paper no. date filed: filed on behalf of: askeladden...

Paper No. _________Date Filed: ________

Filed on behalf of: Askeladden LLC

UNITED STATES PATENT AND TRADEMARK OFFICE____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD_____________

Askeladden LLCPetitioner

v.Loyalty Conversion Systems Corporation

Patent Owner_____________

Case _____________U.S. Patent No. 8,540,152

_____________

PETITION FOR INTER PARTES REVIEW

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TABLE OF CONTENTS

Table of Contents

I. MANDATORY NOTICES UNDER 37 C.F.R. § 42.8(a)(1)............................... 1

A. Real Party-in-Interest Under 37 C.F.R. § 42.8(b)(1) ................................... 1

B. Related Matters Under 37 C.F.R. § 42.8(b)(2) ............................................. 1

C. Lead and Back-Up Counsel Under 37 C.F.R. § 42.8(b)(3)......................... 2

D. Service Information Under 37 C.F.R. § 42.8(b)(4)...................................... 2

II. PAYMENT OF FEES UNDER 37 C.F.R. § 42.103 ............................................ 2

III. GROUNDS FOR STANDING UNDER 37 C.F.R. § 42.104(a)........................ 2

IV. IDENTIFICATION OF CHALLENGE UNDER 37 C.F.R. §42.104(b) AND RELIEF REQUESTED ............................................................... 2

V. SUMMARY OF THE ’152 PATENT..................................................................... 3

A. The Claimed Subject Matter........................................................................... 3

B. Prosecution History ........................................................................................ 5

VI. CLAIM CONSTRUCTION UNDER 37 C.F.R. § 42.104(b)(3) ......................... 6

VII. ARGUMENTS ........................................................................................................... 9

A. Statement of the Law...................................................................................... 9

B. Background: A Historical View of Loyalty Programs .............................. 10

C. Grounds of Rejection ................................................................................... 15

1. Ground 1: Claims 7-11 are obvious in view ofMacLean and Sakakibara................................................................... 15

2. Ground 2: Claims 1-6 and 12-20 are obvious in viewof MacLean, Sakakibara, and Postrel............................................... 33

VIII. Conclusion ................................................................................................................. 60

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EXHIBITS

1501 ― U.S. Patent No. 8,540,152;

1502 ― Declaration of Matthew Calman;

1503 ― U.S. Patent Application Publication No. 2005/0021399 (“Postrel”);

1504 ― 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 web

site: “How to redeem or transfer your points online”;


site: “Air rewards”;

1508 ― Wayback Machine archive dated January 4, 1997, for Citibank web site:

“Citibank Cards and Services”;

1509 ― Wayback Machine archive dated December 1, 1998, for American Express

web site: “Rewards Cards”;


site: “Shopping rewards”;

1511 ― Wayback Machine archive dated December 9, 2003, for Marriott Rewards

web site: “Air Mileage”;

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1512 ― Wayback Machine archive dated November 25, 2002, for Starwood Hotels &

Resorts web site: “Transfer : Airlines”;

1513 ― Wayback Machine archive dated June 19, 2000, for United Airlines web site:

“Mileage Plus partners”;

1514 ― Wayback Machine archive dated July 17, 2004, for WebFlyer web site:

“Mileage Converter”;

1515 ― MacDonald, Jay, Experience rewards pay off for some credit card users,

Bankrate.com, November 17, 2003 (available at

http://www.bankrate.com/finance/credit-cards/experience-rewards-pay-

off-for-some-credit-card-users-1.aspx);

1516 ― Claim Construction Memorandum Opinion and Order, issued 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 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);

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1519 ― Patent Owner’s Preliminary Response (Paper No. 14), in Covered Business

Method Patent Review of U.S. Patent No. 8,511,550 (assigned CBM2014-

00096);

1520 ― USPTO Assignment Records for U.S. Patent No. 8,540,152 (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 web site:

“Cruise Partners”;

1523 ― S&H Green Points – About S&H (available at

http://www.greenpoints.com/info/inf_aboutsh.asp);

1524 ― Wayback Machine archive dated November 27, 1999, for Green Points “The

Points You’ve Been Waiting For”;

1525 ― Wayback Machine archive dated April 15, 1998 for American Airlines web

site: “Welome to AA.com”;

1526 ― Security and Exchange Commission Letter from the Chief: Accountant Issues

Related to Internet Operations, October 18, 1999, available at

http://www.sec.gov/info/accountants/staffletters/calt1018.htm;

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1527 ― The Emerging Issue Task Force of the Financial Accounting Standards 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 (2001), available at

http://www.fasb.org/cs/BlobServer?blobkey=id&blobnocache=true&blob

where=1175820904620&blobheader=application/pdf&blobheadername2=C

ontent-Length&blobheadername1=Content-

Disposition&blobheadervalue2=79563&blobheadervalue1=filename=abs00-

22.pdf&blobcol=urldata&blobtable=MungoBlobs;

1528 ― Stone et al., User Interface Design and Evaluation, Interactive Technologies

(April 29, 2005);

1529 ― U.S. Patent No. 5,513,359; and

1530 ― George Bond, “Gateways to the Internet”, Byte Magazine, pp. 229-31 (Sept.

1995).

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Askeladden LLC petitions for Inter Partes Review (“IPR”) under 35 U.S.C. §§

311-319 and 37 C.F.R. § 42 of Claims 1-20 of U.S. Patent No. 8,540,152 (“’152

Patent”) (Ex 1501)1. For the reasons set forth below, there is a reasonable likelihood

of finding at least one of those claims unpatentable.

I. MANDATORY NOTICES UNDER 37 C.F.R. § 42.8(a)(1)

A. Real Party-in-Interest Under 37 C.F.R. § 42.8(b)(1)

Askeladden LLC (“Petitioner”) is the real party-in-interest for this petition.

B. Related Matters Under 37 C.F.R. § 42.8(b)(2)

Petitioner is concurrently filing another petition for IPR against the ’152 Patent

on other grounds. Petitioner is not aware of any litigation involving the ’152 Patent.

U.S. Patent Nos. 8,313,023 and 8,511,550 (“’023 Patent” and “’550 Patent,”

respectively), which share common domestic priority claims with the ’152 Patent, are

the subjects of CBM review proceedings, assigned CBM2014-00095 (“’023 CBM”)

and CBM2014-00096 (“’550 CBM”). The ’023 and ’550 Patents are also the subject of

an infringement suit in the U.S. District Court for the Eastern District of Texas,

captioned as Loyalty Conversion Systems Corp. v. American Airlines, Inc., Case No. 2:13-cv-

1 Loyalty Conversion Systems Corporation purports to be the owner of the ’152

Patent by virtue of various assignments, none of which are known to have been

recorded with the USPTO. (Ex 1520.) For the sake of convenience, “Patent Owner”

as used herein should be deemed to refer to the actual owner(s) of the ’152 Patent.

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00655 (“American Airlines Litigation”).2

C. Lead and Back-Up Counsel Under 37 C.F.R. § 42.8(b)(3)

LEAD COUNSEL BACK-UP COUNSEL

Robert H. Fischer, Reg. No. 30,051

Fitzpatrick, Cella, Harper & Scinto

1290 Avenue of the Americas

New York, NY 10104

(212) 218-2100 (o)/(202) 218-2200 (f)

Frank A. DeLucia, Reg. No. 42,476

Fitzpatrick, Cella, Harper & Scinto

1290 Avenue of the Americas

New York, NY 10104

(212) 218-2100 (o)/(202) 218-2200 (f)

D. Service Information Under 37 C.F.R. § 42.8(b)(4)

Petitioner consents to service by email at [email protected].

II. PAYMENT OF FEES UNDER 37 C.F.R. § 42.103

The USPTO may charge Deposit Account No. 50-3939 for any fees associated

with the present petition (referencing docket number 02208.043011).

III. GROUNDS FOR STANDING UNDER 37 C.F.R. § 42.104(a)

Petitioner certifies that the ’152 Patent is eligible for IPR and that Petitioner is

not barred or estopped from requesting IPR.

IV. IDENTIFICATION OF CHALLENGE UNDER 37 C.F.R. § 42.104(b)AND RELIEF REQUESTED

Petitioner requests (i) review of Claims 1-20 of the ’152 Patent on the grounds

2 The Court issued a Claim Construction Memorandum Opinion and Order (Ex 1516)

and Memorandum Opinion and Order (Ex 1517) on Sept. 2 and 3, 2014, respectively.

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set forth below and (ii) that each of those claims be found unpatentable.

Ground Claim(s) Basis for Invalidity

1 7-11 Obvious (§ 103) in view of US 2002/0143614

(MacLean) and US 6,721,743 (Sakakibara)2 1-6 and 12-20 Obvious (§ 103) in view of MacLean, Sakakibara, and

US 2005/0021399 (Postrel)

V. SUMMARY OF THE ’152 PATENT

A. The Claimed Subject Matter

The ’152 Patent has 20 claims, of which Claims 1, 7, and 13 are written in

independent form. In general, the claims are directed to a method employing a

computer for managing loyalty points (e.g., frequent flyer miles) issued by an entity

(e.g., airline). Representative Claim 1 recites the following steps in principal part:

- an entity (e.g., airline) agreeing to permit transfers or conversions of non-

negotiable credits (e.g., airline miles) to entity independent funds (e.g., credit

card loyalty program points),

- the entity agreeing to compensate a commerce partner (e.g., credit card

company) by paying an amount in cash or credit (e.g., a monetary valuation

associated with the airline miles) 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 (e.g., the airline loyalty program’s airline miles),

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- 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 entity services that the entity

provides to the member (e.g., airline redeems the miles for an airline ticket),

- wherein said entity independent funds are different loyalty points of a different

loyalty program of a commerce partner (e.g., credit card points are loyalty

points of the credit card company, which is not the airline),

- wherein the different loyalty points are redeemable by the commerce partner

for 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 (e.g., credit card loyalty program account),

- wherein the funds account is neither owned or controlled by the entity or by

any subsidiary or parent of the entity (e.g., airline does not control the credit

card loyalty program account),

- wherein the entity does not accept the entity independent funds as payment for

any of the entity services (e.g., airline does not accept credit card points as

payment for an airline ticket);

- a 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 the computer adds the additional non-negotiable

credits to the loyalty program account (e.g., computer receives at least two

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transactions which earn additional airline miles for the customer, and adds

them to the customer’s miles balance); 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 (e.g., computer subtracts the amount of

airline miles from the customer’s mileage account, based on those miles having

been converted to credit card points),

- 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 (e.g., the airline miles are subtracted from the customer’s

mileage account approximately concurrently with credit card points being

added to the customer’s credit card loyalty program account).

This conversion allows the user to make a purchase from the commerce partner (e.g.,

via the credit card loyalty program’s catalog), who accepts the converted loyalty points

(i.e., credit card points) but not the pre-converted loyalty points (i.e., airline miles).

B. Prosecution History

The ’152 Patent issued from USPAN 13/901,175 (“’175 Application), filed on

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May 23, 2013. The ’152 Patent purports to be a continuation of USPAN 13/542,451

(“’451 Application”), which was filed on July 5, 2012 and issued as U.S. Patent No.

8,342,399 on January 1, 2013. However, such domestic benefit claim is improper

under 35 U.S.C. § 120, inasmuch as the ’175 and ’451 Applications were never co-

pending. Accordingly, the effective filing date of the ’152 Patent is limited to the

actual filing date of May 23, 2013. It is noted that the ‘451 Application purports to be

(1) a continuation-in-part of USPAN 13/168,814 (filed on June 24, 2011); (2) a

continuation-in-part of USPAN 12/759,506 (filed on April 13, 2010); (3) a

continuation-in-part of 12/720,743 (filed on March 10, 2010); and (4) a continuation-

in-part of USPAN 11/420,255 (filed on May 25, 2006).

Prior to initial examination, the applicants filed a terminal disclaimer over

USPANs 13/681,479 and 13/681,493. The applicants also filed an Information

Disclosure Statement concurrently with filing the application, which included over

800 citations. On July 29, 2013, the USPTO allowed the originally-filed claims, and

the applicant paid the issue fee that day. The patent issued on September 24, 2013.

VI. CLAIM CONSTRUCTION UNDER 37 C.F.R. § 42.104(b)(3)

Petitioner submits the following constructions for the claim terms below, in

accordance with their broadest reasonable interpretation. Nothing asserted herein

should be understood as waiving alternative claim constructions in any Article III

litigation involving the ’152 or related patent(s) using different rules of construction.

“Entity” (independent Claims 1, 7, and 13): The ’152 Patent states that entities

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“often reward consumers for utilizing their services with certain credits … [which]

can often be applied towards products and/or services provided by a granting entity

or its affiliates.” (Ex. 1501, 1:32-35.) The ’152 Patent also states that the invention

relates to “a system … in which non-negotiable funds … earned from consumer

incentive activities … are converted into negotiable funds[.]” (Ex. 1501, 3:60-64.) For

the purposes of this proceeding, Petitioner interprets the term to mean an

organization that has a rewards program for a consumer.

“Non-negotiable credits” (independent Claims 1, 7, and 13): The ’152 Patent

states that non-negotiable credits “may not be redeemable on an open market” (Ex

1501, 4:17-19), “generally have no value outside of an environment (building, Web

site, etc.) of the … entity” (Ex 1501, 6:36-38), and include casino credits, and hotel

and car rental loyalty points (Ex 1501, 6:38-55.) One intrinsic feature of non-

negotiable credits is their “restriction on usage to goods and/or services of the

[granting] entity[,]” thereby limiting their usefulness since “a consumer may have no

need for the products or services listed by the entity for which the non-negotiable

credits can be redeemed.” (Ex 1501, 1:39-42.) In this proceeding, Petitioner interprets

the term to mean credits which are accepted only by the granting entity of the credits.

It is noted that the patent owner in the ’023 and ’550 CBMs proposed that this

term be construed as “credits which have redemption restrictions imposed by the

granting entity.” (Ex 1518, pp. 11, 15-16; Ex 1519, pp. 15-17.) However, such a

construction here would be inconsistent with the ’152 Patent. The ’152 Patent states

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that, in addition to restricting usage to the granting entity’s goods/services,

“additional restrictions and limitations can be placed upon the non-negotiable credits

that lessen the usefulness of non-negotiable credits from the consumer's perspective.”

(Ex 1501, 1:42-45.) As such, while additional restrictions may be imposed upon

credits already constituting non-negotiable credits, the “non-negotiable” nature of the

credits is defined by the usage restriction to the granting entity, and any additional

restrictions or limitations are merely optional.

“Entity independent funds” (independent Claims 1, 7, and 13): The ’152 Patent

does not specifically define this term, but states that one problem with non-negotiable

credits is that “will not accept … the credits … for commercial transactions” (Ex

1501, 4:19-21), based on the inherent usage restriction of non-negotiable credits “to

goods and/or services of the [granting] entity” (Ex 1501, 1:39-40). However, these

vendors accept entity independent funds. (Ex 1501, 5:5-14, 42-52.) In this proceeding,

Petitioner interprets the term to mean funds acceptable as payment by at least one

entity different from the original granting entity of the non-negotiable credits.

It is noted that the patent owner in the ’023 and ’550 CBMs proposed that this

term be construed as “funds that are independent of restrictions on redemption

imposed by the entity that granted the corresponding non-negotiable credits.” (Ex

1518, pp. 11, 17-20; Ex 1519, pp. 15, 17-18.) However, such a construction would be

inconsistent with the ’152 Patent, inasmuch as certain entity-imposed restrictions tied

to the non-negotiable credits can still persist with the entity independent funds.

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As one of many possible examples, the ’152 Patent describes that

non-negotiable credits can be airline miles, for which an airline may impose

restrictions in the form of black-out dates. (Ex 1501, 6:21-27.) If airline miles of one

airline (e.g., United) are converted into airline miles of another airline (e.g., Delta), the

Delta miles are then entity independent funds. Yet, Delta miles could be subject to the

same black-out dates as the United miles. As such, the construction of entity

independent funds should rely on its plain understanding that these funds are no

longer subject to the inherent restriction from non-negotiable credits of accepted only

by the granting entity of the credits.

VII. ARGUMENTS

A. Statement of the Law

A claim is obvious under 35 U.S.C. § 103 when “the differences between the

claimed invention and the prior art are such that the claimed invention as a whole

would have been obvious before the effective filing date of the claimed invention to a

person having ordinary skill in the art to which the claimed invention pertains.” 35

U.S.C. § 103(a); see KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007).

In that regard, a person of ordinary skill in the art at the time of May 25, 2006,

would have had either (i) a Bachelor’s degree with two (2) years of experience in

marketing, or (ii) a Masters of Business Administration (M.B.A.) degree or higher, as

well as knowledge of Internet web page design and development, and knowledge of

customer loyalty programs. (Ex 1502, ¶ 18.)

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As indicated above, Claim 1 includes a negative limitation, as do each of the

other independent claims. The Board has previously ruled that silence in the reference

concerning a negative limitation may fully meet the limitation. (Ex parte Cheng, Appeal

2007-0959, p. 6 (BPAI 2007) (non-precedential) (stating that silence in a reference as

to whether specific data was transferred anticipated a negative limitation that the data

was not transferred); Ex parte Chang, Appeal 2009-013592, pp. 7-8 (BPAI 2012).)

B. Background: A Historical View of Loyalty Programs

Merchant Loyalty Programs

As described in the expert declaration of Mr. Matthew A. Calman (Ex 1502, ¶¶

1-29), merchant loyalty programs have existed since at least the 1970’s. (See, e.g., Ex

1523.) Common examples of such long-standing programs include airline rewards

(e.g., United or American Airlines award miles) and credit card rewards (e.g.,

American Express (“AMEX”) membership reward points or MBNA Mastercard

points). Merchants created these loyalty programs both to entice business with new

customers and to encourage repeat business by existing customers over competing

merchants. (See generally, Ex 1526; Ex 1527.) Typically, customers accumulated

program points in these loyalty programs through successive transactions with the

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respective merchant.3 For instance, in the case of airline rewards programs, a

customer typically received a certain quantity of program points corresponding to the

distance of a purchased flight. In the case of credit card rewards, a customer typically

received a certain quantity of program points according to a value of purchases

charged to the credit card. (Ex 1502, ¶¶ 24-29.)

Redeeming Awards Using Loyalty Points

With these loyalty programs, customers redeemed their accumulated points for

rewards, the prospect of which drove consumer interest in these programs. (See, e.g.,

Ex 1524.) Each loyalty program had particular redemption criteria in accordance with

the program’s terms and conditions. For instance, an airline rewards program may

have permitted a customer to exchange a certain number of points for a free airline

flight or an upgrade. (Ex 1525.) A credit card reward program may have permitted a

customer to exchange points for merchandise, gift cards, discounts, or even cash.

Customers typically redeemed their points by submitting a request and identifying the

desired reward. (Ex 1502, ¶¶ 27-29.)

Such redemption rewards have been in place at least as early as the 1990’s. (Ex

1502, ¶ 29; Ex 1508; Ex 1509.)

3 The ’152 Patent refers to these points of certain loyalty programs as “non-negotiable

credits” and a merchant behind a loyalty program as an “entity”. (Ex 1501, 1:29-37.)

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Loyalty Reward Redemption via Web Site

To one of ordinary skill, the concept of fulfilling loyalty point redemption

requests via e-commerce was well-established prior to the filing of the ’152 Patent. In

the pre-Internet era, customers typically redeemed their points for a reward by

submitting a request via mail or telephone. With the Internet becoming a platform for

conducting business in the 1990’s, merchants used web sites that included user online

access to their loyalty programs. With this functionality, users could electronically

submit a reward redemption request at their leisure by, e.g., filling out a web form in a

GUI. (See, e.g., Ex 1528; Ex 1529; Ex 1530.) Alternatively, the reward redemption was

conducted in the form of an online checkout, using points as a payment source. For

instance, since at least June 2000, customers could redeem AMEX membership

reward points for merchandise via its web site. (Ex 1502, ¶¶ 34-40; Ex 1506.)

In addition to the AMEX example, the concept of loyalty programs and web

site redemptions was described in U.S. Patent Appl. Pub. No. 2002/0143614

(“MacLean”), which was filed on March 27, 2001. MacLean describes further

examples of loyalty programs and web site redemptions. MacLean describes that

loyalty programs are classified into “four main types… travel (airlines and hotels),

financial (credit cards), retail and network (AirMiles, ClickRewards and WebMiles).”

(Ex 1504, ¶ [0003].) A customer, after accumulating sufficient points in a loyalty

program, “redeems its points for some reward.” (Ex 1504, ¶ [0057].)

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Loyalty Point Conversion to Another Merchant’s Store Credit

According to the ’152 Patent, the issuing entity may restrict redemption of

loyalty credits only to the entity’s own goods/services. (Ex 1501, 1:39-45.) However,

adaptations to work around this restriction, such as the redemption of one merchant’s

loyalty points for another merchant’s store credit, have been known prior to the ’152

Patent application. For instance, since at least June 2000, AMEX has provided an

option to convert its membership reward points into store credit of independent

merchants (e.g., Saks Fifth Avenue). (Ex 1510.) A customer was able to perform such

conversion online at the AMEX web site. (Ex 1506; see also Ex 1513; Ex 1514; Ex

1515; Ex 1521; Ex 1522.) Providing this conversion option enhanced the appeal of

the loyalty points, leading to increased commerce. (Ex 1502, ¶¶ 30-33.)

Loyalty Point Conversion to Another Merchant’s Loyalty Program Points

The ’152 Patent also asserted that while consumers often accumulate credits

across multiple credit-earning programs from different merchants, “a customer may

have no need for the products or services listed by the [merchant] for which” points

from each individual program may be redeemed. (Ex 1501, 1:40-1:42.) However,

while loyalty point redemption at some merchants may have been limited to only their

own products, many merchants have, for some time, permitted conversion of their

loyalty points into points of another merchant’s loyalty program. (Ex 1502, ¶¶ 30-33.)

For instance, since at least June 2000, AMEX has given its customers the

option to convert their AMEX membership reward points to loyalty program points

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for various airlines, including through an online conversion process. (Ex 1506; Ex

1507; see also Ex 1511; Ex 1512.) The conversion was performed in accordance with a

conversion ratio of AMEX membership rewards points to airline loyalty program

points. (Ex 1507.) After the conversion, the customer could have used the converted

points to purchase an airline ticket. (Ex 1506; Ex 1507.) (Ex 1502, ¶¶ 32, 33.)

This concept was also described in MacLean, in that a user can exchange points

from a first issuer loyalty program (or “withdrawing LP”), e.g., American Airlines, to a

second issuer loyalty program (or “depositing LP”), e.g., American Express. (Ex 1504,

¶¶ [0041]; [0052].) As MacLean states, this approach addresses the concern that “most

customers do not accumulate sufficient numbers of points at which customers can

accumulate sufficient number of points at which the customers can effect redemption

for the rewards.” (Ex 1504, ¶ [0013].)

As this practice of loyalty point conversion was already commonplace long

before the ’152 Patent filing, adaptations of this concept to specific applications

would have been well within the skills of an ordinary artisan.

Similarities between Loyalty Point Conversions and Monetary Currency Conversions

Likewise, a person of ordinary skill would be familiar with the well-known

conversion between different monetary currencies. For instance, travelers have been

able to exchange U.S. dollars for most worldwide foreign currencies, at banks and

even dedicated currency exchange businesses for decades. The quantity of exchanged

currency is determined in accordance with a conversion ratio (i.e., exchange rate)

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between the two currencies. (Ex 1502; ¶¶ 41-45.)

Given an appreciation of these foundational concepts, the person of ordinary

skill in the art would have regarded the subject matter claimed in the ’152 Patent as

clearly obvious, in view of the prior art that is discussed below. (Ex 1502, ¶¶ 46-48.)

C. Grounds of Rejection

1. Ground 1: Claims 7-11 are obvious in view of MacLean andSakakibara

MacLean is a U.S. patent application that published on October 3, 2002.

Sakakibara is a U.S. patent that issued on April 13, 2004. Both MacLean and

Sakakibara qualify as prior art under 35 U.S.C. § 102(b) regardless of whether the ’152

patent is entitled to its May 25, 2006 priority date. Although applicants cited MacLean

and Sakakibara during prosecution, applicants did not emphasize their significance

from the other 800-odd references which they cited, and there is no indication they

received the Examiner’s individual attention over applicants’ other cited references.

Independent Claim 7 (and Claims 8-11 depending therefrom)

Claim 7 recites a method involving a conversion operation that transfers or

converts non-negotiable credits to entity independent funds. As discussed above, non-

negotiable credits are credits which are accepted only by the granting entity of those

credits. In this regard, MacLean discloses credits in the form of loyalty points issued

by loyalty programs (“LPs”) such as airline mileage programs. (Ex 1504, ¶¶ [0002];

[0003].) MacLean specifically notes that LPs “are based on the concept of influencing

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the customer to continue to purchase products and/or services from one source[.]”

(Id.) With respect to a commerce partner agreeing to permit transfers or conversions

of non-negotiable credits into entity independent funds, MacLean discloses an entity

in the form of an issuer among points issuers 130a-130c that operates a withdrawing

LP and a commerce partner in the form of an issuer among points issuers 130a-130c

that operates a depositing LP whereby a customer’s withdrawing LP points are

exchanged (i.e., transferred or converted) to depositing LP points. (Ex 1504, Fig. 1; ¶¶

[0044]; [0052].) MacLean provides for this transfer or conversion through the use of a

conversion operation, wherein a button 648, called “continue xchange,” initiates a

conversion of at least a subset of withdrawing LP points (i.e., “non-negotiable

credits”) into depositing LP points (i.e., “entity independent funds”). (Ex 1504, Fig.

6E; ¶ [0052].) The converted depositing LP points are entity independent funds, in

that they are funds acceptable as payment by at least one entity (i.e., by depositing LP)

different from the original granting entity of the withdrawing LP points (i.e., by

withdrawing LP, which is different from the depositing LP). (Ex 1504, Fig. 1.) This

exchange occurs in accordance with an exchange rate (“fixed credits-to-funds ratio”)

between points of the different LPs of system 100 (a network of computers). (Ex

1504, ¶ [0021]; Figs. 1, 2.) For instance, one disclosed effective exchange rate (i.e.,

after consideration of a transaction fee) is “3,600:10,000 or 0.36.” (Id., ¶ [0064].)

Another exchange rate, based on raw withdrawal and deposit rates, is the ratio in

withdrawal and deposit rates of $0.008:$0.02. (Ex 1504, ¶ [0064].) It is noted that the

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depositing LP issuer “agrees” to permit transfers or conversions, e.g., by setting the

specific point withdrawal and deposit rates. (Ex 1504, ¶ [0023].)

With respect to non-negotiable credits, MacLean’s LP 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

(e.g., Delta Airlines or Bloomingdale’s), which has long been the standard practice.

(Ex 1502, ¶ 96.) Moreover, Sakakibara explicitly discloses this concept.

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.

(Ex 1505, Abstract; 7:7-10.) Claim 9 of Sakakibara states that, prior to conversion,

loyalty points issued by one entity are only redeemable at that entity (i.e., they are non-

negotiable). (Ex 1505, 12:64-13:30.) Sakakibara thus explicitly recognizes that, absent

conversion, another entity (i.e., a commerce partner) does not accept the non-

negotiable credits as payment for services. (Ex 1502, ¶ 97.)

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. Indeed, both references are directed to loyalty points

earned by customer activity. Second, both references describe withdrawing points

from one loyalty program account and converting them to another loyalty program’s

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points. While MacLean does not state in detail that loyalty points issued by a merchant

are only accepted as payment by that merchant, this was a well understood feature of

loyalty points, as evidenced by Sakakibara. (Ex 1502, ¶ 99.)

Dependent Claims 10 and 11

Claims 10 and 11 recite the conversion operation being performed by an

entity’s computer of the entity’s loyalty program and by a commerce partner’s

computer of the commerce partner’s loyalty program, respectively. At the time of the

’152 Patent, it was generally understood that computers can perform conversion

operations involving loyalty points. Indeed, MacLean describes a system 100 that uses

computers to carry out a loyalty points exchange. (Ex 1504, ¶¶ [0040]; [0043]-[0047];

[0049]-[0055]; [0059]-[0061], Figs. 1, 2.) MacLean discloses a computer in the form of

the 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). (Ex 1504, ¶ [0043] (emphasis

added).) As another example, depositing and withdrawing issuers 130 act as

computers for their respective LPs, such issuer terminals 130 receiving points deposit

and withdrawal transaction messages, respectively, from the transaction center 120,

validating the messages, and executing corresponding changes to the customer’s LP

account balance. (Ex 1504, ¶¶ [0059]; [0044]-[0045]; [0060]-[0062] (points exchange

between issuers); Figs. 1, 2.) As such, MacLean teaches that an entity computer of the

entity’s LP can perform a conversion operation, and also teaches that a commerce

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partner’s computer of the commerce partner’s LP can perform a conversion

operation. Nonetheless, Sakakibara additionally 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 the commerce partner’s LP) to

perform the conversion operation. In particular, Sakakibara explicitly teaches

exchanging points between two different businesses, wherein a computer managed by

one (or another) of the businesses performs a conversion operation. For example,

Sakakibara teaches that a “controller” in a central unit 10 performs a points exchange,

wherein “[t]he central unit 10 is managed by a first business entity,” i.e., the central

unit 10 is for a loyalty program of the first business entity. (Ex 1505, 2:52-3:17, 6:3-8.)

Sakakibara, uses the term “first business entity [or entities]” in one instance to refer to

a commerce partner (e.g., Ex 1505, 2:16-32, where points of a “second business entity”

are converted to points of a “first business entity”), and, in another instance uses that

term to refer instead to an entity. (e.g., Ex 1505, 12:64-13:18, where points of “first

business entities” are converted to points of a “second business entity”). In view of

MacLean’s teaching of a withdrawing issuer 130 (i.e., an entity computer of the

entity’s LP) and a depositing issuer 130 (i.e., a commerce partner computer of the

commerce partner’s LP), and the foregoing teachings of Sakakibara, it would have

been clearly obvious to one of ordinary skill in the art to perform the conversion

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operation at the withdrawing issuer 130, or, alternatively, at the depositing issuer 130,

because such a combination 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. Since 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. The foregoing also applies to claims 4 and 5, discussed with respect to

Ground 2, below. (Ex 1502, ¶¶ 78-89, 126-132.)

Claim 7 MacLean + Sakakibara7. A methodcomprising:a commercepartner agreeingto permittransfers orconversions ofquantities ofnon-negotiablecredits to entityindependentfunds,

Commerce Partner Agreeing to Permit Transfers or ConversionsMacLean discloses a commerce partner, such as a depositing oneof points issuers 130a-130c in Fig. 1, wherein each points issuer130 “provides a mechanism . . . . effecting a points exchange.”(Ex 1504, ¶ [0044]; see also ¶¶ [0042]; [0043]; [0064]-[0066].)Furthermore, MacLean discloses that an issuer 130 is capable ofvalidating customers that “wish to exchange points from theissuer’s LP.” (Ex 1504, ¶ [0048]; see also ¶¶ [0042]; [0046]-[0048];[0051]-[0053]; [0056]; [0059] (referring to how a “pointsexchange” is performed in the context of programs executed byissuer server 280 [0055]); [0062]-[0065].) MacLean also discloses“a system and method . . . permitting the customer to set a firstnumber of first points to be exchanged and permitting the firstand second point issuers to set [i.e., agree to] the pointwithdrawal and deposit rates of their first and second pointsrespectively.” (Ex. 1504, ¶ [0023]; see also Abstract, ¶¶ [0017];[0020]; [0041]; Figs. 6A-6I.) Also, MacLean refers to “exchangingfirst points for second, different points that are issued by asecond point issuer at exchange rates set [i.e., agreed to] by thefirst and second point issuers respectively.” (Ex. 1504, ¶ [0027].)

Non-Negotiable CreditsWith respect to credits (points) being “non-negotiable,” MacLeanrecognizes using loyalty points at only the granting entity: “This

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invention has in at least one embodiment an application toloyalty programs (LPs). LPs are designed as the name suggests is[sic] to create and maintain the loyalty of a customer to aparticular product or service. The source of such services and/orproducts is also the issuer or distributor of the points to itscustomers and the redeemer of those points for rewards. LPs arebased on the concept of influencing the customer to continue topurchase products and/or services from one source, whereby thecustomer is repetitively issued points and, over a period of time,will accumulate sufficient points that may be redeemed for avaluable reward.” (Ex 1504, ¶ [0002] (emphasis added).)

Sakakibara describes “exchanging points between differentbusiness entities... wherein the first points are only directlyredeemable by the first business entity, and wherein the secondpoints are only directly redeemable by the second businessentity.” (Ex 1505, 12:64-13:30.)

Entity Independent FundsMacLean discloses entity independent funds (at least some ofwhich are in the form of post-converted points) that may beredeemed for a reward (Ex 1504, ¶¶ [0002]; [0057]), e.g., products(Ex 1504, ¶ [0009]), provided by a commerce partner. (See Ex1504, ¶¶ [0017]; [0027]; [0041] (discussing converting points ofone LP (i.e., entity) into points issued by a different LP (i.e.,commerce partner)).) For example, MacLean discloses entityindependent funds in the form of points of an American ExpressCard (converted from American Airlines points). (Ex 1504, ¶[0041].) Thus, the points are acceptable as payment by at leastone entity different from the original granting entity of the non-negotiable credits. (Ex 1502, ¶¶ 92-99.)

wherein thecommercepartner receivescompensation incash or creditfrom an entityfor transfers orconversions,

An example of an entity in MacLean is a “withdrawing issuer” (seeEx 1504, ¶¶ [0064]; [0065]; Figs. 9, 10), such as any of pointsissuers 130a-130c (Ex 1504, Fig. 1). (See Ex 1504, ¶¶ [0044];[0047]; [0052]; [0053]; [0059]; [0062]; [0064]; [0065].)MacLean discloses payments (compensation) from the entity(withdrawing issuer) to the commerce partner (depositing issuer)for each non-negotiable credit redeemed by the commercepartner. (See Ex 1504, ¶¶ [0064]-[0067]; Figs. 9-12.) First, thewithdrawing issuer must pay to the transaction center 120 anassociated cash value of each point withdrawn. (Ex 1504, ¶¶[0064]; [0066].) Next, this withdrawn cash value is provided to

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the commerce partner via the transaction center 120, wherein thetransaction center 120 “must pay to the depositing issuer” anassociated cash value per point deposit. (Ex 1504, ¶¶ [0064];[0067].) (Ex 1502, ¶ 100.)

wherein saidnon-negotiablecredits areloyalty points ofthe loyaltyprogrampossessed by amember,wherein theloyalty pointsare maintainedin a loyaltyprogramaccount ownedor controlled bythe entity,

The non-negotiable credits are loyalty points of a loyalty programpossessed by a member, wherein the loyalty points aremaintained in a loyalty program account owned or controlled bythe entity. MacLean states: “[t]his invention relates to apparatusand methods for keeping track of points and, in particular, formanaging and exchanging those points that are issued andredeemed in the context of a loyalty program (LP).” (Ex 1504, ¶[0001].) MacLean discloses that a “point issuer 130 (‘issuer’) [i.e.,the entity] is any entity that controls the disposition anddistribution of a currency” [the non-negotiable credits] . . . [and]the point issuer operates a Loyalty Program that controls aprivate currency of points [i.e., non-negotiable credits].” (Ex1504, ¶ [0040].) Loyalty program points are maintained inaccounts. (Ex 1504, ¶ [0031] (exchange of points from thecustomer’s “account” in a withdrawing loyalty program’s (LP) tothe customer’s “account” in a depositing LP).) A member(customer) possesses (holds) points (non-negotiable credits) inone or more loyalty programs. (Ex 1504, ¶ [0040].) (Ex 1502, ¶101.)

wherein theentity redeemsthe loyaltypoints for a setof entityservices that theentity providesto the member,

MacLean recognizes that points may be redeemed for rewards,e.g., loyalty points may be redeemed for a set of entity servicesthat the entity provides to the member. (Ex 1504, ¶¶ [0002] (aloyalty points issuer is also the redeemer of those points forrewards); [0003] (loyalty programs for airlines and hotels, i.e.,services); [0007] (discussing airline and hotel loyalty programs);[0041] (points issued by American Airlines); see also Fig. 4A (“Tryour quick award finder to see what awards you can redeem yourpoints for!”).) (Ex 1502, ¶ 102.)

wherein saidentityindependentfunds aredifferent loyaltypoints of adifferent loyaltyprogram of a

The entity independent funds are different loyalty points of adifferent loyalty program of a commerce partner. MacLean statesthat “[t]his invention relates to apparatus and methods forkeeping track of points and, in particular, for managing andexchanging those points that are issued and redeemed in thecontext of a loyalty program (LP).” (Ex 1504, ¶ [0001].) MacLeandiscloses that “[t]he points management system 100 . . . permits acustomer to effect an exchange of points from one LP [loyalty

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commercepartner,

program] to another. For example, a customer may exchangepoints issued by American Airlines for those issued by theAmerican Express Card. Alternatively, the customer may transferpoints issued by any number of LPs to a single LP, whereby thecustomer may redeem its collected points for the rewards offeredby the single LP.” (Ex 1504, ¶ [0041]; see also ¶¶ [0017]; [0027];[0040]; [0041] (discussing converting points of one LP (i.e.,entity) into points issued by a different LP (i.e., commercepartner)).) (Ex 1502, ¶ 103.)

wherein thedifferent loyaltypoints areredeemable bythe commercepartner forcommercepartner servicesthat thecommercepartner providesto the member,

MacLean recognizes that points may be redeemed for rewards,e.g., the different loyalty points may be redeemed by thecommerce partner for commerce partner services that thecommerce partner provides to the member. (Ex 1504, ¶¶ [0002](a loyalty points issuer is also the redeemer of those points forrewards); [0003] (loyalty programs for airlines and hotels, i.e.,services); [0007] (discussing airline and hotel loyalty programs);[0041] (points issued by American Airlines); Fig. 9 (trade fromcredit card points to airline points, i.e., the commerce partner isan airline and the commerce partner services can include airlineservices); see also Fig. 4A (“Try our quick award finder to see whatawards you can redeem your points for!”).) (Ex 1502, ¶ 104.)

wherein saidentityindependentfunds arepossessed by themember and aremaintained in afunds account,wherein thefunds account isneither ownedor controlled bythe entity or byany subsidiaryor parent of theentity,

MacLean discloses a system involving a customer (i.e., member)and a plurality of points issuers (i.e., the entity as well as differentpoints issuers) that each operate loyalty programs to which thecustomer belongs. (Ex 1504, ¶¶ [0040]; [0044]; Fig. 1.) Loyaltyprogram points are maintained in accounts (e.g., funds account).(E.g., Ex 1504, ¶ [0031] (exchange of points from the customer’s“account” in a withdrawing loyalty program’s (LP) to thecustomer’s “account” in a depositing LP).)

MacLean also states: “point issuer 130 (‘issuer’) is any entity thatcontrols the disposition and distribution of a currency . . . thepoint issuer operates a Loyalty Program that controls a privatecurrency of points.” (Ex 1504, ¶ [0040]; see also ¶ [0044] (“Ingeneral, each issuer 130, operates a LP which maintains pointsbalances for each customer that belongs to that LP.”).) Thus, afunds account can be owned and controlled by a depositingissuer (commerce partner), and accordingly is neither owned norcontrolled by a withdrawing issuer (entity). (Ex 1502, ¶ 105.)

wherein theentity does not

MacLean recognizes that a business may only redeem loyaltypoints of its own loyalty program, but not points of others. (E.g.,

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accept the entityindependentfunds aspayment for anyof the entityservices;

Ex 1504, ¶¶ [0002] (“[Loyalty Programs’ LPs are designed as thename suggests is [sic] to create and maintain the loyalty of acustomer to a particular product or service. The source of suchservices and/or products is also the issuer or distributor of thepoints to its customers and the redeemer of those points forrewards.”); [0041] (“Typically, each kind of point is issued andredeemed by a different LP and may have a different value orliability to its LP.”); see also ¶¶ [0048] (referring to rules set byissuers for their loyalty programs); [0027] (“[T]he exchange ofpoints is blocked in absence of either of the first or secondexchange rates”).)

Sakakibara describes “exchanging points between differentbusiness entities… wherein the first points are only directlyredeemable by the first business entity, and wherein the secondpoints are only directly redeemable by the second businessentity.” (Ex 1505, 12:64-13:30.) (Ex 1502, ¶¶ 106-108.)

a computer forthe differentloyalty programdetecting acommunicationover a networkto grant amember of thedifferent loyaltyprogram a newquantity of theentityindependentfunds, whereinthe new quantityof entityindependentfunds resultsfrom aconversionoperation, saidconversionoperation beinga conversion or

With regard to any computer recited in Claim 7 (throughout), andin any of its dependent claims, MacLean teaches a system 100 tomanage points of a variety of loyalty programs (LPs). (Ex 1504, ¶[0040].) MacLean’s system 100 uses computers to performoperations of these applicable claims, and communications canbe effected over a network. (Ex 1504, ¶¶ [0031]; [0045]; Figs. 1, 2(showing customer terminals 110a-110c, transaction center 120,issuer terminals 130a-130c, and internet [i.e., network] 205).)MacLean also discloses communicating messages indicatingconversion operations, between computers over a network. (Ex1504, ¶¶ [0031]; [0043]; [0052]; [0053]; [0059]-[0061].)

MacLean discloses a conversion operation in the form of a“continue xchange” button 648. (Ex 1504, ¶ [0052]; Fig. 6E.)Subsequent to button 648 being selected, interface 650 ispresented that shows entity independent funds in the form ofvalues “5,001” and “3,334,” under element 654. (Ex 1504, Fig.6F.) These values result from transfer and expending of aquantity of non-negotiable credits from the loyalty programaccount (Ex 1504, Fig. 6E (644a, 644b)) and a conversion of thenon-negotiable credits to the mentioned entity independentfunds (Ex 1504, Fig. 6F (654a, 654b)).

The non-negotiable credits (e.g., elements 644a and 644b) andthe entity independent funds (e.g., “5,001” and “3,334”) are

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a transfer of atleast a subset ofthe non-negotiablecredits into thenew quantity ofentityindependentfunds based onthe fixed credit-to-funds ratio,wherein thesubset of thenon-negotiablecredits areexpended aspart of theconversion ortransfer;

related to each other in accordance with a fixed credits-to-fundsratio, referred to by MacLean as an “exchange rate.” (Ex 1504, ¶¶[0021]; [0027]; [0052]; Fig. 6E.) The quantities of non-negotiablecredits [which are expended] comprises value “150,000.” (Ex1504, Figs. 6E, 6F; see also ¶ [0064]; Fig. 9 (withdrawal rate at$0.008 per point, deposit rate at $0.02 per point, and “effectivepoints exchange rate” of 3,600:10,000 or 0.36 due to atransaction fee).)

As another example, a button 678 in interface 670, whenselected, initiates a communication in step 618 to effect paymentfor an exchange and results in a confirmation number 682 beingissued. (Ex 1504, ¶ [0052]; Fig. 6H.)

See also Ex 1504, ¶ [0059] (referring to the withdrawal of pointsfrom a customer’s LP account followed by the deposit of pointsinto another of the customer’s LP accounts).

Further with respect to detecting a communication over anetwork to grant a member of the different loyalty program anew quantity of the entity independent funds, MacLean refers towithdrawal and deposit transaction messages (Ex 1504, ¶¶ [0053];[0054]; Figs. 7H, 7G.) (Ex 1502, ¶¶ 109-113.)

responsive tothecommunication,the computergranting themember thenew quantity ofthe entityindependentfunds, which areadded to thefunds account,

See above regarding MacLean’s disclosure of computers.

MacLean discloses points deposit transaction messages (i.e., addnew entity independent funds to a loyalty program account). (Ex1504, ¶ [0054]; [0061]; Fig. 7H.)

MacLean discloses the computer granting the new entityindependent funds responsive to receiving the communication:“[A] points exchange includes the steps of the withdrawal ofpoints from one or more of the customer’s LP accounts followedby the deposit of points into another of the customer’s LPaccounts. Each issuer terminal 130 must be equipped with amethod of receiving points withdrawal and deposit transactionmessages from the transaction center 120, validating thetransaction messages and executing the corresponding changes tothe customer’s account balance within that LP.” (Ex 1504, ¶[0059]; see also ¶ [0061]).)

In one example, entity independent funds that are granted are inthe form of values “5,001” and “3,334.” (Ex 1504, Figs. 6E, 6F.)As another example, MacLean discloses a confirmation selector,

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button 678 in interface 670, that is presented subsequent toconversion option 648 being selected. (Ex 1504, Figs. 6E, 6H.)Button 678 is used in step 618, and, when selected, effectspayment for the exchange [i.e., granting of the entity independentfunds] and results in a confirmation number 682 being issued.(Ex 1504 ¶ [0052]; see also Fig. 6F (button 659 is another exampleof a confirmation selector).) (Ex 1502, ¶¶ 114, 115.)

whereinquantities ofnon-negotiablecredits aresubtracted fromthe loyalty pointaccountapproximatelyconcurrent intime with thenew quantitiesof entityindependentfunds beingadded to thefunds account;and

See above regarding MacLean’s disclosure of adding new quantitiesof entity independent funds to the funds account.

Regarding subtraction of quantities of non-negotiable creditsfrom the loyalty program account, MacLean discloses aconversion operation in the form of a “continue xchange” button648. (Ex 1504, ¶ [0052]; Fig. 6E.) Subsequent to button 648being selected, interface 650 is presented that shows entityindependent funds in the form of values “5,001” and “3,334,”under element 654. (Ex 1504, Fig. 6F.) These values result fromsubtracting a quantity of non-negotiable credits from the loyaltyprogram account (Ex 1504, Fig. 6E (644a, 644b)) and aconversion of the non-negotiable credits to the mentioned entityindependent funds. (Ex 1504, ¶ [0059] (referring to thewithdrawal of points from a customer’s LP account followed bythe deposit of points into another of the customer’s LPaccounts).) The subtracted quantity of non-negotiable creditscomprises value “150,000.” (Ex 1504, Figs. 6E, 6F).

MacLean illustrates using transaction messages to credit anddebit loyalty program accounts. (Ex 1504, Figs. 7H, 7G.)MacLean refers to withdrawal and deposit transaction messages(Ex 1504, ¶¶ [0053]; [0054]), as well as to withdrawals anddeposits from loyalty program accounts in order to effect apoints exchange (Ex 1504, ¶¶ [0059]-[0066].)

MacLean discloses that points (e.g., entity independent funds) arein accounts (e.g., funds account). (Ex 1504, ¶ [0031] (exchange ofpoints from the customer’s “account” in a withdrawing loyaltyprogram’s (LP) to the customer’s “account” in a depositing LP).)

MacLean discloses that subtracting non-negotiable credits occursapproximately concurrently with adding corresponding entityindependent funds. (Ex 1504, Figs. 6E, 6F (web pages eachdisplaying subtracted quantities of non-negotiable credits“150,000” and added quantities of entity independent funds

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“5,001” and “3,334”); see also ¶¶ [0051] (effecting a pointsexchange via a “real time” protocol); [0057]-[0059] (using“push[es]” and “pulls” to update portfolio balance information aschanges occur to issuer 130 accounts).) (Ex 1502, ¶¶ 116-118.)

the computerredeeming atleast a portionof the newquantity ofentityindependentfunds inexchange foruser selectedones of thecommercepartner services,


MacLean recognizes that points may be redeemed for rewards,e.g., the new quantity of entity independent funds may beexchanged for user selected ones of the commerce partnerservices. (Ex 1504, ¶¶ [0002] (a loyalty points issuer is also theredeemer of those points for rewards); [0003] (loyalty programsfor airlines and hotels, i.e., services); [0007] (discussing airline andhotel loyalty programs); [0041] (points issued by AmericanAirlines), Fig. 9 (trading credit card points for airline points, i.e.,the commerce partner is an airline and the commerce partnerservices can include airline services); see also Fig. 4A (“Try ourquick award finder to see what awards you can redeem yourpoints for!”).) (Ex 1502, ¶ 119.)

wherein thecomputer doesnot accept thenon-negotiablecredits of theloyalty programfor thecommercepartner servicesor at least doesnot accept thenon-negotiablecredits inabsence of firstconverting ortransferring thenon-negotiablecredits intoentityindependentfunds.


MacLean recognizes that a business may only redeem loyaltypoints of its own loyalty program, but not points of others. (E.g.,Ex 1504, ¶¶ [0002] (“[Loyalty Programs’ LPs are designed as thename suggests is [sic] to create and maintain the loyalty of acustomer to a particular product or service. The source of suchservices and/or products is also the issuer or distributor of thepoints to its customers and the redeemer of those points forrewards.”); [0041] (“[E]ach kind of point is issued and redeemedby a different LP and may have a different value or liability to itsLP.”); see also ¶¶ [0048] (referring to rules set by issuers for theirloyalty programs); [0027] (“[T]he exchange of points is blocked inabsence of either of the first or second exchange rates”).)

Moreover, Sakakibara discloses that an exchange (such as forredemption) is not permitted without credits (first points) beingfirst converted into entity independent funds (second points). Inparticular, Sakakibara describes “a method of exchanging pointsbetween different business entities . . . wherein the first points areonly directly redeemable by the first business entity, and whereinthe second points are only directly redeemable by the secondbusiness entity.” (Ex 1505, 12:64-13:30.) (Ex 1502, ¶¶ 120, 121.)

Claim 8

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8. The method ofclaim 7, whereinthe new quantityof entityindependent fundsadded to the fundsaccount is lessthan a quantitythatmathematicallyresults fromapplying a fixedcredits-to-fundsratio to the subsetof non-negotiablefunds due to asurcharge incurredfor the conversionoperation, whereinthe surcharge is innon-negotiablecredits, entityindependentfunds, orcombinationsthereof.

MacLean discloses a surcharge incurred for the conversionoperation, and therefore the added new quantity of entityindependent funds is less than a quantity (e.g., at least a subset)of non-negotiable funds (taking into account a fixed credits-to-funds ratio): “This means that for a withdrawal of 10,000points from the customer’s account with the first issuer 900will pay $80 in step 911 to the transaction center 902. Thetransaction center 902 levies in step 912 a transaction fee inthe amount of $8 that was set as a percentage of the cost ofthe withdrawal, leaving $72 (913) available to buy points fromthe second issuer 901, which has set in step 914 its pointdeposit rate at $0.02. In step 915, the transaction center 902uses the available $72 to deposit 3,600 points in the customer’saccount in the second issuer 901. In this case, the customersees an effective points exchange rate of 3,600:10,000 or .36between the first issuer 900 and the second issuer 901. Fig. 9also illustrates that, by setting a points withdrawal rate that islower than the book liability per point and by setting a pointsdeposit rate that is higher that [sic] the book liability per point,the issuers are able to generate a profit on both pointswithdrawal and deposit transactions.” (Ex 1504, ¶ [0064]; seealso ¶¶ [0021]; [0027]; [0065] (“[T]he value of the depositedpoints is calculated by subtracting a transaction fee that islevied on all point exchanges”); [0067] (“As described above,each point deposit has an associated cash value in the form ofmonetary units, e.g., dollars, which the transaction center 120must pay to the depositing issuer.”).) (Ex 1502, ¶¶ 122, 123.)

Claim 99. The method of claim7, wherein the entityservices provided by theentity for which the non-negotiable credits areredeemable with theentity comprise at leastone of: travel services foran airlines, travel servicesfor a train, travel servicesfor a cruise ship, vehiclerental services for avehicle, or lodging

MacLean discloses that entity services are provided bythe entity for which the non-negotiable credits areredeemable with the entity: “The source of such servicesand/or products is also the issuer or distributor of thepoints to its customers and the redeemer of those pointsfor rewards.” (Ex 1504, ¶ [0002].)

MacLean discloses that loyalty program points may be“issued by airlines, hotels, financial entities, e.g., creditcards, and networks, e.g. portal web sites on theInternet.” (Ex 1504, ¶ [0040]; see also ¶¶ [0003] (loyaltyprograms for airlines and hotels, i.e., services); [0007](discussing airline and hotel loyalty programs).) MacLean

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services for lodging themember,

states that a “customer may exchange loyalty programpoints issued by an airline, such as American Airlines forthose issued by a credit card loyalty program, such as theAmerican Express Card.” (Ex 1504, ¶ [0041].) Thus,MacLean discloses that entity services include, e.g.,airline services. (Ex 1502, ¶¶ 124, 125; see also ¶ 76.)

wherein the commercepartner services providedby the commerce partnerfor which the entityindependent funds areredeemable with thecommerce partnercomprise at least one of:travel services for anairlines, travel servicesfor a train, travel servicesfor a cruise ship, vehiclerental services for avehicle, or lodgingservices for lodging themember.

MacLean discloses that commerce partner services areprovided by the commerce partner for which the entityindependent funds are redeemable: “The source of suchservices and/or products is also the issuer or distributorof the points to its customers and the redeemer of thosepoints for rewards.” (Ex 1504, ¶ [0002].)

MacLean discloses that loyalty program points may be“issued by airlines, hotels, financial entities, e.g., creditcards, and networks, e.g. portal web sites on theInternet.” (Ex 1504, ¶ [0040]; see also ¶¶ [0003] (loyaltyprograms for airlines and hotels, i.e., services); [0007](discussing airline and hotel loyalty programs).)

Furthermore, MacLean discloses a commerce partnerthat is an airline. (Ex 1504, Fig. 9.) Thus, MacLeandiscloses that commerce partner services include, e.g.,airline services. (Ex 1502, ¶¶ 124, 125; see also ¶ 77.)

Claim 1010. The methodof claim 7,wherein thecomputerperforming theoperation is anentity’scomputer of theentity’s loyaltyprogram,

The Entity’s Computer of the Entity’s Loyalty ProgramPerforming the OperationMacLean discloses that the computer performing the operation isan entity’s computer of the entity’s loyalty program. An exampleof the computer is included in the transaction center 120, whichis “attached” to the entity (the withdrawing issuer 130a-130c).(Ex 1504, ¶ [0045].) The transaction center 120 “acts as a‘currency exchange’ for the issuers 130a-130c [i.e., for the loyaltyprogram of the entity], effecting the exchange of points from oneissuer to another.” (Ex 1504, ¶ [0043].) As another example ofthe computer, see a withdrawing issuer 130. (Ex 1504, ¶¶ [0044];[0045]; Figs. 1, 2.) MacLean states that “[e]ach issuer terminal 130must be equipped with a method of receiving points withdrawaland deposit transaction messages from the transaction center120, validating the transaction messages and executing thecorresponding changes to the customer’s account balance withinthat LP.” (Ex 1504, ¶ [0059]; [0047]; [0052]; [0060]-[0062]

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(relating to a points exchange between issuers). Also, see aboveregarding MacLean’s disclosure of computers.

Moreover, Sakakibara discloses exchanging points between twodifferent businesses, wherein a computer managed by one (oranother) of the businesses performs the operation. Sakakibaradiscloses that the points exchange [i.e., operation] is carried outby a “controller” in “central unit 10,” wherein “[t]he central unit10 is managed by a first business entity.” (Ex 1505, 2:52-3:17;6:3-8.) Sakakibara uses the term “first business entity [orentities]” in one instance to refer to a commerce partner (Ex1505, 2:16-32) and in another instance to refer to an entity (Ex1505, 12:64-13:18.) Thus, Sakakibara discloses that the operationis performed by an entity’s computer of the entity’s loyaltyprogram. (Ex 1502, ¶¶ 126, 127; see also ¶¶ 79-81.)

wherein theentity’scomputerpermitsconsumerredemption ofthe non-negotiablecredits for entityservices that theentity provides,

See above regarding MacLean’s disclosure of computers.MacLean recognizes that points may be redeemed for rewards,e.g., non-negotiable credits may be redeemed for entity servicesthat the entity provides. (Ex 1504, ¶¶ [0002] (a loyalty pointsissuer is also the redeemer of those points for rewards); [0003](loyalty programs for airlines and hotels, i.e., services); [0007](discussing airline and hotel loyalty programs); [0041] (pointsissued by American Airlines); see also Fig. 4A (“Try our quickaward finder to see what awards you can redeem your pointsfor!”).) (Ex 1502, ¶¶ 126, 127; see also ¶ 82.)

wherein theentity’scomputer doesnot permitconsumerredemption ofthe entityindependentfunds for theentity servicesthat the entityprovides or forthe commercepartner servicesthat the


MacLean recognizes that a business may only redeem loyaltypoints of its own loyalty program, but not points of others. (E.g.,Ex 1504, ¶¶ [0002] (“[Loyalty Programs’ LPs are designed as thename suggests is [sic] to create and maintain the loyalty of acustomer to a particular product or service. The source of suchservices and/or products is also the issuer or distributor of thepoints to its customers and the redeemer of those points forrewards.”); [0041] (“Typically, each kind of point is issued andredeemed by a different LP and may have a different value orliability to its LP.”).)

Sakakibara describes “exchanging points between differentbusiness entities… wherein the first points are only directlyredeemable by the first business entity, and… the second points

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commercepartnerprovides.

are only directly redeemable by the second business entity.” (Ex1505, 12:64-13:30.) (Ex 1502, ¶¶ 126, 127; see also ¶ 83.)

Claim 1111. The method ofclaim 7, wherein thecomputer performingthe operation is acommerce partner’scomputer of thecommerce partner’sdifferent loyaltyprogram,

The Commerce Partner’s Computer of the CommercePartner’s Loyalty Program Performing the Operation

MacLean discloses that the computer performing theoperation is a commerce partner’s computer of thecommerce partner’s different loyalty program. An exampleof the computer is included in the transaction center 120,which is “attached” to the commerce partner (thedepositing issuer 130a-130c). (Ex 1504, ¶ [0045].) Thetransaction center 120 “acts as a ‘currency exchange’ forthe issuers 130a-130c [i.e., for the loyalty program of thecommerce partner], effecting the exchange of points fromone issuer to another.” (Ex 1504, ¶ [0043].) As anotherexample of the computer, see a depositing issuer 130. (Ex1504, ¶¶ [0044]; [0045]; Figs. 1, 2.) MacLean states that“[e]ach issuer terminal 130 must be equipped with amethod of receiving points withdrawal and deposittransaction messages from the transaction center 120,validating the transaction messages and executing thecorresponding changes to the customer’s account balancewithin that LP.” (Ex 1504, ¶ [0059]; see also ¶¶ [0047];[0052]; [0060]-[0062] (relating to a points exchangebetween issuers).)

Also, see above regarding MacLean’s disclosure ofcomputers.

Moreover, Sakakibara discloses exchanging points betweentwo different businesses, wherein a computer managed byone (or another) of the businesses performs the operation.Sakakibara discloses that the points exchange [i.e.,operation] is carried out by a “controller” in “central unit10,” wherein “[t]he central unit 10 is managed by a firstbusiness entity.” (Ex 1505, 2:52-3:17; 6:3-8.) Sakakibarauses the term “first business entity [or entities]” in oneinstance to refer to a commerce partner (Ex 1505, 2:16-32)and in another instance to refer to an entity (Ex 1505,12:64-13:18.) Thus, Sakakibara discloses that the

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conversion operation is performed by a computer for thedifferent loyalty program of the commerce partner. (Ex1502, ¶¶ 128, 129; see also ¶¶ 85-87.)

wherein the commercepartner’s computerpermits consumerredemption of theentity independentfunds for commercepartner services thatthe commerce partnerprovides,


MacLean recognizes that points may be redeemed forrewards, e.g., entity independent funds may be redeemedfor commerce partner services that the commerce partnerprovides. (Ex 1504, ¶¶ [0002] (a loyalty points issuer is alsothe redeemer of those points for rewards); [0003] (loyaltyprograms for airlines and hotels, i.e., services); [0007](discussing airline and hotel loyalty programs); [0041](points issued by American Airlines); Fig. 9 (trading creditcard points for airline points, i.e., the commerce partner isan airline and the commerce partner services can includeairline services); see also Fig. 4A (“Try our quick awardfinder to see what awards you can redeem your pointsfor!”).) (Ex 1502, ¶¶ 128, 129; see also ¶ 88.)

wherein the commercepartner’s computerdoes not permitconsumer redemptionof the non-negotiablecredits for the entityservices that the entityprovides, wherein thecomputer does notaccept the non-negotiable credits ofthe loyalty programfor the commercepartner services or atleast does not acceptthe non-negotiablecredits in absence offirst converting ortransferring the non-negotiable credits intoentity independentfunds.


MacLean recognizes that a business may only redeemloyalty points of its own loyalty program, but not points ofothers. (Ex 1504, ¶¶ [0002] (“[Loyalty Programs’ LPs aredesigned as the name suggests is [sic] to create and maintainthe loyalty of a customer to a particular product or service.The source of such services and/or products is also theissuer or distributor of the points to its customers and theredeemer of those points for rewards.”); [0041] (“[E]achkind of point is issued and redeemed by a different LP andmay have a different value or liability to its LP.”); see also ¶¶[0048] (referring to rules set by issuers for their loyaltyprograms); [0027] (“[T]he exchange of points is blocked inabsence of either of the first or second exchange rates”).)

Sakakibara describes “a method of exchanging pointsbetween different business entities . . . wherein the firstpoints are only directly redeemable by the first businessentity, and wherein the second points are only directlyredeemable by the second business entity.” (Ex 1505,12:64-13:30.) (Ex 1502, ¶¶ 128-132; see also ¶ 89.)

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2. Ground 2: Claims 1-6 and 12-20 are obvious in view ofMacLean, Sakakibara, and Postrel

Independent Claims 1 and 13 (and Claims 2-6 and 14-20 depending therefrom)

Many of the limitations recited in independent Claims 1 and 13 have already

been addressed above with respect to independent Claim 7. The Board is respectfully

requested to refer to the above discussion in Ground 1 (combination of MacLean and

Sakakibara) with respect to such claim limitations.

Postrel is a U.S. patent application that published on January 27, 2005, and thus

qualifies as prior art under 35 U.S.C. § 102(b). Postrel was also one of the 800-odd

applicant-cited references during prosecution, and there is no indication that Postrel

received the Examiner’s individual attention. Like MacLean and Sakakibara, Postrel

relates to a system for transferring or converting loyalty points.

Petitioner’s other concurrently filed IPR petition against the ’152 Patent relies

on Postrel as a primary reference. Those grounds of rejection based on Postrel are

not redundant with the grounds herein based on MacLean because, although

MacLean is a stronger reference overall in that it clearly depicts values of non-

negotiable credits and entity independent funds after a conversion (see all claims) (see,

e.g., Figs 6A-6I), in other respects each reference is stronger than the other for

different claims or limitations. For instance, MacLean provides greater detail on

performing various functions in a single human-to-machine interaction session

(Claims 6, 12, and 20) and subtracting non-negotiable credits approximately

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concurrently with adding entity independent funds (Claims 1, 7, and 13), whereas

Postrel provides greater detail regarding 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). That MacLean stands on its own as a primary

reference against the ‘152 Patent is established in this Petition.

Like independent Claim 7, independent Claims 1 and 13 recite a method

involving a conversion operation that transfers or converts non-negotiable credits to

entity independent funds. MacLean discloses these features, especially when

combined with explicit teachings of Sakakibara, as set forth above with respect to

Claim 7. Different from Claim 7, Claim 1 recites an entity agreeing to permit the

transfers or conversions. In this regard, 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. (Ex 1504, ¶ [0023].) Also different from Claim 7,

Claim 1 recites the earning of non-negotiable credits occurring in accordance with

terms-of-use, while 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. However, it was generally understood at the time of the

’152 Patent that loyalty points may be earned and redeemed according to particular

terms-of-use and restrictions. (Ex 1502, ¶¶ 67, 157.) MacLean implicitly discloses

earning under “terms-of-use” and redeeming loyalty points under restrictions, by

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specifically referring to “terms and conditions” to which the points exchange is

subjected. (Ex 1504, ¶ [0052]; see also ¶¶ [0041]; [0048]; [0052].)

Moreover, Postrel explicitly discloses these terms-of-use and restrictions.

Postrel discloses a system for converting loyalty points and redemption of these newly

converted loyalty points. (Ex 1503, ¶¶ [0043]-[0044].) In particular, Postrel discusses

points being earned and redeemed for services offered by a loyalty program with

“restrictions on use.” (Ex 1503, ¶¶ [0004]; [0009]; [0030]; [0047]; [0049]; [0032].) Thus,

one of ordinary 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. With these

terms-of-use, a user follows the set requirements for earning and redeeming loyalty

points, avoiding confusion during this process. (Ex 1502, ¶¶ 67, 158, 159.)

In addition, Claim 13 further recites processors responsive to executing

program instructions of at least one memory. In this regard, 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 at least implicitly teaches using processors and executing

program instructions stored in memory, as the same was well known in the field. (Ex

1502, ¶¶ 137, 139, 140.)

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Moreover, processors and memory having program instructions are also

explicitly disclosed in Postrel. Postrel describes the use of a computer product with a

processor and memory having program instructions. (Ex 1503, ¶ [0068] (“server

[with] memory means” and “processing means”).) 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 explicit teachings of Postrel, and based on the basic

knowledge regarding the general structure of a computer. Both MacLean and Postrel

not only relate to loyalty program points, but specifically involve conversion of

customer loyalty program points via a computer. Thus, to the extent that MacLean

does not state in detail that its computer has a storage device that stores the program

500 and a processor that executes such program, one of ordinary skill in the art would

have known that such program 500 would need to be stored for execution and

executed by a processor, and Postrel discloses a memory and a processor for that

exact purpose. (Ex 1502, ¶¶ 139, 140.)

Claim 13 additionally recites the conversion operation occurring pursuant to an

agreement existing between the entity and commerce partner. 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, inasmuch as even MacLean teaches the back-

end of the points exchange process involves exchanging money between the parties.

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(Ex 1504, Fig. 9; ¶ [0064]; Ex 1502, ¶¶ 160, 161.) Moreover, MacLean discloses that

points are exchanged through a set exchange rate, which necessarily implies that such

a rate has been agreed upon by the entity and commerce partner. (Ex 1504, ¶¶ [0023];

[0027]; Ex 1502, ¶ 160.) As such, MacLean implicitly discloses the existence of

agreements, and it would have been known that such agreements must have been in

place.

Moreover, Sakakibara explicitly discloses such agreements existing. Sakakibara

discloses contracts which set the exchange rates between business entities

participating in loyalty points exchanges. (Ex. 1505, 7:7-10.) 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. In addition, such

agreements provide safeguards against a party’s non-compliance of its obligations in a

points exchange. (Ex 1502, ¶ 160.)

Claims 2-6 and 14-20 depend from one of independent Claims 1 and 13,

respectively, and the limitations recited therein are disclosed in MacLean, as set forth

in the claim chart below. Additionally, with respect to the Claim 6 and 20 limitations

reciting a “single human-to-machine interaction,” Petitioner notes that this term is

undefined in the ’152 Patent. MacLean discloses the various functions in those

respective claims as occurring in a single human-to-machine interaction (i.e., web

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browsing session). (Ex 1504, ¶¶ [0009]; [0049]; [0050]; [0052]; [0054]; [0057]; [0059]-

[0066].) For example, MacLean depicts the establishing, detecting, and subtracting of

loyalty points all occurring within a single web-session. (see, e.g., Ex 1504, Figs. 4A-4I

and 6A-6I). Furthermore, there is no shown ability for a user to, e.g., save their

transaction progress, which would be required to perform these tasks during separate

sessions. (Ex 1502, ¶¶ 91, 179.) Thus, these features are clearly inherently disclosed, in

MacLean, as occurring in a single human-to-machine interaction session as it also

would have enabled a user to conveniently and efficiently take actions that would

cause the recited claim steps to be performed within a single web browsing session,

versus within separate browsing sessions. (Id.)

Dependent Claim 12

Claim 12 requires several functions to be performed in a single human-to-

machine interaction session. This limitation is disclosed in MacLean in combination

with Postrel. As noted above, “single human-to-machine interaction session” is

undefined in the ’152 Patent. MacLean discloses that functions, such as those recited

in Claim 12 (the detecting of a communication, the granting of the new quantity of

entity independent funds, and the redemption of entity independent funds) can be

performed in a single human-to-machine interaction session. For example, MacLean

teaches that computers can detect a communication and grant new entity independent

funds in one session. (Ex 1504, ¶¶ [0049]; [0050]; [0052].) Furthermore, MacLean at

least implicitly teaches that the entity independent funds can be redeemed within a

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single human-to-machine interaction session. (Ex 1504, ¶ [0009]; Ex 1502, ¶ 134.)

Moreover, such redemption of the new quantity of entity independent funds is

explicitly disclosed in Postrel. Postrel teaches that, subsequent to aggregating loyalty

points (i.e. new quantity of entity independent funds), a user may “execute a purchase

transaction with those points,” e.g., by purchasing items off a VISA catalog. (Ex 1503,

¶ [0047].) Thus these features are, at the very least, clearly inherent in MacLean and

Postrel. Moreover, it also 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.)

Claim 1 MacLean + Sakakibara + Postrel1. A methodcomprising:an entityagreeing topermittransfers orconversions ofnon-negotiablecredits to entityindependentfunds,

Entity Agreeing to Permit Transfers or ConversionsMacLean discloses an entity, such as a withdrawing one of pointsissuers 130a-130c in Fig. 1, wherein each points issuer 130“provides a mechanism . . . . effecting a points exchange.” (Ex1504, ¶ [0044]; see also ¶¶ [0042]; [0043]; [0064]-[0066].)Furthermore, MacLean discloses that an issuer 130 is capable ofvalidating customers that “wish to exchange points from theissuer’s LP.” (Ex 1504, ¶ [0048]; see also ¶¶ [0042]; [0046]-[0048];[0051]-[0053]; [0056]; [0055]; [0059] (referring to how a “pointsexchange” is performed in the context of programs executed byissuer server 280); [0062]-[0065].) MacLean also discloses “asystem and method . . . permitting the customer to set a firstnumber of first points to be exchanged and permitting the firstand second point issuers to set [i.e., agree to] the point withdrawaland deposit rates of their first and second points respectively.”(Ex. 1504, ¶ [0023]; see also Abstract, ¶¶ [0017]; [0020]; [0041]; Figs.

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6A-6I.) Also, MacLean refers to “exchanging first points forsecond, different points that are issued by a second point issuer atexchange rates set [i.e., agreed to] by the first and second pointissuers respectively.” (Ex. 1504, ¶ [0027].)

See Non-Negotiable Credits in Claim 7, supra.

See Entity Independent Funds in Claim 7, supra.

(Ex 1502, ¶¶ 49-56.)wherein theentity agrees tocompensate acommercepartner bypaying anamount in cashor credit foreach non-negotiablecreditredeemed bythe commercepartner,

An example of a commerce partner in MacLean is a “depositingissuer” (Ex 1504, ¶¶ [0064]; [0065]; Figs. 9, 10), such as any ofpoints issuers 130a-130c (Ex 1504, Fig. 1). (See Ex 1504, ¶¶ [0044];[0047]; [0052]; [0053]; [0059]; [0062]; [0064]; [0065].)

MacLean discloses payments (compensation) from the entity(withdrawing issuer) to the commerce partner (depositing issuer)for each non-negotiable credit redeemed by the commercepartner. (See Ex 1504, ¶¶ [0064]-[0067]; Figs. 9-12.) First, thewithdrawing issuer must pay to the transaction center 120 anassociated cash value of each point withdrawn. (Ex 1504, ¶¶[0064]; [0066].) Next, this withdrawn cash value is provided to thecommerce partner via the transaction center 120, wherein thetransaction center 120 “must pay to the depositing issuer” anassociated cash value per point deposit. (Ex 1504, ¶¶ [0064];[0067].) (Ex 1502, ¶ 57.)

wherein saidnon-negotiablecredits areloyalty pointsof the loyaltyprogrampossessed by amember,wherein theloyalty pointsare maintainedin a loyaltyprogramaccount ownedor controlledby the entity,

The non-negotiable credits are loyalty points of a loyalty programpossessed by a member, wherein the loyalty points are maintainedin a loyalty program account owned or controlled by the entity.MacLean states that “[t]his invention relates to apparatus andmethods for keeping track of points and, in particular, formanaging and exchanging those points that are issued andredeemed in the context of a loyalty program (LP).” (Ex 1504, ¶[0001].) MacLean discloses that a “point issuer 130 (‘issuer’) [i.e.,the entity] is any entity that controls the disposition anddistribution of a currency” [the non-negotiable credits] . . . [and]the point issuer operates a Loyalty Program that controls a privatecurrency of points [i.e., non-negotiable credits].” (Ex 1504, ¶[0040].) Loyalty program points are maintained in accounts. (E.g.,Ex 1504, ¶ [0031] (exchange of points from the customer’s“account” in a withdrawing loyalty program’s (LP) to thecustomer’s “account” in a depositing LP).) MacLean also disclosesthat a member (customer) possesses (holds) points (non-

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negotiable credits) in one or more loyalty programs. (Ex 1504, ¶[0040].) (Ex 1502, ¶ 58.)

wherein theentity redeemsthe loyaltypoints for a setof entityservices thatthe entityprovides to themember,

MacLean recognizes that points may be redeemed for rewards,e.g., that the entity redeems the loyalty points for a set of entityservices that the entity provides to the member. (Ex 1504, ¶¶[0002] (a loyalty points issuer is also the redeemer of those pointsfor rewards); [0003] (loyalty programs for airlines and hotels, i.e.,services); [0007] (discussing airline and hotel loyalty programs);[0041] (points issued by American Airlines); see also Fig. 4A (“Tryour quick award finder to see what awards you can redeem yourpoints for!”).) (Ex 1502, ¶ 59.)

wherein saidentityindependentfunds aredifferentloyalty pointsof a differentloyaltyprogram of acommercepartner,

The entity independent funds are different loyalty points of adifferent loyalty program of a commerce partner. MacLean statesthat “[t]his invention relates to apparatus and methods for keepingtrack of points and, in particular, for managing and exchangingthose points that are issued and redeemed in the context of aloyalty program (LP).” (Ex 1504, ¶ [0001].) MacLean discloses that“[t]he points management system 100. . .permits a customer toeffect an exchange of points from one LP [loyalty program] toanother. For example, a customer may exchange points issued byAmerican Airlines for those issued by the American Express Card.Alternatively, the customer may transfer points issued by anynumber of LPs to a single LP, whereby the customer may redeemits collected points for the rewards offered by the single LP.” (Ex1504, ¶ [0041]; see also ¶¶ [0017]; [0027]; [0040]; [0041] (discussingconverting points of one LP (i.e., entity) into points issued by adifferent LP (i.e., commerce partner)).) (Ex 1502, ¶ 60.)

wherein thedifferentloyalty pointsare redeemableby thecommercepartner forcommercepartnerservices thatthe commercepartnerprovides to the

MacLean recognizes that points may be redeemed for rewards,e.g., that the different loyalty points are redeemable by thecommerce partner for commerce partner services that thecommerce partner provides to the member. (Ex 1504, ¶¶ [0002] (aloyalty points issuer is also the redeemer of those points forrewards); [0003] (loyalty programs for airlines and hotels, i.e.,services); [0007] (discussing airline and hotel loyalty programs);[0041] (points issued by American Airlines), Fig. 9 (trade fromcredit card points to airline points, i.e., the commerce partner is anairline and the commerce partner services can include airlineservices); see also Fig. 4A (“Try our quick award finder to see whatawards you can redeem your points for!”).) (Ex 1502, ¶ 61.)

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member,wherein saidentityindependentfunds arepossessed bythe memberand aremaintained in afunds account,wherein thefunds accountis neitherowned orcontrolled bythe entity or byany subsidiaryor parent ofthe entity,

MacLean discloses a system involving a customer (i.e., member)and a plurality of points issuers (i.e., the entity as well as differentpoints issuers) that each operate loyalty programs to which thecustomer belongs. (Ex 1504, ¶¶ [0040]; [0044]; Fig. 1.) The loyaltyprogram points are maintained in accounts (e.g., funds account).(Ex 1504, ¶ [0031] (exchange of points from the customer’s“account” in a withdrawing loyalty program’s (LP) to thecustomer’s “account” in a depositing LP).) MacLean furtherdiscloses that a member (customer) possesses (holds) points(entity independent funds) in one or more loyalty programs. (Ex1504, ¶ [0040].)

MacLean also states: “point issuer 130 (‘issuer’) is any entity thatcontrols the disposition and distribution of a currency… the pointissuer operates a Loyalty Program that controls a private currencyof points.” (Ex 1504, ¶ [0040]; see also ¶ [0044] (“[E]ach issuer 130,operates a LP which maintains points balances for each customerthat belongs to that LP.”).) Thus, a funds account can be ownedand controlled by a depositing issuer (commerce partner), and assuch, is neither owned nor controlled by a withdrawing issuer(entity). (Ex 1502, ¶ 62.)

wherein theentity does notaccept theentityindependentfunds aspayment forany of theentity services;

MacLean recognizes that a business may only redeem loyaltypoints of its own loyalty program, but not points of others. (E.g.,Ex 1504, ¶¶ [0002] (“[Loyalty Programs’ LPs are designed as thename suggests is [sic] to create and maintain the loyalty of acustomer to a particular product or service. The source of suchservices and/or products is also the issuer or distributor of thepoints to its customers and the redeemer of those points forrewards.”); [0041] (“Typically, each kind of point is issued andredeemed by a different LP and may have a different value orliability to its LP.”); [0048] (referring to rules set by issuers fortheir loyalty programs).)

Sakakibara describes “a method of exchanging points betweendifferent business entities . . . wherein the first points are onlydirectly redeemable by the first business entity, and wherein thesecond points are only directly redeemable by the second businessentity.” (Ex 1505, 12:64-13:30.) (Ex 1502, ¶ 63.)

the computerdetecting a setof two or more

With regard to any computer recited in Claim 1 (throughout), andin any of its dependent claims, MacLean teaches a system 100 tomanage points of a variety of loyalty programs (LPs). (Ex 1504, ¶

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interactionsearningadditional non-negotiablecredits for themember inaccordancewith terms-of-use of theloyaltyprogram,wherein thecomputer addsthe additionalnon-negotiablecredits to theloyaltyprogramaccount; and

[0040].) MacLean’s system 100 uses computers to performoperations of these applicable claims, and communications can beeffected over a network. (See, e.g., Ex 1504, ¶¶ [0031]; [0045]; Figs.1, 2 (showing customer terminals 110a-110c, transaction center120, issuer terminals 130a-130c, and internet [i.e., network] 205).)MacLean also discloses communicating messages indicatingconversion operations, between computers over a network. (E.g,.Ex 1504, ¶¶ [0031]; [0043]; [0052]; [0053]; [0059]-[0061].)

MacLean discloses that non-negotiable credits in the form ofpoints are earned and added through interaction(s) with an entity:“points are added to the customer’s account typically when thecustomer purchases some goods or services.” (Ex 1504, ¶ [0057];see also ¶¶ [0050] (“the customer is given the opportunity to add totheir portfolio, their customer accounts in LPs . . . [using] ‘addloyalty program’ button 443 . . . . The customer [presses] button479 to add the LP account to their portfolio,” and “[a] validaccount confirmation record will include the current pointsbalance for that LP account.”); [0057] (“Using these programs [inFigs. 7C-7E, which relate to changes in customer point balances],the transaction center 120 is able to maintain current pointsaccount balances in its customer portfolios” and “[t]he issuerserver 280 transmits this record [of updated account balances] viaa data transmission path 206 to the transaction server 250, whichin turn stores the updated account balance in the customer’sportfolio maintained in the master database 240”)); [0055](referring to programs providing current point account balancesand performing points transactions (withdrawals and deposits).)Accordingly, any of computers such as in transaction center 120,or in an issuer 130a-130c (e.g., server 280), can perform thedetecting.

Earned Under Terms of UseMacLean teaches loyalty program terms of use in the form of“pointsfolio agreement” element 472, in association with button479 for adding loyalty programs. (Ex 1504, ¶ [0050].)Also, Postrel discloses loyalty program terms of use under whichpoints are earned, e.g., 100 points for a $100 purchase. (Ex 1503,¶¶ [0004]; [0009]; [0030].) (Ex 1502, ¶¶ 64-68.)

responsive toan indicationof a conversion

See above regarding MacLean’s disclosure of computers.MacLean discloses a conversion operation in the form of a“continue xchange” button 648. (Ex 1504, ¶ [0052]; Fig. 6E.)

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operationoccurrence, thecomputersubtracting aquantity of thenon-negotiablecredits fromthe loyaltyprogramaccount, saidsubtractedquantity ofnon-negotiablecreditscomprising atleast a quantityof non-negotiablecredits thatwere convertedor transferredto a newquantity ofentityindependentfunds,

Subsequent to button 648 being selected (i.e., responsive to anindication of a conversion operation), interface 650 is presented,which shows a new quantity of entity independent funds in theform of values “5,001” and “3,334,” under element 654. (Ex 1504,Fig. 6F.) These values result from subtracting a quantity of non-negotiable credits from the loyalty program account (Ex 1504, Fig.6E (644a, 644b)), and conversion of the non-negotiable credits tothe mentioned new entity independent funds. The subtractedquantity of non-negotiable credits comprises value “150,000.” (Ex1504, Figs. 6E, 6F).

As another example, a button 678 in interface 670, when selected,initiates a communication in step 618 to effect payment for anexchange and results in a confirmation number 682 being issued.(Ex 1504, ¶ [0052]; Fig. 6H; see also ¶¶ [0053]; [0054] (withdrawaland deposit transaction messages).

MacLean Figs. 7F-7H show the programs that “validate andexecute an exchange of points [i.e., a conversion] between two ormore LPs” via the transaction center 120 and the issuer terminals130. (Ex 1504, ¶ [0059]; Figs. 7F-7H.)MacLean refers to withdrawal and deposit transaction messages(Ex 1504, ¶¶ [0053]; [0054]), as well as to withdrawals and depositsfrom loyalty program accounts in order to effect a pointsexchange (Ex 1504, ¶¶ [0059]-[0066].)MacLean discloses that points (e.g., non-negotiable credits) are inaccounts (e.g., loyalty program account). (E.g., Ex 1504, ¶ [0031](exchange of points from the customer’s “account” in awithdrawing loyalty program’s (LP) to the customer’s “account” ina depositing LP).) (Ex 1502, ¶ 69.)

wherein theconversionoperationoccurrencecauses thesubtracting ofthe non-negotiablecredits fromthe loyaltyprogramaccount to

See above regarding MacLean’s disclosure of the conversionoperation occurrence causing the subtracting of the non-negotiable credits from the loyalty program account.

Regarding addition of a corresponding quantity of entity-independent funds to the funds account per the conversionoperation occurrence, MacLean states: “[A] points exchangeincludes the steps of the withdrawal [i.e., subtraction] of pointsfrom one or more of the customer’s LP accounts followed by thedeposit [i.e., addition] of points into another of the customer’s LPaccounts. Each issuer terminal 130 must be equipped with amethod of receiving points withdrawal and deposit transaction

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occurapproximatelyconcurrentlywith anaddition of acorrespondingquantity ofentity-independentfunds beingadded to thefunds accountper theconversionoperationoccurrence.

messages from the transaction center 120, validating thetransaction messages and executing the corresponding changes tothe customer’s account balance within that LP.” (Ex 1504, ¶[0059]; see also ¶ [0052].) A corresponding quantity of entity-independent funds, in one example, is in the form of values“5,001” and “3,334.” (Ex 1504, Figs. 6E, 6F.)

MacLean illustrates using transaction messages to credit and debitloyalty program accounts. (Ex 1504, Figs. 7H, 7G.)

MacLean refers to withdrawal and deposit transaction messages(Ex 1504, ¶¶ [0053]; [0054]), as well as to withdrawals and depositsfrom loyalty program accounts in order to effect a pointsexchange (Ex 1504, ¶¶ [0059]-[0066].)

MacLean discloses that points (e.g., entity independent funds) arein accounts (e.g., funds account). (E.g., Ex 1504, ¶ [0031](exchange of points from the customer’s “account” in awithdrawing loyalty program’s (LP) to the customer’s “account” ina depositing LP).)

MacLean discloses that subtracting non-negotiable credits occursapproximately concurrently with adding corresponding entityindependent funds. (Ex 1504, Figs. 6E, 6F (web pages eachdisplaying subtracted quantities of non-negotiable credits“150,000” and added quantities of entity independent funds“5,001” and “3,334,”); see also ¶¶ [0051] (effecting a pointsexchange via a “real time” protocol); [0057]- [0059] (using“push[es]” and “pulls” to update portfolio balance information aschanges occur to issuer 130 accounts).) (Ex 1502, ¶¶ 70-72.)

Claim 22. The method ofclaim 1,whereinthe subtractedquantity of non-negotiable creditsis greater than aquantity thatmathematicallyresults fromapplying a fixedcredits-to-fundsratio to the new

MacLean discloses a surcharge incurred for the conversionoperation, and therefore the subtracted quantity of non-negotiable credits is greater than a quantity of new entityindependent funds (taking into account a fixed credits-to-fundsratio): “This means that for a withdrawal of 10,000 points fromthe customer’s account with the first issuer 900 will pay $80 instep 911 to the transaction center 902. The transaction center902 levies in step 912 a transaction fee in the amount of $8 thatwas set as a percentage of the cost of the withdrawal, leaving$72 (913) available to buy points from the second issuer 901,which has set in step 914 its point deposit rate at $0.02. In step915, the transaction center 902 uses the available $72 to deposit

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quantity of entityindependent fundsdue to a surchargeincurred for theconversionoperation, whereinthe surcharge is innon-negotiablecredits, entityindependentfunds, orcombinationsthereof.

3,600 points in the customer’s account in the second issuer901. In this example, the customer sees an effective pointsexchange rate of 3,600:10,000 or .36 between the first issuer900 and the second issuer 901. Fig. 9 also illustrates that, bysetting a points withdrawal rate that is lower than the bookliability per point and by setting a points deposit rate that ishigher that [sic] the book liability per point, the issuers are ableto generate a profit on both points withdrawal and deposittransactions.” (Ex 1504, ¶ [0064]; see also ¶¶ [0021]; [0027];[0065] (“[T]he value of the deposited points is calculated bysubtracting a transaction fee that is levied on all pointexchanges . . . .”); [0067] (“As described above, each pointdeposit has an associated cash value in the form of monetaryunits, e.g., dollars, which the transaction center 120 must pay tothe depositing issuer.”).) (Ex 1502, ¶¶ 73, 74.)

Claim 33. The method of claim 1, wherein the entity services providedby the entity for which the non-negotiable credits areredeemable with the entity comprise at least one of:

travel services for an airlines, travel services for a train, travelservices for a cruise ship, vehicle rental services for a vehicle, orlodging services for lodging the member,

wherein the commerce partner services provided by thecommerce partner for which the entity independent funds areredeemable with the commerce partner comprise at least one of:

travel services for an airlines, travel services for a train, travelservices for a cruise ship, vehicle rental services for a vehicle, orlodging services for lodging the member.

See Claim 9, supra.(Ex 1502, ¶¶ 75-77; see also ¶ 125.)

Claim 44. The method of claim 1, wherein the computer performing theoperation is an entity’s computer of the entity’s loyalty program, whereinthe entity’s computer permits consumer redemption of the non-negotiable credits for entity services that the entity provides, wherein theentity’s computer does not permit consumer redemption of the entityindependent funds for the entity services that the entity provides or forthe commerce partner services that the commerce partner provides.

See Claim10, supra.(Ex1502, ¶¶78-83.)

Claim 55. The method of claim 1,wherein the computer

See Claim 11, supra. With respect to the entitynot permitting direct customer redemption of

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performing the operation is acommerce partner’s computer ofthe commerce partner’s differentloyalty program, wherein thecommerce partner’s computerpermits consumer redemption ofthe entity independent funds forcommerce partner services thatthe commerce partner provides,

wherein the commerce partner’scomputer does not permitconsumer redemption of thenon-negotiable credits for theentity services that the entityprovides,

wherein the entity does notpermit direct customerredemption of the entityindependent funds for the entityservices that the entity provides.

the entity independent funds for the entityservices that the entity provides, MacLeanrecognizes that a business may only redeemloyalty points of its own loyalty program, butnot points of others. (E.g., Ex 1504, ¶¶ [0002](“[Loyalty Programs’ LPs are designed as thename suggests is [sic] to create and maintain theloyalty of a customer to a particular product orservice. The source of such services and/orproducts is also the issuer or distributor of thepoints to its customers and the redeemer ofthose points for rewards.”); [0041] (“Typically,each kind of point is issued and redeemed by adifferent LP and may have a different value orliability to its LP.”).)

Sakakibara describes “a method of exchangingpoints between different business entities . . .wherein the first points are only directlyredeemable by the first business entity, andwherein the second points are only directlyredeemable by the second business entity.” (Ex1505, 12:64-13:30.) (Ex 1502, ¶¶ 84-89.)

Claim 66. Themethod ofclaim 1,wherein thecomputerperforms theestablishing,detecting,andsubtractingwithin asinglehuman-to-machineinteractionsession.


MacLean describes a system wherein establishing, the detecting, andthe subtracting all may occur within a single human-to-machineinteraction session. For example, a single human-to-machineinteraction session occurs in a web browsing session (using browser202), during which the customer “‘surfs’ to the points managementsystem web site,” establishes an account via button 401, and in whichinteractions are detected earning non-negotiable loyalty credits: “thecustomer is given the opportunity to add to their portfolio, theircustomer accounts in LPs . . . [using] ‘add loyalty program’ button443 . . . . The customer [presses] button 479 to add the LP accountto their portfolio,” and “[a] valid account confirmation record willinclude the current points balance for that LP account.” (Ex 1504, ¶¶[0049]; [0050]; see also ¶ [0057] (“points are added to the customer’saccount typically when the customer purchases some goods orservices.”).) Also during that web browsing session (using browser202), the conversion operation involving the subtracting can be

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performed. (Ex 1504, ¶¶ [0052]; [0055]-[0063].) (Ex 1502, ¶¶ 90, 91.)Claim 1212. The methodof claim 7,wherein thecomputer forthe differentloyalty programperforms thedetecting of thecommunication,the granting ofthe newquantity ofentityindependentfunds, and theredeeming of atleast a portionof the entityindependentfunds within asingle human-to-machineinteractionsession.


MacLean discloses a system wherein the detecting, granting, andredeeming all may occur within a single human-to-machineinteraction session. For example, a single human-to-machineinteraction session occurs in a web browsing session (usingbrowser 202), during which the customer “‘surfs’ to the pointsmanagement system web site.” (Ex 1504, ¶ [0049].) Regardingdetecting of the communication, MacLean discloses that duringthis session communication is established with the necessaryissuers (e.g., depositing issuer) and a points deposit transactionmessage is transmitted. (Ex 1504, ¶¶ [0051]; [0054].) Also duringthis session, the customer is granted new entity independentfunds via the conversion operation. (Ex 1504, ¶ [0052]; Figs. 6E(element 648), 6F (showing entity independent funds “5,001” and“3,334.”); see also ¶¶ [0059]; [0061].) Additionally, during thissession, deposits are made into loyalty program accounts in orderto effect a points exchange. (Ex 1504, ¶¶ [0054]); [0059]-[0066].)

MacLean also recognizes that during a website session (e.g., usinga browser 202), entity independent funds may be redeemed. E.g.,MacLean discusses “Points Universe” which “keeps track ofpoints, miles and other currencies in one statement. . . . Byshopping/visiting sites, these points can be used to redeemproducts on the Awards Store Catalogue.” (Ex 1504, ¶ [0009]; seealso Fig. 4A (“Try our quick award finder to see what awards youcan redeem your points for!”).)

Further with respect to the entity independent funds beinggranted and redeemed within a single human-to-machineinteraction session, Postrel states: “[a]fter the purchaser hasaggregated his desired points, he may execute a purchasetransaction with those points. In the preferred embodiment, thepurchaser may purchase any item at any merchant that accepts hiscredit card—which will be virtually every merchant.” (Ex 1503, ¶[0047].) “[T]he purchaser may select an item from a catalog ofitems provided in conjunction with the central exchange account.For example, in the VISA embodiment, VISA may partner withan entity or entities that can provide to it a catalog of items forsale. The purchaser can easily link to that catalog and make a

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purchase accordingly.” (Ex 1503, ¶ [0049].) (Ex 1502, ¶¶ 133-135.)

Claim 1313. A methodcomprising:at least oneprocessor,responsive toexecutingprograminstructions of atleast onememory,accessing astorage devicecontaininginformation of aloyalty programaccount of aloyalty programof an entity,

With regard to any computer pertaining to Claim 13(throughout), and in any of its dependent claims, MacLeanteaches a system 100 to manage points of a variety of loyaltyprograms (LPs). (Ex 1504, ¶ [0040].) MacLean’s system 100 usescomputers to perform operations of these applicable claims, andcommunications can be effected over a network. (See, e.g., Ex1504, ¶¶ [0031]; [0045]; Figs. 1, 2 (showing customer terminals110a-110c, transaction center 120, issuer terminals 130a-130c,and internet [i.e., network] 205).)

With respect to claim 13 (throughout) and its dependent claims,MacLean does not explicitly recite processors (such as those incomputers). However, Postrel discloses “processing means . . .adapted to allow the user to request and exchange considerationfor rewards from reward servers . . . to coordinate the exchangeof consideration and increase or decrease the user exchangeaccounts stored in memory in response to actions performed bythe user computer, reward server and merchants.” (Ex 1503, ¶[0068]; see also ¶ [0060]; Figs. 4, 5; ¶ [0060].)

Regarding program instructions with respect to claim 13(throughout) and its dependent claims, MacLean discloses thatcomputers are programmed, e.g., to facilitate the input of arequest from a potential customer to communicate with at least aselected one of the plurality of loyalty programs, respond to thecustomer's request by constructing a customer's validationrecord in accordance with the criteria of the selected one loyaltyprogram, transmit the customer's validation record to theterminal associated with the selected one loyalty program, receiveand to compare the customer's validation record with criteria ofa selected one loyalty program, and, validate the customer forcommunication with the selected one loyalty program. (Ex 1504,¶ [0029].) MacLean also discloses, e.g., that “program 500 isstored and executed in the transaction center 120.” (Ex 1504, ¶[0052]; see also ¶¶ [0032]; [0034]; [0036]; Figs. 3, 5A, 5B(representing programs).)

While MacLean does not specifically disclose a memory havingprogram instructions (such as memories in computers), Postrel

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discloses a “server [with] memory means for storing the useraccount information, user profiles, and rules [e.g., programinstructions] specified by the user, system, or merchant.” (Ex1503, ¶ [0068].)

With respect to any storage devices recited in Claim 13(throughout) and its dependent claims, MacLean disclosesstorage devices, e.g., issuer terminals 130a-130c having servers280a-280c and databases 285a-285c that can contain informationof members’ loyalty program accounts. (Ex 1504, ¶¶ [0044];[0047]; Fig. 2.) Master database 240 also maintains a profile ofeach customer that includes, e.g., current LP points balances anda record of points exchanges for that customer. (Ex 1504, ¶¶[0046]; [0049].)

In particular, MacLean discloses storage devices containinginformation of a non-negotiable credit account of a loyaltyprogram member. For example, the LP account information ismaintained in the “master database 240 of the transaction center120.” (Ex 1504, ¶ [0049].) “This customer portfolio, illustrativelycalled the ‘pointsfolio’, contains detailed information about eachLP that the customer is a member and tracks current pointsbalances for each LP.” (Ex 1504, ¶ [0049]; see also ¶ [0046] (“Theweb server 230 utilizes this profile to permit the customer 110 tologin to the web site, to display point balances and to permitpoints exchange requests.”).) As another example, MacLean alsodiscloses that databases 285a-285c contain information ofmembers’ loyalty program accounts. (Ex 1504, ¶ [0047]; Fig. 2.)

MacLean discloses accessing storage devices containinginformation of a loyalty program account of a loyalty program ofan entity. For example, each issuer 130 (e.g., withdrawing issuer)maintains points balances for each customer that belongs to thatLP, and MacLean discloses bi-directional communicationto/from those issuers. (Ex 1504, ¶ [0044]; Fig. 1.) Further,MacLean discloses bidirectional communication with masterdatabase 240. (Ex 1504, Fig. 2.) MacLean also discloses, e.g.,downloading current points balances from issuer database 285.(Ex 1504, ¶ [0047].) MacLean discloses an entity, such as awithdrawing one of points issuers 130a-130c in Fig. 1. (Ex 1504,¶ [0044]; see also ¶¶ [0042]; [0043]; [0064]-[0066].)

With respect to information of a loyalty program account of a

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loyalty program of an entity, MacLean discloses that the entitymaintains a loyalty program, e.g.: “This invention has in at leastone embodiment an application to loyalty programs (LPs). LPsare designed as the name suggests is [sic] to create and maintainthe loyalty of a customer to a particular product or service. Thesource of such services and/or products is also the issuer ordistributor of the points to its customers and the redeemer ofthose points for rewards. LPs are based on the concept ofinfluencing the customer to continue to purchase productsand/or services from one source, whereby the customer isrepetitively issued points and, over a period of time, willaccumulate sufficient points that may be redeemed for a valuablereward.” (Ex 1504, ¶ [0002] (emphasis added).) Loyalty programpoints are maintained in accounts. (E.g., Ex 1504, ¶ [0031](exchange of points from the customer’s account in awithdrawing loyalty program’s (LP) to the customer’s account ina depositing LP).) (Ex 1502, ¶¶ 136-141.)

wherein loyaltyprogram accountmaintains anumber of non-negotiablecredits, whichare loyalty pointsof the loyaltyprogram,possessed by amember,wherein theloyalty programaccount isowned orcontrolled by theentity,

MacLean discloses that non-negotiable credits of the loyaltyprogram account are a member (customer)’s loyalty points of aloyalty program of the entity. (Ex 1504, ¶ [0002]; Ex 1505, 12:64-13:30.) MacLean states that “[t]his invention relates to apparatusand methods for keeping track of points and, in particular, formanaging and exchanging those points that are issued andredeemed in the context of a loyalty program (LP).” (Ex 1504, ¶[0001].) MacLean discloses that “a point issuer 130 (‘issuer’) [i.e.,the entity, a withdrawing issuer] is any entity that controls thedisposition and distribution of a currency” [the non-negotiablecredits]. (Ex 1504, ¶ [0040].) The point issuer operates a LoyaltyProgram that controls a private currency of points [i.e.,non-negotiable credits]. (Ex 1504, ¶ [0040]; see also ¶ [0041] (referringto a loyalty program of an entity such as American Airlineshaving loyalty points).) A member (customer) holds points [non-negotiable credits] in one or more loyalty programs. (Ex 1504, ¶[0040].) Loyalty program points are maintained in accounts.(E.g., Ex 1504, ¶ [0031] (exchange of points from customer’s“account” in a withdrawing loyalty program (LP) to customer’s“account” in a depositing LP).) (Ex 1502, ¶¶ 142-147.)

wherein theentity redeemsthe loyalty pointsfor a set of entity

MacLean recognizes that points may be redeemed for rewards,e.g., loyalty points may be redeemed for a set of entity servicesthat the entity provides to the member. (Ex 1504, ¶¶ [0002] (aloyalty points issuer is also the redeemer of those points for

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services that theentity providesto the member;

rewards); [0003] (loyalty programs for airlines and hotels, i.e.,services); [0007] (discussing airline and hotel loyalty programs);[0041] (points issued by American Airlines); see also Fig. 4A (“Tryour quick award finder to see what awards you can redeem yourpoints for!”).) (Ex 1502, ¶ 148.)

at least oneprocessor,responsive toexecutingprograminstructions of atleast onememory,accessing asecond storagedevicecontaininginformation of afunds account ofa differentloyalty programof a commercepartner,

See above regarding MacLean and Postrel disclosing processors,program instructions of a memory, and storage devices.

MacLean discloses accessing a second storage device containinginformation of a funds account of a different loyalty program ofa commerce partner. For example, MacLean states that eachissuer 130 (e.g., a depositing issuer) maintains points balances foreach customer that belongs to that LP, and MacLean disclosesbi-directional communication to/from those issuers. (Ex 1504, ¶[0044]; Fig. 1.) MacLean discloses bi-directional communicationto/from master database 240. (Ex 1504, Fig. 2.) MacLean alsodiscloses, e.g., downloading current points balances from issuerdatabase 285. (Ex 1504, ¶ [0047].) MacLean also discloses thatentity independent funds are maintained in accounts for eachloyalty program member. (E.g., Ex 1504, ¶ [0031] (exchange ofpoints from the customer’s account in a withdrawing loyaltyprogram’s (LP) to the customer’s account in a depositing LP).)

An example of a commerce partner in MacLean is a “depositingissuer” (Ex 1504, ¶¶ [0064]; [0065]; Figs. 9, 10), such as any ofpoints issuers 130a-130c (Ex 1504, Fig. 1). (Ex 1504, ¶¶ [0044];[0047]; [0052]; [0053]; [0059]; [0062]; [0064]; [0065].) MacLeanalso discloses funds (entity independent funds) in the form ofpoints of an American Express Card (converted from AmericanAirlines points). (Ex 1504, ¶ [0041].) (Ex 1502, ¶ 149, 150.)

wherein fundsaccountmaintains anumber of entityindependentfunds, which aredifferent loyaltypoints of thedifferent loyaltyprogram,possessed by themember,

MacLean discloses that the entity independent funds of thefunds account are loyalty points of a commerce partner loyaltyprogram. (Ex 1504, ¶¶ [0002]; [0009]; [0017]; [0027]; [0041];[0057].) MacLean states that “[t]his invention relates to apparatusand methods for keeping track of points and, in particular, formanaging and exchanging those points that are issued andredeemed in the context of a loyalty program (LP).” (Ex 1504, ¶[0001].) MacLean also discloses that “a point issuer 130 (‘issuer’)[i.e., the commerce partner, a depositing issuer] is any entity thatcontrols the disposition and distribution of a currency [i.e., entityindependent funds]… [and] the point issuer operates a LoyaltyProgram that controls a private currency of points [i.e., non-

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wherein thefunds account isowned orcontrolled by thecommercepartner,

negotiable credits].” (Ex 1504, ¶ [0040].) Loyalty program pointsare maintained in accounts. (Ex 1504, ¶ [0031] (exchange ofpoints from the customer’s “account” in a withdrawing loyaltyprogram’s (LP) to the customer’s “account” in a depositing LP).)MacLean discloses an example of a commerce partner (e.g.,“American Express”). (Ex 1504, ¶ [0041].) A member (customer)holds points [entity independent funds] in one or more loyaltyprograms. (Ex 1504, ¶ [0040].) (Ex 1502, ¶¶ 151-153.)

wherein thecommercepartner redeemsthe differentloyalty points fora set ofcommercepartner servicesthat thecommercepartner providesto the member,

MacLean recognizes that points may be redeemed for rewards,e.g., the different loyalty points may be redeemed for a set ofcommerce partner services that the commerce partner providesto the member. (Ex 1504, ¶¶ [0002] (a loyalty points issuer is alsothe redeemer of those points for rewards); [0003] (loyaltyprograms for airlines and hotels, i.e., services); [0007] (discussingairline and hotel loyalty programs); [0041] (points issued byAmerican Airlines); Fig. 9 (trade from credit card points toairline points, i.e., the commerce partner is an airline and thecommerce partner services can include airline services); see alsoFig. 4A (“Try our quick award finder to see what awards you canredeem your points for!”).) (Ex 1502, ¶ 154.)

wherein theentity does notaccept the entityindependentfunds aspayment for theentity services,

MacLean recognizes that a business may only redeem loyaltypoints of its own loyalty program, but not points of others. (E.g.,Ex 1504, ¶¶ [0002] (“[Loyalty Programs’ LPs are designed as thename suggests is [sic] to create and maintain the loyalty of acustomer to a particular product or service. The source of suchservices and/or products is also the issuer or distributor of thepoints to its customers and the redeemer of those points forrewards.”); [0041] (“Typically, each kind of point is issued andredeemed by a different LP and may have a different value orliability to its LP.”); see also ¶ [0048] (referring to rules set byissuers for their loyalty programs).)

Sakakibara describes “a method of exchanging points betweendifferent business entities . . . wherein the first points are onlydirectly redeemable by the first business entity, and wherein thesecond points are only directly redeemable by the secondbusiness entity.” (Ex 1505, 12:64-13:30.) (Ex 1502, ¶ 155.)

wherein theentity does notown or controlthe funds

MacLean discloses that loyalty program points are maintained inaccounts (e.g., funds account and loyalty program account). (E.g.,Ex 1504, ¶ [0031] (exchange of points from the customer’s“account” in a withdrawing loyalty program’s (LP) to the

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account, whereinthe commercepartner does notown or controlthe loyaltyprogramaccount,

customer’s “account” in a depositing LP).)

MacLean also states: “point issuer 130 (‘issuer’) is any entity thatcontrols the disposition and distribution of a currency . . . thepoint issuer operates a Loyalty Program that controls a privatecurrency of points.” (Ex 1504, ¶ [0040]; see also ¶ [0044] (“Ingeneral, each issuer 130, operates a LP which maintains pointsbalances for each customer that belongs to that LP.”).) Thus, afunds account can be owned and controlled by a depositingissuer (commerce partner), and accordingly is neither owned norcontrolled by a withdrawing issuer (entity). Likewise, a loyaltyprogram account can be owned and controlled by a withdrawingissuer (entity), and accordingly is neither owned nor controlledby a depositing issuer (commerce partner). (Ex 1502, ¶ 156.)

wherein saidnon-negotiablecredits and theentity-independentfunds havedifferentrestrictions-on-use establishedby terms-of-useof the loyaltyprogram andestablished byterms-of-use ofthe differentloyalty program,

MacLean recognizes using loyalty program “terms andconditions,” such as those associated with non-negotiablecredits. (Ex 1504, ¶ [0052]; Figs. 6F (element 657), 4C (element422 “TERMS AND CONDITIONS OF USING THEPRODUCTS AND SERVICES”).) MacLean also recognizesgenerally restricting loyalty point usage: “[t]ypically, each kind ofpoint is issued and redeemed by a different LP and may have adifferent value or liability to its LP.” (Ex 1504, ¶ [0041]; see also ¶[0048] (rules set by issuers for their loyalty programs).)

In addition, Postrel discloses that entity independent funds areredeemable under different terms-of-use of a commerce partnerloyalty program: “Fig. 12 illustrates a simple database formatwherein each merchant and user under that merchant has arecord which indicates how many points are in the account, aswell as other optional information (such as par value of points,restrictions on use, etc.) (Ex 1503, ¶ [0032] (emphasis added).)(Ex 1502, ¶ 157-159.)

wherein anagreement existsbetween theentity and thecommercepartner thatpermits transfersor conversionsof non-negotiable

MacLean discloses the use of agreements between entities andcommerce partners. For example, MacLean discloses “a systemand method… permitting the customer to set a first number offirst points to be exchanged and permitting the first and secondpoint issuers to set [i.e., agree to] the point withdrawal anddeposit rates of their first and second points respectively.” (Ex1504, ¶ [0023].) MacLean refers to “exchanging first points forsecond, different points that are issued by a second point issuerat exchange rates set [i.e., agreed to] by the first and second pointissuers respectively.” (Ex 1504, ¶ [0027].) MacLean further

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credits to entityindependent,wherein theagreementspecifies that theentitycompensates thecommercepartner bypaying anamount innegotiable fundsfor each non-negotiable creditredeemed perthe agreement;

discloses payments (compensation) from the entity (withdrawingissuer) to the commerce partner (depositing issuer) in negotiablefunds for each non-negotiable credit redeemed (pointsexchange). (Ex 1504, ¶¶ [0064]-[0067]; Figs. 9-12.) First, thewithdrawing issuer 900 pays to the transaction center 120 anassociated cash value for each point withdrawn. (Ex 1504, ¶¶[0064]; [0066].) Next, this withdrawn cash value is provided tothe depositing issuer 901 via the transaction center 120, whereinthe transaction center 120 “must pay to the depositing issuer” anassociated cash value per point deposit. (Ex 1504, ¶¶ [0064];[0067].) (Ex 1502, ¶¶ 160, 161.)

With respect to an agreement existing, Sakakibara disclosescontracts (i.e., agreements) between first and second businessentities participating in a points exchange. (Ex 1505, 7:7-10 (e.g.,contract sets exchange rates).)

at least oneprocessor,responsive toexecutingprograminstructions of atleast onememory,performing aconversionoperation totransfer a subsetof the non-negotiablecredits into anew quantity ofentityindependent inaccordance withthe agreement;

See above regarding MacLean and Postrel’s disclosure ofprocessors and program instructions of a memory, as well asMacLean and Sakakibara’s disclosure regarding agreements.

MacLean discloses a conversion operation in the form of a“continue xchange” button 648. (Ex 1504, ¶ [0052]; Fig. 6E.)Subsequent to button 648 being selected, interface 650 ispresented that shows entity independent funds in the form ofvalues “5,001” and “3,334,” under element 654. (Ex 1504, Fig.6F.) These values result from transfer of a quantity of non-negotiable credits from the loyalty program account (see Ex 1504,Fig. 6E (644a, 644b)) and a conversion of the non-negotiablecredits to the mentioned entity independent funds. (See also Ex1504, ¶¶ [0053]-[0054] (withdrawal and deposit transactionmessages); [0059]-[0066] (referring to the withdrawal of pointsfrom a customer’s LP account followed by the deposit of pointsinto another of the customer’s LP accounts); Figs. 6H(confirmation button 678), 7F-7H.) The non-negotiable credits(e.g., elements 644a and 644b) and the entity independent funds(e.g., “5,001” and “3,334”) are related to each other inaccordance with a fixed credits-to-funds ratio, referred to byMacLean as an “exchange rate.” (Ex 1504, ¶¶ [0021]; [0027];[0052]; Fig. 6E.) The quantities of non-negotiable credits (whichare expended) comprises value “150,000.” (Ex 1504, Figs. 6E,6F; see also ¶ [0064]; Fig. 9 (withdrawal rate at $0.008 per point,

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deposit rate at $0.02 per point, and “effective points exchangerate” of 3,600:10,000 or 0.36 due to a transaction fee).)

Sakakibara discloses carrying out a conversion operation inaccordance with the agreement, e.g., because the agreement setsthe points exchange rate. (Ex 1505, 7:7-10 (e.g., contract setsexchange rates).) (Ex 1502, ¶ 162.)

at least oneprocessor,responsive toexecutingprograminstructions of atleast onememory, andresponsive to theconversionoperation,subtracting aquantity of thenon-negotiablecredits from theloyalty programaccount of thestorage device,said subtractedquantity of non-negotiablecreditscomprising atleast the subsetof non-negotiablecredits; and

See above regarding MacLean and Postrel disclosing processors,program instructions of a memory, storage devices, and aconversion operation.

MacLean teaches subtracting a quantity of non-negotiable credits(Ex 1504, Figs. 6E, 6F (subtracted quantity “150,000”)) from thenon-negotiable credit account (Ex 1504, Figs. 6E, 6F (LP15 andLP16)) responsive to a conversion operation occurrence. (Ex1504, ¶ [0052]; see also Fig. 6H, ¶¶ [0053]; [0054]; [0059]-[0066].)This subtraction from the non-negotiable credit accountbalances before the conversion operation (“1,000,000”) leaves adifference of “850,000” in each account. (Ex 1504, Figs. 6E,6F.)

As another example, selecting a button 678 in interface 670initiates a communication in step 618 to effect payment for anexchange, which issues confirmation number 682. (Ex 1504, ¶[0052]; Fig. 6H.) Transaction messages are used to credit anddebit loyalty program accounts. (Ex 1504, Figs. 7H, 7G.)

MacLean refers to withdrawal and deposit transaction messages(Ex 1504, ¶¶ [0053]; [0054]), as well as to withdrawals anddeposits from loyalty program accounts in order to effect apoints exchange (Ex 1504, ¶¶ [0059]-[0066].) In one example, aquantity of non-negotiable credits are subtracted from the non-negotiable credit account. The “points exchange program 500”“performs all of the withdrawals” of non-negotiable credits fromnon-negotiable credit accounts. These are referred to as “pointswithdrawals.” (Ex 1504, ¶ [0053].) (Ex 1502, ¶ 163.)

at least oneprocessor,responsive toexecutingprograminstructions of atleast one

See above regarding MacLean and Postrel disclosing processors,program instructions of a memory, storage devices, and aconversion operation.

MacLean discloses adding the new entity independent funds tothe second storage device (e.g., database 285): “[A] pointsexchange includes the steps of the withdrawal [i.e., subtraction]of points from one or more of the customer’s LP accounts

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memory, andresponsive to theconversionoperation,adding at least aportion of thenew quantity ofentityindependentfunds to thefunds account ofthe secondstorage device,

followed by the deposit [i.e., addition] of points into another ofthe customer’s LP accounts. Each issuer terminal 130 must beequipped with a method of receiving points withdrawal anddeposit transaction messages from the transaction center 120,validating the transaction messages and executing thecorresponding changes to the customer’s account balance withinthat LP.” (Ex 1504, ¶¶ [0047]; [0059]; see also ¶¶ [0047]; [0049](master database 240).) Added entity independent funds, in oneexample, are in the form of values “5,001” and “3,334.” (Ex1504, ¶ [0052]; Figs. 6E, 6F.)

As another example, selecting a button 678 in interface 670,initiates a communication in step 618 to effect payment for anexchange, which issues confirmation number 682. (Ex 1504, ¶[0052]; Fig. 6H.) Transaction messages are used to credit anddebit loyalty program accounts. (Ex 1504, Figs. 7H, 7G.)

MacLean refers to withdrawal and deposit transaction messages(Ex 1504, ¶¶ [0053]; [0054]), as well as to withdrawals anddeposits from loyalty program accounts in order to effect apoints exchange (Ex 1504, ¶¶ [0059]-[0066].) In one example, anew quantity of entity independent funds is added to the entityindependent funds account. The “points exchange program 500”“performs the points deposit” of entity independent funds to theentity independent funds accounts. These are referred to as“points deposit[s].” (Ex 1504, ¶ [0053].) (Ex 1502, ¶ 164.)

wherein thesubtracting ofthe quantity ofnon-negotiablecredits from theloyalty programaccount and theadding of theentityindependentfunds to thefunds accountoccursapproximatelyconcurrently intime.

MacLean discloses that subtraction of non-negotiable creditsoccurs approximately concurrently in time with addition ofcorresponding entity independent funds. (Ex 1504, Figs. 6E, 6F(web pages each displaying subtracted quantities of non-negotiable credits “150,000” and added quantities of entityindependent funds “5,001” and “3,334,”); see also ¶¶ [0051](effecting a points exchange via an application programminginterface (API), i.e., a “real time” protocol); [0057]-[0059] (using“push[es]” and “pulls” to update portfolio balance informationas changes occur to issuer 130 accounts).) (Ex 1502, ¶165.)

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Claim 1414. The method of claim 13, wherein the subtractedquantity of non-negotiable credits from the loyaltyprogram account is greater than a quantity thatmathematically results from applying a fixed credits-to-funds conversion ratio to the new quantity of entityindependent funds due to a surcharge incurred for theconversion operation.

See Claim 2, supra(MacLean’s credits-to-funds ratio is a“conversion” ratio).(Ex 1504, ¶¶ [0052];[0062].) (Ex 1502, ¶¶166, 167; see also ¶ 74.)

Claim 1515. The method of claim 13, wherein the atleast a portion of the new quantity of entityindependent funds added to the funds accountis less than a quantity that mathematicallyresults from applying a fixed credits-to-fundsconversion ratio to the subset of non-negotiable funds due to a surcharge incurredfor the conversion operation.

See Claim 8, supra (MacLean’scredits-to-funds ratio is a“conversion” ratio; “at least aportion” of the new quantity ofentity independent funds are lessthan the mathematical result as thenew quantity is less per Claim 8).(Ex 1504, ¶ [0064].) (Ex 1502, ¶¶168, 169; see also ¶ 123.)

Claim 1616. The method of claim 13, wherein the entity servicesprovided by the entity for which the non-negotiable credits areredeemable with the entity comprise at least one of:

travel services for an airlines, travel services for a train, travelservices for a cruise ship, vehicle rental services for a vehicle, orlodging services for lodging the member,

wherein the commerce partner services provided by thecommerce partner for which the entity independent funds areredeemable with the commerce partner comprise at least one of:

travel services for an airlines, travel services for a train, travelservices for a cruise ship, vehicle rental services for a vehicle, orlodging services for lodging the member.

See Claim 9, supra.(Ex 1502, ¶¶ 170,171; see also ¶¶ 75-77, 125.)

Claim 1717. Themethodof claim13,whereinthe atleast one

See above regarding MacLean’s disclosure of computers. Also, see claims4 and 10 regarding Sakakibara’s disclosure of a computer for the entityperforming the conversion operation, and see claim 13 regardingPostrel’s disclosure of processors.

MacLean discloses a computer for the loyalty program of the entity. Anexample of the computer is included in the transaction center 120,which is “attached” to the entity (the withdrawing issuer 130a-130c).

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processoris inside acomputerfor theloyaltyprogramof theentity.

(Ex 1504, ¶ [0045].) The transaction center 120 “acts as a ‘currencyexchange’ for the issuers 130a-130c [i.e., for the loyalty program of theentity], effecting the exchange of points from one issuer to another.”(Ex 1504, ¶ [0043]; see also ¶ [0047].)

As another example, see Ex 1504, ¶¶ [0060]; [0061] (relating to issuersand the transaction center effecting a points exchange); see also ¶ [0062](relating to a points exchange). MacLean also states that “[e]ach issuerterminal 130 must be equipped with a method of receiving pointswithdrawal and deposit transaction messages from the transactioncenter 120, validating the transaction messages and executing thecorresponding changes to the customer’s account balance within thatLP.” (Ex 1504, ¶ [0059].) (Ex 1502, ¶¶ 172, 173.)

Claim 1818. Themethod ofclaim 13,whereinthe at leastoneprocessoris inside acomputerfor thedifferentloyaltyprogramof thecommercepartner.

See above regarding MacLean’s disclosure of computers. Also, see claims5 and 11 regarding Sakakibara’s disclosure of a computer for thecommerce partner performing the conversion operation, and see claim13 regarding Postrel disclosing computers having processors.

MacLean discloses a computer for the different loyalty program of thecommerce partner. An example of the computer is included in thetransaction center 120, which is “attached” to the commerce partner(the depositing issuer 130a-130c). (Ex 1504, ¶ [0045].) The transactioncenter 120 “acts as a ‘currency exchange’ for the issuers 130a-130c [i.e.,for the loyalty program of the commerce partner], effecting theexchange of points from one issuer to another.” (Ex 1504, ¶ [0043]; seealso ¶ [0047].)

As another example, see Ex 1504, ¶¶ [0060]; [0061] (relating to issuersand the transaction center effecting a points exchange); see also ¶ [0062](relating to a points exchange). MacLean also states that “[e]ach issuerterminal 130 must be equipped with a method of receiving pointswithdrawal and deposit transaction messages from the transactioncenter 120, validating the transaction messages and executing thecorresponding changes to the customer’s account balance within thatLP.” (Ex 1504, ¶ [0059].) (Ex 1502, ¶¶ 174, 175.)

Claim 1919. The method of claim 13,wherein the loyalty programof the entity is an airline,hotel, or credit card loyaltyprogram, wherein the

MacLean discloses that loyalty program points maybe “issued by airlines, hotels, financial entities, e.g.,credit cards, and networks, e.g. portal web sites onthe Internet.” (Ex 1504, ¶ [0040].) MacLean alsostates that a “customer may exchange loyalty

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different loyalty program ofthe commerce partner is anairline, hotel, or credit cardloyalty program.

program points issued by an airline, such asAmerican Airlines for those issued by a credit cardloyalty program, such as the American ExpressCard.” (Ex 1504, ¶ [0041].) (Ex 1502, ¶¶ 176, 177.)

Claim 2020. The method of claim 13,wherein the at least oneprocessor performs theaccessing of the storagedevice, the accessing of thesecond storage device, theconversion operation, thesubtracting of the quantityof non-negotiable credits,and the adding of theportion of the new quantityof entity independent fundswithin a single human-to-machine interaction session.

In MacLean, a single human-to-machine interactionsession occurs in a web browsing session (usingbrowser 202), where the customer “‘surfs’ to thepoints management system web site”, whereinstorage devices are accessed for information of aloyalty program account of a loyalty program of anentity and for information of a funds account of adifferent loyalty program of a commerce partner (Ex1504, ¶ [0044]; [0046]; [0047]; [0049]; Figs. 1, 2), andin which the conversion operation can be performed(Ex 1504, Figs. 6E, 6F; see also ¶¶ [0052]; [0059]),resulting in the subtraction of non-negotiable creditsand addition of entity independent funds all in onesession (Ex 1504, ¶¶ [0052]; [0053]; [0059]-[0062];Figs. 6E, 6F, 6H, 7F-7H.) (Ex 1502, ¶¶ 178, 179.)

VIII. Conclusion

For the reasons set forth above, Petitioner submits that Claims 1-20 of the ’152

Patent are invalid under 35 U.S.C. § 103. Accordingly, Petitioner requests institution

of Inter Partes Review of these claims for each ground presented herein.

Respectfully submitted,

/Frank A. DeLucia/Attorney for PetitionerRegistration No. 42,476

FITZPATRICK, CELLA, HARPER & SCINTO1290 Avenue of the AmericasNew York, New York 10104-3800Facsimile: (212) 218-2200

CERTIFICATE OF SERVICE

Pursuant to 37 C.F.R. §§ 42.6(e)(4) and 42.105, the undersigned certifies that

on this date, a true and correct copy of this Petition for Inter Partes Review and all

supporting exhibits were served via Express Mail on the Patent Owner at the

correspondence address of record for U.S. Patent No. 8,540,152.

PATENTS ON DEMAND, P.A.-General4581 Weston RoadSuite 345Weston, FL 33331

Dated: October 23, 2014 /Frank A. DeLucia/Attorney for PetitionerRegistration No. 42,476

paper no. date filed: filed on behalf of: askeladden...

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