment of money that is unconditional and
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`capable of transfer by negotiable (Col 7, ln 29-33). Thus, negotiable funds are
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`fungible where non-negotiable credits are not. Negotiable funds have numerous
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`conditions (Col 7 ln 40-48) imposed upon them by virtual of their being negotiable
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`(as opposed to non-negotiable).
`
`
`
`Our claims include numerous limitations consistent with Patent Owner’s
`
`proposed claim construction. Claim 1 includes “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” (because the entity backs the loyalty
`
`points of its program); “wherein the entity independent funds are loyalty points of
`
`a different program of the commerce partner” (explicitly requires the program used
`
`to be different); “wherein entity independent funds are possessed by a member and
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`maintained in a funds account, wherein the funds account is neither owned or
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`controlled by the entity or by any subsidiary or parent of the entity” because the
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`entity doesn’t back the entity independent funds, which are not it’s loyalty points.
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`Other claims (independent and dependent) are consistent with the above. Thus, it
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`is clear that numerous claimed limitations are imposed consistent with the
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`proposed definition.
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`Petitioner proposes claim construction for the terms “entity” “non-negotiable
`
`4
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`credits” and “entity independent funds.” These proposed definitions by the
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`Petitioner are consistent with our proposed definitions for “loyalty program of the
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`entity” and “loyalty program of the commerce partner.”
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`
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`The Petitioner notes that non-negotiable credits are accepted only by the
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`granting entity” which more properly should state that non-negotiable credits are
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`only accepted per terms of the loyalty program of the entity” as the entity could
`
`through its loyalty program could permit others to redeem the non-negotiable
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`credits. In other words, the entity has backed or guaranteed the valuation of the
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`non-negotiable credits that it issues so this entity can (and often does) establish
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`terms for the loyalty program with regard to redemption of these entity-backed
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`points. This wasn’t an issue affecting the grounds asserted in the IPRs based on
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`MacLean for purposes of the initial institution decision determination – yet this
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`slightly broader definition is more consistent with the meaning of the claims
`
`(which is why although we previously didn’t challenge the Petitioner’s claim
`
`construction for the limited purpose of the initial institution decision, we reserved
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`rights to challenge it later – so that no file-wrapper based limitation is inadvertently
`
`imposed on the ‘063 patent; should the Board disagree we invite the Board to use
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`the above construction for the IPR2015-00124 determination which is being
`
`concurrently decided by the same panel).
`
`With the above clarifications, the Petitioner’s claim construction on these
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`5
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`three terms (other than the slight modification to the definition of non-negotiable
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`credits) may be used by the Board. Patent Owners expressly reserves the right to
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`challenge the claim construction asserted by the Petitioner should the IPRs be
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`instituted and should claim construction of these three terms be at issue at such a
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`time.
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`Combination of Postrel and MacLean is Improper
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`
`
`In the petition (pages 14-), claims 1-20 were are asserted as unpatentable
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`based on 35 USC 103 in view of a combination of Postrel in view of Sakakibara in
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`further view of MacLean. This combination is improper, so the relied upon
`
`grounds for claims 1-20 fail, and the petition should not be instituted for this
`
`reason.
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`
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`As an overview, Postrel describes a networked loyalty program having two
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`different types of points, merchant points and exchange points. The networked
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`program operator of Postrel backs both types of points. That is, even if a merchant
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`that previously distributed the networked points goes out of business, the members
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`of the networked program retain their points. If the networked loyalty program
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`operator goes out of business, both types of the networked loyalty program points
`
`are forfeited (such as in an event of bankruptcy of the networked program
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`operator). The network program operator establishes terms under which its
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`networked loyalty program operators. The network program points are distributed
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`
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`6
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`
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`by multiple venders (who have to pay the networked operator for the points and for
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`new point originations) and redeemed by multiple venders participating in the
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`networked loyalty program. Postrel lacks teachings for crossing the networked
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`loyalty program boundaries. That is, activities possible within the program
`
`boundaries of the networked loyalty program are unrelated to our claims. They are
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`also unrelated to MacLean’s teachings, which require a transaction center, which is
`
`not a program operator, to perform exchanges outside of the boundaries of any
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`loyalty programs. To do so, a first set of points within program boundaries of a
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`first LP operator are converted to cash, which is a negotiable fund outside any
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`program boundaries. Then, the cash is used to purchase points within the program
`
`boundaries of a different program. Each program operator must establish deposit
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`and withdrawal rates (which are cash rates for buying/selling points). The
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`attempted combination doesn’t make sense, as it forces intra-program activities to
`
`be combined with an extra-program exchange. The combination would not be
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`performed by one of ordinary skill understanding the teachings of Postrel and
`
`MacLean as a result.
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`
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`To elaborate and support the above, Postrel establishes a global universal
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`network based rewards program (para 0042, third sentence) that utilizes the
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`infrastructure of a typical credit card network (abstract, first sentence; para 0026
`
`defining this infrastructure). Postrel allows its network points to be “branded”
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`
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`7
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`
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`(para 0030) while leveraging existing contractual relationships of a credit card
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`network (para 0031). The point information regardless of branding is held in a
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`central server (para 0033) of Postrel’s networked loyalty program. By leveraging
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`the credit card network, points (of both types available in the networked program)
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`must have a par value (para 0036, last sentence) and points of the networked
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`program are earned by a customer across many merchants (para 0036, first
`
`sentence). Points held in the central network are redeemed by swiping a credit
`
`card (last sentence of para 0039) at a POS that allows the points to be used as cash
`
`equivalent at credit card accepting merchants (referenced against a cash equivalent
`
`value). If a person is willing to incur credit card ‘network’ fees, branded
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`merchant points can be unbranded and turned into credit card pre-paid credit,
`
`which is referred to as exchange points (para 0043, last few sentences). In other
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`words, the two different types of points in Postrel’s networked loyalty program
`
`determine who (the user or a merchant) is responsible for transaction fees (of the
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`credit card network). A person could lose points because of the transaction fees to
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`‘unbrand’ his or her points (first sentence of para 0045) because a merchant in the
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`program typically pays the transaction fees (para 0052), yet unbranding incurs a
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`service fee that the user pays (which is able to be paid using the cash-value of
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`points, causing a ‘loss’ of points). Without points being fungible (thereby making
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`them negotiable), they cannot be exchanged per Postrel’s teachings. The default
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`
`
`8
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`
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`fungibility of points (last sentence of para 0036) and the fact that points have a
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`cash equivalent (para 0063 “The term point is used to reference any earned value
`
`that has a cash equivalent or negotiable worth …” is what allows the credit card
`
`network to be utilized. Branding of points can permit a “fake” number of
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`merchant specific points to be attributed to a customer. Regardless of this
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`branding, each point has a cash value, which is what the centralized system really
`
`uses. In other words a pizza business can brand a dollar’s worth of exchange
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`points “1000 Pizza points” and a supermarket can brand a dollar’s worth of
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`exchange points “200 SuperMart points” (FIG. 12), yet aggregating and redeeming
`
`these points will always be handled at two dollar worth (total) of exchange points
`
`each (see para 0043-0045). There may be ‘unbraiding’ charges (see first sentence
`
`of para 0045 and para 0046) that is a service fee. These network points regardless
`
`of branding are accumulated in a network loyalty program that includes many
`
`different retailers that issue and redeem the network points. Aggregated network
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`points are effectively pre-paid credit card currency that are accepted by every
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`merchant that accepts as equivalent to credit card payments (para 0047). From
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`Postrel’s teachings, all points (merchant or exchange) are handled as if they are
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`pegged to a single currency value on a per point basis. This is what allows points
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`to be treated like cash by the credit card network. All redemptions are cash
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`equivalent exchanges, which are made using a credit card. This is a significant
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`9
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`limitation imposed on the networked loyalty program points in order to leverage
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`the credit card infrastructure. (Therefore, concepts such as offering rewards that
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`effectively cost a loyalty point operator nothing – like rewarding otherwise unused
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`capacity are not possible using Postrel’s networked loyalty system. Instead,
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`redemption options are restricted to cash-equivalent transactions purchased via a
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`credit card. The fundamental equities of balancing costs verses profit from shaping
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`consumer behavior are therefore not possible, which is the purpose of the claimed
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`invention – maintaining a beneficial LP that shapes behavior for an entity while
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`softening the boundaries defined by program restrictions such as black-out dates,
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`reward restrictions, etc. typically needed to maintain this balance. This balance is
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`why the transactions of the claims occur across program boundaries with a
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`commerce partner, with whom a specific relationship with the entity exists - such
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`as the potential beneficial relationship between Hotels and Airlines, with regard to
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`program loyalty – as discussed in the overview section.)
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`
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`MacLean provides teachings that bridge a strong boundary between two
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`different loyalty programs. These teachings require that each of two or more
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`program establishes a deposit value and a withdrawal value for its points. (para
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`0044, second sentence; para 0062, first sentence; para 0062 defining withdrawal
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`rate deposit rate and liability rate; para 0064, first sentence; para 0064, last
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`sentence; para 0021; para 0023, second sentence; para 0027; para 0031, last
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`10
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`sentence; para 0037). Without the deposit and withdrawal rates being established
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`that are baselined against a currency value, MacLean cannot function in
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`accordance with its declared principles of operation and MacLean cannot be used
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`for its intended purpose.
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`
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`Grounds asserted in the petition for combining Postrel and MacLean are
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`presented between pages 14-20. Pages 14-16 provide Petitioner assertions
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`regarding teachings of Postrel (and lack any assertions for combining Postrel and
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`MacLean). Pages16-18 provide Petitioner assertions regarding Postrel, Sakakibara
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`making one mention to what MacLean doesn’t state in detail on page 17 at the end
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`of the second paragraph (these pages lack any assertions for combining Postrel and
`
`MacLean). Page 18 first states Postrel teaches “real time” transactions. Then
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`asserts that Maclean disclosures a transaction server. At the bottom of page 18,
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`the Petition assets “one would have been motivated to combine the teachings of
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`Postel and MacLean in this regard.” From this statement, it is unknown what the
`
`attempted modification of Postrel is. In other words, the Petition states that both
`
`Postrel and MacLean provide the claimed teachings. If so, there is no reason to
`
`modify the teachings of Postrel by different teachings of MacLean (one of ordinary
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`skill would not reference a redundant prior art teaching for no reason). Page 18
`
`continues with “because doing so would minimize any significant delay in
`
`completing a conversion operation.” This is a statement of a problem that is
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`
`
`11
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`
`
`lacking in Postrel. Therefore, it is not a sound reason for modifying Postrel per
`
`teachings of MacLean. Continuing, page 19 asserts “would avoid a situation
`
`where a user’s account reflects only a partially-complete conversion operation and
`
`thus inaccurate information about points totals.” This is a statement of a problem
`
`that is not present in Postrel. Why would Postrel have this problem ? If it did
`
`(which is not evident) why would teachings of MacLean solve this problem (which
`
`is not evident). Continuing, page 19 asserts “As Postrel and MacLean both relate
`
`the conversion of loyalty points via a web site interface, the benefits of an
`
`instantaneous points exchange, as taught by MacLean, are applicable towards
`
`Postrel’s system.” This is a conclusory and inaccurate statement. MacLean does
`
`not teach an instantaneous points exchange (See FIG. FIG. 6F item 657 noting that
`
`exchanges of MacLean take 24 to 72 hours to complete; this is because there is a
`
`two-stage process involving actions taken by two different remote LP systems in
`
`addition to actions taken by MacLean’s transaction center; See also para 0053 last
`
`sentence of MacLean indicating that updates of stage one of the exchange are
`
`conveyed via email <because of the delay in processing, the user will not still be
`
`involved in a computing session that was used to initiate the conversion>. So
`
`besides providing a generic benefit as a motivation without more, the asserted
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`benefit is inconsistent with the evidence from the teachings of MacLean. Through
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`this point in the petition, no proper motivation for combining teachings of Postrel
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`
`
`12
`
`
`
`and MacLean have been provided. These pages are the only discernable location
`
`where assertions are made in regard to independent claims of the ‘152 patent for
`
`combining teachings of Postrel and MacLean. No proper motivation exists in the
`
`petitioner asserted grounds.
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`
`
`Continuing, page 19 discusses Petition assertions with regard to Sakakibara
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`and Postrel (and lack any assertions for combining Postrel and MacLean). The
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`first two paragraphs of page 20 provide petitioner assertions with regard to Postrel.
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`The last paragraph of page 20 is in reference to claims 6, 12, and 20 specifically to
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`limitations of a human-to-machine interaction session . Continuing, a few
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`sentences providing Petitioner assertions about discrete and dissimilar or similar
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`teachings from either Postrel or MacLean follow (which lack any assertions for
`
`modifying Postrel per MacLean). Continuing, page 21 asserts “It would have been
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`obvious to combine MacLean’s points exchange web site with a web-based
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`redemption option such as the VISA catalog link from Postrel.” Postrel (without
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`modification) includes the VISA link that it describes. Hence, one of ordinary skill
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`would not modify Postrel’s teachings to combine it with MacLean’s teachings to
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`ensure Postrel’s reference teaches what it already does. Continuing, page 21 states
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`“Such a combination would result in a points exchange system more attractive,
`
`valuable, and responsive to members owning the increased convenience and to
`
`having more redemption options available by virtue of the linked catalog.” Again,
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`
`
`13
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`
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`Postrel (unmodified) has the linked catalog. There is no provided motivation that
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`provides an articulated reasoning as to why Postrel’s teachings should be changed
`
`per teachings of MacLean. Postrel’s teachings are asserted by the Petitioner to be
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`real time, so the statement of “more responsive” doesn’t appear logical. Page 21
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`finally asserts “The obvious limitations not discussed in this section is readily
`
`apparent in the chart below.” At best this is a conclusory statement.
`
`
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`The Supreme Court in KSR noted that the analysis supporting a rejection
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`under 35 U.S.C. 103 should be made explicit. The Court quoting In re Kahn, 441
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`F.3d 977, 988, 78 USPQ2d 1329, 1336 (Fed. Cir. 2006), stated that “[R]ejections
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`on obviousness cannot be sustained by mere conclusory statements; instead, there
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`must be some articulated reasoning with some rational underpinning to support the
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`legal conclusion of obviousness.” It is consistently held, such as in re Lizer
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`(Appeal 2009-001858) that a generic benefit is not proper motivation, when no
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`explanation is provided.
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`
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`The asserted grounds of rejection for claims 1-20 with regards to combining
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`the teachings of Postrel and MacLean have been thoroughly analyzed, yet no
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`articulated reasoning with some rational underpinning to support the legal
`
`conclusion of obviousness has been asserted. The asserted grounds fail as a result,
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`and the Board should not institute on these grounds on this basis.
`
`
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`14
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`
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`Combination of Postrel and Sakakibara is Improper
`
`
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`Sakakibara is silent in regards to a networked loyalty program, such as the
`
`one taught by Postrel. Claims 1-20 were asserted as being obvious in light of
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`Postrel in view of Sakakibara. No proper motivation is provided for this
`
`combination, and the asserted grounds fail as a result.
`
`
`
`Grounds asserted in the petition for combining Postrel and Sakakibara are
`
`presented between pages 14-20. Pages 14-16 provide Petitioner assertions
`
`regarding teachings of Postrel (and lack any assertions for combining Postrel and
`
`Sakakibara). The bottom of page 16 states Moreover, such a concept is explicitly
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`disclosed in Sakakibara (after discussing many things that Postrel is asserted to
`
`teach). The first paragraph of page 17 provides Petitioner assertions regarding
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`teachings of Sakakibara. Afterward, page 17 of the Petition states “One of
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`ordinary skill in the art would have recognized Postrel’s individual merchant
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`loyalty points preferably would not have been accepted as payment with another
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`merchant.” This is a false statement. Postrel’s entire purpose is to establish a
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`networked loyalty program, having points accepted by multiple merchants. These
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`points are explicitly fungible (last sentence of para 0036) and are explicitly
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`negotiable (para 0063: “The term point is used to reference any earned value that
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`has a cash equivalent or negotiable worth …”); See also para 0063 first sentence,
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`para 0044, first sentence. This statement proposes a modification EXPLICILTY
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`15
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`
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`adverse to the intended purpose and principle of operation of Postrel. After
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`making this unsupported statement (page 17) no reasoning is provided for this
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`significant change that is adverse to Postrel’s teachings. Subsequent assertions on
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`page 17 include “Indeed, both references are directed to loyalty points earned by
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`customer activity”. This is a statement unrelated to the proposed modi
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