PTAB

CBM2018-00037

CxLoyalty Inc v. MaRitz Holdings Inc

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1. Case Identification

2. Patent Overview

  • Title: System for Transacting Purchases with Loyalty Points
  • Brief Description: The ’087 patent discloses computerized systems and methods for permitting a participant in a rewards program to use loyalty points to purchase goods or services from a vendor that only transacts in currency. The system uses a graphical user interface (GUI) and an application programming interface (API) to mediate the transaction, employing a hidden "program account" (e.g., a shadow credit card) to pay the vendor in currency while deducting the corresponding value in points from the participant's account.

3. Grounds for Unpatentability

Ground 1: Claims 1-15 are Unpatentable Under 35 U.S.C. § 101

  • Prior Art Relied Upon: This ground is based on patent ineligibility under 35 U.S.C. § 101 and the framework established in Alice Corp. v. CLS Bank Int'l, rather than on technical prior art references.
  • Core Argument for this Ground: Petitioner argued that all challenged claims are directed to an abstract idea without reciting an inventive concept sufficient to transform that idea into a patent-eligible invention. The petition structured its argument under the two-step Alice framework.
    • Alice Step 1 - Directed to an Abstract Idea: Petitioner contended the claims are directed to the abstract idea of facilitating or brokering a commercial transaction between two parties using different forms of value—specifically, exchanging loyalty points for currency-based goods. This was characterized as a fundamental economic practice analogous to currency exchange, which has long been held to be an abstract concept. Petitioner asserted that the core concept—redeeming points for products from vendors who are ultimately paid in currency—was a well-known business practice that could be performed manually by agents before the patent's filing date. The claims simply automate this pre-existing economic practice. Petitioner cited judicial decisions in Loyalty Conversion Systems Corp. and Kroy IP Holdings, which found similar claims involving the conversion of loyalty points and automated award fulfillment to be directed to abstract ideas.
    • Alice Step 2 - No Inventive Concept: Petitioner argued the claims fail to provide an inventive concept because they merely recite generic and conventional computer components to implement the abstract idea. The claims add only a processor, a display, a GUI, and an API, all of which were well-understood, routine, and conventional technologies at the time of filing. Petitioner argued that these components are described in purely functional terms (e.g., receiving and transmitting information, converting purchase requests, deducting points) and do not represent any improvement to computer technology itself. The specification allegedly describes the API's role as performing a "standard function." The use of a "shadow account" was argued to be nothing more than conventional electronic record-keeping. Therefore, the claims simply use a generic computer network as a tool to perform an abstract business method, which is insufficient to confer patent eligibility.

4. Key Claim Construction Positions

Petitioner argued that while formal claim construction was unnecessary for a §101 analysis, it proposed the following constructions under the broadest reasonable interpretation standard to clarify the abstract nature of the claims.

  • Program Account: A payment account associated with the loyalty program that is accepted by the vendor system, such as a conventional cash account or credit card. This construction emphasizes that the account itself is a standard financial instrument.
  • Shadow Credit Card: A program credit card account that is hidden from the participant of the program. The key aspect is the hiding of a conventional element, not the invention of a new technology.
  • Program Account Information: Any information identifying a payment account associated with the loyalty program that is acceptable to the vendor system for a currency transaction. This frames the "information" as abstract financial data.
  • Vendor System: Components of a computer network system associated with a third-party vendor capable of transacting a purchase and accepting currency payment via the program account, but not accepting points. This highlights the system's role as a conventional e-commerce platform.

5. Relief Requested

  • Petitioner requested institution of a Covered Business Method (CBM) review and cancellation of claims 1-15 of the ’087 patent as unpatentable for being directed to non-eligible subject matter under 35 U.S.C. § 101.