Pay Plus Solutions Inc v. StoneEagle Services Inc

1. Case Identification

• Case #: IPR2014-01414
• Patent #: RE43,904
• Filed: August 29, 2014
• Petitioner(s): Pay-Plus Solutions, Inc.
• Patent Owner(s): StoneEagle Services, Inc.
• Challenged Claims: 1-26

2. Patent Overview

• Title: MEDICAL BENEFITS PAYMENT SYSTEM
• Brief Description: The ’904 patent discloses a method for facilitating electronic payment of healthcare benefits. The system generates a computer image file containing both an Explanation of Benefits (EOB) and information for a single-use, pre-funded stored-value card account, which is then electronically transmitted to a healthcare provider for payment.

3. Grounds for Unpatentability

Ground 1: Obviousness over Kennedy, Watson, vPayment, and Image Statement - Claims 1-5, 7-8, 10-13, 15-18, 20-23, and 25-26 are obvious over the combination of four prior art references.

• Prior Art Relied Upon: Kennedy (Application # 2007/0005403), Watson (Patent 5,991,750), vPayment Interview (an archived 2006 webpage describing GE's vPayment service), and Image Statement Products (a 2002 press release).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner argued that the prior art combination taught every element of the challenged claims. Kennedy disclosed a system for real-time adjudication of healthcare claims at a point-of-service (POS) terminal, including generating EOB data and transmitting it to the provider for payment via an ACH transaction. However, Kennedy did not use a stored-value card or an image file. Watson and the vPayment Interview disclosed a system for generating unique, single-use virtual credit card numbers pre-authorized for specific amounts, which could be restricted for use with specific merchant types (e.g., medical service providers). Image Statement Products disclosed the practice of generating statements with electronic images of payment instruments (like checks) inserted into them. Petitioner contended that the claimed invention merely substituted the known single-use virtual card of Watson/vPayment for the ACH payment in Kennedy and delivered the combined EOB and payment data as an image file, a common practice taught by Image Statement Products and prevalent in an industry where many providers could not process raw data files (e.g., ANSI 835).
  • Motivation to Combine: A POSITA would combine these references to improve upon Kennedy's system. Replacing Kennedy's ACH payment with the single-use virtual card from Watson/vPayment offered enhanced security and control over payments. Furthermore, because many healthcare providers at the time were not equipped to receive and process standard electronic data files like ANSI 835, there was a well-known industry need to provide payment and EOB information in a more accessible, human-readable format. A POSITA would have been motivated to convert Kennedy's EOB data into an image file and embed the virtual card information, as suggested by Image Statement Products, to create a universally accessible electronic payment document that could be transmitted by fax or other electronic means.
  • Expectation of Success: A POSITA would have a reasonable expectation of success because combining these elements involved applying known technologies for their intended purposes. Integrating a virtual card payment system with a claims adjudication workflow and formatting the output as an image file were predictable applications of existing technologies.

Ground 2: Obviousness over Kennedy, Watson, vPayment, Image Statement, and Knowledge - Claims 6, 9, 14, 19, and 24 are obvious over the primary combination in view of general knowledge.

• Prior Art Relied Upon: Kennedy (Application # 2007/0005403), Watson (Patent 5,991,750), vPayment Interview, Image Statement Products, and the general knowledge of a POSITA ("Knowledge").

• Core Argument for this Ground:

  • Prior Art Mapping: This ground addresses claims requiring the transmitted file to include a computer-generated image of a physical payment card. Petitioner argued that the core combination already taught transmitting all the necessary payment information (card number, CVV, expiration date). The additional step of presenting this textual information graphically on an image of a physical card was a trivial design choice.
  • Motivation to Combine: A POSITA would be motivated to render the payment information as an image of a card to make it more easily and quickly recognizable to the recipient at the healthcare provider's office. This was a well-known method for improving the usability of financial documents and would have been an obvious aesthetic and functional modification.
  • Expectation of Success: Success would be assured, as graphically rendering text on a background image was a routine and predictable task for a POSITA.

• Additional Grounds: Petitioner asserted that remaining dependent claims 3-5, 8, 10-11, 13, 15-16, 18, 20-21, and 23-26 were obvious based on the same core combination of Kennedy, Watson, vPayment, and Image Statement Products. These claims added limitations such as transmission by fax, reconciliation of the account, and restricting the card's use to a medical services terminal, all of which Petitioner argued were explicitly taught or suggested by the primary references or were obvious extensions thereof.

4. Key Claim Construction Positions

• "single-use[,] stored-value card account": Petitioner proposed this term be construed to mean "a stored-value card account that may only be used to make a single payment." This construction was argued as consistent with the patent's description of generating a "unique card number...assigned to a single payment." Petitioner distinguished "single-use" from "single-purpose," arguing the former relates to the number of transactions (one), while the latter relates to the type of transaction (e.g., medical only).
• "loading...with an amount" / "prefunded with an amount": Petitioner argued these terms should be construed as "associating an amount of value with a card account," not necessarily transferring cash into it. This broader construction was necessary to encompass credit-based instruments, which the patent specification explicitly includes within the definition of "stored-value cards." This construction allows the teachings of Watson, which pre-authorizes credit for a specific amount, to meet the claim limitation.
• "intercepting": As used in claim 2, Petitioner proposed construing this term to simply mean "receiving." Petitioner argued the patent provided no special definition and its plain and ordinary meaning should apply.

5. Relief Requested

• Petitioner requested institution of an inter partes review and cancellation of claims 1-26 of the ’904 patent as unpatentable under 35 U.S.C. §103.