Walgreen Co v. Advanced Marketing Systems LLC

1. Case Identification

• Case #: CBM2016-00015
• Patent #: 8,370,199
• Filed: November 10, 2015
• Petitioner(s): Walgreen Co.; Ahold U.S.A., Inc.; Delhaize America, LLC.; and Publix Super Markets, Inc.
• Patent Owner(s): Advanced Marketing Systems, LLC
• Challenged Claims: 15 and 28

2. Patent Overview

• Title: Discount Vehicle and Method of Tracking Discounts
• Brief Description: The ’199 patent describes a data processing system and method for a customer incentive program. The invention centers on a physical "multi-discount vehicle" (MDV), such as a paper flyer, containing multiple product discounts and an associated machine-readable code for tracking redemption at checkout.

3. Grounds for Unpatentability

Ground 1: Claim 28 Lacks Written Description under §112

• Core Argument for this Ground: Petitioner argued that claim 28 fails the written description requirement of 35 U.S.C. §112 because it introduces a concept not supported by the specification. The claim recites discounts "selected by a customer," but the specification consistently and exclusively describes a system where a promotion administrator selects the discounts, which are then "pro-actively distributed" to consumers on a pre-printed vehicle. Petitioner contended that this concept of customer selection is not only absent from the disclosure but is fundamentally inconsistent with the described invention, which relies on administrator-driven promotion. This alleged deficiency is also present in the related parent applications, which similarly describe an administrator-centric model.

Ground 2: Claim 28 is Indefinite under §112

• Core Argument for this Ground: Petitioner asserted that claim 28 is indefinite because it contains a means-plus-function term, "a data processor," for which the specification fails to disclose the corresponding structure required by 35 U.S.C. §112. The claimed functions include receiving transaction information and "selectively deactivat[ing] the code for only particular discounts." Petitioner argued that the specification provides no algorithm or specific structure for performing these functions. Instead, it describes the system in purely functional terms, referencing only generic components like a "computer," "POS processor," and "conventional scanning equipment" operating with "existing code software." This lack of a disclosed algorithm to perform the claimed functions allegedly renders the scope of the claim indeterminate.

Ground 3: Claim 15 is Anticipated by Ovadia under §102(b)

• Prior Art Relied Upon: Ovadia (International Publication No. WO 96/30851).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner argued that Ovadia discloses every element of claim 15. Ovadia describes a system using a paper-based advertising vehicle (e.g., a mailed brochure) that contains multiple discount offers for specific products. The vehicle includes a machine-readable barcode that uniquely identifies the brochure. At a point-of-sale (POS) terminal, this barcode is scanned to retrieve the associated discount offers from a central computer. The system then applies discounts for purchased items. Critically, Ovadia teaches that redeemed offers can be held invalid or electronically voided, which selectively deactivates those specific discounts while leaving unredeemed offers on the same vehicle active for future use. This process directly maps to the key limitations of claim 15, including the discount vehicle, the select code for tracking, and the selective deactivation of used discounts.

4. Key Claim Construction Positions

• "discount vehicle": Petitioner proposed this term be construed as "a paper-based article including representations of product discounts printed thereon." This construction was argued to be critical because the specification consistently and exclusively describes the vehicle as a physical, paper-based item (e.g., a "freestanding insert" or "flat card"). Petitioner argued that a broader construction encompassing electronic vehicles like websites or mobile apps, as alleged by the Patent Owner in district court litigation, would be unsupported by the specification and render the claims invalid under §112.
• "said select code can be selectively deactivated for only particular discounts": Petitioner proposed this phrase means "ensuring that the [select] code cannot be used to obtain a product discount that was already obtained." This construction was based on the specification's description of flagging purchased items and deactivating their promotions to prevent duplicate use, a concept central to the anticipation argument against Ovadia.

5. Key Technical Contentions (Beyond Claim Construction)

• Covered Business Method (CBM) Patent Qualification: A significant portion of the petition was dedicated to arguing that the ’199 patent qualifies for CBM review because it claims a method for performing a financial activity (administering a customer discount program) and is not directed to a "technological invention." Petitioner contended that the claims do not recite a novel or unobvious technical feature, instead relying on conventional and generic computer components (e.g., POS scanners, general-purpose computers) to automate a well-known business practice. Further, Petitioner argued the patent does not solve a technical problem but rather addresses purely business-related issues like the inconvenience and potential for fraud associated with traditional paper coupons.

6. Relief Requested

• Petitioner requested institution of a Covered Business Method review and cancellation of claims 15 and 28 of the ’199 patent as unpatentable.