Ex Parte Ogren

Patent Trial and Appeal Board

Jul 23, 2013

10857299 (P.T.A.B. Jul. 23, 2013)

UNITED STATES PATENT AND TRADEMARK OFFICE 1
___________ 2
3
BEFORE THE PATENT TRIAL AND APPEAL BOARD 4
___________ 5
6
Ex parte ANDREW R. OGREN 7
___________ 8
9
Appeal 2011-005474 10
Application 10/857,299 11
Technology Center 3600 12
___________ 13
14
15
Before MURRIEL E. CRAWFORD, ANTON W. FETTING, and 16
BIBHU R. MOHANTY, Administrative Patent Judges. 17
18
FETTING, Administrative Patent Judge. 19
20
21
DECISION ON APPEAL22
Appeal 2011-005474
Application 10/857,299

2

STATEMENT OF THE CASE1 1
Andrew R. Ogren (Appellant) seeks review under 35 U.S.C. § 134 of 2
a final rejection of claims 11-15 and 22-30, which along with claims 1-10, 3
16-21, and 31-34 withdrawn from consideration, are the only claims pending 4
in the application on appeal. We have jurisdiction over the appeal pursuant 5
to 35 U.S.C. § 6(b). 6
The Appellant invented a way of using discount-type items, such as 7
discount type cards available at point-of-sale (POS) for the party providing 8
the discount-type items to receive fees when consumers purchase them, and 9
also when consumers use the items for purchasing products associated with 10
the items (Spec. 1:5-8). 11
An understanding of the invention can be derived from a reading of 12
exemplary claim 1, which is reproduced below [bracketed matter and some 13
paragraphing added]. 14
11. A method comprising: 15
[1] a first party supplying point-of-sale (POS)-activated items 16
to an establishment having one or more POS terminals; 17
[2] providing the POS-activated items by the establishment 18
to consumers; 19
[3] electronically activating the POS-activated items 20
at the POS terminals of the establishment; 21
and, 22
[4] after electronically activating the POS-activated items, 23
the first party receiving a first fee 24
per POS-activated item 25
based on the providing of the POS-activated items 26
27

1 Our decision will make reference to the Appellant’s Appeal Brief (“App.
Br.,” filed Sep. 3, 2010) and Reply Brief (“Reply Br.,” filed Jan. 26, 2011),
and the Examiner’s Answer (“Ans.,” mailed Nov. 26, 2010).
Appeal 2011-005474
Application 10/857,299

3

by the establishment to the consumers, 1
when the establishment sells the POS-activated items 2
to the consumers. 3
4
The Examiner relies upon the following prior art: 5
Masi US 6,105,001 Aug. 15, 2000
Saad US 2004/0011866 Al Jan. 22, 2004
Claims 11 and 12 stand rejected under 35 U.S.C. § 102(e) as 6
anticipated by Saad. 7
Claims 13-15 and 22-30 stand rejected under 35 U.S.C. § 103(a) as 8
unpatentable over Saad and Masi. 9
10
ISSUES 11
The issues regarding novelty and obviousness turn primarily on the 12
breadth of the terms fee and receiving. 13
14
FACTS PERTINENT TO THE ISSUES 15
The following enumerated Findings of Fact (FF) are believed to be 16
supported by a preponderance of the evidence. 17
Facts Related to the Prior Art 18
Saad 19
01. Saad is directed to the sale and delivery of consumer products 20
using a prepaid product card, which is particularly suitable for the 21
sale and delivery of gifts, such as flowers or floral arrangements, 22
and delivering other consumer products, including for example 23
food, toys, clothes, accessories, or the like. Saad, para. 0002. 24
Appeal 2011-005474
Application 10/857,299

4

02. Selling and delivering a product includes distributing a product 1
card, which includes product and card information, such as a 2
product identification code and a card identification code, storing 3
the product and card information in a computer system, collecting 4
revenue from a purchaser of the card, and activating the card when 5
the card is purchased so that the card can be redeemed. Saad 6
further includes receiving the product and card information and 7
the delivery information from the redeemer of the card, inputting 8
the delivery information into the computer system, and delivering 9
a product associated with the product and card information to a 10
location associated with the delivery information. Saad, para. 11
0006. 12
03. Revenue is collected from the retail establishment for distributing 13
the product cards based on at least a percentage of a dollar 14
amount associated with the product card. In addition, a portion of 15
the revenue is applied toward delivery costs of the product 16
associated with the product identification code. Saad, para. 0017. 17
04. Initially, the prepaid cards are distributed to retailers by a 18
wholesaler. The wholesaler collects payment from the retailer, 19
which payment represents at least a percent of the dollar amounts 20
associated with the cards. Each card preferably includes a UPC 21
code for tracking purposes for the retailer. Saad, para. 0028. 22
05. After the cards are delivered to a retailer, the retailer confirms 23
receipt of the cards, which may change the status of the card. In 24
this manner, while the cards are in transit, the cards are invalid 25
and inactive and cannot be used. The cards are validated upon 26
Appeal 2011-005474
Application 10/857,299

5

receipt of the cards by the retailer and activated upon the sale of 1
the card by the retail customer. In this manner, the card cannot 2
be used without being paid for first; thus, reducing or eliminating 3
the chances of the card being shoplifted. Saad, para. 0031. 4
06. Saad’s process allows for distribution of the profit among the 5
participants in the sale and delivery process. Saad, para. 0050. 6
Masi 7
07. Masi is directed to non-cash point-of-sale transaction systems for 8
managing purchase transactions and for distributing of purchase 9
commissions among distributors and users of non-cash point-of-10
sale transaction systems. Masi 1:6-10. 11
08. Traditionally, issuers of non-cash payment devices have entered 12
into merchant agreements whereby participating merchants pay 13
commissions to the card issuers in exchange for providing 14
customers with the convenience of using non-cash payment 15
devices. Masi 1:18-22. 16
09. A commission payment and accounting system organizes 17
transaction data pertaining to holders of a non-cash payment 18
device, such as a debit card or credit card, into a hierarchical 19
database reflecting the organizational structure of an incentive 20
program for using the debit cards and for enlisting new 21
cardholders. Commissions on purchases are electronically 22
transferred to the card issuer, and the commission payment and 23
accounting system is configured to determine and dispense 24
commission payments to cardholders according to the stored 25
electronic funds transaction data, the organizational relationships 26
Appeal 2011-005474
Application 10/857,299

6

among cardholders, and a predetermined schedule associating 1
proportional commission rates with defined organizational 2
relationships. Masi 1:49-62. 3
10. When a purchase is approved, the processor then establishes a data 4
connection with an automated clearing house (ACH) processor. 5
For each purchase, the authorization processor instructs the ACH 6
processor to effect the following electronic fund transfers: a debit 7
to the member account in the amount of the purchase, a credit to 8
the merchant account 2 in the amount of the purchase, a debit to 9
the merchant account in the amount of the discount or fixed 10
amount, and a credit to the organization account in the amount of 11
the discount or fixed amount. For example, for a $20 purchase at 12
a merchant having a discount rate of 10%, there will be a debit of 13
$20 charged to the member account, a credit of $20 paid to the 14
merchant account, and a debit of $2 charged to the merchant 15
account, and a credit of $2 paid to the organization account. Masi 16
3:20-40. 17
Knowledge of One of Ordinary Skill in the Accounting Arts 18
11. Revenue is recognized generally at the point of service or 19
completion of a sales transaction. Generally Accepted Accounting 20
Principles (GAAP). 21
22
ANALYSIS and NEW GROUND of REJECTION 23
Saad describes gift cards having the unusual feature that although the 24
cards are denominated in money terms, they actually represent physical gifts 25
or services that are provided when the cards are redeemed. The cards in 26
Appeal 2011-005474
Application 10/857,299

7

Saad are not debit type cards that can be used as credit cards, but rather 1
tickets or vouchers for redemption into predetermined products. Thus there 2
are two separate transactions involved with the activated cards, viz., the sale 3
of the card and the delivery of the underlying product. 4
The sole issue before us as to claim 11 is whether in Saad, the first fee 5
is received when the establishment sells the POS-activated items to the 6
consumers. In reading Saad in the abstract, it is not entirely clear when 7
funds are transferred. 8
Saad states that revenue is collected from the retail establishment for 9
distributing the product cards and a portion of the revenue is applied toward 10
delivery costs of the product associated with the product identification code. 11
FF 03. Note that these products and deliveries are not of the cards 12
themselves, but of the products represented by the cards. 13
Now Saad also states that the prepaid cards are distributed to retailers 14
by a wholesaler, who collects payment from the retailer, which payment 15
represents at least a percent of the dollar amounts associated with the cards. 16
Appellant contends this is the distribution meant in Saad paragraph 0017. 17
But Saad does not actually state the timing of that collection. Examiner 18
finds that because the cards are not activated until point of sale (FF 05), the 19
distribution in Saad paragraph 0017 is the distribution to the customer at 20
point of sale. Thus, Examiner finds that the timing of the customer payment 21
is around the timing of the point of sale, and this would control the timing of 22
the fees. 23
We find the Examiner is essentially also taking notice of the generally 24
accepted accounting principle that revenue is not recognized until the 25
product is sold. The product in this case is the product represented by an 26
Appeal 2011-005474
Application 10/857,299

8

activated card, as an unactivated card is useless. But the services provided 1
to finally complete the sale involve three different transactions. There are 2
thus three discrete services provided, at each of which some portion of the 3
overall fee might be recognized, viz., initial distribution to the retailer, 4
distribution of the card to the customer, and redemption of the card by gift 5
recipient. 6
Thus although the cash collected is for the cards that are distributed, 7
the funds that would be transferred to back up the shipped product would not 8
be so transferred until the liability for that card occurred, i.e., at point of sale. 9
Similarly, the fee for the service provided by the card would not be 10
recognized until that point of time, irrespective of when the funds for that 11
fee were actually transferred. The claim recites “after electronically 12
activating the POS-activated items, the first party receiving a first fee per 13
POS-activated item based on the providing of the POS-activated items by 14
the establishment to the consumers, when the establishment sells the POS-15
activated items to the consumers.” The claim does not narrow the manner of 16
receipt or the nature of the first fee. Clearly revenue recognition at point of 17
sale to cover the liability and provide for the service of selling the card 18
would be a fee received at that point. 19
As to separately argued claim 12, the Examiner is merely finding that 20
Saad separately recognizes revenue for delivery of the product represented 21
by the gift card. There is a similar fee recognized at time of redemption. FF 22
06. Examiner is treating Saad’s entire seller organization as mapping to the 23
establishment recited in the claim. 24
Appeal 2011-005474
Application 10/857,299

9

The arguments as to the remaining claims are similar to those in 1
support of claim 12. Masi is only applied to show it was predictable to offer 2
a discount on the product in Saad. 3
As this analysis significantly changes the thrust of the Examiner’s 4
rejection, we reverse the Examiner’s rejections and enter a new ground of 5
rejection pursuant to 37 C.F.R. § 41.50(b) of claims 11-15 and 22-30 under 6
35 U.S.C. § 103(a) as unpatentable over Saad and Masi based on the 7
analysis supra. 8
9
CONCLUSIONS OF LAW 10
The rejection of claims 11 and 12 under 35 U.S.C. § 102(e) as 11
anticipated by Saad is improper. 12
The rejection of claims 13-15 and 22-30 under 35 U.S.C. § 103(a) as 13
unpatentable over Saad and Masi is improper. 14
A new ground of rejection of claims 11-15 and 22-30 under 35 U.S.C. 15
§ 103(a) as unpatentable over Saad and Masi is entered. 16
17
DECISION 18
The Examiner’s rejections of claims 11-15 and 22-30 are reversed. 19
A new ground of rejection of claims 11-15 and 22-30 under 35 U.S.C. 20
§ 103(a) as unpatentable over Saad and Masi is entered. 21
This Decision contains a new rejection within the meaning of 37 22
C.F.R. § 41.50(b) (2011). 23
Our decision is not a final agency action. 24
Appeal 2011-005474
Application 10/857,299

10

37 C.F.R. § 41.50(b) provides that Appellant, WITHIN TWO 1
MONTHS FROM THE DATE OF THE DECISION, must exercise one of 2
the following two options with respect to the new rejection: 3
(1) Reopen prosecution. Submit an appropriate amendment of 4
the claims so rejected or new evidence relating to the claims 5
so rejected, or both, and have the matter reconsidered by the 6
Examiner, in which event the proceeding will be remanded 7
to the Examiner. . . . 8
(2) Request rehearing. Request that the proceeding be reheard 9
under § 41.52 by the Board upon the same record. . . . 10
No time period for taking any subsequent action in connection with 11
this appeal may be extended under 37 C.F.R. § 1.136(a). See 37 C.F.R. 12
§ 1.136(a)(1)(iv) (2011). 13
14
REVERSED; 37 C.F.R. § 41.50(b) 15
16
17
18
19
20
21
hh 22