Askeladden LLCv.Sean McGhie

Patent Trial and Appeal Board

Mar 11, 2016

13901175 (P.T.A.B. Mar. 11, 2016)

Trials@uspto.gov Paper No. 56
571.272.7822 Filed: March 11, 2016

UNITED STATES PATENT AND TRADEMARK OFFICE
_______________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
_______________

ASKELADDEN LLC,
Petitioner,

v.

SEAN I. MCGHIE and BRIAN K. BUCHHEIT,
Patent Owner.
_______________

Case IPR2015-00124
Patent 8,540,152 B1
_______________

Before SALLY C. MEDLEY, JONI Y. CHANG, and
GEORGIANNA W. BRADEN, Administrative Patent Judges.

BRADEN, Administrative Patent Judge.

FINAL WRITTEN DECISION
Inter Partes Review
35 U.S.C. § 318(a) and 37 C.F.R. § 42.73

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I. INTRODUCTION
We have jurisdiction to hear this inter partes review under 35 U.S.C.
§ 6(c), and this Final Written Decision is issued pursuant to 35 U.S.C.
§ 318(a) and 37 C.F.R. § 42.73. For the reasons that follow, we determine
that Petitioner has shown by a preponderance of the evidence that claims 1–
20 of U.S. Patent No. 8,540,152 B1 (Ex. 1501, “the ’152 patent”) are
unpatentable.
A. Procedural History
Petitioner, Askeladden LLC1 filed a Petition to institute an inter
partes review of claims 1–20 of the ’152 patent. Paper 1 (“Pet.”). Patent
Owner, Sean I. McGhie and Brian K. Buchheit,2 filed a Revised Preliminary
Response. Paper 15 (“Prelim. Resp.”). Upon consideration of the Petition
and Preliminary Response, pursuant to 35 U.S.C. § 314(a), we instituted an
inter partes review of claims 1–20 as on the following grounds:

1 The Real Parties-in-Interest also includes The Clearing House Payment
Company. See Paper 28.
2 Patent Owner is represented by inventor Brian Buchheit, who is an attorney
and registered to practice before the Office. At times during the proceeding,
Mr. Buchheit indicated that he was representing “Patent Owners” (Mr.
Buchheit and Mr. McGhie), while at other times Mr. Buchheit indicated that
he was not representing Mr. McGhie, but rather acting pro se. Papers 4, 15,
40, 50; Ex. 2054. Over the course of the proceeding, we have provided
instructions to Patent Owner on filing papers, authorized Patent Owner leave
to refile papers and file papers beyond due dates, and expunged other Patent
Owner papers that were not authorized, not in compliance with Board rules,
and/or contained arguments beyond what was authorized. See, e.g., Papers
8, 9, 11, 14, 38, 39 (and Exhibit 3001), 51, 53.
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References Basis Claims Challenged
MacLean3 and Sakakibara4 § 103 7–11
MacLean, Sakakibara, and
Postrel5
§ 103 1–6 and 12–20
See Paper 35 (“Dec. to Inst.”), 39.
In the Scheduling Order, which sets times for taking action in this
proceeding, we notified the parties that “any arguments for patentability not
raised in the [Patent Owner] response will be deemed waived.” Paper 36, 3;
see also Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,766
(Aug. 14, 2012) (a patent owner’s “response should identify all the involved
claims that are believed to be patentable and state the basis for that belief”).
Patent Owner, however, did not file a Patent Owner Response. To ensure
clarity in our record, we required Patent Owner to file a paper, indicating
whether it had abandoned the contest.6 Paper 51. Patent Owner indicated
that it had not abandoned the contest. Paper 53. Patent Owner, however,
did not seek authorization to belatedly file a Patent Owner Response, nor
indicated that it wished to file such a Response. We have, therefore, the

3 US Patent Publication No. 2002/0143614 A1, pub. Oct. 3, 2002 (Ex. 1504,
“MacLean”).
4 US Patent No. 6, 721,743 B1, iss. Apr. 13, 2004 (Ex. 1505, “Sakakibara”).
5 US Patent Publication No. 2005/0021399 A1, pub. Jan. 27, 2005 (Ex.
1503, “Postrel”).
6 An abandonment of the contest is construed as a request for adverse
judgment. 37 C.F.R. § 42.73(b)(4). A request for adverse judgment, on
behalf of a Patent Owner, would result in the cancellation of the involved
claims of a challenged patent, e.g., without consideration of the Petition, etc.
On the other hand, when a Patent Owner does not abandon the contest, but
chooses not to file a Patent Owner Response, the Board generally will render
a final written decision, e.g., based on consideration of the Petition, etc.
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Petition before us with no Patent Owner Response. Nonetheless, Petitioner
bears the burden to show, by a preponderance of the evidence, that the
challenged claims are unpatentable.
For the reasons that follow, we determine that Petitioner has shown by
a preponderance of the evidence that claims 1–20 of the ’152 patent are
unpatentable.
B. Related Proceedings
Petitioner informs us that the ’152 patent is the subject of a
concurrently-filed petition for inter partes review. Pet. 1; see IPR2015-
00125. Petitioner also informs us that related U.S. Patent Nos. 8,313,023 B1
and 8,511,550 B1 (“’023 Patent” and “’550 Patent,” respectively) are the
subjects of covered business method review proceedings, cases CBM2014-
00095 (“’023 CBM”) and CBM2014-00096 (“’550 CBM”). Pet. 1.
C. The ’152 Patent
The ’152 patent discloses systems and methods for converting points
or credits from one loyalty program to a different loyalty program and
redeeming the points or credits for services or merchandise. Ex. 1501,
Abstract. One embodiment of the ’152 patent is illustrated in Figure 1,
reproduced below.
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As shown in Figure 1, non-negotiable points or credits 136 earned from a
consumer incentive activity 122 (e.g., a frequent flyer loyalty program) are
converted to negotiable funds 138 provided by conversion agency 136. Id.
at 3:60–64; Fig. 1. According to the ’152 patent, consumer incentive
activity 122 is sponsored by credit providing entities 120. Id. at 6:19–21.
Examples of credit providing entities 120 includes corporations such as
airlines, hotels, credit card companies, casinos, cruise ships, States (for
lottery, scratch off games, etc.), churches, race tracks, online gambling site
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providers, e-commerce sites, slot-machine houses, carnivals, gambling
parlors, companies (for promotional sweepstakes), high schools (for raffles),
and the like. Id. at 6:21–27.
The ’152 patent discloses an “online embodiment,” described as
embodiment 150 in Figure 1, where person 110 can interact (130) with credit
providing entity site 156 to participate in consumer incentive activity 122.
Id. at 4:38–41; Fig. 1. According to embodiment 150, commercial
transaction 114 can be conducted via an e-commerce Web site 157. Id. at
4:41–42. Additionally, conversion agency 124 can implement a software
based conversion service 158, which performs conversion of non-negotiable
funds 136 into negotiable funds 138. Id. at 4:43–46. Web sites 156, 157 and
service 158 can run within one or more servers 154. Id. at 4:46–47. Servers
154 can be connected to client 152 via network 153, where client 152 is a
computing device that user 110 interacts (130 and/or 114) with. Id. at 4:47–
50.
The ’152 patent discloses an “account transfer embodiment,”
described as embodiment 170 in Figure 1, where user 110 participates in
consumer incentive activity 122 (e.g., in this instance game of chance 172).
Id. at 5:15–17; Fig. 1. Earnings (134, 136) from the consumer incentive
activity 122 are recorded within tangible data store 174 associated with
credit providing entity 120. Id. at 5:18–20. Data store 174 can include
account 175 for user 110, which tracks the amount of credits 134 (i.e., non-
negotiable funds 136) belonging to user 110. Id. at 5:20–23. According to
the ’152 patent, conversion agency 124 can access directly account 175 of
data store 174 and can convert a quantity of credits 134 into negotiable funds
138, which are recorded in tangible data store 176 (not directly associated
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with entity 120). Id. at 5:23–27. Data store 176 can include account 177 for
the user 110, which contains an amount of negotiable funds 138 belonging to
user 110. Id. at 5: 27–29. User 110 can conduct commercial transactions
114 via machine 179, such as a kiosk, an ATM, etc., which can assess and
dispense the funds in account 177. Id. at 5:29–31.
D. Illustrative Claim
As noted above, an inter partes review was instituted as to claims
1– 20 of the ’152 patent, of which claims 1, 7, and 13 are independent
claims. Claim 1 is illustrative of the challenged claims and is reproduced
below (with paragraphing):
1. A method comprising:
an entity agreeing to permit transfers or conversions of
non-negotiable credits to entity independent funds, wherein the
entity agrees to compensate a commerce partner by paying an
amount in cash or credit for each non-negotiable credit redeemed
by the commerce partner, wherein said non-negotiable credits are
loyalty points of the loyalty program possessed by a member,
wherein the loyalty points are maintained in a loyalty program
account owned or controlled by the entity, wherein the entity
redeems the loyalty points for a set of entity services that the
entity provides to the member, wherein said entity independent
funds are different loyalty points of a different loyalty program
of a commerce partner, wherein the different loyalty points are
redeemable by the commerce partner for commerce partner
services that the commerce partner provides to the member,
wherein said entity independent funds are possessed by the
member and are maintained in a funds account, wherein the
funds account is neither owned or controlled by the entity or by
any subsidiary or parent of the entity, wherein the entity does not
accept the entity independent funds as payment for any of the
entity services;
the computer detecting a set of two or more interactions
earning additional non-negotiable credits for the member in
accordance with terms-of-use of the loyalty program, wherein
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the computer adds the additional non-negotiable credits to the
loyalty program account; and
responsive to an indication of a conversion operation
occurrence, the computer subtracting a quantity of the non-
negotiable credits from the loyalty program account, said
subtracted quantity of non-negotiable credits comprising at least
a quantity of non-negotiable credits that were converted or
transferred to a new quantity of entity independent funds,
wherein the conversion operation occurrence causes the
subtracting of the non-negotiable credits from the loyalty
program account to occur approximately concurrently with an
addition of a corresponding quantity of entity-independent funds
being added to the funds account per the conversion operation
occurrence.
Ex. 1501, 16:5–45.
II. DISCUSSION
A. Claim Construction
In an inter partes review, claim terms in an unexpired patent are
interpreted according to their broadest reasonable construction in light of the
specification of the patent in which they appear. 37 C.F.R. § 42.100(b); see
also In re Cuozzo Speed Techs., LLC, 793 F.3d 1268, 1279 (Fed. Cir. 2015)
(“Congress implicitly approved the broadest reasonable interpretation
standard in enacting the AIA,” and “the standard was properly adopted by
PTO regulation.”), cert. granted sub nom., Cuozzo Speed Techs. LLC v. Lee,
136 S. Ct. 890 (mem.) (2016). Under the broadest reasonable construction
standard, claim terms are given their ordinary and customary meaning, as
would be understood by one of ordinary skill in the art in the context of the
entire disclosure. In re Translogic Tech., Inc., 504 F.3d 1249, 1257 (Fed.
Cir. 2007).
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Petitioner proposes constructions for the following claim terms:
“entity,” “non-negotiable credits,” and “entity independent funds,” which are
recited at least in independent claims 1, 7, and 13. Pet. 6–9. In our Decision
to Institute, we determined that Petitioner’s proposed constructions are
consistent with the broadest reasonable construction, and adopted them.
Dec. to Inst. 7–10. We also construed “commerce partner” to mean an
individual or group involved in commercial activity. Id. at 10–11. Neither
party has indicated that our constructions are improper and we do not
perceive any reason or evidence that now compels any deviation from our
initial constructions. Accordingly, the following claim constructions apply
to this Final Written Decision:

Claim Term Construction
entity an organization that has a rewards
program for a consumer
non-negotiable credits credits which are accepted only by
the granting entity of the credits
entity independent funds funds acceptable as payment by at
least one entity different from the
original granting entity of the non-
negotiable credits
commerce partner an individual or group involved in
commercial activity
Our analysis in this Decision is not impacted by whether we apply the
broadest reasonable interpretation or the Phillips standard applicable to
district court proceedings. See Phillips v. AWH Corp., 415 F.3d 1303 (Fed.
Cir. 2005) (en banc).
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B. Principles of Law
A claim is unpatentable under 35 U.S.C. § 103(a) if “the differences
between the subject matter sought to be patented and the prior art are such
that the subject matter as a whole would have been obvious at the time the
invention was made to a person having ordinary skill in the art to which said
subject matter pertains.” KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 406
(2007). The question of obviousness is resolved on the basis of underlying
factual determinations, including: (1) the scope and content of the prior art;
(2) any differences between the claimed subject matter and the prior art;
(3) the level of skill in the art; and (4) objective evidence of nonobviousness,
i.e., secondary considerations. See Graham v. John Deere Co., 383 U.S. 1,
17–18 (1966).
In that regard, an obviousness analysis “need not seek out precise
teachings directed to the specific subject matter of the challenged claim, for
a court can take account of the inferences and creative steps that a person of
ordinary skill in the art would employ.” KSR, 550 U.S. at 418; Translogic,
504 F.3d at 1262. A prima facie case of obviousness is established when the
prior art itself would appear to have suggested the claimed subject matter to
a person of ordinary skill in the art. In re Rinehart, 531 F.2d 1048, 1051
(CCPA 1976).
We analyze the instituted grounds of unpatentability in accordance
with the above-stated principles.
C. Level of Ordinary Skill in the Art
The applied prior art reflects the appropriate level of skill at the time
of the claimed invention. See Okajima v. Bourdeau, 261 F.3d 1350, 1355
(Fed. Cir. 2001).
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D. Asserted Obviousness of Claims 7–11 in view of MacLean and
Sakakibara
Petitioner contends claims 7–11 of the ’152 patent are unpatentable
under 35 U.S.C. § 103 in view of MacLean and Sakakibara. Pet. 15–32. To
support its contentions, Petitioner provides detailed explanations as to how
the combination of prior art meets each claim limitation. Id. Petitioner also
relies upon a Declaration of Matthew Calman (Ex. 1502) for support. For
reasons that follow, we determine that Petitioner has shown by a
preponderance of the evidence that the challenged claims of the ’152 patent
would have been obvious in view of MacLean and Sakakibara.
1. Overview of MacLean
MacLean discloses an apparatus and a method for facilitating the
exchange of points between selected entities. Ex. 1504, Abstract. The
method of MacLean specifically allows for tracking, managing, and
exchanging points that are issued and redeemed in the context of a loyalty
program. Id. ¶¶ 1, 14. Figure 1, reproduced below, illustrates one
embodiment of a point management system taught in MacLean.

In Figure 1, point management system 100 facilitates interaction
between customer 110, a transaction center 120, and a plurality of points
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issuers 130a–c. Id. ¶ 40. According to MacLean, point issuer 130 is any
entity that (i) controls the disposition and distribution of a currency and (ii)
operates a Loyalty Program that controls a private currency of points. Id.
MacLean discloses that the points managed by system 100 may take the
form of a variety of Loyalty Program (“LP”) points such as those issued by
airlines, hotels, financial entities, e.g., credit cards, and networks, e.g., portal
web sites on the Internet. Id.
Another embodiment of the system taught in MacLean is illustrated in
Figure 3, reproduced below.

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Figure 3 shows the steps that MacLean’s point management system
100 uses to permit a customer to affect an exchange of points from one LP to
another. MacLean teaches that customer 110 opens a portfolio with
transaction center 120 and enters information regarding each points issuer
130a–c with whom customer 110 has participated and has accumulated LP
points. Ex. 1504 ¶ 50; Figs. 4a–b. Transaction center 120 validates that
customer 110 has an account with each points issuer 130a–c. Id. A valid
account confirmation record will include the current points balance for that
LP account and transaction center 120 will add the account to customer
110’s portfolio. Id.; Fig. 4E.
MacLean discloses an embodiment that uses computer programs to
implement the exchange of point from a first issuer LP (from which points
are withdrawn) to a second issuer LP (to which points are deposited and
received). Id. ¶ 52; Figs. 5A, 6A–I. This embodiment is illustrated in
Figure 5A, reproduced below.
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Figure 5A shows that once a customer has validated accounts in its
portfolio, the customer can follow a series of steps to request that points be
exchanged between two issuer LPs. According to MacLean, after the
customer designates withdrawing LPs, step 507 of Figure 5A compares the
current point balances of the customer’s accounts in withdrawing LPs with
the number of points requested in step 506, and if the requested points are
greater than the assessed account balances, then step 508 terminates the
point exchange carried out by the execution of the point exchange program
500 and a message is displayed to notify the customer that its current point
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balances are insufficient to complete the requested points exchange. Ex.
1504 ¶ 52; Fig. 5A. On the other hand, MacLean explains that if the points
are available in the customer’s LP accounts, then the point exchange
program 500 moves to step 509, which displays web page 630. Id. ¶ 52;
Figs. 5A, 6D. Web page 630 includes a box 632 for step 510, which permits
the customer to designate the depositing LP to which the points are
transferred. Id.; Fig. 6D. Step 511 in MacLean calculates the exchange
rates for this points transaction and displays a summary of the withdrawal
and deposit points. Id.; Fig. 6E. If the customer chooses to continue with the
transaction, then in step 515 the customer enters any required payment
information needed to affect the exchange. Id.; Figs. 6D–6I.
MacLean discloses that once the details of the requested points
exchange have been accumulated and confirmed by the web server 230,
points exchange program 500 is executed in a two-step procedure. Id. ¶ 53;
Fig. 2. The first step performs all of the point withdrawals from the
designated withdrawing LPs and the second step performs the points deposit
to the designated depositing LPs. Id.
2. Overview of Sakakibara
Sakakibara discloses a system for managing and exchanging points
received as rewards for purchasing products, or using various products or
services. Ex. 1505, 1:10–29. The system in Sakakibara allows a user to
convert points from one program into points from another program in
accordance with a conversion ratio. Id. at 7:7–10.
Figure 1, reproduced below, illustrates one embodiment disclosed in
Sakakibara.
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As shown in Figure 1, a first business entity 100 provides on-line
services, as well as loyalty points that are used as virtual money, but can
only be used on communication network 400. Id. at 6:3–12. Another
embodiment in Sakakibara discloses that the loyalty points issued by first
business entity 100 are redeemable only by first business entity 100. Id. at
12:64–13:30.
According to the illustration in Figure 1, customers 200 are connected
to communication network 400 through customer-use terminal units 20 such
as personal computers, and also have a membership to point services
provided by various second business entities 300 that serve valuable points
which are exchangeable for various products and services as a reward for
consumption activity. Id. at 6:15–22. First business entity 100 and second
business entities 300 enter business cooperation contracts with each other
and the entities are connected to network 400 through cooperate-use
terminal units 30. Id. at 6:25–29. According to Sakakibara, communication
points database 101 records information related to loyalty points, while
exchange database 102 records information related to an exchange rate of
loyalty points and various valuable exchange points managed by second
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business entities 300, and customer information database 103 records
information related to customers 200. Id. at 6:44–51.
Sakakibara provides an embodiment that allows customers 200 to
authenticate their identities, confirm that they have memberships with first
business entity 100 and respective second business entities 300, and then
exchange loyalty points between the business entities. Id. at 7:40–8:10.
Sakakibara discloses that in exchange database 102, data indicating the
exchange rates between the valuable exchange points and the loyalty points
managed by respective second business entities 300 are recorded in the items
showing the names of respective second business entities 300 (or the
common names of provided services). Id. at 7:1–6. Figure 4, reproduced
below, illustrates an example of exchange rates established for second
business entities 300 using Sakakibara’s system.

Figure 4 shows exchange rates used to calculate the value of loyalty points
and determine the appropriate exchange information. Id. at 8:36–9:9. The
recorded exchange rates are values set according to the contents of the
contracts made between first business entity 100 and respective second
business entities 300. Id. at 7:7–10.
3. Analysis
Petitioner contends the disclosures of MacLean and Sakakibara, as
summarized above, teach or suggest each limitation of claims 7–11 of the
’152 patent. Pet. 15–32.
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a. Independent Claim 7
Petitioner contends that a person of ordinary skill in the art, at the time
of the invention, would have been well versed in loyalty programs, loyalty
points, and the conversion or exchange of loyalty points. Id. at 10–15.
According to Petitioner, MacLean and Sakakibara are both in the same field
(loyalty points management systems) and address the same problem —
managing/controlling and exchanging/converting loyalty points. Id. at 17–
18; see Ex. 1502 ¶ 99. Petitioner supports its position with the Declaration
of Mr. Calman, who testifies that a person of skill in the art would have
understood MacLean and Sakakibara relate to general principles of loyalty
programs and include well-known features (such as withdrawing points from
one loyalty program and converting them to another loyalty program’s
points) that were widely practiced in loyalty programs, thereby rendering the
challenged claims obvious. Ex. 1502 ¶¶ 24–40; 53–55.
For claim 7, Petitioner contends that MacLean discloses loyalty
programs issuing credits in the form of loyalty points, such as airline
mileage programs, to aid in influencing customers to continue to purchase
products and/or services from one source. Pet. 15–16 (citing Ex. 1504 ¶¶ 2,
3; Fig. 2). According to Petitioner, the system described in MacLean allows
for the transfer of conversion of loyalty program points in accordance with
an exchange rate that is set for points of different loyalty programs. Id. at
16–17 (citing Ex. 1504 ¶¶ 21, 23, 44, 52, 64, Figs. 1, 2, 6E). Petitioner then
explains that MacLean loyalty points are consistent with the general concept
that loyalty points earned from one merchant (e.g., United Airlines or
Macy’s) could not be redeemed for goods or services at another merchant
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(e.g., Delta Airlines or Bloomingdale’s), which Petitioner argues has long
been the standard practice. Id. at 17 (citing Ex. 1502 ¶ 96.)
Petitioner further contends that Sakakibara discloses the concept that
loyalty points are non-negotiable credits. Pet. 17. According to Petitioner,
Sakakibara describes a system that allows a user to convert loyalty points
from one entity’s program into points from another’s in accordance with a
conversion ratio and explicitly recognizes that, absent conversion, another
entity (i.e., a commerce partner) does not accept the non-negotiable credits
as payment for services. Id. (citing Ex. 1505, Abstract, 7:7–10, 12:64–
13:30); Ex. 1502 ¶ 97. Petitioner cites to claim 9 of Sakakibara as support
for its position, because claim 9 recites that, prior to conversion, loyalty
points issued by one entity are only redeemable at that entity (i.e., they are
non-negotiable). Id. (citing Ex. 1505, 12:64–13:30).
Petitioner then asserts that one of ordinary skill in the art would have
recognized that MacLean’s individual merchant loyalty points would
preferably have been accepted only by that merchant, and would not have
been accepted as payment with another merchant, based on the explicit
teachings of Sakakibara, which also relates to the general principles of
loyalty programs. Id.
We agree with Petitioner’s position that the combined teachings of
MacLean and Sakakibara, as summarized above, teaches or suggests each
limitation of challenged claim 7. Specifically, we agree that the cited
references teach or suggest an exchange of points for funds occurring
“approximately concurrent in time.” We credit the testimony of Mr.
Calman, who states that MacLean teaches that subtracting non-negotiable
credits occurs approximately concurrently with adding corresponding entity
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independent funds. Ex. 1502 ¶ 118. We give Mr. Calman’s testimony
substantial weight in that regard because it is supported by MacLean’s
disclosure, specifically MacLean’s Figures 6E and 6F, which illustrate the
results of the subtraction and the addition being displayed on the same web
page as a member carries out a points exchange. See Ex. 1504 ¶ 51, Figs.
6E, 6F. Mr. Calman further explains that MacLean teaches that a points
exchange may be effected using a “real time” protocol (id. ¶ 51), and
MacLean also refers to using “push[es]” and “pulls” to update portfolio
balance information as changes occur to issuer 130 accounts (Id. ¶¶ 57–59).
Ex. 1502 ¶ 118. Mr. Calman testifies that one of ordinary skill in the art
would have understood at the time of the invention MacLean to teach that
the subtraction and addition occur approximately concurrently. Id. A
challenge to patentability under 35 U.S.C. § 103 requires that all the claim
limitations must be taught or suggested by the prior art as gauged in view of
the creativity of an ordinarily skilled artisan. See KSR, 550 U.S. at 420–421.
Therefore, we are satisfied that one of skill in the art would have understood
MacLean teaches that “quantities of non-negotiable credits are subtracted
from the loyalty point account approximately concurrent in time with the
new quantities of entity independent funds being added to the funds
account” as recited in challenged claim 7.
We also agree with, and adopt as our own, Petitioner’s showing that
MacLean describes or suggests a “commerce partner agreeing to permit
transfers or conversions of quantities of non-negotiable credits to entity
independent funds” as required by claim 7. See Pet. 20. Specifically, we
agree that MacLean teaches a commerce partner that agrees to permit
transfers or conversions of points. Id. As explained above in the claim
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construction section, we construe the claim term “commerce partner” to
mean an individual or group involved in commercial activity. See supra,
Section II.A. Therefore, we are satisfied that MacLean teaches or suggests a
“commerce partner agreeing to permit transfers or conversions of quantities
of non-negotiable credits to entity independent funds” as required by claim
7.
Similarly, we agree with, and adopt as our own, Petitioner’s showing
that MacLean describes or suggests that a “commerce partner receives
compensation in cash or credit from an entity for transfers or conversions,”
as required in claim 7. See Pet. 21–22. Additionally, we credit the
testimony of Mr. Calman, who explains that MacLean discloses payments
from a withdrawing issuer to a depositing issuer (i.e., the commerce partner)
for each non-negotiable credit redeemed by the depositing issuer. Ex. 1502
¶ 100 (citing Ex. 1504 ¶¶ 64–67; Figs. 9–12). Thus, we are satisfied that one
of ordinary skill in the art would have understood that MacLean teaches or
suggests that a “commerce partner receives compensation in cash or credit
from an entity for transfers or conversions,” as recited by claim 7.
Lastly, we agree with Petitioner’s position that the combination of
MacLean and Sakakibara teaches a computer (which is the computer for the
different loyalty program of the commerce partner) redeeming at least a
portion of the new quantities of entity independent funds in exchange for
user selected ones of the commerce partner services as required by claim 7.
We specifically find that Sakakibara discloses that an exchange (such as for
redemption) is not permitted without credits (first points) being first
converted into entity independent funds (second points), and that Sakakibara
describes “[a] method of exchanging points between different business
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entities . . . wherein the first points are only directly redeemable by the first
business entity, and wherein the second points are only directly redeemable
by the second business entity.” See Ex. 1505, 12:64–13:30. We also credit
the testimony of Mr. Calman, who opines about how one of ordinary skill in
the art would read MacLean in light of Sakakibara and about motivating
factors behind the points exchanges in MacLean and Sakakibara. Ex. 1502
¶ 121.
Therefore, we conclude Petitioner has shown by a preponderance of
the evidence that claim 7 would have been obvious under 35 U.S.C. § 103 in
view of MacLean and Sakakibara.
b. Dependent Claims 8–11
Claims 8–11 depend from claim 7, and Petitioner contends that
MacLean and Sakakibara, as summarized above, teaches or suggests aspects
of each dependent claim. Pet. 18–20, 27–32. Petitioner cites to the
Declaration of Mr. Calman who explains that, at the time of the invention, a
person of ordinary skill in the art would have understood that MacLean’s
point exchange system demonstrates transfers or conversions of loyalty
points between the entity’s loyalty program and a commerce partner’s
computer as claimed. Ex. 1502 ¶¶ 78–89, 122–132. We give Mr. Calman’s
testimony substantial weight in that regard because it is supported by
MacLean’s disclosure and what MacLean would have conveyed to a person
of ordinary skill in the art at the time of the invention.
We also determine that Petitioner has identified sufficient reasoning
for the proposed combination of MacLean and Sakakibara with respect to
claims 8–11 as well as claim 7. Pet. 18–20, 27–32; Ex. 1502 ¶¶ 78–89, 122–
132. For example, Petitioner argues that because both MacLean and
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Sakakibara relate to conversion of loyalty program points, one of ordinary
skill in the art would have appreciated that Sakakibara’s teachings are
applicable towards the system of MacLean. Pet. 19–20. We agree with, and
adopt as our own, Petitioner’s rationale: “[s]ince both MacLean and
Sakakibara relate to conversion of loyalty program points, one of ordinary
skill in the art would have appreciated that Sakakibara’s teachings are
applicable towards the similar system of MacLean. Id. at 20. Therefore, we
conclude that Petitioner has shown by a preponderance of the evidence that
claims 8–11 are unpatentable over the combination of MacLean and
Sakakibara.
c. Summary
We have reviewed the Petition and the supporting evidence, and adopt
as our own Petitioner’s findings, as well as its rationale for combining
MacLean and Sakakibara, and conclude that Petitioner has shown by a
preponderance of the evidence that claims 7–11 would have been obvious
under 35 U.S.C. § 103 in view of the disclosure of MacLean and Sakakibara.
E. Asserted Obviousness of Claims 1–6 and 12–20 in view of
MacLean, Sakakibara, and Postrel
Petitioner contends claims 1–6 and 12–20 of the ’152 patent are
unpatentable under 35 U.S.C. § 103 in view of MacLean, Sakakibara, and
Postrel. Pet. 33–60. To support its contentions, Petitioner provides detailed
explanations as to how the combination of prior art meets each claim
limitation. Id. Petitioner also relies upon a Declaration of Mr. Calman (Ex.
1502) for support. In view of the overviews of MacLean (see supra Section
II.D.1) and Sakakibara (see supra Section II.D.2) as provided above and for
reasons that follow, we determine that Petitioner has shown by a
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preponderance of the evidence that challenged claims 1–6 and 12–20 of the
’152 patent would have been obvious in view of MacLean, Sakakibara, and
Postrel.
1. Overview of Postrel
Postrel describes a system in which a user may redeem reward points
earned with a merchant, or may redeem the points with another merchant
through an exchange network. Ex. 1503 ¶ 10. The user additionally may
aggregate reward points with those of other merchants into a central
exchange account and then redeem the points for goods or services from any
approved merchant on the network. Id. ¶¶ 10, 44.
One embodiment in Postrel discloses a system that is illustrated in
Figure 4, reproduced below.

Figure 4 shows reward server computers 10, 12, 14, trading server 20,
merchant computer 30, and user computer 40 in communication with
network 40. Id. ¶ 59. According to Postrel, a user may acquire and
accumulate reward points through any loyalty program and the points are
posted in a user’s reward account, which is accessible through reward server
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computer 10. Id. Postrel discloses that trading server 20 has both (i) a
communication means to allow users to access the server and to allow the
trading server to contact reward servers and (ii) a processing means to
interpret the rules and coordinate the contact to the respective reward
servers. Id. ¶ 68, Fig. 5. The processing means is adapted to allow the user
to request and exchange consideration for rewards from reward servers, and
coordinates the exchange of consideration and then can increase or decrease
the user exchange accounts stored in memory in response to actions
performed by the user computer, reward server, and/or merchants. Id.
Another embodiment in Postrel discloses maintaining loyalty points
by storing user and merchant account information in database 54, which is
associated with trading server 20. Ex. 1503 ¶ 32. This embodiment is
shown in Figure 12, reproduced below.

Figure 12 illustrates a simple database format wherein each merchant
and user under that merchant has a record which indicates how many points
are in the account, as well as other optional information (such as par value of
points, restrictions on use, etc.). Id.
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2. Analysis
Petitioner contends the combined teachings of MacLean, Sakakibara,
and Postrel as summarized above, teach or suggest each limitation of claims
1–6 and 12–20 of the ’152 patent. Pet. 33–60.
a. Independent Claims 1 and 13
Petitioner relies on MacLean and Sakakibara for the same reasons as
cited above in regards to independent claim 7. Pet. 33. Petitioner further
relies on Postrel for the use of processors and memory in computers (claims
13–20), terms-of-use for earning loyalty points (claims 1–6), and redeeming
loyalty points following conversion from non-negotiable credits to entity
independent funds (claim 12). Id. at 34. According to Petitioner,
independent claims 1 and 7 are similar, but claim 1 differs in that claim 1
recites an entity agreeing to permit the transfers or conversions. Id.
Petitioner contends MacLean discloses that withdrawing LP issuer (i.e.,
entity) “agrees” to permit transfers or conversions, e.g., by setting the
specific point withdrawal and deposit rates. Id. (citing Ex. 1504 ¶ 23).
Petitioner notes that claim 1 also differs from claim 7 in that claim 1 recites
the earning of non-negotiable credits occurring in accordance with terms-of-
use, while independent claim 13 recites that the non-negotiable credits and
the entity independent funds have different restrictions-on-use established by
terms-of-use of the two loyalty programs. Id. Petitioner explains that a
person of ordinary skill in the art would have been well versed in loyalty
programs and would have understood that loyalty points may be earned and
redeemed according to particular terms-of-use and restrictions. Id. (citing
Ex. 1502 ¶¶ 67, 157).
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Petitioner contends that Postrel discloses these terms-of-use and
restrictions. Pet. 35. According to Petitioner, Postrel discloses a system for
converting loyalty points and redemption of these newly converted loyalty
points. Id. (citing Ex. 1503 ¶¶ 43–44). In particular, Petitioner cites to
Postrel’s discussion of points being earned and redeemed for services
offered by a loyalty program with “restrictions on use.” Id. (citing Ex. 1503
¶¶ 4, 9, 30, 32, 47, 49). Petitioner supports its position with the Declaration
of Mr. Calman, who testifies that a person of skill in the art would have
recognized that MacLean’s earning and redemption of loyalty points, as
combined with Sakakibara’s restrictions, would be in accordance with
terms-of-use established by the respective loyalty program, based on the
explicit teachings of these loyalty programs’ terms-of-use in Postrel, because
such terms-of-use would have established customers’ participation
guidelines. Ex. 1502 ¶¶ 67, 158, 159. Mr. Calman further opines that with
these terms-of-use, a user follows the set requirements for earning and
redeeming loyalty points, avoiding confusion during this process. Id.
Petitioner further contends that MacLean and Postrel teach processors
responsive to executing program instructions of at least one memory as
recited in claim 13. Pet. 35. According to Petitioner, it was generally
understood at the time of the ’152 patent that computers, such as those used
in MacLean’s system 100, had processors executing program instructions
stored in memory, thus, MacLean teaches using processors and executing
program instructions stored in memory, as the same was well known in the
field. Id. (citing Ex. 1502 ¶¶ 137, 139, 140). Moreover, Petitioner contends
that processors and memory having program instructions are also disclosed
in Postrel. Id. Petitioner explains that Postrel describes the use of a
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computer product with a processor and memory having program
instructions. Id. at 36 (citing Ex. 1503 ¶ 68 (“server [with] memory means”
and “processing means”). Petitioner asserts that one of ordinary skill in the
art would have clearly recognized that MacLean’s computer programs would
preferably have been stored on memory and executed on computers having
one or more processors, based on the teachings of Postrel, and based on the
basic knowledge regarding the general structure of a computer. Id.
Petitioner also contends that the combination of MacLean,
Sakakibara, and Postrel teaches the conversion operation occurring pursuant
to an agreement existing between the entity and commerce partner as
required by claim 13. Pet. 36. According to Petitioner, it was generally
understood at the time of the ’152 patent that any conversion of loyalty
points from an entity to a commerce partner would have occurred in
accordance with an agreement existing between the parties, and MacLean
teaches that the backend of the points exchange process involves exchanging
money between the parties. Id. Petitioner then argues that Sakakibara
explicitly discloses such agreements existing, because Sakakibara discloses
contracts which set the exchange rates between business entities
participating in loyalty points exchanges. Id. at 37 (citing Ex. 1505, 7:7–10).
Petitioner supports its position with the Declaration of Mr. Calman, who
testifies that one of ordinary skill in the art would have plainly recognized
that MacLean’s conversions would have preferably been performed in
accordance with agreements existing between the parties as explicitly
disclosed in Sakakibara, because such would allow each loyalty program to
ensure that its loyalty points are fairly treated. Ex. 1502 ¶ 160. In addition,
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such agreements provide safeguards against a party’s non-compliance of its
obligations in a points exchange. Id.
We agree with, and adopt as our own, Petitioner’s analysis that the
combined teachings of MacLean, Sakakibara, and Postrel, as summarized
above, teaches or suggests each limitation of challenged claims 1 and 13. As
we discussed above, we give substantial weight to the testimony of Mr.
Calman regarding the teachings of MacLean (see Ex. 1502 ¶ 72), because
MacLean teaches an exchange of points for funds occurring “approximately
concurrent[] in time” as required in claims 1 and 13.
We also agree with, and adopt as our own, Petitioner’s finding that
MacLean describes or suggests “an entity agreeing to permit transfers or
conversions of non-negotiable credits to entity independent funds” and
“wherein the entity agrees to compensate the commerce partner by paying an
amount in cash or credit for each non-negotiable credit redeemed by the
commerce partner” as recited by claim 1. See Pet. 39–40; Ex. 1502 ¶¶ 49–
56. As explained above in the claim construction section, we construe the
claim term “commerce partner” to mean an individual or group involved in
commercial activity. See supra, Section II.A. Therefore, we are satisfied
that MacLean teaches or suggests the limitations at issue recited by claim 1.
In summary, we have reviewed the Petition and the supporting
evidence, and adopt as our own Petitioner’s findings, as well as its rationale
for combining MacLean, Sakakibara, and Postrel, and conclude that
Petitioner has shown by a preponderance of the evidence that claims 1 and
13 would have been obvious under 35 U.S.C. § 103 in view of the teachings
in MacLean, Sakakibara, and Postrel.
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b. Dependent Claims 2, 3, 14–16, and 19
Claims 2, 3, 14–16, and 19 depend from claims 1 and 13 respectively,
and Petitioner contends that MacLean, Sakakibara, and Postrel, as
summarized above, teaches or suggests aspects of each dependent claim.
Pet. 37–39, 45–49, 58–60. Petitioner cites to the Declaration of Mr. Calman
who explains that, at the time of the invention, a person of ordinary skill in
the art would have understood MacLean to disclose both (1) levying a
transaction fee calculated as a percentage of the cost of the withdrawal,
which leaves a reduced amount for buying points from the second
(depositing) issuer and a fixed credits-to-funds ration is a conversion ratio
(Ex. 1502 ¶¶ 74, 167, 169), and (2) that a customer may exchange loyalty
program points issued by an airline, such as American Airlines for those
issued by a credit card loyalty program, such as the American Express Card
(id. ¶¶ 75, 171, 177). We give Mr. Calman’s testimony substantial weight in
that regard because it is supported by MacLean’s disclosure and what
MacLean would have conveyed to a person of ordinary skill in the art at the
time of the invention.
We also are satisfied that Petitioner has identified sufficient reasoning
for the proposed combination of MacLean, Sakakibara, and Postrel with
respect to claims 2, 3, 14–16, and 19 for the same reasons as applied to
claims 1 and 13. Pet. 35–37; Ex. 1502 ¶¶ 139, 140. For example, Petitioner
indicates that because both MacLean and Postrel relate to the conversion of
customer loyalty program points via computer, one of ordinary skill in the
art would have appreciated that Postrel’s teachings are applicable towards
the system of MacLean. Pet. 35–36. We agree with, and adopt as our own,
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Petitioner’s rationale for combining MacLean, Sakakibara, and Postrel. See
id. at 36.
Accordingly, we conclude that Petitioner has shown by a
preponderance of the evidence that claims 2, 3, 14–16, and 19 are
unpatentable over the combination of MacLean, Sakakibara, and Postrel.
c. Dependent claims 4, 5, 17, and 18
Claims 4, 5, 17, and 18 depend from claims 1 and 13 respectively.
Dependent claims 4, 5, 17, and 18 require specific computers to perform an
operation. For example, claim 4 requires an operation to be performed by an
entity’s computer.
Petitioner contends that MacLean, Sakakibara, and Postrel, as
summarized above, teaches or suggests aspects of each dependent claim.
Pet. 38–39, 45–49, 58–60. According to Petitioner, MacLean discloses a
computer in the form of transaction center 120 performing the points
exchange, which “acts as a ‘currency exchange’ for the issuers 130a-130c,”
i.e., for the withdrawing LP issuer (entity) and for the depositing LP issuer
(commerce partner). Id. at 18 (citing Ex. 1504 ¶ 43), 46 (citing Ex. 1502 ¶¶
78–83). Petitioner argues that Sakakibara evidences that, at the very least, it
would have been clearly obvious to employ a withdrawing issuer 130 of
MacLean (i.e., an entity computer of the entity’s LP) to perform the
conversion operation, and also that it would have been obvious to
alternatively employ a depositing issuer 130 of MacLean (i.e., a commerce
partner’s computer of a commerce partner’s LP) to perform the conversion
operation. Id. at 19.
Petitioner cites to the Declaration of Mr. Calman to support its
position. Mr. Calman explains that, at the time of the invention, it was
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known in the art that a computer, such as an entity’s computer of the entity’s
loyalty program, could perform an operation, as evidenced by MacLean. Ex.
1502 ¶¶ 79, 85, 173, 175. Mr. Calman further testifies that:
In light of what was known in the art at the time, and the
explicit teachings of Sakakibara, one of ordinary skill in the art
would read MacLean in light of Sakakibara to describe an
entity’s computer of the entity’s loyalty program performing the
operation. Applying Sakakibara’s teachings to MacLean’s
system would have provided the MacLean system with increased
flexibility while allowing the issuer terminal that performed the
conversion operation to have greater control over the operation.
Id. ¶ 81. We give Mr. Calman’s testimony substantial weight in that regard
because it is supported by (1) the disclosure in MacLean and Sakakibara,
and (2) what MacLean and Sakakibara would have conveyed to a person of
ordinary skill in the art at the time of the invention. See id. ¶¶ 79, 85, 173,
175.
Therefore, we agree with, and adopt as our own, Petitioner’s findings
regarding 4, 5, 17, and 18, because we are satisfied that MacLean,
Sakakibara, and Postrel teach or suggest the limitations of claims 4, 5, 17,
and 18. Additionally, we agree with and adopt as our own, Petitioner’s
rationale for combining MacLean, Sakakibara, and Postrel. Accordingly, we
conclude that Petitioner has shown by a preponderance of the evidence that
claims 4, 5, 17, and 18 are unpatentable over the combination of MacLean,
Sakakibara, and Postrel.
d. Dependent claims 6, 12, and 20
Claims 6 and 20 depend from claims 1 and 13 respectively, while
claim 12 depends from claim 7. Dependent claims 6, 12, and 20 require
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several functions to be performed “within a single human-to-machine
interaction session.”
Petitioner contends that MacLean, Sakakibara, and Postrel, as
summarized above, teaches or suggests aspects of each dependent claim.
Pet. 38–39, 45–49, 58–60. According to Petitioner, MacLean discloses that
functions, such as those recited in claims 6, 12, and 20 (the detecting of a
communication, the granting of the new quantity of entity independent
funds, the subtracting of funds, and the redemption of entity independent
funds) can be performed in a single human-to-machine interaction session.
Pet. 38, 60. Petitioner argues that, for example, MacLean teaches that
computers can detect a communication and grant new entity independent
funds in one session. Id. (citing Ex. 1504 ¶¶ 49, 50, 52). Petitioner further
argues that redeeming a new quantity of entity independent funds is
disclosed in Postrel, because Postrel teaches that, subsequent to aggregating
loyalty points (i.e., a new quantity of entity independent funds), a user may
“execute a purchase transaction with those points,” e.g., by purchasing items
off of a VISA catalog. Id. at 39 (citing Ex. 1503 ¶ 47).
Petitioner supports its position with the Declaration of Mr. Calman,
who testifies that it would have been obvious to combine MacLean’s points
exchange web site with a web-based redemption option such as the VISA
catalog link from Postrel, and to thereby enable all the mentioned functions
to be performed in a single web browsing session, because the resulting
combination would provide users with a more convenient and efficient
experience and with the greater/more convenient redemption options by
virtue of the linked catalog. Ex. 1502 ¶ 135. We give Mr. Calman’s
testimony substantial weight in that regard because it is supported by (1) the
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disclosure in MacLean and Postrel, and (2) what MacLean and Postrel
would have conveyed to a person of ordinary skill in the art at the time of
the invention. See id.
Therefore, we agree with, and adopt as our own, Petitioner’s findings
regarding 6, 12, and 20, because we are satisfied that MacLean, Sakakibara,
and Postrel teach or suggest the limitations of claims 6, 12, and 20.
Additionally, we agree with and adopt as our own, Petitioner’s rational for
combining MacLean, Sakakibara, and Postrel. Accordingly, we conclude
that Petitioner has shown by a preponderance of the evidence that claims 6,
12, and 20 are unpatentable over the combination of MacLean, Sakakibara,
and Postrel.
e. Summary
We find Petitioner has shown by a preponderance of the evidence that
claims 1–6 and 12–20 would have been obvious under 35 U.S.C. § 103 in
view of the disclosures of MacLean, Sakakibara, and Postrel.
III. CONCLUSION
For the foregoing reasons, we conclude Petitioner has shown by a
preponderance of the evidence that (1) claims 7–11 of the ’152 patent would
have been obvious under 35 U.S.C. § 103 in view of the disclosure of
MacLean and Sakakibara, and (2) claims 1–6 and 12–20 of the ’152 patent
would have been obvious under 35 U.S.C. § 103 in view of the disclosures
of MacLean, Sakakibara, and Postrel.
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IV. ORDER
For the reasons given, it is
ORDERED that, by a preponderance of the evidence, claims 1–20 of
the ’152 patent are unpatentable;
FURTHER ORDERED that because this is a Final Written Decision,
parties to the proceeding seeking judicial review of the decision must
comply with the notice and service requirements of 37 C.F.R. § 90.2.

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FOR PETITIONER:
Robert H. Fischer
Frank A. DeLucia
Stephen Yam
Justin Oliver
FITZPATRICK, CELLA, HARPER & SCINTO
AskeladdenIPR@fchs.com
AskeladdenIPR@fchs.com
AskeladdenIPR@fchs.com
joliver@fchs.com

FOR PATENT OWNER:
Brian Buchheit
bbuchheit@gmail.com

Sean McGhie
sean.mcghie@me.com