Pay Plus Solutions Inc v. StoneEagle Services Inc

1. Case Identification

• Case #: IPR2015-00569
• Patent #: RE44,748
• Filed: January 14, 2015
• Petitioner(s): Pay-Plus Solutions, Inc.
• Patent Owner(s): StoneEagle Services, Inc.
• Challenged Claims: 7-30

2. Patent Overview

• Title: MEDICAL BENEFITS PAYMENT SYSTEM
• Brief Description: The ’748 patent relates to a method of facilitating payment of healthcare benefits on behalf of a payer. The system electronically transmits a payment from a stored-value card account for an authorized benefit amount concurrently with an explanation of benefits (EOB) to solve cost and delay issues associated with mailing paper checks.

3. Grounds for Unpatentability

Ground 1: Obviousness over Kennedy, Watson, and vPayment Interview - Claims 7-8, 10-14, 16-20, 22-26, and 28-30 are obvious over Kennedy in view of Watson and vPayment Interview.

• Prior Art Relied Upon: Kennedy (Application # 2007/0005403), Watson (Patent 5,991,750), and vPayment Interview (a 2006 archived webpage transcript).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner argued that Kennedy disclosed a system for real-time adjudication of healthcare claims and transmitting payment information with an EOB to providers, but it used a conventional ACH transfer for payment. Watson and the related vPayment Interview disclosed GE's vPayment service, which created unique, single-transaction virtual stored-value card accounts chargeable only up to a pre-authorized amount (e.g., an invoice amount). The combination of Watson/vPayment Interview with Kennedy allegedly taught all key limitations of the independent claims, including creating a unique stored-value card account limited to the adjudicated benefit amount and creating a file containing the account details and EOB for the provider.
  • Motivation to Combine: A POSITA would have been motivated to replace Kennedy's ACH payment mechanism with the virtual card system of Watson/vPayment Interview. Petitioner asserted this was a simple substitution of one known, commercially available payment modality for another to gain the well-understood benefits of card payments, such as faster processing, easier reconciliation, and potential revenue from interchange fees.
  • Expectation of Success: The combination involved applying a known payment technology (virtual cards) to an existing transaction processing system (healthcare claims). Success was predictable because both systems were designed to handle electronic financial transactions and their integration was straightforward.

Ground 2: Obviousness over Kennedy and Allen - Claims 7-8, 11-14, 17-20, 23-26, and 29-30 are obvious over Kennedy in view of Allen.

• Prior Art Relied Upon: Kennedy (Application # 2007/0005403) and Allen (Application # 2005/0209964).
• Core Argument for this Ground:
  • Prior Art Mapping: The argument mirrored Ground 1, with Allen serving as the source for the stored-value card technology. Allen, whose named inventor is the same as the ’748 patent's inventor, disclosed a method of providing a "distinct payment number" (e.g., a credit card number) with a "fixed charge limit" for insurance claim payments. Allen taught generating a unique payment number for a predetermined limit amount and loading funds to it, thereby disclosing the creation of a unique, authorized-amount stored-value card account. Combining this with Kennedy’s EOB generation and transmission system allegedly rendered the claims obvious.
  • Motivation to Combine: The motivation was identical to Ground 1: substituting a known electronic payment method (Allen's virtual card) for Kennedy's ACH transfer to achieve predictable benefits. Allen itself highlighted the advantages of using cards over checks for insurance payments, providing an explicit reason for the combination.

Ground 3: Obviousness over Kennedy, a Secondary Reference, and Image Statement Products - Claims 9, 15, 21, and 27 are obvious over Kennedy, Watson/vPayment Interview, and Image Statement Products.

• Prior Art Relied Upon: Kennedy (Application # 2007/0005403), Watson (Patent 5,991,750), vPayment Interview (a 2006 archived webpage transcript), and Image Statement Products (a 2002 press release).
• Core Argument for this Ground:
  • Prior Art Mapping: This ground built upon the combination of Kennedy and Watson/vPayment Interview to address dependent claims requiring "a computer-generated image of a physical card" be provided in the transmitted file. Petitioner asserted that Image Statement Products taught that bank statements could be generated by electronically inserting images of physical checks into the statements, and that banks could clear payments using these images.
  • Motivation to Combine: A POSITA, having already combined Kennedy and Watson to create an electronic EOB with virtual card payment data, would have found it obvious to also incorporate the teachings of Image Statement Products. At a time when many providers were not equipped to receive ANSI 835-formatted data, creating a human-readable file (like a PDF) was common practice. Including an image of a card, rather than just text, would have been a mere design choice to make the payment information more easily recognizable on the EOB statement, analogous to including an image of a check.
• Additional Grounds: Petitioner asserted additional obviousness challenges based on combinations of Kennedy with Wells (Patent 6,901,387), which taught a similar limited-use account identifier system. Further grounds combined Kennedy, Allen, and Image Statement Products, and Kennedy, Wells, and Image Statement Products, relying on the same design modification theories.

4. Key Claim Construction Positions

• "single-use, stored-value card account" (claim 13): Petitioner proposed this term be construed to mean "a stored-value card account that may be used to make only a single payment." Petitioner argued this construction aligns with the ordinary meaning of "single-use" and is distinct from "single-purpose" (i.e., usable only for medical services), a limitation recited separately in dependent claim 16. This construction was central to arguing that prior art teaching one-time-use virtual card numbers met the limitation.
• "stored-value card" / "stored-value card account": Petitioner proposed adopting the PTAB's prior construction from a related case, defining these terms as "credit card, debit card, or EFT card" and their corresponding account types. This broad construction allowed prior art disclosing any of these common payment card types to be applied to the claims.

5. Relief Requested

• Petitioner requests institution of an inter partes review and cancellation of claims 7-30 of the ’748 patent as unpatentable under 35 U.S.C. §103.