Interactive Communications Intl Inc v. Blackhawk Network Inc

1. Case Identification

• Case #: IPR2024-00465
• Patent #: 11,488,451
• Filed: January 17, 2024
• Petitioner(s): Interactive Communications International, Inc.
• Patent Owner(s): Blackhawk Network Inc.
• Challenged Claims: 1-24

2. Patent Overview

• Title: System and Method for Selling Pre-Printed Lottery Tickets
• Brief Description: The ’451 patent relates to a method for activating manufactured, pre-printed random draw lottery tickets using a retailer’s existing point-of-sale (POS) terminal. The system employs a third-party transaction processor as an intermediary to receive an activation request from the retailer POS and securely forward it to a lottery administration system, eliminating the need for specialized lottery hardware at the retail location.

3. Grounds for Unpatentability

Ground 1: Obviousness over Irwin - Claims 1-9 and 11-24 are obvious over Irwin

• Prior Art Relied Upon: Irwin (Patent 9,405,984).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner argued that Irwin discloses all limitations of the challenged claims. Irwin describes a system for activating pre-printed lottery tickets (both "quick-pick" cards and "passive" tickets) using a merchant's standard POS equipment. In Irwin, an activation request is sent from the POS through a pre-existing credit/debit card processing interchange—comprising an acquiring processor, an interchange (e.g., Visa), and an issuing processor—to a "lottery central site." Petitioner asserted these interchange components are third-party transaction processors that receive requests from multiple retailers and communicate with the lottery administration system (the "lottery central site") via a secured channel. The lottery site then provides an indication back that draw information has been associated with the ticket, all without requiring custom lottery hardware at the retailer.
  • Key Aspects: This ground asserts that a single prior art reference, which leverages existing financial transaction networks for lottery activation, renders nearly all challenged claims obvious without modification.

Ground 2: Obviousness over Szrek and Llach - Claims 1-10 and 12-24 are obvious over Szrek in view of Llach

• Prior Art Relied Upon: Szrek (Patent 7,627,497) and Llach (Application # 2013/0441768).

• Core Argument for this Ground:

  • Prior Art Mapping: Petitioner contended that Szrek discloses a base system for activating pre-printed lottery tickets at a POS terminal that communicates with a backend game provider, a system the Board previously found rendered claims of the parent ’894 patent obvious. Llach, which describes activating stored-value cards (e.g., gift cards), supplies the express teaching of a third-party transaction computer acting as an intermediary between a retailer POS and a card issuer’s authorization system. The combination results in Szrek’s lottery activation system being routed through Llach’s third-party transaction processor, which is taught to handle requests from a plurality of different retailers.
  • Motivation to Combine: A POSITA would combine Szrek and Llach to expand Szrek’s system into a centralized network capable of supporting numerous retailers and locations, analogous to the well-known and commercially successful gift card activation model that Llach describes. Petitioner argued that Szrek itself teaches its system is similar to activating phone cards, making the application of Llach’s intermediary processor a natural and predictable extension.
  • Expectation of Success: A POSITA would have a high expectation of success, as incorporating Llach’s transaction computer into Szrek’s system was a known technique for centralizing transaction processing. The integration would be a minimal and trivial modification, yielding the predictable result of a scalable lottery activation network.

• Additional Grounds: Petitioner asserted additional obviousness challenges, including claim 10 over Irwin combined with Szrek to add age verification, and claim 11 over Szrek and Llach combined with Gilmore (Application # 2005/0233797) to add the generation of lottery numbers at the time of purchase at the POS.

4. Key Claim Construction Positions

• "transaction processor": Petitioner proposed adopting the plain and ordinary meaning, consistent with the Board's construction in a related post-grant review (PGR2020-00084): "a processor that processes transactions between two devices." This construction is central to Petitioner's arguments because it frames the processor as a distinct intermediary component, separate from the retailer's POS terminal and the lottery administration system. This allows Petitioner to map the functionality of third-party processors in the prior art, such as the acquiring/interchange/issuing processors in Irwin or the transaction computer in Llach, to the claimed "third-party transaction processor."

5. Arguments Regarding Discretionary Denial

• Petitioner argued that discretionary denial under 35 U.S.C. §325(d) would be improper. The primary reference for Ground 1, Irwin, was never cited or considered by the examiner. For Grounds 3 and 4, the specific combination of Szrek and Llach was not presented to the examiner. Petitioner asserted that although Szrek and Llach were included in a broad Information Disclosure Statement (IDS), the examiner never mentioned them and was likely unaware of their significance or the arguments presented in the related PGR against the parent patent. Therefore, the examiner erred by not considering the art and arguments that are central to this petition.

6. Relief Requested

• Petitioner requests institution of an inter partes review (IPR) and cancellation of claims 1-24 of Patent 11,488,451 as unpatentable under 35 U.S.C. §103.