Paper No. 38
`
` Entered: March 27, 2017
`
`Trials@uspto.gov
`571-272-7822
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`THE KROGER COMPANY and BROOKSHIRE GROCERY COMPANY,
`Petitioner,
`
`v.
`
`NEXUSCARD, INC.,
`Patent Owner.
`____________
`
`Case CBM2015-00183
`Patent 5,924,080
`____________
`
`
`
`Before JENNIFER S. BISK, MICHAEL J. FITZPATRICK, and
`MINN CHUNG, Administrative Patent Judges.
`
`Opinion for the Board filed by Administrative Patent Judge MINN CHUNG
`
`Opinion Concurring filed by Administrative Patent Judge MICHAEL J.
`FITZPATRICK
`
`CHUNG, Administrative Patent Judge.
`
`
`
`FINAL WRITTEN DECISION
`35 U.S.C. § 328(a) and 37 C.F.R. § 42.73
`
`
`
`
`
` Entered: March 27, 2017
`
`Trials@uspto.gov
`571-272-7822
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`THE KROGER COMPANY and BROOKSHIRE GROCERY COMPANY,
`Petitioner,
`
`v.
`
`NEXUSCARD, INC.,
`Patent Owner.
`____________
`
`Case CBM2015-00183
`Patent 5,924,080
`____________
`
`
`
`Before JENNIFER S. BISK, MICHAEL J. FITZPATRICK, and
`MINN CHUNG, Administrative Patent Judges.
`
`Opinion for the Board filed by Administrative Patent Judge MINN CHUNG
`
`Opinion Concurring filed by Administrative Patent Judge MICHAEL J.
`FITZPATRICK
`
`CHUNG, Administrative Patent Judge.
`
`
`
`FINAL WRITTEN DECISION
`35 U.S.C. § 328(a) and 37 C.F.R. § 42.73
`
`
`
`
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`CBM2015-00183
`Patent 5,924,080
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`
`
`I. INTRODUCTION
`In this covered business method patent review, instituted pursuant to
`35 U.S.C. § 324, The Kroger Co. and Brookshire Grocery Company
`(collectively, “Petitioner”) challenge the patentability of claims 1–11 (the
`“challenged claims”) of U.S. Patent No. 5,924,080 (Ex. 1001, “the ’080
`patent”), owned by Nexuscard, Inc. (“Patent Owner”). This Final Written
`Decision is entered pursuant to 35 U.S.C. § 328(a) and 37 C.F.R. § 42.73.
`With respect to the ground instituted in this trial, we have considered the
`papers submitted by the parties and the evidence cited therein. For the
`reasons discussed below, we determine Petitioner has shown by a
`preponderance of the evidence that claims 1–11 of the ’080 patent are
`unpatentable.
`
`A. Procedural History
`On September 25, 2015, Petitioner filed a Petition (Paper 1, “Pet.”)
`requesting a covered business method patent review of claims 1–11 of the
`’080 patent under Section 18 of the Leahy-Smith America Invents Act, Pub.
`L. No. 112-29, 125 Stat. 284, 329 (2011) (“AIA”). Patent Owner filed a
`Corrected Preliminary Response (Paper 11, “Prelim. Resp.”).1 On March
`28, 2016, we instituted a covered business method patent review based on
`the ground that claims 1–11 are directed to patent-ineligible subject matter
`under 35 U.S.C. § 101. Paper 16 (“Dec. on Inst.”), 28.
`After institution of trial, Patent Owner filed a Patent Owner Response
`(Paper 22, “PO Resp.”), to which Petitioner filed a Reply (Paper 26, “Pet.
`
`1 Pursuant to our Order Regarding Exhibit Numbering and Formatting
`(Paper 7) and upon our authorization (Paper 10), Petitioner filed a Corrected
`Preliminary Response (Paper 11).
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`Reply”). An oral hearing was held on December 15, 2016. A transcript of
`the hearing is included in the record as Paper 37 (“Tr.”).
`
`B. Related Proceedings
`The parties indicate that the ’080 patent has been asserted against
`Petitioner in the following patent infringement cases: Nexuscard, Inc. v. The
`Kroger Co., No. 2:15-cv-00968-JRG (E.D. Tex.); and Nexuscard, Inc. v.
`Brookshire Grocery Company, No. 2:15-cv-00961-JRG (E.D. Tex.).
`Pet. 17; Paper 5, 1 (Patent Owner’s list of related matters). According to the
`parties, the ’080 patent is also the subject of the following patent
`infringement case: Nexuscard, Inc. v. Winn Dixie Stores Inc., No. 4:15-cv-
`00138-CDL (M.D. Ga.). Pet. 17; Paper 5, 1.
`
`
`II. THE ’080 PATENT
`A. Described Invention
`The ’080 patent describes a method of processing merchandise
`discounts based on a computerized membership system. Ex. 1001, Abstract,
`col. 1, ll. 46–47. According to the ’080 patent, the purpose of the disclosed
`process is to replace or eliminate conventional paper coupons used in retail
`stores. Id. at col. 2, ll. 52–59. To accomplish this goal, a centralized
`computer system is established to distribute, collect, and organize
`information between the central system and the local merchants. Id. at
`col. 2, ll. 54–57. The centralized computer system is part of a “couponless”
`product discount membership system operated by a membership service
`provider. Id. at col. 1, ll. 46–54; col. 2, ll. 52–59; col. 3, ll. 11–33.
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`When consumers join the discount membership system, they are given
`individualized membership cards. Id. at col. 2, ll. 57–59. The membership
`cards include a memory storage mechanism, such as a magnetic stripe,
`which contains the consumer’s membership information. Id. at col. 2, ll. 59–
`62. Product manufacturers, distributors, and retail stores are also enrolled in
`the membership system. Id. at col. 3, ll. 22–33. The membership provider’s
`centralized computer has a database that stores information regarding
`merchants, manufacturers, and consumers. Id. at col. 3, ll. 11–21. The
`database also stores the consumer identification codes and merchandise
`information including the identification code of merchandise subject to a
`price discount. Id. at col. 1, ll. 55–59. A communication system, such as a
`cash register, provides real time communication between merchant members
`and the provider’s computer. Id. at col. 1, ll. 52–54.
`When a consumer member selects products for purchase at a merchant
`member’s location, the product identification code of each of the selected
`merchandise is scanned at the merchant communication system. The
`consumer membership card is also scanned to obtain the consumer’s
`identification code, which is transmitted to the provider’s computer for
`membership verification. Id. at col. 1, l. 62–col. 2, l. 4. The merchandise
`identification code for each item is also sent to the provider’s computer to
`determine discounts by comparing the scanned code with the product
`identification codes of the discounted merchandise stored at the computer.
`Id. at col. 2, ll. 7–10. Upon determination, the discounts are deducted from
`the purchase price of the merchandise that is subject to a price discount, and
`a sales slip showing the discounts is printed for the consumer. Id. at col. 2,
`ll. 11–16, 30–32, Abstract. The consumer purchase data is stored and
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`maintained in a database at the provider’s computer. Id. at col. 2, ll. 17–20.
`Purchase demographics reports can be generated from the purchase data
`compiled in the database. Id. at col. 2, ll. 19–22. According to the ’080
`patent, by applying the discounts to the purchase prices at the time of actual
`purchases of the products, the disclosed system allows “eliminating fraud
`and waste, tracking customer usage, and building a valuable customer
`demographic database.” Id. at col. 1, ll. 39–45.
`
`B. Illustrative Claim
`Of the challenged claims, claims 1 and 11 are independent. Claim 11
`is illustrative of the challenged claims and is reproduced below:
`11. The method of processing and applying merchandise
`discounts
`to a consumer’s purchases by providing a
`computerized membership system, said membership including a
`plurality of consumer members, a plurality of point of purchase
`merchant members, a plurality of manufacturer members, and a
`centralized system provider, said membership system having:
`a point of purchase merchant member computer terminal
`and computer and a centralized provider’s computer, said
`provider’s computer having a database for the storage and
`retrieval of information, said database storing information
`regarding point of purchase merchant members, manufacturer
`members, and consumer members, in predetermined files, at
`least some of said information being entered into the system at
`the time of a member establishing membership in said system
`and
`
`communication means, said communications means
`providing real time communication between said member
`merchant’s computer terminals and said provider’s computer,
`comprising the steps of:
`individual
`a. providing consumer members with
`identification codes, said identification codes accessing said
`databases;
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`b. storing said consumer member identification codes on
`said provider’s computer in a consumer database;
`c. providing each consumer member with a membership
`ID, said membership ID having memory storage means, said
`memory storage means containing at least said consumer
`identification code;
`d. storing merchandise information provided by a
`manufacturer member in a manufacturer member database in
`said provider’s, said merchandise information including at least
`a merchandise
`identification code and
`the discount on
`predetermined merchandise,
`indicia
`indicia, said
`e. displaying
`to consumers
`identifying point of purchase merchandise subject to a price
`discount,
`f. transporting, by said consumer, consumer selected
`discounted and non-discounted merchandise a purchase location
`at said merchant member to form a collection of transported
`merchandise, each of said transported merchandise having a
`merchandise identification code,
`g. scanning merchandise identification codes of each of
`said transported merchandise, at said communication means,
`h. scanning said consumer ID,
`i. uploading said scanned consumer identification code,
`from said merchant member, through said communication
`means to said provider’s computer,
`j. comparing said consumer identification code with
`consumer
`identification codes stored
`in said provider’s
`computer and verifying said consumer’s membership,
`k. uploading said merchandise identification code for
`each of said scanned merchandise to said merchant member’s
`computer,
`l. comparing at said merchant’s computer, said
`merchandise
`identification code
`for consumer
`selected
`merchandise with the identification codes of said discounted
`merchandise,
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`m. computing the discounts on said merchandise subject
`to a price discount,
`n. uploading to said provider’s computer merchandise
`codes for merchandise subject to a price discount,
`o. downloading from said provider’s computer to said
`merchant’s computer through said merchant communication
`means, discounts on said merchandise subject to a price
`discount,
`p. printing at said merchant member’s computer terminal
`a sales slip for said member consumer including the discounts
`for said merchandise subject to a price discount,
`q. sorting and storing in said provider’s databases said
`downloaded data on said consumer and said merchandise
`purchased by said a member consumer from a member
`merchant, and
`r. storing merchant member sales data on said merchant
`member computer,
`wherein said provider maintains and processes, in real
`time, discounts provided by manufacturer members to member
`consumers without said member merchant being required to
`process said discounts or member consumers being required to
`present coupons or file rebates to obtain said discounts.
`
`
`III. ANALYSIS
`A. Claim Construction
`In a covered business method patent review, claim terms in an
`unexpired patent are given their broadest reasonable construction in light of
`the specification of the patent in which they appear. 37 C.F.R. § 42.100(b);
`see Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2144 (2016) (holding
`that a prior version of 37 C.F.R. § 42.100(b), which likewise called for the
`broadest reasonable construction, “represents a reasonable exercise of the
`rulemaking authority that Congress delegated to the . . . Office”). Under the
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`broadest reasonable interpretation standard, and absent any special
`definitions, claim terms are given their ordinary and customary meaning, as
`would be understood by one of ordinary skill in the art, in the context of the
`entire disclosure. In re Translogic Tech. Inc., 504 F.3d 1249, 1257 (Fed.
`Cir. 2007).
`In the Decision on Institution, we preliminarily interpreted various
`claim terms of the ’080 patent as follows:
`
`Claim Term (Claims)
`
`Interpretation
`
`“communication means”
`(1, 8, 11) 2, 3
`
`“memory storage means”
`(1, 11)
`
`Claimed Function: “providing real time
`communication between [a point of purchase]
`member merchant’s computer terminal and [a
`centralized] provider’s computer”
`Corresponding Structure: a cash register with
`a communication capability, a credit card
`verification machine, a terminal, or a scanner,
`and equivalents
`
`Claimed Function: “containing at least . . .
`consumer identification code”
`Corresponding Structure: a magnetic stripe on
`a card, and equivalents
`
`
`2 The parties agree the terms “communication means” and “memory storage
`means” should be interpreted as means-plus-function limitations under
`35 U.S.C. § 112, ¶ 6. Pet. 22, 23; Prelim. Resp. 6, 8.
`3 Section 4(c) of the AIA re-designated 35 U.S.C. § 112 ¶ 6, as 35 U.S.C.
`§ 112(f). Because the ’080 patent has a filing date prior to September 16,
`2012, the effective date of § 4(c) of the AIA, we refer to the pre-AIA version
`of 35 U.S.C. § 112. See AIA § 4(e).
`
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`Claim Term (Claims)
`
`Interpretation
`
`“real time
`communication” (1, 7, 11)
`
`“communication without intentional delay,
`given the processing limitations of the system
`and the time required to effect the
`communication”
`
`See Dec. on Inst. 8–11. The parties do not dispute these interpretations in
`their Patent Owner Response and Reply. For this Final Written Decision,
`after considering the complete record, we see no reason to deviate from
`those constructions and, therefore, maintain our constructions as set forth
`above.
`
`B. Standing
`Section 18 of the AIA limits filing of petitions for a covered business
`method patent review to persons or their privies that have been sued or
`charged with infringement of a covered business method patent. AIA,
`§ 18(a)(1)(B); see 37 C.F.R. § 42.302(a). A “covered business method
`patent” is a patent that “claims a method or corresponding apparatus for
`performing data processing or other operations used in the practice,
`administration, or management of a financial product or service, except that
`the term does not include patents for technological inventions.” AIA
`§ 18(d)(1). For the reasons described below, we determine that Petitioner
`has standing to file the Petition for covered business method patent review
`of the ’080 patent.
`
`1. Sued for Infringement
`As discussed above, Petitioner represents, and Patent Owner does not
`dispute, that Petitioner has been sued for infringement of the ’080 patent in
`Nexuscard, Inc. v. The Kroger Co., No. 2:15-cv-00968-JRG (E.D. Tex.) and
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`Nexuscard, Inc. v. Brookshire Grocery Co., No. 2:15-cv-00961-JRG (E.D.
`Tex.). Pet. 16; Paper 5, 1. Thus, Petitioner has been sued for infringement
`for purposes of AIA § 18(a)(1)(B).
`
`2. Whether the ’080 Patent is a Covered Business Method Patent
`Subject to Covered Business Method Patent Review
`
`a. Financial Service or Product
`Petitioner bears the burden of demonstrating that the ’080 patent is a
`“covered business method patent”—i.e., a patent that claims a method “used
`in the practice, administration, or management of a financial product or
`service.” AIA § 18(d)(1); 37 C.F.R. § 42.304(a). “[T]he definition of
`‘covered business method patent’ is not limited to products and services of
`only the financial industry, or to patents owned by or directly affecting the
`activities of financial institutions such as banks and brokerage houses. The
`plain text of the statutory definition . . . covers a wide range of finance-
`related activities.” Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306,
`1325 (Fed. Cir. 2015). To determine whether a patent is eligible for a
`covered business method patent review, the focus is on the claims. Blue
`Calypso, LLC v. Groupon, Inc., 815 F.3d 1331, 1340 (Fed. Cir. 2016)
`(Ҥ 18(d)(1) directs us to examine the claims when deciding whether a
`patent is a CBM patent.”). A patent is eligible for review if it has at least
`one claim directed to a covered business method. Versata, 793 F.3d at
`1326–27 (accepting the Board’s use of a single claim to determine whether a
`patent is eligible for covered business method patent review); see also 77
`Fed. Reg. 48,734, 48,736 (Aug. 14, 2012) (Transitional Program for
`Covered Business Method Patents—Definitions of Covered Business
`Method Patent and Technological Invention).
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`Petitioner contends that the ’080 patent claims a method or apparatus
`used in the practice, administration, or management of a financial product or
`service because the claims are all directed to a “method for processing and
`applying merchandise discounts to a consumer’s purchases,” for which a
`consumer provides monetary payment. Pet. 3. For example, Petitioner
`asserts that claim 11 recites a method for “processing and applying discounts
`to merchandise (the merchandise having a specified cost) that includes
`determining the amount to be charged to a customer following the
`application of the discount(s), and determining the nature and amount of the
`discount(s).” Id. at 3–6 (citing Ex. 1001, col. 11, l. 41–col. 12, l. 63).
`Petitioner also contends that the Specification of the ’080 patent is “littered
`with references to the primary purpose of the purported invention:
`calculating prices of items that are subject to discount.” Id. at 7 (citing
`Ex. 1001, col. 1, ll. 7–8, 39–45). Petitioner argues the ’080 patent, therefore,
`includes at least one claim to a method or apparatus used in the practice,
`administration, or management of a financial product or service. Id. at 12.
`Patent Owner does not dispute Petitioner’s contentions regarding the
`“financial product or service” prong of the CBM patent review eligibility for
`the ’080 patent. Based on the record presented, we are persuaded Petitioner
`has shown that the ’080 patent claims a method or apparatus used in the
`practice, administration, or management of a financial product or service.
`The record supports, and we adopt, Petitioner’s contention that the ’080
`patent is directed to a method or apparatus for “calculating prices of items
`that are subject to discount.” Id. at 7 (citing Ex. 1001, col. 1, ll. 7–8, 39–45
`(“SUMMARY OF THE INVENTION”)) (emphasis added). As noted by
`Petitioner, claim 11 explicitly recites a “method of processing and applying
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`merchandise discounts to a consumer’s purchases,” which includes a step
`for “computing the discounts on said merchandise subject to a price
`discount” that has been selected for purchase by the consumer at a purchase
`location. Id. at 3–6 (emphases added). On this record, we conclude that the
`’080 patent meets the “financial product or service” requirement of AIA
`§ 18(d)(1) because the ’080 patent claims a method for calculating the prices
`of products. See Versata, 793 F.3d at 1325–26 (finding a patent that claims
`“[a] method for determining a price of a product” to “fall well within the
`terms of the statutory definition of a ‘covered business method patent’”
`under AIA § 18(d)(1)) (emphasis added); see also Secure Axcess, LLC v.
`PNC Bank Nat’l Ass’n, 848 F.3d 1370, 1381 (Fed. Cir. 2017) (citing Versata
`as an example where a claim recites one of a “wide range of finance-related
`activities,” which the Federal Circuit has “held to be within the CBM
`provision”).
`
`b. Technological Invention Exception
`The definition of “covered business method patent” in AIA § 18(d)(1)
`excludes patents for “technological inventions.” In determining whether a
`patent is for a technological invention, we consider “whether the claimed
`subject matter as a whole recites a technological feature that is novel and
`unobvious over the prior art; and solves a technical problem using a
`technical solution.” 37 C.F.R. § 42.301(b). The presence of a general
`purpose computer or a combination of known technologies does not render a
`patent a technological invention. Blue Calypso, 815 F.3d at 1339;
`SightSound Techs., LLC v. Apple Inc., 809 F.3d 1307, 1315 (Fed. Cir. 2015).
`In the Decision on Institution, we determined, upon considering the
`arguments and evidence submitted by the parties, that Petitioner has
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`demonstrated sufficiently that the ’080 patent is not a patent for
`“technological inventions” under AIA § 18(d)(1) because the challenged
`claims recite generic and conventional computer components and devices.
`Dec. on Inst. 13–16. Patent Owner and Petitioner do not dispute whether the
`’080 patent is a patent for a technological invention in the Patent Owner
`Response and Petitioner’s Reply, and we do not perceive any reason or
`evidence in the record that compels deviation from our earlier determination.
`During the oral hearing, Patent Owner argued that the ’080 patent’s
`invention includes the technological feature of using credit card verification
`machines in an unconventional way to communicate with the centralized
`provider’s system and provide verification of the consumer’s membership.
`Tr. 24:17–26:20. To the extent Patent Owner’s argument is directed to the
`“technological invention” exclusion under AIA § 18(d)(1), Patent Owner’s
`argument is unpersuasive because Patent Owner concedes credit card
`verification machines were conventional at the time of the invention of the
`’080 patent. Id. at 26:21–27:4. In addition, as discussed in the Decision on
`Institution, the ’080 patent describes credit card verification machines as
`conventional. Dec. on Inst. 15–16 (citing Ex. 1001, col. 8, ll. 65–66). As
`discussed above, a combination of known technologies does not render a
`patent a technological invention under AIA § 18(d)(1). Blue Calypso, 815
`F.3d at 1339; SightSound Techs, 809 F.3d at 1315.
`Accordingly, after considering the complete record, we adopt our
`previous analysis described in the Decision on Institution for purposes of
`this Final Written Decision, and conclude that Petitioner has shown
`sufficiently that the challenged claims recite well-known, conventional
`computer components or devices, and that the ’080 patent, therefore, is not a
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`patent for a technological inventions under AIA § 18(d)(1). See Dec. on
`Inst. 13–16.
`
`c. Conclusion
`Based on the foregoing, we determine Petitioner has demonstrated
`sufficiently that the ’080 patent is a covered business method patent under
`AIA § 18(d)(1) and is eligible for review under the transitional covered
`business method patent program.
`
`C. Asserted Ground Based on 35 U.S.C. § 101
`Petitioner contends that claims 1–11 of the ’080 patent are directed to
`patent-ineligible subject matter under 35 U.S.C. § 101. Pet. 25–72. Patent
`Owner disagrees. PO Resp. 8–44. Upon review of all of the parties’ papers
`and supporting evidence discussed in those papers, we are persuaded that
`Petitioner has demonstrated, by a preponderance of evidence, that claims 1–
`11 are unpatentable under 35 U.S.C. § 101.
`Section 101 provides that “[w]hoever invents or discovers any new
`and useful process, machine, manufacture, or composition of matter, or any
`new and useful improvement thereof, may obtain a patent therefor, subject to
`the conditions and requirements of this title.” The Supreme Court has “long
`held that this provision contains an important implicit exception: Laws of
`nature, natural phenomena, and abstract ideas are not patentable.” Alice
`Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2354 (2014) (quoting
`Assoc. for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107,
`2116 (2013) (internal quotation marks and brackets omitted)).
`The Supreme Court has set forth a two-stage analytical framework to
`determine whether a claim falls outside the scope of section 101. The
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`inquiry’s first step requires us to determine “whether the claims at issue are
`directed to one of those patent-ineligible concepts.” Alice, 134 S. Ct. at
`2355. If so, under step two, we consider the elements of the claims
`“individually and ‘as an ordered combination’” to determine whether there
`are “additional elements” sufficient to “‘transform the nature of the claim’
`into a patent-eligible application.” Id. (quoting Mayo Collaborative Servs. v.
`Prometheus Labs., Inc., 132 S. Ct. 1289, 1297–98 (2012)). In the context of
`claims that are challenged as containing an abstract idea, as is the case here,
`those two stages are typically referred to as the “abstract idea” step and the
`“inventive concept” step. Affinity Labs of Texas, LLC v. DIRECTV, LLC,
`838 F.3d 1253, 1257 (Fed. Cir. 2016).
`
`1. Abstract Idea Step
`Under the “abstract idea” step of the Alice analysis, “there may be
`close calls about how to characterize what the claims are directed to,”
`especially in cases involving computer-related claims. Enfish, LLC v.
`Microsoft Corp., 822 F.3d 1327, 1339 (Fed. Cir. 2016); see also Elec. Power
`Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1353 (Fed. Cir. 2016) (“[W]e have
`noted that there can be close questions about when the inquiry should
`proceed from the first stage to the second.”) (citing Enfish, 822 F.3d at 1339;
`Rapid Litig. Mgmt. Ltd. v. CellzDirect, Inc., 827 F.3d 1042, 1050–52 (Fed.
`Cir. 2016); Bascom Global Internet Servs., Inc. v. AT&T Mobility LLC, 827
`F.3d 1341, 1348–49 (Fed. Cir. 2016)). Reflecting those points, the Federal
`Circuit has provided further guidance on the first-stage analysis since the
`Petition was filed in 2015. For example, the court in Enfish held that a
`relevant inquiry in step one of the Alice framework is to ask whether the
`“focus” of the claims is on a specific asserted improvement in computer
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`capabilities or, instead, on a process that qualifies as an “abstract idea” for
`which computers are invoked merely as a tool. Enfish, 822 F.3d at 1335–36
`(citing Alice, 134 S. Ct. at 2358–59). The Federal Circuit subsequently
`described the first-stage inquiry as “looking at the ‘focus’ of the claims, their
`‘character as a whole.’” Elec. Power Grp., 830 F.3d at 1353 (citing Enfish,
`822 F.3d at 1335–36; Internet Patents Corp. v. Active Network, Inc., 790
`F.3d 1343, 1346 (Fed. Cir. 2015)). We analyze Petitioner’s contentions and
`Patent Owner’s responses under the “abstract idea” step in view of this
`recent development of law since the Petition was filed.
`Petitioner contends that the challenged claims are directed to the
`abstract idea of a “membership discount program.” Pet. 29. Petitioner
`asserts the ’080 patent describes that discount coupons have long been used
`by manufacturers, retail stores, and consumers, and that prior art computer
`systems have been developed to eliminate the use of coupons. Id. at 29–30
`(citing Ex. 1001, col. 1, ll. 11–13, 17–20). Petitioner contends that the
`challenged claims are directed to automating the age-old discount methods
`using generic steps relating to customer membership programs. Id. at 30.
`Petitioner argues that the ’080 patent and its claims purport to address the
`inconvenience of coupons by applying discounts after verifying that the
`customer is a member of the discount program. Pet. Reply 9–10 (citing
`Ex. 1001, col. 1, l. 39–col. 2, l. 35; col. 2, ll. 52–54).
`Focusing on independent claims 1 and 11 as representative claims,4
`Petitioner argues that the claims are directed to an abstract, mental process
`
`
`4 Petitioner contends that claims 1 and 11 are nearly identical with minor
`differences, which are immaterial for purposes of patent eligibility analysis
`under § 101. Pet. 30. Patent Owner does not dispute Petitioner’s contention
`
`
`
`16
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`CBM2015-00183
`Patent 5,924,080
`
`because the recited steps can be performed manually or using pen and paper
`by replacing computing components with manual and human equivalents,
`such as providing consumers with a membership number and an
`identification, maintaining membership information and merchandise
`discount information in hardcopy membership rolls and product discount
`lists, comparing the membership ID and the merchandise at the point of
`purchase with the membership roll and discount lists to verify membership
`and available discounts, calculating applicable discounts mentally or by pen
`and paper, writing out a receipt, and logging the transaction details in a store
`ledger. See Pet. 32–34. Petitioner asserts that the only difference between
`the process recited in the challenged claims and the “manual” process is the
`use of general purpose computers to “collect, store, and process information
`about consumer memberships, merchants, manufacturers, and sales
`transactions.” Id. at 34. Petitioner argues that courts have found claims
`reciting similar processes that can be performed mentally by humans to be
`unpatentable as directed to abstract ideas. Id. (citing In re Bilski, 545 F.3d
`943, 965 (Fed. Cir. 2008); Gottschalk v. Benson, 409 U.S. 63, 67 (1972);
`CyberSource Corp. v. Retail Decisions Inc., 654 F.3d 1366, 1372 (Fed. Cir.
`2011); Intellectual Ventures I LLC v. Capital One Bank (USA), 792 F.3d
`1363, 1368 (Fed. Cir. 2015)).
`Petitioner further contends that the steps recited in claims 1 and 11 of
`this case, such as the “storing,” “scanning,” “uploading,” and “downloading”
`steps, as well as the steps of “sorting and storing” downloaded data, are
`similar to the data processing steps recited in the claims in Content
`
`
`and argues claims 1 and 11 together for purposes of Patent Owner’s abstract
`idea analysis under Alice. See PO Resp. 18–25.
`
`
`
`17
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`CBM2015-00183
`Patent 5,924,080
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`Extraction and Transmission LLC v. Wells Fargo Bank, N.A., 776 F.3d 1343
`(Fed. Cir. 2014), which were found to be patent ineligible as being directed
`to the abstract idea of (1) collecting data; (2) recognizing certain data within
`the collected data set; and (3) storing the recognized data. Pet. 71–72 (citing
`Content Extraction, 776 F.3d at 1345, 1347). Petitioner argues that the
`claims in both cases “merely shift conventional information processing in
`their respective industry from a manual process to one that is computerized.”
`Id. at 72.
`Petitioner contends that the claims are not directed to improved
`computer functionality because the claims recite using conventional
`computer components in a conventional manner, such as using a card reader
`to scan magnetic stripes, providing communication between a computer
`terminal and a central computer, and utilizing databases on the computers.
`Pet. Reply 8, 10 (citing Ex. 1001, col. 2, ll. 59–62, col. 8, ll. 65–66;
`Ex. 1002, Abstract, col. 58, ll. 30–34, col. 76, ll. 11–14, Fig. 19). Petitioner
`argues that the ’080 patent does not describe new ways to scan magnetic
`stripes or new communication protocols, but, rather, merely uses these
`conventional components in their ordinary manner as tools to apply a
`membership discount program. Id. at 11. Petitioner argues that the ’080
`patent and its claims purport to address the inconvenience of coupons in
`discount programs (id. at 9–10) but that providing discounts without
`coupons is not a solution to a challenge particular to computers or a specific
`improvement to the ways computers operate. Id. at 11.
`Under the approach described in Alice and further explained in Enfish,
`Internet Patents, and Electric Power Group, we are persuaded by
`Petitioner’s argument and evidence that claims 1 and 11 are directed to an
`
`
`
`18
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`CBM2015-00183
`Patent 5,924,080
`
`abstract idea. As discussed above, Petitioner has shown that the claims
`recite a process to “collect, store, and process information about consumer
`memberships, merchants, manufacturers, and sales transactions” (Pet. 34), a
`process that qualifies as an “abstract idea” (id. at 71) of “conventional
`information processing” in the retail industry (id. at 72), for which
`conventional components, such as a magnetic stripe scanner, computers, and
`databases, are merely invoked as tools used in their ordinary and
`conventional manner (Pet. Reply 8–11). In Electric Power Group, the
`Federal Circuit explained that the “the realm of abstract ideas” includes
`“collecting information, including when limited to particular content.” Elec.
`Power Grp., 830 F.3d at 1353. The court determined, therefore, that the
`claims at issue were directed to an abstract idea because “the focus of
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